How can NRIs Benefit from Investing in Indian Real Estate

The fact remains that the real estate prices in the world are sinking. But the real estate investment in India is ringing. This is the reality of the situation. To encash of this reality the Non-Resident Indians (NRIs) should now think of making investment in India in the real estate sector.

Believe me when I say that the investment by Non-Resident Indians if made today in the real estate sector, then surely it will bring higher appreciation in the years to come and that the investment made today will not bring any regret. Before venturing into investment in real estate in India, the Non-Resident Indians in particular should take care of the provisions contained in the Foreign Exchange Management Act as well as the Income-tax Act.

A fair knowledge of these two enactments will help the Non-Resident Indians to take a wise decision of investment in real estate keeping in view the provisions of law affecting such real estate investment.

As per the said Foreign Exchange Management Act an Indian citizen who resides outside India is permitted to acquire any immovable property in India other then agricultural/plantation property or a farm house. Thus, it is very clear that Non-Resident Indians enjoy almost all the privileges which are enjoyed by a resident Indian with reference to purchase of immovable property in India.
As per the said Foreign Exchange Management Act an Indian citizen who is a resident outside India popularly known as Non-Resident Indian has the permission for the following activities with reference to acquisition and transfer of immovable property in India :-

1. acquire immovable property other than agricultural land/plantation property or a farm house by way of purchase subject to the conditions regarding RBI rules mentioned in clause (a) of the Regulation;
2. acquire any immovable property other than agricultural land / plantation property / farm house by way of gift from an Indian citizen resident outside India or from a PIO;
3. acquire property by inheritance;
4. transfer by way of sale any immovable property other than agricultural / plantation property of a farm house by way of sale to a person resident in India;
5. transfer agricultural land / farm house or plantation property way of gift or sale to an Indian citizen resident in India;
6. transfer residential or commercial property in India by way of gift to a person resident in India or to a person resident outside India who is a citizen of India or to a person of Indian origin resident outside India.

Before making any investment in real estate the Non-Resident Indian should very carefully prepare the basic objective or the purpose of making investment in real estate sector in India. The strategy will be different in case the investment in real estate is made for acquiring a residential property for self use.
Likewise, the strategy for investment will be different in a situation where the Non-Resident Indian would like to buy real estate with the objective only of making money at the time of selling the property.

Reversely the strategy will be still quite different if a Non-Resident Indian who is interested to invest in real estate just with the sole objective of receiving a regular flow of money by way of rental income. Hence, the first strategy with reference to investment by a Non-Resident Indian in real estate would be to shortlist the specific purpose or objective of making investment in real estate.

Purchase of Property by NRI for Self Use 

The Non-Resident Indian can make investment in a residential property for his own use. This property can be in the form of ownership flat or it could be in the form of buying a piece of land and constructing a house thereon. In both the situations it is of advantage for a Non-Resident Indian to make investment in a residential self occupied property by taking a loan.

The Non-Resident Indian would be very happy to note that if he takes loan for a self occupied house property, then he would enjoy a deduction from his Indian income in respect of interest paid on loan taken for such self occupied residential property. This loan can be taken either from the bank or financial institution so also the loan can be taken from any member of the family or friend or relative. The maximum deduction in respect of interest on loan that is allowed for self occupied house property is Rs. 1,50,000.

Similarly, as per the provisions contained in section 80C of the Income-tax Act, 1961 within the overall deduction of Rs. 1 lakh the Non-Resident Indian just like a Resident Indian would also enjoy deduction in respect of repayment of the housing loan for self occupied property. However, the deduction for repayment of the loan would be permissible only in respect of loan taken from bank, financial institution etc., etc. Hence, whenever the Non-Resident Indian is contemplating to purchase a residential house property for self use, then surely the best investment strategy would be to take loan and make investment in your lovely self occupied house property.

Real Estate Investment for Rental Income 

The Non-Resident Indian can make investment in a residential property or in a commercial property with the objective of receiving a regular flow of rental income. The provisions of taxing rental income are simple, easy and investor friendly. Broadly speaking, from the rental income derived by a Non-Resident Indian deduction is available in respect of actual payment of house tax as also a special 30 per cent deduction is available towards repairs, maintenance and collection charges of the property.

