According to a report by NoBroker, investment in real estate in India is expected to reach 20% by 2025. This sector is projected to maintain a consistent annual growth rate of 4.19% from 2024 to 2028, and its volume will reach $48.28 trillion by the end of 2028.
The real estate sector offers many opportunities for NRIs to make investments.
However, transferring money to India for real estate purchases requires compliance with legal requirements, which can be quite complex. Also, choosing the best method to transfer funds to India from Canada for such a big purchase can be confusing.
In this blog, we will explore the essential steps and legal requirements for transferring money from Canada to India to facilitate real estate investments,
Why Should an NRI from Canada Buy Property in India?
The Indian real estate market offers great opportunities for NRIs in Canada to invest in India. India's economy is the fastest growing in the world, fueling the consistent demand for housing and commercial spaces.
The rupee's depreciation against some foreign currencies, like the Canadian dollar, makes the Indian real estate market an affordable investment option. Also, Indian properties, particularly in tier-2 and tier-3 cities, generate healthy rental income and provide NRIs with a sturdy, passive income source.
How to Invest in India’s Real Estate From Canada?
Investing in real estate from Canada as an NRI is easy, but it requires going through the different financial channels and tax considerations.
- Fund Transfer Options: NRIs from Canada can purchase property using funds from their NRE, NRO Savings, or FCNR accounts in India. They can also transfer money using different options, such as bank-to-bank or wire transfers.
- Payment Methods for EMIs: NRIs can receive up to 80% of the loan amount from a bank or financial institution and make timely repayments. NRIs can make EMI payments through NRE, NRO, or FCNR bank accounts or directly remit money to India using money transfer platforms like Vance.
- Tax Considerations: India and Canada have a Double Taxation Avoidance Agreement that protects NRI from paying taxes twice. The treaty states that income generated from real estate in India will likely be taxed in India according to Indian tax laws.
What are the Legal Requirements for Transferring Money to India for Property Purchase?
Real-state investment in India for NRIs requires a thorough legal framework to ensure transparency and stability.
- FEMA: The Foreign Exchange Management Act has designed a framework for NRI investment in India. According to this law, NRIs can freely invest in residential and commercial properties, except agricultural land, farmhouses, plantation properties, etc.
- RBI: According to RBI, NRIs can invest in real estate through permissible funding sources and repatriate sale proceeds. NRIs can use the limited funds from abroad or their NRI account for property purchases.
- Tax Implications: Rental income earned from Indian property is taxable for NRIs. However, NRIs are exempt from GST unless they have a permanent establishment in India. Tenants may deduct TDS on rental income at specific rates, and NRIs can claim tax refunds by filing text returns in India.
What are the Best Ways to Transfer Money for Real Estate Purchases from Canada to India?
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In Conclusion
Transferring money for real estate investment from Canada as an NRI offers promising opportunities but also involves navigating the legal requirements and tax considerations.
Different methods, such as bank transfers and money transfer platforms, are the best choices to make the process easy, offering safety, speed, and convenience.