NRI Buying Property in India 2026: TDS, Repatriation & Rules

Here's a scenario I've seen play out more times than I can count. An NRI based in Dubai or New Jersey wires money to a builder in Noida, signs a sale agreement his cousin arranged, and then discovers eight months later that the seller withheld the wrong TDS rate, the sale deed doesn't match his residential status, and his own bank in India won't let him repatriate the eventual sale proceeds because the paper trail is broken. The property might be perfectly good. The compliance around it is a mess.

The numbers here matter more than most people realise. When a resident Indian sells property, the buyer deducts TDS at 1% if the value crosses ₹50 lakh. When you buy from an NRI seller, that figure jumps to 20% plus surcharge and cess on long-term gains, and a punishing 30%-plus on short-term. Get the deduction wrong and the liability lands on you, the buyer, not the seller. That's the trap most NRIs walk into from both sides of the transaction.

This guide walks through the actual rules for NRI buying property in India in 2026: what you can and cannot purchase under FEMA, how TDS works on both ends, how to route funds so you can repatriate later, and the specific documents and timelines that keep the transaction clean. I'll use a worked example with real rupee figures so you can see how the money and the paperwork line up.

Key Takeaways

• NRIs and OCIs can freely buy residential and commercial property but cannot purchase agricultural land, farmhouses, or plantations without RBI approval.
• Fund the purchase only through NRE, NRO, or FCNR accounts via normal banking channels. Never use foreign cash or informal transfers if you want to repatriate later.
• When you buy from an NRI seller, you must deduct TDS at 20%+ on long-term gains, not 1%. The liability is yours if you get it wrong.
• Repatriation is capped at USD 1 million per financial year from NRO funds, and limited to two residential properties bought with NRE/FCNR money.
• Appoint a Power of Attorney holder in India, but draft it narrowly and get it notarised and apostilled correctly.
• Keep every remittance advice, bank statement, and Form 15CA/15CB for at least eight years.

Can an NRI legally buy any property in India?

The short answer is yes, with clear limits. Under the Foreign Exchange Management Act (FEMA) and RBI's general permission, an NRI (Non-Resident Indian) or OCI (Overseas Citizen of India) can buy any number of residential or commercial properties in India without seeking prior approval. No cap on quantity, no special filing before purchase.

Where it gets restrictive is agricultural land, farmhouses, and plantation property. These cannot be purchased by an NRI or OCI under the general permission. You'd need specific RBI approval, which is rarely granted for buyers. If you inherit such land from a resident Indian, you can hold it, but you cannot go out and buy it fresh.

One nuance people miss: your residential status for FEMA and your residential status for income tax are governed by different rules. FEMA looks at intention and duration of stay abroad; the Income Tax Act uses the 182-day and 120-day day-count tests. You can be an NRI for one and a resident for the other in a transition year. This mismatch is exactly where TDS and repatriation errors begin, so pin down both before you sign anything.

Property types an NRI can and cannot buy

Property Type	Purchase Allowed?	Notes
Residential flat/house	Yes	No limit on number; freely repatriable if funded via NRE/FCNR
Commercial property/office	Yes	Popular with GCC-driven demand; rental income taxable in India
Agricultural land	No	Only by inheritance; fresh purchase needs RBI approval
Farmhouse	No	Same restriction as agricultural land
Plantation property	No	Same restriction as agricultural land

If you're weighing residential versus commercial, the commercial office story has genuinely shifted in the last two years. The way GCCs are driving India's office boom has pushed Grade A rental yields in cities like Bengaluru and Pune above what most residential assets offer. Worth a look if you're buying for yield rather than a future home.

How should an NRI fund the purchase to stay FEMA-compliant?

This is the single most important operational decision, and it determines whether you can take your money back out of India later. All payments must move through normal banking channels from one of three account types:

• NRE (Non-Resident External) account — funds earned abroad, held in rupees, fully repatriable. Buy with NRE money and both principal and gains can generally leave India (subject to caps).
• NRO (Non-Resident Ordinary) account — for India-sourced income like rent or a resident-era salary. Repatriation from NRO is capped at USD 1 million per financial year.
• FCNR (Foreign Currency Non-Resident) account — a fixed deposit held in foreign currency, treated like NRE for repatriation.

You can also take a home loan from an Indian bank or HFC. NRI home loans are widely available, though the EMI and any down payment must come from your NRE/NRO/FCNR account or through inward remittance. Note that even where home loan rates have softened while affordability dropped, NRI lending norms on loan-to-value and tenure remain tighter than for residents.

Common Mistake: Paying the token amount or "on-money" in foreign cash during a home visit, then routing the rest through NRE. The token portion has no banking trail, so years later when you sell and try to repatriate, your bank can only certify the traceable amount. That cash portion effectively gets trapped in India. Route every rupee through your NRE/NRO account, including the booking advance.