This special deduction is permissible irrespective of the fact whether you spend on the repairs or you do not spend on repairs. Thus, this is a big deduction available from rental income which is instrumental in cutting down the tax payment by a a Non-Resident Indian on rental income.

Another important feature of taxation relates to complete deduction without any upper limit of the interest paid by the Non-Resident Indian for purchase of property which is given on rent. Thus, the entire interest payment for purchase of property which is given on rent is allowed as a deduction from the rental income. This is a great big advantage. Hence, it is worthwhile for the Non-Resident Indian to make investment in real estate specially the real estate acquired for receiving a fixed flow of rental income by taking a loan for such purchase.

Buy and Sleep for Three Years - The Tax Saver Formula

If the objective of a Non-Resident Indian is to make investment in real estate, with the sole objective of making money by selling such real estate, then for such Non-Resident Indians, it is strongly recommended that they should not sell their real estate at least within three years of purchase of the real estate.
To make the things very simple and clear it may be noted that whenever the property whether commercial or residential is sold by a Non-Resident Indian, then just like Resident Individual income-tax is payable on the Capital Gains amount received by selling the real estate. In case the property is sold for holding it for a minimum period of three years, in that situation the Capital Gains arising to the Non-Resident Individual is known as Long-Term Capital Gain. While reversely if the real estate is sold within a period of less than three years from the date of purchase, in that situation the profit arising on such transaction is treated as Short-Term Capital Gain. Under the Income-tax Law Short-Term Capital Gain is liable to tax and is to be added with other income of the Non-Resident Indian.
Reversely, in case the property is sold after holding it for three years, it becomes Long-Term Capital Gain for which innumerable tax advantages can be achieved by a Non-Resident Indian. For example, if the property is sold after holding it for three years, the benefit of Cost Inflation Index is made available to a Non-Resident Indian whereby substantial tax on Long-Term Capital Gain can be reduced. Similarly, the maximum income-tax payable on Long-Term Capital Gain is just 20 per cent and finally if the property is held for more than three years, then it is possible for the Non-Resident Indian to save such Capital Gains Tax by making investment in new residential property based on the provisions contained in the Income-tax Law.

Thus, it makes a sense for all Non-Resident Indians to purchase real estate in India and sell the same only after holding it for three long years. This small activity if implemented by the NRI in reality will help them to save a substantial amount of income-tax on their Long-Term Capital Gain.

Repatriation of Rental Income and Sale Proceeds of Property 

Within the provisions of the Foreign Exchange Management Act, it is possible for a Non-Resident Indian to repatriate the rental income received from investment in real estate in India. Similarly, it is possible within the framework of the Foreign Exchange Management Act to repatriate the proceeds of sale of immovable property in India more particularly in a situation where such property has been purchased by remittance from abroad or from a NRE Account.

Income-tax Compliances

Whenever a Non-Resident Indian makes investment in immovable property in India, he is not required to comply with any formality of the law. Just buy the property, complete the registration formalities and relax. However, it is advisable that the Non-Resident Indian should obtain a PAN Card i.e. Permanent Account Number Card so that if the Non-Resident Indian has certain income by way of rental income from property in India, then it is easy for him to make tax compliances.

Also please do remember that the Non-Resident Indian should also file Income-tax Return in India in respect of his rental income specially when rental income coupled with other income of the Non-Resident Indian arising in India exceeds the basic income-tax exemption limit. For the benefit of the Non-Resident Indians it may be noted that for the current Financial Year 2011-2012 the basic income-tax exemption limit for individual tax payers is Rs. 1.80,000 and for women tax payers the same is Rs. 1,90,000 while for a senior citizen of the age of 60 plus the basic income-tax exemption is Rs. 2,50,000 and finally for very senior citizens who are of age group of 80 years and above the income-tax exemption limit happens to be Rs. 5,00,000.

