How NRIs Can Invest in Indian Real Estate Legally (2025 Guide)
Non-Resident Indians (NRIs) investing in Indian property must navigate FEMA regulations, tax compliance, and repatriation rules. This comprehensive guide provides a clear legal framework—but remember: this is informational, not legal advice. Always consult a qualified lawyer or CA for your specific case.
Important Legal Disclaimer
This guide provides general information on NRI property investment and is not legal, tax, or financial advice. FEMA rules, state-specific laws, and tax treaties are complex and subject to change. Always consult a qualified chartered accountant (CA) and legal counsel before making investment decisions. infinite-VARIABLE is a technology platform, not a law firm or tax advisory service.
India's booming economy, rising middle class, and strong rental yields attract NRIs looking to invest "back home." Whether it's a retirement villa in Goa, a rental apartment in Bangalore, or commercial space in Mumbai, NRIs can legally own property in India—with some restrictions.
The legal framework is governed by the Foreign Exchange Management Act (FEMA), which defines what NRIs can buy, how they can fund purchases, and how they can repatriate sale proceeds. Additionally, tax compliance under the Income Tax Act is critical for rental income and capital gains.
Who Is Treated as an NRI for Property Purposes?
Under FEMA and the Income Tax Act:
Non-Resident Indian (NRI)
An Indian citizen residing outside India for more than 182 days in a financial year (April-March). Includes students, professionals, and expatriates.
Property Rights: Can own residential and commercial property. Cannot own agricultural land/plantations (except inheritance).
Overseas Citizen of India (OCI)
Foreign citizens of Indian origin (e.g., Green Card holders, naturalized citizens of other countries). OCIs have same property rights as NRIs.
Property Rights: Same as NRIs—residential/commercial allowed, agricultural/plantation restricted.
Note: Person of Indian Origin (PIO) cardholders were merged into OCI category in 2015. All references now use OCI.
What Types of Property Can NRIs Buy in India?
Residential and Commercial — Generally Allowed
NRIs and OCIs can freely purchase:
✓ Residential Property
- • Apartments / flats
- • Independent houses / villas
- • Residential plots (non-agricultural)
- • Under-construction projects
✓ Commercial Property
- • Office spaces
- • Retail shops / showrooms
- • Warehouses (non-agricultural)
- • Co-working spaces
No RBI approval required for residential/commercial purchases, as long as payment is made through banking channels (NRE/NRO/FCNR accounts).
Agricultural/Plantation/Farmhouse — Restrictions Apply
NRIs and OCIs CANNOT purchase:
- ✗Agricultural land: Any land classified for farming/cultivation purposes
- ✗Plantation property: Coffee estates, tea gardens, rubber plantations, etc.
- ✗Farmhouses: Even if on non-agricultural land, if primarily used for agricultural purposes
Exception: Inheritance
NRIs can inherit agricultural land from relatives. However, they must sell it within the time limit prescribed by the relevant state law. Rental income from inherited agricultural land is permitted until sale.
FEMA Rules for NRI Property Transactions (High Level)
Fund Sources: NRE / NRO / FCNR Accounts
NRIs must use legitimate banking channels for property purchase. Accepted fund sources:
NRE Account (Non-Resident External)
Foreign earnings transferred to India. Fully repatriable (principal + interest). Best for property purchase if you want full repatriation rights on sale proceeds.
NRO Account (Non-Resident Ordinary)
Indian income (rent, pension, dividends). Partially repatriable (up to USD 1 million/year after taxes). Suitable if using rental income to buy.
FCNR Account (Foreign Currency Non-Resident)
Fixed deposit in foreign currency. Fully repatriable. Can be used if liquidating FDs for property purchase.
❌ NOT allowed: Cash payments, hawala, cryptocurrency, or funds from unverified sources.
Repatriation Basics
Repatriation = Transferring sale proceeds from India to your foreign bank account.
✓ Fully Repatriable
If property was purchased using NRE/FCNR funds, entire sale proceeds can be repatriated (after taxes). No USD limit.
⚠ Partial Repatriation
If purchased using NRO funds, repatriation limit is USD 1 million per financial year(combined for all NRO balances including property sale).