How does TDS work when an NRI is involved in property?

TDS trips up more NRI transactions than any other single issue, mostly because the rate depends entirely on who the seller is.

When you (NRI) are the buyer from a resident seller

Standard rules apply. If the property value is ₹50 lakh or more, you deduct 1% TDS under Section 194-IA, file Form 26QB, and issue Form 16B to the seller. Nothing exotic here.

When the seller is an NRI (and you're the buyer)

Now Section 195 kicks in, and the numbers change dramatically. You must deduct TDS on the seller's capital gains, not the sale price, at:

• Long-term capital gains (property held over 24 months): 12.5% (post the 2024 revision) plus applicable surcharge and 4% cess. With surcharge on high values, the effective rate can push toward 14–15%.
• Short-term capital gains (held 24 months or less): taxed at the seller's slab rate, deducted at 30% plus surcharge and cess.

Unless the seller obtains a Lower/Nil Deduction Certificate from the Assessing Officer (Form 13), the buyer is technically expected to deduct on the full sale consideration, which is why so many NRI-to-NRI deals stall. The practical fix is for the seller to apply for a Section 197 certificate well ahead of the sale so TDS is deducted only on the actual gain.

As the buyer deducting under Section 195, you need a TAN (not just PAN), you file Form 27Q quarterly, and you issue Form 16A. This is a completely different compliance track from the resident-seller case, and missing it makes you liable for the shortfall plus interest and penalty.

What is a worked example of the money and tax flow?

Let's make this concrete. Rajesh, an NRI in Singapore, buys a ₹1.8 crore apartment in Gurugram from a resident developer, then sells it four years later to another NRI for ₹2.6 crore. Here's how the numbers move.

At purchase (Rajesh is buyer, seller is a resident developer):

• Sale value: ₹1.8 crore, so 1% TDS applies = ₹1.8 lakh deducted and paid via Form 26QB.
• Funding: ₹50 lakh from his NRE account as down payment, ₹1.3 crore via an NRI home loan from an Indian bank, EMIs serviced from NRE. Every rupee traceable.
• Stamp duty and registration in Haryana: roughly 7% for a male buyer = about ₹12.6 lakh, plus registration charges.

At sale four years later (Rajesh is now the NRI seller):

• Sale price: ₹2.6 crore. Indexed cost pushes his purchase base to roughly ₹2.0 crore, giving a long-term gain of about ₹60 lakh.
• The buyer must deduct TDS under Section 195. Without a Section 197 certificate, the buyer might deduct 12.5%+ on the full ₹2.6 crore = about ₹32.5 lakh + surcharge/cess — far more than Rajesh's actual tax.
• Because Rajesh applied for a Lower Deduction Certificate in advance, TDS is deducted only on the ₹60 lakh gain: roughly ₹7.8 lakh instead of ₹32.5 lakh. He avoids blocking ₹24 lakh of his money for a year waiting on a refund.

Repatriation: Because Rajesh originally paid ₹50 lakh from NRE and the rest through a rupee loan repaid from NRE, the sale proceeds attributable to that funding are freely repatriable. The gain portion, being India-sourced, routes through his NRO account and counts against his USD 1 million annual limit. His chartered accountant files Form 15CA and Form 15CB to certify the remittance.

The single decision that saved Rajesh over ₹24 lakh of temporarily blocked cash was applying for the Section 197 certificate before the sale closed. That's the kind of foresight a good advisor earns their fee on.

How does an NRI repatriate sale proceeds out of India?

Repatriation is where the earlier funding discipline pays off. The rules split by how you originally bought the property:

1. If you bought with NRE/FCNR funds: You can repatriate the principal for up to two residential properties, plus the gains, without the USD 1 million cap applying to that traceable principal.
2. If you bought with NRO funds (or the property is inherited): Repatriation is capped at USD 1 million per financial year across all your NRO sources combined.
3. Documentation: Every outward remittance requires Form 15CA (self-declaration) and Form 15CB (a CA's certificate confirming taxes are paid). Your bank will not process the transfer without them.

The practical takeaway: decide your exit strategy at the time of purchase. If repatriation matters to you, fund the buy from NRE, keep the remittance advices, and don't let more than a small operational balance sit in NRO. Advisors who set this up correctly on day one save clients from painful reconstructions later.

What documents and steps does an NRI need to complete a purchase?

