Non-Resident Indians (NRIs holding valid Indian passports) and Overseas Citizens of India (OCI cardholders) can purchase immovable property in India subject to the guidelines issued under FEMA (Foreign Exchange Management Act, 1999) and the regulations framed thereunder.
Permissible property types: NRIs and OCIs can freely purchase residential and commercial properties in India. They cannot purchase agricultural land, plantation property, or farmhouses without specific prior approval from the Reserve Bank of India (RBI). Any acquisition must be for bona fide personal use or investment — not for purely speculative transactions.
Payment must be made through banking channels using foreign exchange brought from abroad, or from funds held in NRE/FCNR accounts. Payments from NRO accounts are also permissible for purchase of immovable property, subject to repatriation limits. Cash transactions are not permitted for property purchases above ₹20,000 under Indian income tax law.
When an Indian resident buys property from an NRI seller, TDS under Section 195 of the Income Tax Act applies on the full sale consideration (not just the capital gain). The applicable rate depends on the nature of the capital gain (long-term or short-term) and whether a Double Taxation Avoidance Agreement (DTAA) with the NRI's country of residence reduces the rate. The buyer must deduct TDS, obtain a TAN, and deposit the TDS with the income tax department before the transaction is registered. Failure to do so creates liability for the buyer.
Power of Attorney: In practice, many NRI property purchases are completed using a duly executed, apostilled, and notarised Power of Attorney (POA). The POA must be carefully drafted to authorise specific acts (signing the sale agreement, appearing before the registrar, etc.) and should be registered in India upon execution for stronger legal standing. We strongly recommend engaging both an Indian advocate and an NRI-specialist CA before executing a POA for property transactions.
Repatriation of sale proceeds: NRIs can repatriate up to USD 1 million per financial year from their NRO account. Sale proceeds from a maximum of two residential properties can be repatriated from the NRE account, subject to conditions including holding the property for a minimum period. Conditions change; confirm current rules with your bank and CA before relying on repatriation assumptions in your investment thesis.
RERA verification is identical for NRIs as for resident buyers — all RERA-registered project details can be verified at maharera.mahaonline.gov.in. NRIs should insist on dealing only with RERA-registered developers and projects.