Hence, the Non-Resident Indians should take care to file their Income-tax Returns specially if the same exceeds the basic exemption limit. Generally the last date of filing Income-tax Return happens to be 31st of July each year. If the Non-Resident Indian is having substantial big income by way of rental income, in that situation Advance Tax must be paid in advance during the Financial Year itself which is to be calculated on the estimated income of the Financial Year.

Reverse Mortgage Benefit for NRIs

The concept of Reverse Mortgage which is very popular and prevalent in USA and other countries of the world is also now popular in India. Now the senior citizens in particular can take advantage of Reverse Mortgage in respect of the real estate owned by them in India. The amount taken from the bank consequent to Reverse Mortgage is not added as income of the Non-Resident Indian. Thus, in old age this concept of Reverse Mortgage really happens to be a wonderful tool of enjoying your property in India on the one hand and on the other hand taking money from the bank consequent to Reverse Mortgage of the property.

The Importance of Circle Rate

In whole of India Circle Rate has been announced by the Government in respect of properties in different parts of India. At any point of time whenever the Non-Resident Indian is interested to purchase the property in India, he should take care to ascertain the Circle Rate of the property and this is mainly because of the fact that the Stamp Duty will be payable on the minimum value of the Circle Rate or the actual price whichever is higher. Likewise, the importance of Circle Rate is also to be noted specially when the Non-Resident Indian is interested to sell the property. In case the property is sold by the Non-Resident Indian at a price lower than the Circle Rate, in that situation whatever is the Circle Rate, the same will be treated as the minimum sale price and consequently the Capital Gain will accordingly be calculated.

Finally, the Non-Resident Indian while making investment in real estate in India would find their decision of making investment in real estate in India a really rewarding proposition because now a days hassles are less, tensions are less, tax provisions are simple, innovative vistas are available to save your tax and finally repatriation becomes easy and simple. However, whenever the new real estate is proposed to be purchased by the Non-Resident Indian, to achieve optimum tax planning the Non-Resident should ascertain the purpose of the purchase of the property.

Depending on the purpose of acquiring real estate the new real estate Investment should be made in the names of different family members keeping in view the tax angle. Wishing all the Non-Resident Indians a wonderful time in the wonderland of investment in real estate in India. The author feels that the investment made by the Non-Resident Indian specially in Indian real estate will be a rewarding experience for them and would make them proud owner of real estate in India with real great rewarding experience on their investment.

by Subhash Lakhotia for MoneyControl
(The author is tax & investment consultant at New Delhi for last over 40 years. He is also Director of M/s R.N. Lakhotia & Associates & The Strategy Group. )

Having been called the rudest, one of the most unliveable, and recently, the most packed city in the country, Mumbai now also has attained the label of the city with the least open space left for its residents. A report released by global real estate consultancy firm Jones Lang LaSalle Intelligence Services says that Mumbai has just 1.95 sq m open space per capita, which is way worse than Delhi, with 15 sq m per person, and Bangalore with 6.4 sq m per capita.


Globally, this is worse even than the world’s most populous metropolis Tokyo, as well as New York, and is dismally below the United Nations Food and Agriculture standard of 9 sq m per capita or per person. Currently, claims the study, there are 14 million Mumbaikars on the entire 480 sq km of the city, and they collectively have only 14 sq km - or 2.5 per cent - of public open space with them, which include parks, playing fields and recreation grounds. 


Incidentally, Chandigarh offers 35 per cent of its city area for open spaces, and Delhi has 20 per cent for gardens and parks. Ashutosh Limaye, head, Research and Real Estate Intelligence Service, Jones Lang LaSalle India, has said in his report, “What I found more disturbing was the non-utilisation of Mumbai’s natural gifts.

An open western coastline of 35 km and a natural harbour on its eastern coast is kept away from people, with less than 10 organised access areas to the sea. With hardly any water sports and occasional water front parks, the Arabian Sea is reduced to a mute spectator for Mumbaikars.” The report also talks about how Mumbai has a 50 sq km vast national park, which is, sadly, underutilised. It has areas covered by mangroves and wetlands that are meant to be a protected zone without public access, but that are fast being encroached by squatters.