Here's the sequence I'd hand a client so they can either do it themselves or brief a lawyer precisely:

1. Get a PAN (mandatory for the sale deed and TDS). If you're buying from an NRI seller, also obtain a TAN.
2. Confirm your FEMA and tax residential status in writing with a CA. This drives everything downstream.
3. Open or verify your NRE/NRO account with an Indian bank and plan the funding split.
4. Conduct legal due diligence — title search, encumbrance certificate, RERA registration of the project, approved building plans, and NOCs. For under-construction property, verify the RERA number on the state RERA portal.
5. Draft a narrow Power of Attorney if you can't be present. Specify the exact property and exact powers. Get it notarised in your country of residence and apostilled (Hague Convention countries) or attested by the Indian consulate, then adjudicated on Indian stamp paper.
6. Deduct and deposit TDS at the correct rate — 1% for resident sellers via Form 26QB, or Section 195 rate for NRI sellers via Form 27Q.
7. Register the sale deed at the sub-registrar office, paying stamp duty and registration charges per state.
8. Retain the full paper trail — remittance advices, bank statements, TDS challans, and Form 16A/16B — for repatriation and future capital gains computation.

Pro Tip: When drafting the Power of Attorney, resist the temptation to give your relative a general PoA "to save time on the next deal." Courts and sub-registrars are increasingly wary of broad PoAs, and a general one invites fraud risk on your own asset. One property, one transaction, defined powers, expiry date. That precision is your protection.

Which cities and property types make sense for NRIs in 2026?

Purely from an asset standpoint, three themes stand out this cycle. NCR continues to benefit from infrastructure buildout, and understanding what the Delhi Master Plan 2047 means for NCR buyers helps you position ahead of price movements. Metro connectivity is a proven value driver, as the pattern of how infra lifts NCR property values shows repeatedly.

On the luxury end, the Gurugram versus Mumbai ultra-luxury comparison is worth reading if your ticket size crosses a few crore. And if you want managed exposure without the hands-on hassle from abroad, our team at eDarpan Properties can shortlist verified properties for sale across India and handle the on-ground diligence you can't do remotely.

Frequently Asked Questions

Can an NRI buy property in India without visiting?

Yes. You can complete the entire transaction through a Power of Attorney holder in India, provided the PoA is properly notarised, apostilled or consular-attested, and registered. Just keep the PoA narrow and property-specific rather than general.

Does an NRI need to file income tax returns in India after buying property?

If the property earns rental income, or when you sell it and have capital gains, you must file an Indian ITR. Even if TDS was deducted, filing lets you claim refunds where the deduction exceeded your actual tax, as in the Section 197 scenario above.

What is the TDS rate when buying property from an NRI?

Under Section 195 you deduct on the seller's capital gains: 12.5% plus surcharge and cess for long-term gains, and 30%-plus for short-term. Absent a Lower Deduction Certificate, deduction may be expected on the full sale value, so encourage the seller to obtain a Section 197 certificate.

Can an NRI take a home loan in India?

Yes. Most major Indian banks and housing finance companies offer NRI home loans, though loan-to-value ratios and tenures are usually tighter than for residents. EMIs and down payments must be paid from your NRE, NRO, or FCNR account or through inward remittance.

How much money can an NRI repatriate from selling property?

For property bought with NRE/FCNR funds, principal for up to two residential properties plus gains is repatriable. For NRO-funded or inherited property, repatriation is capped at USD 1 million per financial year, and every transfer needs Form 15CA and 15CB.

Can an NRI buy agricultural land in India?

No, not through a fresh purchase under RBI's general permission. NRIs and OCIs may only hold agricultural land, farmhouses, or plantation property if it was inherited from a resident Indian. A fresh buy would need specific RBI approval, which is very rarely granted.

Is GST applicable when an NRI buys property?

GST applies only to under-construction property, currently at 5% for non-affordable and 1% for affordable housing, with no input tax credit. Ready-to-move-in property with a completion certificate attracts no GST, only stamp duty and registration charges.

Getting it right the first time

The mechanics of NRI buying property in India aren't complicated once you separate the two things people conflate: FEMA rules that decide what you can buy and how money moves, and Income Tax rules that decide TDS and gains. Fund through NRE/NRO channels, deduct TDS at the correct rate based on who the seller is, draft your PoA narrowly, and keep every scrap of the paper trail. Do those four things and repatriation becomes routine rather than a fight with your bank.

If you'd rather have a team handle the diligence, verification, and coordination on the ground while you focus on the decision, that's exactly what we built eDarpan Properties to do. Browse listings for sale or rental options across Indian cities, or get in touch to talk through a specific transaction. And if you're setting up a company or need a virtual office address for GST and registration alongside your India footprint, we can help there too.

Image credit: Pune Properties - Real Estate India - Vilas Palash Interiors1 by nancyarora2020 via flickr (BY-SA 2.0), sourced through Openverse.