Introduction

An NRI may purchase residential and commercial property in India under the Foreign Exchange Management Act (FEMA) regulations. RBI approval is not required for buying apartments, villas, houses, offices, or shops. There is no restriction on the number of residential or commercial properties an NaRI may acquire.

However, NRIs cannot directly purchase agricultural land, plantation property, or farmhouses. Such properties may only be acquired through inheritance or gift, subject to FEMA rules. All payments must be made through inward remittances or from NRE, NRO, or FCNR bank accounts.

Who Is Eligible to Buy Property in India as an NRI?

An NRI is an Indian citizen residing outside India for more than 182 days in a financial year. Overseas Citizens of India (OCI) and Persons of Indian Origin (PIO) also enjoy similar property rights.

Eligible NRIs may invest in both ready-to-move and under-construction projects. They may also purchase resale properties. Compliance with FEMA guidelines and banking regulations is essential for lawful transactions.

What Is the Step-by-Step Process to Purchase Property?

An NRI may first confirm their residential status and select the type of property. If the property is part of a new project, it must be registered under the Real Estate (Regulation and Development) Act, 2016 if it exceeds the prescribed size limits.

The buyer may verify the title of the property. This includes checking the chain of ownership, encumbrance certificate, land use approvals, and municipal sanctions. Due diligence is critical to prevent fraud or defective title.

An NRI may appoint a legal practitioner to conduct title verification and draft agreements. If the buyer cannot travel to India, they may execute a Power of Attorney in favour of a trusted representative. The Power of Attorney executed abroad may be notarized or apostilled as per Indian legal requirements.

The buyer may arrange financing through Indian banks. Many financial institutions provide NRI home loans, usually up to 80 percent of the property value, subject to eligibility criteria and income proof.

After due diligence, the buyer may sign a sale agreement and pay the token amount, usually 10 to 20 percent of the value. The balance consideration may be paid through approved banking channels. If applicable, tax deducted at source (TDS) must be complied with.

The sale deed must then be registered before the jurisdictional Sub-Registrar. Stamp duty and registration charges vary from state to state, typically ranging between 5 and 8 percent. After registration, mutation of property records must be completed.

What Documents Are Required for an NRI Property Purchase?

An NRI may keep identity documents such as passport, OCI or PIO card, PAN card, visa, and overseas address proof. Financial documents may include bank statements, salary slips, income tax returns, and loan sanction letters where applicable.

Property documents may include the title deed, encumbrance certificate, RERA registration details, approved building plans, and no-objection certificates from relevant authorities. Transaction documents include the sale agreement, registered sale deed, and Power of Attorney if executed.

Proper documentation ensures compliance and protects the buyer’s legal interests.

What Are the Tax Implications for NRIs Buying Property?

Tax compliance is essential in property transactions. If the seller is a resident and the sale value exceeds ₹50 lakh, the buyer must deduct 1 percent TDS. If the seller is an NRI, TDS rates are higher and depend on whether capital gains are long-term or short-term.

Capital gains tax applies when the property is sold. An NRI seller may apply for a lower or nil TDS certificate through prescribed procedures. Rental income earned from the property is taxable in India. TDS may apply to rental payments, and GST registration may be required for certain commercial leases.

Can Sale Proceeds Be Repatriated Abroad?

Repatriation depends on the source of funds used for purchase. If the property was purchased using funds from an NRE account or through foreign remittance, sale proceeds may be fully repatriable subject to conditions.

In other cases, repatriation up to USD 1 million per financial year may be permitted through the NRO account, after payment of taxes and submission of certification forms such as Form 15CA and 15CB. Compliance with RBI guidelines is necessary.

How Can NRIs Protect Themselves from Property Risks?

Property fraud and project delays are common risks. An NRI may conduct thorough legal due diligence before signing any agreement. Verification of land records, RERA compliance, and builder credibility is essential.

An NRI may appoint a local representative for supervision and maintenance. Monitoring state land record portals helps ensure transparency. In case of disputes, the buyer may approach Consumer Commissions, civil courts, or RERA authorities. Online filing and virtual hearings make dispute resolution accessible from abroad.

Conclusion

Property transactions involve regulatory, tax, and documentation complexities. An NRI may consult a legal practitioner to ensure FEMA compliance, clear title verification, and proper drafting of agreements. Professional guidance reduces financial risk and strengthens legal protection.

Buying property in India as an NRI is legally permitted and financially viable. Careful compliance with FEMA rules, tax regulations, and documentation requirements ensures a secure investment. With digital processes and structured safeguards, NRIs may confidently invest in Indian real estate while residing abroad.