What is the procedure for an NRI to buy a residential plot in India?

NRI buying a residential plot in India does not required any special permission or any specific rules that apply for an NRI. The procedure that NRI follow to buy are similar to those followed by residents in India, the main difference is to acquire power of attorney if physically not present for deed registration

We suggest six steps to buy a residential plot in India. We will cover all you need to know about buying a plot with real example. Here are the six steps:

1. Document Verification
2. Power of Attorney
3. Agreement of Sale
4. Home Loan
5. TDS
6. Sale Deed

One of my client work for a Microsoft in Redmond, USA. He wants to invest in real-estate property. The budget is around Rs.2–3 Cr. The location is Bangalore

Initially, we had a plan to invest in agricultural land close to Nandi hills, the idea is to build farmhouse or resort type of setup. We had an offer of around Rs.8 lakh per gunta close to main road. The location seems very promising in near future and we were confident of proceeding. However being an NRI, we have restriction in buying agricultural land so we dropped this idea. But if you are reading this and any of your Indian family members willing to invest in Bangalore, you may suggest this idea. The value addition is buyer may get loan

We moved on to next idea which is to invest in residential or commercial property in core city. We had almost 10–15 options, based on our analysis in various parameters like location, tile document, price and Return on Investment (ROI) in 10 years, we zeroed on a residential plot measuring around 2600 sq.ft. It's a resale plot in a gated community in Hoodi, Bangalore.

The seller acquired this property through family partition deed and its BDA Khata. The seller's initial offer is Rs.3Cr. We cross-checked the government guidance value, the value is Rs.1.85 Cr. We gave counter officer of Rs.1.85 Cr, the seller was reluctant to accept our counter offer. We had multiple round of discussion for the duration of two weeks and derived at the price of Rs.2.15 Cr

To be precise, our buying price is Rs.2,15,81,200 /-

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1.Document Verification:

NRI spend lot of money in real-estate so its essential to do document verification. It helps to stay safe from fraud and forgery. We collected scan copy of following documents from seller for verification

• Seller acquired the property through family partition deed, so we collected partition deed and parent Deed
• Family Tree certificate
• Property Tax receipt
• Khata
• Aadhaar and PAN

Once we have the above listed documents, We did following check

• We extracted latest encumbrance certificate (EC) to check the history of transactions including if any registered mortgage. It costed us Rs.180 to extract EC on kaveri online services
• We extracted certified copy (CC) of deed to check the originality of partition deed and parent deed. It costed us Rs.250 to extract deed on kaveri online service
• We logged into property tax website and downloaded the latest tax receipt. It's free to download tax receipt
• Based on the family tree certificate, we checked the family members' details in partition deed

Once we satisfied with above check, we shared the title documents to advocate for verification report. As per the report, the title document is clear and legible.

(I would like to mention that few buyers blindly forward title documents to advocate for verification, before doing that I request you to do your basic home work by checking the EC and CC on your own. If you don’t know how to check the EC and CC, there are lot of article written on internet, it would take you around 45 min learn and extract the basis documents from government source at the comfort of your home, such act would save you from immense trouble and gives sense of confident in deal)

We finalized this deal on 5th December 2023, on the same day, my client paid the advance of Rs.20 lakh to confirm the deal

My client gave the tentative registration date on 12th February 2024. To meet the deadline of 12th Feb 2024, we plotted the retro-plan in reverse order from Sale deed registration. appointment booking for registration, stamp duty payment, TDS payment, Agreement of Sale and Power of attorney. We share our plan to our client, accordingly my client planned his trip to India and booked his flight tickets

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2. Power of Attorney (POA)

Power of Attorney is a legal document that authorizes a person to act on behalf of another person.

My client wants to buy this property jointly with his wife and she will not be travelling to India for sale deed registration. She granted General Power of Attorney to her husband to register the sale deed on her behalf.

