NRIs Buying Property in India: The Rules, the Money, the Paperwork

An NRI can buy any number of residential or commercial properties in India without permission from the RBI. The bar is on agricultural land, plantation property and farmhouses. Payment must move through Indian banking channels: an NRE account, an NRO account, an FCNR deposit or a direct inward remittance. Cash is illegal. That is the whole law in four sentences. The rest of this page is what those sentences mean on the ground.

What FEMA lets you buy

The Foreign Exchange Management Act, 1999 and the rules under it govern property purchases by NRIs and OCIs. The position as of June 2026:

There is no filing before purchase and no filing after purchase for residential or commercial property. You do not write to the RBI. You do not register with FEMA. You buy, you register the sale deed, you are done with the exchange-control side.

The penalty for buying barred land is real. FEMA contraventions can attract a penalty of up to three times the amount involved, and the Enforcement Directorate handles these cases. Do not buy farmland through a relative's name to get around the bar. Benami holding is a separate offence with its own statute.

How you pay

Four routes, all through banks:

  1. Inward remittance from your overseas account to the seller or builder, through normal banking channels.
  2. NRE account: repatriable funds. Buy from here if you want the cleanest exit later.
  3. FCNR(B) deposit: same repatriation character as NRE.
  4. NRO account: your India-sourced money, rent, dividends, old savings. Usable, but sale proceeds traced to NRO funds fall under the USD 1 million per year repatriation scheme on exit.

The funding route decides your exit. Pay from NRE, FCNR or inward remittance and you can repatriate the full principal when you sell, capped at two residential properties in a lifetime for the principal portion. Pay from NRO and repatriation runs through the USD 1 million scheme with Form 15CA and 15CB. Decide the route before you wire the token amount, not after.

Foreign currency notes and traveller's cheques are not valid payment. Neither is cash in rupees. A seller who asks for a cash component is asking you to commit a FEMA and tax offence at the same time.

The TDS you must deduct as buyer

This is the step NRI buyers miss most. In India the buyer deducts tax on a property purchase. Get this wrong and the Income Tax Department treats you, the buyer, as the defaulter.

Buying from a resident seller: Section 194-IA. Deduct 1% of the sale consideration if the price is Rs 50 lakh or more. Deposit it with Form 26QB within 30 days of the end of the month of deduction. You do not need a TAN. Give the seller Form 16B.

Buying from an NRI seller: Section 195. Different statute, different scale. There is no Rs 50 lakh threshold. TDS applies on the full sale value, not the gain. For property the seller held over 24 months, the rate is 12.5% plus surcharge and cess, which can reach about 14.95% at high values. For property held 24 months or less, slab rates apply. You must obtain a TAN, deposit the tax by challan and file Form 27Q. The seller can apply for a lower deduction certificate under Section 197 so that tax is deducted on the gain instead of the gross price. Ask the seller for residency proof in writing before you sign. A seller who claims resident status but is in fact an NRI leaves you holding the liability.

Power of Attorney: buying without flying

You do not need to be in India to buy. You need a specific Power of Attorney.

Give the POA to someone whose incentives you understand. A builder's staff member holding your POA is a conflict, not a convenience.

Registration day

After the deed: the setup nobody tells you about

The sale deed makes you the owner on paper. Three more registers must catch up:

  1. Khata or mutation: the municipal record that names you for property tax. Apply with the deed and tax receipts. In Bangalore this is the khata transfer. In Mumbai and Pune it is mutation in the property card or society records.
  2. Utilities: electricity, water and gas accounts move to your name. Pending dues stay with the meter, not the old owner, so clear them before transfer.
  3. Society: apply for membership and the share certificate transfer in cooperative societies. Pay the transfer premium. Get the no-dues letter in writing.

Then decide what the flat does next. An empty flat decays and attracts encroachment risk. A rented flat needs someone on the ground for tenants, rent, repairs and proof. That is the problem 66 MG Road exists to solve: one vetted manager, every rupee a line item, dated photo and video proof of all work, and no commission on your rent. See what management costs across the market and our own pricing.

FAQ

Can an NRI buy agricultural land in India? No. FEMA bars NRIs and OCIs from buying agricultural land, plantation property and farmhouses. Inheritance from a resident is the exception.

Does an NRI need RBI permission to buy a flat? No. Residential and commercial purchases need no RBI approval and no filing.

Can an NRI buy property in cash? No. Payment must come through banking channels: NRE, NRO, FCNR or inward remittance. Cash deals violate FEMA and income tax law.

How much TDS do I deduct when buying from another NRI? TDS under Section 195 on the full sale value: 12.5% plus surcharge and cess for long-term holdings, slab rates for short-term. You need a TAN and must file Form 27Q. The seller can cut this with a lower deduction certificate.

Can I buy with a resident Indian as co-owner? Yes, an NRI can buy with a resident or another NRI. Each co-owner's funding must follow FEMA routes. Joint purchase with a foreign citizen who is not an OCI raises issues: take advice first.

Can an NRI get a home loan in India? Yes. Indian banks lend to NRIs for residential and commercial purchases. EMIs must come from NRE or NRO accounts or inward remittance.

How many properties can an NRI own? No limit on residential or commercial holdings. The two-property cap applies to repatriation of sale proceeds for foreign-funded residential property, not to ownership.

Buying from Singapore or Dubai and need someone in India who answers? 66 MG Road runs NRI-owned property in Mumbai, Pune, Bangalore, Hyderabad, Chennai and Gurgaon. One property, one contact, every rupee itemized. See pricing.

Saurabh Garg, founder, 66 MG Road

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