What Can NRIs Buy in India?
Non-Resident Indians (NRIs) and Persons of Indian Origin (PIOs) can freely purchase residential and commercial property in India without RBI approval. However, the following property types are NOT permitted without specific RBI permission:
- Agricultural land
- Plantation property
- Farmhouses
There is no limit on the number of properties an NRI can own in India. For residential properties, the usual RERA, title, and due diligence requirements apply exactly as they do for resident Indians.
FEMA Rules: How NRIs Must Pay
Under FEMA (Foreign Exchange Management Act), NRI property purchases must be funded through one of the following routes:
- NRE Account (Non-Resident External): Funds in NRE accounts are freely repatriable and can be used for property purchases. Funds here come from income earned outside India.
- NRO Account (Non-Resident Ordinary): Funds in NRO accounts (Indian-sourced income like rent, dividends) can be used, but repatriation of principal has limits (USD 1 million per financial year).
- Inward Remittance: Direct foreign currency remittance through normal banking channels (SWIFT transfer) is permitted.
- Home Loan EMIs: If taking a home loan, EMIs can be paid from NRE/NRO accounts or from the borrower's foreign account directly.
Cash payments, traveller's cheques, or foreign currency notes are NOT permitted for property purchases under FEMA.
Home Loan for NRIs
- Most major banks (SBI, HDFC, ICICI, Axis) and Housing Finance Companies offer home loans to NRIs.
- Loan-to-Value (LTV): Up to 80% of property value for loans up to ₹75L; 75% for higher amounts.
- Tenure: Maximum 20–25 years, subject to retirement age.
- EMI must be paid from NRE/NRO account or through inward remittance. Pre-EMI interest during construction phases applies the same way as for resident buyers.
- Some lenders require a co-borrower in India (resident Indian) for NRI loans, though this is not universal.
TDS on Property Purchase
Under Section 194IA, if the property value exceeds ₹50 lakh, the buyer must deduct 1% TDS from each payment and deposit it with the government within 30 days. This applies whether the buyer is an NRI or a resident Indian, and whether the seller is an NRI or resident.
Special case: If the SELLER is an NRI, the buyer must deduct TDS at 20% (or the applicable DTAA rate if the NRI provides a tax residency certificate) on the full sale consideration — not just the gains. The NRI seller can apply to the Income Tax Officer for a lower deduction certificate if their actual gain-based tax liability is lower.
Rental Income from NRI-Owned Property
- Rental income received in India is taxed under "Income from House Property."
- A 30% standard deduction on net rental income is available (regardless of actual maintenance expenses).
- If the tenant is a company or firm and pays rent exceeding ₹2.4 lakh/year, they must deduct TDS at 30% before paying rent to the NRI owner.
- Rental income can be credited to an NRO account. Repatriation of net rental income is permitted within the USD 1 million annual limit from NRO.
Capital Gains on Sale by NRI
- Short-term capital gains (property held ≤2 years): Taxed at the applicable income tax slab rate (can be 30% for NRIs).
- Long-term capital gains (property held >2 years): Taxed at 12.5% without indexation (post-Budget 2024 change). Previously, it was 20% with indexation — note this is a significant recent change.
- NRIs can claim DTAA benefits if their country of residence has a Double Taxation Avoidance Agreement with India.
Repatriation of Sale Proceeds
- Proceeds from sale of up to 2 residential properties can be repatriated by an NRI, subject to the USD 1 million annual limit from NRO accounts.
- The amount repatriable is limited to the original acquisition cost brought in from abroad or the NRE/foreign account (principal). Capital gains portion is subject to separate treatment.
- An Authorised Dealer (your bank) can remit the proceeds on production of Form 15CA/CB (Chartered Accountant certificate on tax compliance).
Power of Attorney (POA)
If the NRI cannot be present in India for property registration, they can grant a Power of Attorney to a trusted individual (family member or lawyer). The POA must be:
- Executed and notarised in the country of residence.
- Apostilled (for Hague Convention countries) or attested by the Indian Embassy/Consulate.
- Adjudicated/stamped at the sub-registrar's office in India before use.
RERA Rights for NRIs
NRIs have identical rights under RERA as resident buyers. Section 18 delay interest, refund rights, and complaint mechanisms are fully available. Most state RERA authorities now conduct hearings via video conference, enabling NRIs to participate without travelling to India. Grant a POA if document signings are needed during proceedings.
FAQ
Can an NRI buy property jointly with a resident Indian?
Yes. Joint ownership with a resident Indian is permitted and often used for tax and succession planning purposes.
Can the NRI's minor children inherit the property?
Yes. NRI-owned property can be inherited by any person (resident or NRI) without FEMA restriction. Inherited property is not subject to the FEMA payment restrictions.
Are OCIs (Overseas Citizens of India) treated the same as NRIs?
For property purchase purposes, yes. OCIs have the same rights as NRIs under FEMA for property transactions, with the same restrictions on agricultural land, plantation, and farmhouses.
Before committing to any project, NRIs and OCIs should run an independent score check. Brickplot's 11-axis property score evaluates RERA compliance, title cleanliness, builder financial health, and construction risk — the exact factors that are harder to verify remotely.