We followed below procedure to execute the General Power of Attorney (GPA)

• Draft the GPA in word document
• Printed in A4 size paper in USA
• Signed the GPA inform of notary in USA
• Two witnesses signed the GPA
• Notary sealed and signed the GPA

My client couriered the following documents to India, to us

• Original GPA that is signed and notarized
• Self-attested ID proof of PAN and OCI

We received DHL package from Microsoft mailroom, Redmond. It consists of the original GPA

We submitted the following documents in Shivajinagar District registrar office for adjudication of stamp duty.

• Request letter
• Original GPA
• Stamp duty of Rs.200 from Khajane-2 website (now the revised stamp duty is Rs.500)
• Self-attested ID proofs

In one day, Our GPA is adjudicated and we collected back from district registrar office. Below is the image of our GPA

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3. Agreement of Sale:

An Agreement of Sale constitutes the terms and conditions of sale of a property by the seller to the buyer. An Agreement of Sale should have the details of seller, buyer, property schedule, buying price, mode of payment, tentative date of sale deed registration etc.…

At this moment, buyer is in USA and he not available in India for registration of Agreement of Sale. After the mutual discussion with seller, we decided to skip the Agreement of sale. We didn’t sign Agreement of Sale for this deal.

In case, if you want to sign Agreement of Sale with seller, you may execute a registered or unregistered agreement

Follow the below procedure for registration of Agreement of Sale:

• Download the basic template in internet and draft your Agreement of Sale in word document
• Merge the seller’s and buyer’s PAN in one PDF. it is called an Annexures
• Submit your application in Kaveri Online services including upload of Agreement of sale draft and annexures. Sub-registrar office verify documents
• Pay the stamp duty and registration fee. Book your registration slot
• Print the draft in A4 size paper and take the printout of your application summary report
• As per your slot, visit the sub-registrar office and register your Agreement of Sale

Follow the below procedure for unregistered Agreement of Sale:

• Download the basic template in internet and draft your Agreement of Sale in word document
• Buy non-judicial e-stamp paper. Stamp vendors are available around sub-registrar office near your place. The stamp duty is 0.1% of buying price. Max cap is Rs.20,000/-
• Print the draft from 1st page of e-stamp paper and followed by normal A4 size paper
• Seller and buyer should sign at all pages and two witnesses signs at last page

This completed the procedure to sign Agreement of Sale

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4. Home Loan:

A home loan is an amount that an individual borrows from financial institution to buy a property.

We need following documents to proceed home loan

• PAN and OCI or passport
• Income proof
• Softcopy of property documents, such as deed, Encumbrance certificate, Tax receipt and Khata
• Agreement of Sale between buyer and seller

Your presence is not required to process home loan in India. You just need to login to bank website and file the application online. In a day or two, the bank representative will call you for supporting documents and you can email the same. In around 5 working days, the bank representative will visit the property for valuation and in 15 working days your loan will be sanctioned

At the time of your sale deed registration, you will sign MODT with bank against the deposit of your title document and bank will hand over the cheque to seller

I have been personally witnessing that NRI have been obtaining home loan from SBI, HDFC or ICICI through online submission and liaising through email from abroad. These banks have exclusive service for NRIs so make use of the exclusivity to expedite your application

In our case, our client is not opting for home loan and we are self-financing the complete consideration amount of Rs.2.15 Cr. So the loan processing is not applicable for us.

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5. TDS:

The abbreviation of TDS is Tax Deducted at Source. TDS is applicable on sale of immovable property wherein the sale consideration exceeds or equal to Rs.50 lakhs.

TDS of 1% should be deducted by buyer of the property at the time of paying sale considerations to seller. If the seller of the property is NRI then the TDS rate as follows:

• Consideration is less than Rs.50 Lakh - TDS is 20.80% including surcharge and Cess
• Consideration is between Rs.50 Lakh to 1 Cr - TDS is 22.88% including surcharge and Cess
• Consideration is above Rs.1 Cr - TDS is 23.92% including surcharge and Cess

TDS deduction should be deposited in e-Filing website of Income Tax Department, here is the link Home

PAN is mandatory to login e-Filing website, the advantage is that once you login with your PAN number, all your personal info will be auto-displaced like name, age, address, contact number and communication address.

