The Indian real estate market has always been very attractive to non-resident Indians (NRIs) wishing to have their roots in their home country. The reasons for investing in NRIs could be different from upgrading your family home, which offers a better lifestyle so that parents have a signature property to come back to.
To determine if the current range of reforms would have a positive impact on the NRI, it is essential to understand what the typical concerns of NRIs investing in India are.
So far, the common concerns of NRIs investing in India were the opaque nature of business, lack of information, no standard due diligence principle, premature delivery and finalization of projects with a criminal appeal or not Buyers. Especially for NRIs, the heavy nature of the supervised with project developers, where they were unfinished was a great motivation to invest in their home countries.
The question now is whether the NRI can have more confidence in decision-making investment with policy changes such as RERA and GST attract the Indian real estate NRI in 2017.
The government has largely addressed most of these concerns about some of the major policy changes in 2016, namely Real Estate Regulation Act (RERA), Goods and Services Tax (GST) and Law Benami transactions.
RERA or the Law of 2016, standards and real estate development (RERA) ensure that regulations in the market poorly regulated. The buyer will be protected and greater transparency in the sector will be visible. RERA will support the developers in the dissemination of financial information, the timely development of projects and the maintenance of good corporate governance practices.
The GST is the most important tax reform introduced in India. The GST proposes to eliminate the difference in indirect taxes applicable in several states. The benefits of the real estate sector from the fact that the GST would provide more clarity on the tax credits for ER transactions and the allocation of incoming credit would reduce real estate prices.
The Benami Operations Act (Prohibition) provides an effective regime to prohibit Benami transactions. The amended law allows the authorities to temporarily fix the specified Benami properties that may possibly be confiscated. In addition, if a person is guilty of a Benami offense operation by the competent court, which is punished with imprisonment for a period of at least one year, but can be extended to seven years and is also liable to a fine of 25 percent of the fair market value of the property.
The introduction of REIT (Real Estate Investment Trusts) will also have a very positive impact on the real estate sector. REIT open platform that will enable all types of investors – even those with smaller budgets – to achieve safe and rewarding investment in the Indian real estate market. The best thing about REITs is that investors can start with as little as Rs 2 lakh sum to secure the units in return.
For NRI, the RERA, GST, Benami Act, REIT and government initiatives such as demonetization are greatly stimulated by the sense of investment. These measures have improved transparency and modified rules and regulations have greatly simplified the procurement process. FEMA’s tolerant policies and the relaxation of laws by the RBI regarding the purchase of goods by NRIs also raised the interest of NRIs in the purchase of real estate.