Jeetendra Gupta, Mumbai Intellectuals Voices, a group that raises social issues within the city, claims that this is a matter of immediate concern and the government should take steps to protect open spaces. “For a common man, it is difficult to understand what a reserved open place is. If the authorities put a board defining open space, it would be a bit difficult for people to encroach upon it. However, that’s not happening and hence, we see most of the open spaces being encroached and turned into a concrete jungle.”

Limaye explained how the crunch is forcing citizens to pay for open spaces — in the form of gardens and pools in a residential complex. “Mumbai’s real estate is creating its own family level open spaces in its residential projects. It is clear that only the cr me de la cr me can afford this. But the aspiration fast trickles down from luxury to high-end and then to mid-end residences where one pays almost twice the money for ‘non-residential space’ while buying a house. “Creating such spaces artificially on a concrete base means a heavy carbon footprint, higher energy consumption, depriving air space for additional residences that the city requires so badly, and above all taking the property price beyond the sustainable limit for the majority of citizens,” Limaye said.

Source:- IndianRealtyNewz

Investors have always viewed gold as a safe place to put your money, and with good reasoning too. Gold has always been a way to preserves ones wealth due to its stability especially during times of economic instability. It is also considered a low risk investment by most and is universally accepted around the world. Buying gold can be a great way to provide a hedge against inflation and currency crises. However gold, unlike stocks, don't produce any earnings (no dividends or interest) and it has limited industrial uses. Not to mention gold's value has been historically volatile and has not always kept up with inflation. You will have to decide for yourself if the benefits outweigh the risks.

Whenever Apple launches in a new sector of the tech market, it has a habit of blitzing the opposition with glamorous new products.
After taking the smartphone and tablet markets by storm, If the latest rumours are to be believed in the Silicon Valley, Apple is planning to dominate the living room with yet another slickly-designed user-friendly device - an Apple TV

Apple already has some stunningly attractive displays on sale – including the Apple iMac all-in-one computer and a range of monitors for its Mac Mini and MacBook laptops. Now imagine a scaled up version – with the possibility of a 46-inch screen – and you may have a fair idea of what Apple has up it’s sleeve.

Current Apple products have stunningly vibrant and sharp screens, but it’s usually the build quality that set gadgets like the MacBook Pro or iMac apart from rivals. If Apple makes a 46-inch HDTV complete with an all-aluminium design, it’s bound to be onto a winner.

A TV would also go perfectly with the Apple TV streaming box, further integrating iTunes into your daily life. At present, the rumours hint at a 2012 launch for an Apple HDTV.


"Apple is working on new technology to deliver video to televisions, and has been discussing whether to try to launch a subscription TV service, according to people familiar with the matter," said an August 26 article in the The Wall Street Journal.

"Apple is almost certainly working on a digital television based on its iOS operating system, according to multiple sources in Silicon Valley," reported technology blog VentureBeat after speaking with sources that include Piper Jaffray analyst Gene Munster and Venture capitalist Stewart Alsop of Alsop Louie ventures. Steward Also told VentureBeat that "Apple will do to television manufacturers what it did to phone makers with the iPhone."

VentureBeat suggested that Apple's vision could "tie seamlessly into other Apple devices, like the iPhone, iPad and MacBook Air, giving the company an enviable full-circle consumer product line," and added that the Apple TV might function similarly to the smart devices seen in a promotional video published by Gorilla Glass maker Corning.

Apple has long been rumored to be working on a smart TV. In June 2011 a former Apple executive who spoke to technology blog DailyTech on the condition of anonymity revealed that Apple had teamed up with a "major OEM to sell iOS-powered, Apple branded displays."

Despite the continued rumors, many tech pundits remain doubtful about Apple's entry into the TV market. Skeptics say Apple won't enter the TV market because it has a very low replacement cycle (most families won't replace their TV for between 5 to 10 years) and low margins.

Earlier this year Google tested the waters by teaming up with Sony and other manufacturers to release a line of Google TVs and set top boxes that were designed to disrupt the market. The project was met with a lukewarm response, however Google executive chairman Eric Schmidt recently announced that Google TV will launch in Europe by early.

Source : The Gadget Show