To pay the TDS, we need seller’s PAN number, enter the seller’s PAN number, the seller's details will be auto-displayed, enter the consideration amount and proceed with TDS payment through netbanking. If the seller is a NRI, we need PAN and TAN number as well

I must thank government for making the TDS payment easier in e-Filing. Earlier we used to type buyer details, seller details and property transaction details manually which was consist of 4–5 pages, it was tedious and confusing process, we used to hire chartered accountant to do this. Now the TDS process has been streamlined with auto pop-up and paying the TDS become effortless.

In our case, the consideration is Rs.2.15 Cr which is greater Rs. 50 lakhs and seller is a Indian citizen living in HAL 3rd stage, Bangalore. We are paying consideration to seller in lumpsum and not in installment so we deducted TDS 1% from consideration, that is Rs.2,15,812

We logged into e-filing website using buyer's PAN number. Under the 26QB application, entered the seller’s PAN number, consideration amount of Rs.2,15,81,200 and paid TDS of Rs.2,15,812 through HDFC Bank Payment gateway. Immediately after the payment, we had option to download TDS challan on screen.

Refer to below challan

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6. Sale Deed:

Sale Deed is a written document that establishes property ownership. Sale Deed includes details related to Seller, Buyer, property description, consideration and rights of buyer etc..

Required documents:

• Deed of how seller acquired the property
• Tax receipt
• Khata
• Seller’s PAN
• Buyer’s PAN
• TDS Challan
• Sale Deed draft to be registered

Procedure to register sale deed:

• Submit an application in Kaveri Online Services
• Application is verified at sub-registrar office
• Sub-registrar office send the payment request (for stamp duty and registration fee)
• Make the payment
• Book an appointment for registration
• Visit the sub-registrar office and register the Sale Deed

As per our retro plan, we submitted the application for sale deed registration on 3rd February 2024. We selected KR Puram as our sub-registrar office in our application

On 5th February 2024, our application was verified and we received option to pay government fee. On the same day, we tried paying the government fee and we had few challenges, would like to share our challenges so you can be proactive when your time comes

Our client was holding an account in CITI Bank, this bank was not directly integrated in Kaveri website, so we tried through payment gateway. Payment was declined and our transaction was failed. Due to failed transaction, the payment status shows “Payment pending with agency Bank”. refer to below image

This payment status has not refreshed ever after couple of days. I learned that NEFT transfer would take almost 7–15 days to refresh failed transaction. I was stuck and i was not able to make the payment and book the slot for registration on 12th Feb 2024

To overcome this issue we Immediately refiled a new application, we went to sub-registrar office and requested the officer to approve my new application on urgent basis as we want to register the deed tomorrow, the office was very helpful on time.

We paid the government fee through SBI netbanking

Instead NEFT transfer, try UPI if transaction value is less than Rs.1 lakh or netbanking if transaction value is more than Rs.1 Lakh because failed transaction from UPI and netbanking would refresh within a day and we can retry the payment in same application.

I would like to mention that when we deal with international client, we always be proactive and set things at least 2–3 days in advance because most international clients have planned visit to India, if any deviation in our plan like transaction issue at last minute, it impacts their plan as well so it is important for us avoid last minute hassle. We set everything 3 days advance including slot booking for registration.

On 9th Feb 2024, my client flew from USA to Mumbai and stayed with his parents over weekend. On 12th Feb 2024 flew from Mumbai to Bengaluru, booked a cab at Bengaluru Airport and reached KR Puram sub-registrar office at 11.30 am. We submitted the application summary report at registration counter and completed the registration within 12pm including scanning of digital record and download of latest encumbrance certificate

Below is our registered Sale deed:

Below is the transaction page:

My client paid the final settlement of Rs.94 lakhs to seller through online account transfer and seller acknowledged the receipt. We collected parent documents from seller.

On very next day, my client flew back to USA. Now we are working on transfer of Khata and property tax

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For consultation, please write to us pgnproperties@gmail.com

Thank you for reading….