Nowadays very liberal rules and ‘regulations are prevalent for all those Non-Resident Indians who would like to make investment in the real estate sector in India. It is also interesting to note that an NRI like any other resident Indian is also entitled to enjoy a deduction in respect of interest on loan for residential house property to the extent of `.1,50,000. Likewise, even the repayment of the housing loan brings in tax concession to an NRI because the said repayment of housing loan also enjoys a tax deduction within the overall limit of `. 1 lakh as per Section 80C of the Income-Tax Act, 1961. In case the property is given on rent, the NRI can enjoy deduction of 30% towards expenses for repairs and collection charges. The interest on let out property is allowed as a deduction from the rental income without any upper limit.
Detailed provisions have been made in the FEMA as also in the Rules and Regulations made there under about the acquisition or transfer of immovable property in India by a person resident outside India including an NRI. Hence, it is necessary to go through these provisions. The general rule is that liberal permission has been granted for the NRIs to acquire and transfer an immovable property in India. However, a distinction is based on citizenship of India between NRIs who are Indian citizens and NRIs of Indian origin. In some cases, other Non-residents also are permitted to acquire an immovable property in India subject to certain conditions. Thus, the general rule is that unless it is permitted under the FEMA or under its Rules and Regulations, the acquisition or transfer of an immovable property in India by a person including an Indian citizen resident outside India would require an approval from the Reserve Bank of India vide Notification No. FEMA21/2000-RB dated 3.5.2000. A Notification has been issued by the Reserve Bank of India in this regard and is known as Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations, 2000. This is modified by RBI Circular No. 43 dated 8-12-2003. . For the latest relaxation in these Regulations, please enquire from the Reserve Bank of India.