Can an NRI buy property in India? What are the rules and restrictions?

(1) NRIs (Indian citizens resident abroad):
(a) Residential property — flats, apartments, houses, villas — freely, any number;
(b) Commercial property — offices, shops, warehouses — freely;
(c) Under-construction property — from RERA-registered developers — freely;
(d) Agricultural land, farmhouse, plantation property — NOT allowed by purchase; only by inheritance or gift from a resident Indian;

(2) OCIs and PIOs (Overseas Citizens of India / Persons of Indian Origin):
(a) Same rules as NRIs — residential and commercial freely; agricultural land prohibited;
(b) OCI status does not affect property rights relative to NRIs;

(3) Foreign nationals (non-NRI, non-OCI):
(a) Cannot purchase property in India without specific RBI approval;
(b) Can acquire on long-term lease (up to 5 years without RBI permission);

(4) No limit on number of properties — NRIs can own as many residential or commercial properties as they wish;

(5) Joint purchase — NRI can buy jointly with another NRI or with a resident Indian close relative.

Permitted funding sources under FEMA:

(1) NRE account — funds fully repatriable; most common for foreign-income-funded purchases;
(2) NRO account — for Indian-income-funded purchases; repatriation of sale proceeds subject to USD 1 million per year limit;
(3) FCNR account — foreign currency deposit; can be liquidated to fund purchase;
(4) Foreign remittance directly — inward remittance in foreign currency through normal banking channels;
(5) NRI home loan — available from Indian banks and HFCs (HDFC, SBI, ICICI, LIC Housing Finance); repayment from NRE/NRO accounts or foreign remittance;
(6) NOT permitted — payment in foreign currency cash, traveller's cheques, or from a non-resident ordinary account of a person other than the buyer;

Home loan specifics for NRIs:
(a) Loan-to-value: up to 80% typically;
(b) Tenure: up to 20–30 years;
(c) Income reckoned on foreign income (salary slips, employment contract, bank statements);
(d) EMI deducted from NRE/NRO account by standing instruction;
(e) Interest rates: typically same as resident loans or marginally higher;
(f) Power of Attorney holder can complete formalities if NRI is abroad.

(1) Due diligence — title search, encumbrance certificate, RERA registration check, developer credentials; engage a local property lawyer;

(2) Agreement to sell — pay token advance; ensure agreement specifies NRI buyer; stamp duty on agreement as per state law;

(3) TDS on purchase from an NRI seller — if you are buying from an NRI:
(a) Deduct TDS at 20% on long-term capital gains or 30% on short-term capital gains (not on sale price — on capital gains, but buyer must ensure compliance);
(b) Obtain TAN, file TDS return (Form 27Q), issue Form 16A;
(c) This is the buyer's obligation — non-compliance attracts interest and penalty;
(d) If buying from a resident Indian, standard 1% TDS on purchase price above ₹50 lakh;

(4) Stamp duty and registration — same as for resident buyers; rates vary by state (3–8%); NRI must be present or give POA to representative for registration;

(5) Power of Attorney — NRI can execute a registered POA in favour of a resident relative to complete purchase, registration and possession formalities; must be notarised and apostilled abroad. See our NRI POA guide;

(6) Documents required:
(a) Passport and visa/work permit;
(b) PAN card (mandatory for property purchase above ₹50 lakh);
(c) OCI card if applicable;
(d) Bank statements showing NRE/NRO funding;
(e) Passport photographs;
(f) Address proof abroad.

Rental income:
(1) Taxable in India; TDS by tenant at 30% on rent paid to NRI;
(2) Standard deduction of 30% of rental income available;
(3) Declare in Indian ITR-2; claim DTAA credit in country of residence;

Capital gains on sale:
(1) Long-term capital gains (LTCG) — if held more than 2 years: 12.5% (without indexation, post-Budget 2024) or 20% with indexation for pre-July 2024 purchases;
(2) Short-term capital gains — held 2 years or less: taxable at slab rates;
(3) Buyer deducts TDS on capital gains (not on sale price) — however, in practice buyers often over-deduct; NRI can apply for a lower TDS certificate (Form 13) to the Income Tax Officer before sale;
(4) Section 54 exemption available — reinvest in another residential property within 2 years (purchase) or 3 years (construction) to save LTCG tax;
(5) Section 54EC — invest LTCG in NHAI/REC bonds within 6 months (up to ₹50 lakh);

Repatriation of sale proceeds:
(1) Park proceeds in NRO account;
(2) Remit up to USD 1 million per financial year with Form 15CA + 15CB (CA certificate);
(3) For amounts above USD 1 million, case-by-case RBI approval required. See our repatriation guide.

(1) Purchase prohibited — NRIs and OCIs cannot purchase agricultural land, farmhouses or plantation property in India under FEMA regulations;

(2) Inheritance and gift allowed — agricultural land received by inheritance from a resident Indian is permitted; receipt as a gift from a resident Indian relative is also permitted;

(3) What 'agricultural land' includes: land classified as agricultural in revenue records; farmhouses; plantation property (tea, coffee, rubber estates);

(4) Conversion — if inherited agricultural land is converted to residential/commercial use under state land use laws, the converted land can be sold to a resident Indian;

(5) Sale of inherited agricultural land — can be sold only to a resident Indian; sale proceeds deposited in NRO account; repatriation subject to the USD 1 million per year limit with documentary compliance;

(6) Holding indefinitely — there is no requirement for NRIs to sell inherited agricultural land; they may hold it, lease it to farmers, or have it cultivated;

(7) Common mistake: purchasing agricultural land through a resident Indian as benami (in another's name) — this is a serious FEMA and Benami Transactions Prohibition Act violation; penalties include confiscation of property.