This post is a little different theme from the usual ones, more focused on Indians who moved to Germany and need to figure out property/real estate matters in India. This is because I see these questions being asked in various forums about property in India as an NRI from Germany.
….am I an NRI?
NRI or Non Resident Indian, from a tax perspective, has
- Stayed in Indian for the current tax year for 182 or more days, or
- In the last 4 years has stayed in India for 365 days or more, of which at-least 60 days in current year.
As a Non Resident Indian, can I buy property in India while living in Germany?
Yes, you need not visit India to buy a property. As an NRI you can only buy residential or commercial property in India. The mechanism to do this is buy giving a special power of attorney to someone in India.
Any payments should be made from your NRO account only.
Can I sell Property in India as an NRI from Germany, without visiting India?
The Power of Attorney(POA) is again the instrument to help you here. However, few very important things to understand. By Law, Power of Attorney does not allow the power holder to sell a property, the transaction is only valid when a clear sale deed is executed. So, the person holding this POA has to enact the sale deed which might need your document signatures and so on.
How to get a Power of Attorney in Germany?
The Embassy of India does this for you, you should reach out to CGI Frankfurt or Berlin. The steps are:
- Get a power of attorney(called Vollmacht) made by local Notary in the local Landgericht (Court).
- Take the original and a copy to Embassy, sign this document in the presence of Consular Officer
- The Embassy then attests your signature.
Of course this is just the first step, in India you will need No Objection Certificate, Occupation Certification, Sanction Certificate and maybe more to finally get it done.
What about taxation after selling property as an NRI from Germany?
After you make the sale of Property in India as an NRI from Germany, the next step usually is to send this money from India to Germany. The below might changed based on tax laws for the year.
- If the property is sold <2 years of ownership, then 30% capital gains tax will be applied in India
- If the sale is after >2 years of ownership the tax claim is 20%
- You might get exemptions under Section 54, if you are reinvesting the proceeds in other property (within a prescribed time limit).
The money should be deposited to your NRO account if you want to remit it to Germany. For sums <US$ 1 million you only need a certificate from a CA proving the source, this is also referred as Form 15CA