General country information
India, with a population of 1.27 billion (second only to China) is a huge country made up of 28 states, each with their own government. It shares borders with China (Tibet), Bhutan and Nepal to the north, Pakistan to the north-west, and Burma to the north east. To the east, almost surrounded by India, is Bangladesh. Near India’s southern tip, across the Palk Strait, is Sri Lanka.
The largest Indian cities are Mumbai (formerly Bombay), Delhi, Kolkata (formerly Calcutta), Chennai (formerly Madras), Bangalore, and Hyderabad.The official language is Hindi, written in the Devanagari script. It is spoken by close to a third of the population as a first language. English is an ‘associated language’. In addition there are 18 official state languages.
India has benefited greatly from the ‘global economy’ and the IT revolution and besides its traditional heavy industries, is now a major player in IT and software development, and call centre outsourcing. Even so 350m people remain in poverty..
The Gross Domestic Product (GDP) grew by 4% in 2012 and that is expected to rise to 5.6% by the end of 2013. However depreciation of the rupee and high inflation has seen economic confidence drop to 53%.
Nominal house prices rose in 10 cities (out of the 15 cities covered by National Housing Bank (NHB) Residex figures) during the year to Q2 2013, while 5 cities had price nominal house price declines. But when adjusted for inflation, house prices actually fell in 11 cities, whereas only 4 cities experienced price increases
Net rental income is taxed at progressive rates, from 20% to 30%. Capital gains are taxed at the standard income tax rates.
The costs of buying and selling a property, are between 8.75% and 18%. Stamp duties and registration fees vary according to city and locality.The total cost of property registration is around 6.50% to 13.50% of the property value. The six procedures required can be completed in roughly 67 days.
A foreign national of non-Indian origin resident outside India cannot buy any immovable property in India. It is illegal for foreign nationals to own property in India unless they satisfy the residency requirement of 183 days in a financial year (a tourist visa lasts for 180 days). It is also illegal to buy property on a tourist visa.Investors are strongly advised to seek legal advice before putting money into immovable property or businesses in India. ‘There have been several cases where verbal agreements were reneged on and loopholes in agreements exploited to their disadvantage’, says the Foreign Office..
Moreover property cannot be purchased jointly in the name of one eligible person with one non-eligible person. That means a non-resident Indian or foreign national of Indian origin cannot buy a property jointly with a foreigner.
However, once a foreign national is resident in India, they are free to purchase any immovable property in India receiving the same rights as any other resident. This freedom is however not available to citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal and Bhutan
It is always wise to engage a reputable local lawyer for advice before approaching estate agents or private vendors.Only short leasehold (under five years) property is exempt from these rules. “Ineligible persons” (e.g. foreign nationals of non-Indian origin and also citizens of certain countries specified above) can acquire residential (not commercial) accommodation on lease not exceeding five years without any RBI permission. However, much property has been ‘sold’ to foreigners on 5 year leases. The buyers won´t get title to the property until they can obtain residency, which is what most of them intend to do eventually. But they may be disappointed – increasingly new visas explicitly forbid foreigners from staying in India more than 180 days consecutively.