Documents required for repatriation: CA certificate, Form 15CA/15CB, sale deed, proof of taxes paid, original purchase proof. Consult your CA for exact requirements.
Joint Ownership with Resident Relatives
NRIs can buy property jointly with:
- Another NRI/OCI: Full repatriation if both used NRE funds.
- Resident Indian (close relative): NRI's share is repatriable (resident's share is not). Define ownership % clearly in sale deed.
Caution: Joint ownership with non-relatives or multiple parties complicates repatriation. Seek legal advice before structuring.
Step-by-Step Process for NRIs to Buy Property in India
Choose City and Micro-Market
Research rental yields, appreciation potential, and infrastructure. Use platforms like infinite-VARIABLE to compare locations. Shortlist 3-5 properties.
Appoint Power of Attorney (If Needed)
If you can't be present in India for registration, appoint a trusted relative/lawyer as Power of Attorney (PoA). Get PoA notarized at Indian embassy/consulate. Choose General PoA for flexibility or Special PoA for specific property.
KYC, PAN, Bank Accounts
Apply for PAN if you don't have one (mandatory). Open NRE/NRO account if needed. Complete KYC: passport, address proof, visa/work permit. Some banks allow video KYC for NRIs.
Finalize Property & Conduct Due Diligence
Verify clear title (encumbrance certificate for 30 years). Check approved building plan, occupation certificate. Hire a property lawyer to verify chain of ownership. Ensure property is not disputed or under litigation.
Booking & Agreement to Sell
Pay booking amount via wire transfer (NRE/NRO account). Sign Agreement to Sell (notarized if signing via PoA). Ensure agreement mentions fund source (NRE/NRO) for future repatriation proof.
Property Registration
Pay stamp duty (varies by state: 5-7% typically) and registration fees (1-2%). Attend sub-registrar office (or PoA holder attends). Execute sale deed in presence of witnesses. Collect registered sale deed within 7-15 days.
Post-Purchase Compliance
Pay property tax to municipal corporation. Update ownership in society records. If rental, register rental agreement. File Indian ITR if earning rental income (even if residing abroad).
Taxation Overview for NRI Investors
⚠️ Tax laws change frequently. This is a high-level overview. Consult a qualified CA for personalized advice.
Rental Income Taxation
Tax Rate
Rental income is taxed as "Income from House Property" at applicable income tax slab rates. Standard deduction of 30% is allowed for repairs/maintenance (notional, no proof required).
TDS (Tax Deducted at Source)
If monthly rent exceeds ₹50,000, tenant must deduct TDS at 31.2%(30% tax + surcharge + cess) before paying rent to NRI landlord.
NRI can apply for lower TDS certificate from Income Tax Department if actual tax liability is lower.
Annual Filing
NRIs must file ITR-2 annually in India if earning rental income. Due date: July 31 (can extend to December 31 for salaried individuals, but NRI property income typically requires July 31).
TDS on Sale of Property (Capital Gains)
When selling property, buyer must deduct TDS on capital gains:
| Holding Period | Gain Type | TDS Rate | Tax Rate (Final) |
|---|---|---|---|
| < 2 years | Short-Term | 31.2% | As per slab |
| ≥ 2 years | Long-Term | 22.88% | 20% (with indexation) |
Indexation benefit: Adjust purchase price for inflation using Cost Inflation Index (CII). Reduces taxable capital gains significantly for long-term holdings.
Double Taxation Avoidance (DTAA)
India has DTAA treaties with 90+ countries. If you pay tax on Indian property income in your country of residence, you may claim foreign tax credit to avoid paying tax twice.
How it works: Pay tax in India first (via TDS/ITR). Claim credit in your resident country (e.g., USA Form 1116, UK Self Assessment). Consult a cross-border tax specialist for DTAA benefits.
Selling Property & Repatriating Funds
Broad Rules for Sale Proceeds Repatriation
Scenario 1: Purchased with NRE/FCNR Funds
Repatriation: Fully allowed (100% of sale proceeds after taxes). No USD limit. Provide proof of original NRE remittance and property purchase documents.
Scenario 2: Purchased with NRO Funds
Repatriation: Up to USD 1 million per financial year (April-March) after all taxes. Requires CA certificate on Form 15CA/15CB.
