According to Mint reports, Non-Resident Indians (NRIs) must treat Indian property as an actively managed investment rather than a passive asset. NRI Simplify co-founder Gaurav Matta emphasized that while Indian real estate can be excellent for NRIs, it rarely operates as a buy-and-forget investment. The investment requires ongoing attention for tenant management, rent collection, maintenance, taxes, documentation, and compliance. Unlike mutual fund investments, property ownership involves active work including collecting rent, managing tenants, arranging repairs, and ensuring property tax payments are made on time. As reported by Mint, NRIs often look at property and mutual funds as competing investment choices, but the real question is not which asset is better; it is what role each asset plays in the overall portfolio. Property can offer tangible ownership and long-term appreciation, but it can also be illiquid, management-intensive and concentrated, while mutual funds provide greater diversification, liquidity and flexibility to deploy capital across market segments.
According to Mint reports, rental income earned by NRIs from property in India is taxable under the head 'Income from house property' at applicable income-tax slab rates. NRIs can claim deductions for municipal taxes paid during the financial year, along with the standard deduction of 30% of the net annual value. Under Section 195 of the Income-tax Act, 1961, rent paid to an NRI is generally subject to Tax Deducted at Source (TDS) at applicable rates, including surcharge and cess, wherever applicable. The final tax liability depends on the individual's taxable income and applicable tax provisions. As an NRI, you may also consult your tax advisor to analyze relevant Double Taxation Avoidance Agreement (DTAA) to claim benefits on such rental income available under such agreements.
As reported by Mint, NRIs have several options for managing rental property in India, depending on how much assistance they need and how frequently they can oversee the property themselves. A trusted family member or friend can handle basic tasks like coordinating with tenants, handing over keys and arranging repairs through a Power of Attorney (POA). Alternatively, a property management company can handle day-to-day responsibilities, including finding tenants, collecting rent and coordinating maintenance. Many NRIs combine these options, with a property manager handling daily operations while a POA holder signs rent agreements or completes formalities requiring owner authorization. An NRI can receive rent through online rent agreements, digital tenant verification, e-stamping and a non-resident ordinary (NRO) bank account for rent collection. Tenants can transfer rent amounts through NEFT, IMPS, or UPI linked to the NRO account, with funds being partially repatriable up to $1 million per financial year subject to applicable conditions and tax payment requirements.
According to Mint analysis, currency movements significantly impact NRI property investments. Matta explained that a ₹2 crore property was worth approximately $238,000 in October 2024, but today's exchange rate shows the same property worth about $208,000, representing a 13% reduction in dollar terms. The property has not fallen by a single rupee in India, demonstrating how currency movements alone can make meaningful differences in international returns. Similar calculations show reductions of about 13% in pound terms and 8% in Canadian-dollar terms. An investment rising in rupees may deliver smaller gains in overseas currency, while a weaker rupee can reduce the overseas value of Indian assets, even when a property's rupee price remains unchanged. Mutual fund investments also face currency movements because their returns are denominated in rupees, but some businesses within diversified equity funds earn revenue abroad, with export earnings and pricing power helping offset currency weakness over longer periods.
As reported by Mint, selling properties requires careful planning and documentation for NRIs. The process involves using required banking channels including NRE or NRO accounts, with documentation from chartered accountants helping show tax compliance. Properties can take months or years to sell, with brokerage, legal expenses, taxes, repairs, and vacant periods reducing earnings. Society maintenance charges may continue even without tenants. Matta noted that for an NRI, the decision should therefore be driven by the purpose of the investment, time horizon, liquidity needs, risk appetite and, importantly, the tax and regulatory implications in both India and the country of residence. Selling property can take months depending on buyers, market conditions and ownership checks, with brokerage, legal expenses and maintenance during vacant periods reducing gains. Open-ended mutual funds generally offer easier access to invested money, with investors able to request withdrawals online and payments arriving within a few business days, making them more suitable for emergencies or when plans change.
