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NRIs Guide to Renting a Home in India

If you are an NRI who has purchased property in India for rental income, you should know about these four aspects:
1.      Rent Proceeds
The rent proceeds can be credited to the NRE or NRO account. Rent proceeds received in these accounts can be freely repatriated. If you do not have an NRE or NRO account, the proceeds can also be directly remitted abroad but you would need an appropriate certificate from a chartered accountant certifying that all taxes have been duly paid.
2.      Tax Implications
If you are getting a rental income from the property you have bought in India, you are liable to pay the tax in India, irrespective of which country you reside in currently.There are some deductions you can avail of. In order to ascertain how much of your rental income is taxable consider the following deductions in the first place:
·         Standard deduction at the rate of 30 percent on the taxable value
·         Taxes paid to the municipal authority with respect to the concerned property which has been rented out
·         Interest paid over a loan availed of for the purpose of construction, repairs or renewals of the property.

3.      Rental Agreement

Before making a rental agreement, proper tenant background verification is essential. You should also notarize all house rental agreements. It helps you as well as your tenant: Section 49 of the Registration Act states that an unregistered rental agreement will not be admissible in evidence, so it is a must stop. Also, a registered agreement is treated as a proof of address which your tenant can use to get a new phone or gas connection. Other than that, an NRI should also draft a clear chart as to how and when the rent will be increased and what kind of inclusions and exclusions in the rent, you want to address.

4.      Power of attorney

A Power of Attorney (PoA) can act as your point of contact and assure you that you will get your rent on time every month. You can also execute a power of attorney (PoA) through the Indian Embassy through Legalizationin which signatures of the notary or judge before whom the POA is executed are required to be authenticated by the duly accredited representative of the Indian Embassy/Consulate. In Apostalization, the deed of POA executed outside India are governed by the Hague Convention, 1961. Also known as super legalization, an apostille is a certificate which confirms and verifies the signature/seal of the person who authenticated the document. It is not necessary to always issue the power of attorney to a lawyer, you may also issue it to a friend or relative who can oversee the complete house rental procedures without getting into the hassles.

The information provided in this article is generic in nature and for informational purposes only. It is in no manner can act as a substitute for specific advice in your own circumstances. We strongly recommend you to seek professional guidance pertaining to your query or doubt.

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