NRI Guide to Buying Property in India: Rules, Taxes and Repatriation

Most NRI property purchases go wrong in one of two places: the money trail at the time of buying, or the tax and repatriation paperwork at the time of selling ten years later. The property itself is rarely the problem. This NRI guide to buying property in India covers what you can buy, how to pay, the tax rules you will meet, how to transact from abroad, and how to set things up on day one so that getting your money out later is routine rather than a year-long exercise. It is general guidance; FEMA rules, tax rates and DTAA provisions change, so confirm specifics with a chartered accountant before you act.

NRI guide to buying property in India: what you can buy

Under FEMA (Foreign Exchange Management Act) rules as generally applied:

• Residential and commercial property: NRIs and OCI cardholders can buy without prior permission, and there is no limit on the number of properties.
• Agricultural land, plantation property and farmhouses: generally not permitted for purchase. These can be inherited or received as gift from a resident relative in some cases, but buying them is the classic mistake. If a plot is marketed as "farmland" or "agri plot", stop and check its land-use status.
• Joint purchase with another NRI or a resident Indian is allowed; joint purchase with a foreign national who is not of Indian origin is restricted.

Citizens of a small list of neighbouring countries face additional restrictions even if they hold NRI-type status; check the current rules if this applies.

How to pay: the part that matters in ten years

Everything about repatriation later depends on how you paid now.

• Pay from an NRE, NRO or FCNR(B) account, or via inward remittance through normal banking channels.
• Keep every payment traceable: bank statements, remittance advices, and receipts from the seller or builder matching each transfer.
• No cash component, however the seller frames it. You will not be able to repatriate it, it exposes you to legal risk, and it creates a capital gains problem at sale.
• Funds from an NRE or FCNR account make repatriation of sale proceeds simpler. Funds from an NRO account bring you under the annual repatriation cap. Many CAs recommend routing the purchase through NRE funds where possible, for exactly this reason.

Home loans for NRIs

Indian banks lend to NRIs for property purchase, typically with a slightly lower loan-to-value ratio than for residents and a shorter maximum tenure. Expect to provide:

• Passport, visa or residence permit, OCI card if applicable
• Overseas employment contract and salary slips, or business documents
• Overseas bank statements and credit report from your country of residence
• NRE or NRO account details in India, since EMIs must be paid from these

A resident Indian co-applicant, often a parent or sibling, is sometimes required. Sanction can take longer than for a resident, so start the loan process before you shortlist, not after. The basics of what banks look at are in home loan eligibility explained simply at Home Loan Eligibility Explained Simply (What Banks Look At).

Taxes you will meet

At purchase: TDS you must deduct

When an NRI buys from a resident seller, the buyer deducts TDS at the rate applicable to resident sellers (a low rate above a price threshold). When an NRI sells, the buyer must deduct TDS at a substantially higher rate applicable to non-residents, on the full sale value unless a lower-deduction certificate is obtained from the tax department. Buyers of NRI property often do not know this, so expect to educate them or have your CA do it. Rates and thresholds change; check the current figures.

Stamp duty and registration

Paid at the same state rates as residents. The estimate method in stamp duty and registration charges at Stamp Duty and Registration Charges: How to Estimate Your Total Cost applies.

Rental income

Rent earned in India is taxable in India. The tenant is technically required to deduct TDS when paying rent to an NRI. You can claim the standard deduction and home-loan interest deduction as a resident would. You will need to file an Indian return, and the income may also be reportable in your country of residence, with relief under the applicable DTAA.

Capital gains at sale

Long-term and short-term capital gains rules apply based on holding period, with exemptions available for reinvestment in another residential property or specified bonds, within time limits. Keep the purchase deed, payment proofs, improvement bills and brokerage receipts from day one; you will need them to compute cost and claim exemptions.

Transacting from abroad: power of attorney

Most NRIs cannot fly in for every step. A power of attorney (PoA) given to a trusted relative or professional lets them sign on your behalf. Points that matter:

• Execute the PoA at the Indian consulate or have it notarised and apostilled in your country of residence, then adequately stamped in India within the prescribed period after it arrives.
• Make it specific: the property, the acts permitted (sign agreement, pay, register, receive possession), and a validity period.
• A general PoA that lets the holder sell is a risk to you and a red flag to future buyers. Keep sale powers separate and narrow.
• Some sub-registrars insist on a registered PoA; check locally before the registration date.

Verifying the property remotely

You cannot walk the site, so the agent's documentation has to do the walking for you. Insist on:

• RERA registration number for the project and the agent, verifiable on the state portal. Why this matters for an agent's credibility is covered in RERA registration for agents at RERA Registration for Agents: Why Showing Your Number Builds Trust.
• Title chain, encumbrance certificate, approved plan and occupancy certificate, reviewed by your own lawyer in India.
• A full video walkthrough, daylight, uncut, including the approach road, gate, lift and every room, plus a live video call from the site.
• A property page with photos, floor plan, exact address and the agent's profile and reviews, so you can compare options in one place. A live example of the format is at a live agent page.

Setting up for repatriation from day one

Repatriation of sale proceeds is allowed, subject to conditions and limits that depend on how the property was funded and on current RBI rules. In broad terms, proceeds for property bought with NRE or FCNR funds can be repatriated up to the original foreign-currency investment, for a limited number of residential properties; amounts beyond that, and proceeds credited to an NRO account, come under the annual repatriation limit. The process involves a CA certificate (Form 15CB) and a declaration (Form 15CA), and the bank will want the full paper trail.

Keep, from the day you buy:

1. Sale deed and all payment receipts
2. Bank statements showing each payment's source account
3. Inward remittance certificates (FIRC) if money came from abroad
4. Loan sanction and closure letters
5. Annual property tax receipts and rental agreements
6. Every Indian tax return filed for the property's income

A folder with these six items turns repatriation into a two-week bank exercise instead of a year of reconstructing records.

A short NRI checklist

• Confirm the property type is permitted (no agricultural land)
• Pay only through NRE/NRO/FCNR or inward remittance, no cash
• Start the loan early; expect extra documents
• Understand TDS obligations both as buyer now and seller later
• Execute a specific, time-limited PoA
• Verify title and RERA through your own lawyer
• Keep a repatriation folder from day one
• Retain a CA in India for annual filings

Rules in this area change frequently. Use this as your map and a chartered accountant as your guide for the specifics.

Frequently asked questions

Can an NRI buy any property in India?

NRIs and OCIs can generally buy residential and commercial property without special permission. Agricultural land, plantation property and farmhouses are generally not permitted for purchase, though they can be inherited. Check current FEMA rules before committing.

How should an NRI pay for a property?

Through normal banking channels from an NRE, NRO or FCNR account, or by inward remittance. Cash payments and payments from overseas in foreign currency directly to the seller are not the route to take; keep a clean banking trail for repatriation later.

Can an NRI take the money out of India after selling?

Repatriation is permitted within limits and conditions, typically easier for property bought with funds from an NRE or FCNR account, and subject to an annual cap for NRO balances. Tax clearance and a chartered accountant's certificate are part of the process, so plan it from the purchase stage.