Buying property in India as an NRI (Non-Resident Indian) or OCI (Overseas Citizen of India) is governed by a specific set of rules under FEMA (Foreign Exchange Management Act, 1999), RBI guidelines, and Indian income tax law. Getting these rules right is not optional , violations can result in penalties, void transactions, and complications with repatriation. This is the complete 2026 guide.
Who Qualifies as an NRI for Property Purposes?
For FEMA and property law purposes, an NRI is an Indian citizen residing outside India. An OCI (Overseas Citizen of India) cardholder , regardless of citizenship , has the same property rights as an NRI for most purposes. PIOs (Persons of Indian Origin) with OCI cards are treated as NRIs. Foreign nationals of non-Indian origin cannot purchase residential or commercial property in India except in very limited circumstances.
What Property Can NRIs Buy in India?
Under FEMA Notification 21(R)/2018, NRIs and OCIs can purchase the following without RBI permission:
- Residential property (flats, houses, villas)
- Commercial property (offices, shops)
- Any number of properties , no limit on the number
What NRIs CANNOT buy without special RBI permission:
- Agricultural land
- Plantation property
- Farmhouses
NRIs can, however, inherit agricultural land and farmhouses from resident Indians , inheritance is not subject to this restriction.
How Must NRIs Pay for Property in India?
Payment must be made through:
- Funds held in an NRE (Non-Resident External), NRO (Non-Resident Ordinary), or FCNR (Foreign Currency Non-Resident) account in India
- Inward remittance from abroad through normal banking channels
NRIs cannot pay in foreign currency cash or by traveller's cheques. Payment must be in Indian Rupees through a banking channel. This requirement has implications for documentation , keep proof of source of funds for every payment made towards the property.
Home Loans for NRIs
NRIs can take home loans from Indian banks and HFCs (Housing Finance Companies). The repayment must be made through NRE/NRO accounts or inward remittances. The loan amount in foreign currency cannot exceed the equivalent of the property value. Most major banks , SBI, HDFC, ICICI, Axis , have dedicated NRI home loan products.
TDS Obligations When NRI Buys from a Resident Indian
If an NRI buys property from a Resident Indian at a value exceeding ₹50 lakhs, the NRI (as buyer) must deduct TDS at 1% of the sale consideration under Section 194-IA and deposit it with the Income Tax Department.
If the NRI buys from another NRI, TDS rates are higher , the buying NRI must deduct at the applicable capital gains tax rate (20-23% for LTCG).
TDS When an NRI Sells Property
When an NRI sells property to any buyer (resident or NRI), the buyer must deduct TDS:
- Long-Term Capital Gains (held >24 months): ~12.5% + surcharge + cess (~14-23% effective)
- Short-Term Capital Gains: applicable slab rate (~30% + surcharge + cess)
This TDS is on the entire sale consideration , not just the profit. NRIs with a lower actual tax liability should apply for a Lower Deduction Certificate under Section 197 before the sale. See our detailed guide: Capital gains tax for NRIs selling property in India , 2026 update.
Repatriation of Sale Proceeds
NRIs can repatriate up to USD 1 million per financial year from property sale proceeds, subject to:
- TDS has been properly deducted by the buyer
- Income tax return has been filed and tax paid
- A CA certificate in Form 15CA/15CB is obtained
- The original purchase was made through foreign exchange or NRE/NRO funds
Repatriation of proceeds from more than 2 residential properties may require RBI approval.
Can NRIs Buy Without Visiting India?
Yes , with a properly executed and registered Power of Attorney, an NRI can authorise a trusted person in India to handle the entire purchase process , document verification, agreement signing, registration, and Khata transfer , without the NRI being physically present.
Legal Verification Before Buying
All the rules above govern the financial and FEMA compliance aspects of the purchase. Separately, you must still conduct full legal verification of the property , title search, EC, Khata, RERA, litigation check , before committing. Distance makes NRIs particularly vulnerable to fraud. Our NRI remote property verification service handles this end-to-end without requiring your presence in India. See our complete property document verification checklist.
Summary: NRI Property Purchase Checklist
- Confirm the property type is permissible (not agricultural land / farmhouse)
- Ensure payment is through NRE/NRO/FCNR or inward remittance
- Conduct independent legal due diligence (title, EC, Khata, RERA)
- Deduct TDS if buying from another NRI or if applicable under 194-IA
- Execute a registered POA if you cannot be present for registration
- After purchase: transfer Khata, update revenue mutation, plan for eventual repatriation
Our NRI property advisory service at Clawrity covers all of the above , from legal verification to POA to FEMA compliance guidance.