NRI Guide to Buying Property in India
Non-Resident Indians (NRIs) and Persons of Indian Origin (PIOs) can buy most types of property in India under FEMA regulations. This guide covers what you can buy, how to finance it, tax implications, and how to repatriate sale proceeds.
What NRIs Can and Cannot Buy
Permitted
- ✓Residential property (any number)
- ✓Commercial property (office, shop, warehouse)
- ✓Property inherited from any person (including agricultural land)
- ✓Property gifted by a relative who is an Indian resident, NRI, or PIO
Not Permitted
- ✗Agricultural land (cannot purchase; can only inherit)
- ✗Plantation property
- ✗Farmhouse
These restrictions apply under FEMA (Foreign Exchange Management Act) regulations. RBI approval is needed for exceptions.
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Get a Property ValuationHow NRIs Can Finance Property in India
NRIs can finance property purchases through:
- NRE/NRO account funds: Payments must be made from NRE (Non-Resident External) or NRO (Non-Resident Ordinary) accounts held in India. Foreign currency remittances through normal banking channels are accepted.
- Home loans from Indian banks: SBI, HDFC, ICICI, and other banks offer NRI home loans. Loan-to-value ratio is typically 75-80%. Interest rates may be 0.25-0.5% higher than resident rates. Tenure up to 20-25 years.
- Not allowed: Payment in foreign currency, traveller's cheques, or from accounts outside India. No cash transactions.
Tax Implications for NRIs
TDS on purchase
When buying from an NRI seller, the buyer must deduct TDS at 12.5% (LTCG) or at applicable slab rate (STCG). When buying from a resident seller, standard 1% TDS applies on properties above ₹50L.
TDS on sale (NRI selling)
The buyer must deduct TDS at 12.5% for LTCG or slab rate for STCG under Section 195. The NRI seller can apply for a lower/nil TDS certificate from the Income Tax officer by showing proof of reinvestment (Section 54/54EC) and furnishing Form 15CA/15CB.
Rental income
Rental income from Indian property is taxable in India at slab rates. TDS of 30% is deducted by the tenant (if the tenant is liable). The NRI can file an Indian tax return to claim refund of excess TDS. DTAA (Double Taxation Avoidance Agreement) credit is available in the country of residence.
Capital gains
Same rules as residents: STCG at slab rate (holding < 24 months), LTCG at 12.5% (holding ≥ 24 months). Section 54 and 54EC exemptions are available. Note: DTAA may provide relief from double taxation in your country of residence.
Repatriation of Sale Proceeds
NRIs can repatriate sale proceeds from India subject to these conditions:
- Residential property: Sale proceeds of up to 2 residential properties can be repatriated. The property must have been held for at least 10 years (for properties purchased from NRE funds, no such restriction).
- Maximum repatriation: Limited to the amount originally paid from foreign inward remittance or NRE account for the property (not the sale proceeds).
- Forms required: Form 15CA (online declaration) and Form 15CB (CA certificate) must be submitted to the bank. The bank processes the remittance after verifying TDS compliance.
- NRO to NRE transfer: Up to USD 1 million per financial year can be transferred from NRO to NRE account (net of taxes).
Power of Attorney for NRIs
Since NRIs may not be physically present in India for every step, a registered Special Power of Attorney (SPA) is commonly used. Key requirements:
- The POA must be specific to the property transaction (General POA is not valid for property sale in most states)
- Must be notarized by the Indian Embassy/Consulate in your country of residence, or notarized locally and then apostilled (for Hague Convention countries)
- Must be registered at the Sub-Registrar Office in India (adjudicated for stamp duty)
- The POA holder should be a trusted family member or a licensed advocate
Disclaimer: This guide is for general informational purposes only. FEMA regulations, tax rules, and repatriation limits are subject to change by RBI and the Finance Ministry. Rules described here reflect the position as of 2026. NRIs should consult a qualified Chartered Accountant and a FEMA-specializing lawyer before making property decisions in India.