Scenario 3: Inherited Property
Repatriation: USD 1 million per year limit applies (treated similar to NRO). If inherited property was purchased by resident using NRE funds, consult CA for nuances.
Form 15CA / 15CB — Required for Repatriation
To repatriate sale proceeds, NRIs must submit:
Form 15CA
Part declaration filed by remitter (you). Contains details of remittance, purpose, and CA certificate reference.
Form 15CB
CA certificate verifying: taxes paid on sale, DTAA applicability, compliance with FEMA. CA must be registered in India.
Documents required from CA: Sale deed, original purchase proof, TDS certificates (Form 16A), ITR acknowledgments, bank statements showing NRE/NRO fund source.
Practical Risk Checklist for NRIs
Title and Encumbrance Checks
- • Get 30-year encumbrance certificate from sub-registrar
- • Verify no pending litigation or disputes
- • Check for mortgage/loans on property
- • Hire property lawyer (₹10-25K) for title verification
Builder Credibility
- • RERA registration (mandatory for projects)
- • Past project delivery record
- • Financial health (check CIBIL if public info available)
- • Online reviews and complaints
Redevelopment / Local Rules
- • Is society planning redevelopment? (frozen rent for 5-7 years)
- • Check FSI (Floor Space Index) changes in area
- • Verify property aligns with local zoning (residential/commercial)
Property Management
- • Appoint local property manager (₹1-2K/month)
- • Set up auto-debit for maintenance, taxes
- • Use trusted rental platforms or agents (10-15% fee)
- • Consider infinite-VARIABLE's property services for NRIs
How infinite-VARIABLE Helps NRIs
Investing from abroad is complex. We simplify it with AI-powered tools and NRI-focused services:
🌍 Multi-Currency Yield Reports
See rental yields and appreciation in USD, GBP, AED, SGD. Compare India vs Dubai vs UK properties.
🏠 Trusted Property Management
Partner network for tenant screening, rent collection, maintenance coordination. Sleep easy while we handle India operations.
⚖️ Legal & CA Referrals
We connect you with FEMA-compliant lawyers and CAs who specialize in NRI property transactions.
📊 Repatriation Calculators
Estimate net proceeds after TDS, taxes, and repatriation limits. Model USD 1M/year scenarios for NRO sales.
⚠️ Important: infinite-VARIABLE provides technology and data intelligence. We are NOT a law firm or CA firm. All legal/tax advice must come from qualified professionals. We complement—not replace—your advisors.
Frequently Asked Questions
Can an NRI buy agricultural land in India?
No, NRIs cannot buy agricultural land, plantation property, or farmhouses in India under FEMA regulations. However, they can inherit such property from relatives. If inherited, the NRI must sell the agricultural property within the time limit prescribed by the relevant state law, though rental income from inherited agricultural land is permitted.
How many properties can an NRI own in India?
There is no legal limit on the number of residential or commercial properties an NRI can own in India. NRIs can purchase multiple apartments, office spaces, or plots (excluding agricultural/plantation land). Each property purchase must comply with FEMA regulations regarding payment sources and documentation requirements.
How is rental income taxed for NRIs?
Rental income for NRIs is taxed as 'Income from House Property' at applicable slab rates after standard deduction of 30% for maintenance and repairs. TDS of 31.2% (30% tax + surcharge + cess) is deducted by the tenant if monthly rent exceeds ₹50,000. NRIs must file ITR-2 annually. Double Taxation Avoidance Agreements (DTAA) may provide relief if paying tax in both India and country of residence.
Do NRIs need PAN to buy property in India?
Yes, PAN (Permanent Account Number) is mandatory for NRIs to buy property in India. It's required for property registration, tax filings, and banking transactions. NRIs can apply for PAN online through the Income Tax Department's e-filing portal or through Indian embassies/consulates abroad. The process typically takes 15-30 days.
Compliance Footnote
This guide is for informational purposes only and does not constitute legal, tax, or financial advice. FEMA regulations, tax laws, and state-specific property rules are subject to change. Consult a qualified chartered accountant (CA) and legal counsel before making any property investment decisions. infinite-VARIABLE is a technology platform and does not provide legal or tax services.