NRI Buying Property in India: FEMA Rules, Taxes & Repatriation

Every few months I get the same call. An NRI friend or client, usually settled in Dubai, Singapore, or somewhere in the US, has decided it's time to buy a flat in India. Maybe it's for the parents. Maybe it's an investment because a broker cousin promised 12% appreciation. And almost every single time, they've already picked the property before checking two things that actually matter: whether they're even allowed to buy it under FEMA, and how they'll get their money back out of India when they eventually sell.

Here's a number that surprises most people: the RBI does not permit NRIs and OCIs to buy agricultural land, plantation property, or farmhouses in India, no matter how much money they have or how many local relatives vouch for them. I've watched a deal fall apart at the sub-registrar's office because the "residential plot" being sold was still classified as agricultural land in revenue records. The token money was paid, the buyer had flown in from Toronto, and the registration simply couldn't happen.

This guide is about doing it right. If you're an NRI buying property in India, I'll walk you through FEMA eligibility, the banking channels you're legally required to use, TDS traps that eat into your funds, home loan realities, and the repatriation limits that decide how much of your sale proceeds you can actually send back abroad. Concrete numbers, real timelines, and the mistakes I've personally seen cost people lakhs.

Key Takeaways

• NRIs and OCIs can freely buy residential and commercial property, but never agricultural land, farmhouses, or plantations without specific RBI approval.
• All payments must route through your NRE, NRO, or FCNR account or via normal banking channels. Traveller's cheques and foreign currency notes are not allowed.
• When you buy from a resident, TDS is 1% above ₹50 lakh. When you sell as an NRI, the buyer must deduct TDS at up to 20% (LTCG) or your slab rate (STCG) on the full sale value unless you get a lower-deduction certificate.
• Repatriation is capped at USD 1 million per financial year from your NRO account, subject to tax payment and Form 15CA/15CB.
• Property bought with NRE funds gives you cleaner, faster repatriation than NRO-funded purchases.
• Get a CA and a property lawyer involved before you pay token money, not after.

Can an NRI legally buy property in India under FEMA?

Short answer: yes, but within clear boundaries set by the Foreign Exchange Management Act (FEMA) and enforced by the RBI. This applies to both Non-Resident Indians (NRIs) holding an Indian passport and Overseas Citizens of India (OCI) cardholders. The rules are almost identical for both.

What you can buy without any RBI permission:

• Residential property (apartments, independent houses, residential plots)
• Commercial property (offices, shops, commercial units)

What you cannot buy under the general permission:

• Agricultural land
• Plantation property (tea, coffee, rubber estates and similar)
• Farmhouses

There is no cap on the number of residential or commercial properties an NRI can own. I've had clients with four flats across Pune, Hyderabad, and Noida, all perfectly compliant. The catch is always classification. Before you sign anything, pull the land use record. In many peri-urban parts of cities like Bengaluru, Gurgaon, and Chennai, "villa plots" are being sold on land that hasn't been formally converted from agricultural to non-agricultural (NA) use. If the registrar sees "agriculture" in the record, an NRI purchase is blocked.

Common Mistake: Assuming an OCI card gives you the same land rights as a resident Indian. It doesn't. If you inherit agricultural land, you're allowed to hold it, but you cannot purchase it. People conflate inheritance rights with purchase rights all the time, and it burns them at registration.

How must an NRI pay for property in India?

FEMA is very specific about the money trail. You cannot walk in with a suitcase of dirhams. Payment must come through:

• Funds remitted from abroad through normal banking channels, or
• Your NRE (Non-Resident External) account, or
• Your NRO (Non-Resident Ordinary) account, or
• Your FCNR(B) deposit account

What's not allowed: foreign currency notes, traveller's cheques, or payment routed through a resident's account on your behalf. The reason this matters is not just compliance for compliance's sake. The account you pay from directly affects how easily you can repatriate money later.

Here's the practical rule I give clients: if you plan to eventually take the money back abroad, fund the purchase from your NRE account. Property bought with NRE funds allows repatriation of the principal (up to two residential properties) far more cleanly than NRO-funded purchases, which fall under the annual USD 1 million cap and heavier documentation.

What are the TDS rules when an NRI buys or sells property?

This is where most NRIs lose money through pure ignorance, and it works in two directions.

When you're buying from a resident seller

Under Section 194-IA, if the property value is ₹50 lakh or more, you as the buyer deduct 1% TDS on the sale consideration and deposit it against the seller's PAN. Straightforward, low friction.

When you're the NRI seller (this is the trap)

When an NRI sells property, the buyer is required to deduct TDS under Section 195, and the rates are steep:

• Long-term capital gains (property held over 24 months): TDS at 20% plus surcharge and cess, effectively up to ~23.9%.
• Short-term capital gains (held 24 months or less): TDS at your applicable income tax slab rate, which for high-value deals can be 30% plus surcharge.

The nasty part: TDS is deducted on the entire sale value, not just the gains, unless you obtain a Lower Deduction Certificate (LDC) under Section 197 from the Income Tax Department. Without an LDC, you might have ₹40 lakh locked up as TDS on a ₹2 crore sale, and you'll only recover the excess after filing your ITR the following year.

Pro Tip: Apply for the Lower Deduction Certificate on the TRACES portal (Form 13) at least 4 to 6 weeks before your expected sale date. A good CA can get the LDC pegged close to your actual gains, so instead of ~24% of the full value being locked up, only the tax on your real profit is deducted. On a ₹2 crore sale, this single step can free up ₹25–30 lakh of your money immediately instead of a year later.

Can an NRI get a home loan in India, and what are the terms?

Yes. Most major lenders offer NRI home loans, including SBI, HDFC, ICICI, Axis, and LIC Housing Finance. The terms are broadly similar to resident loans with a few differences worth knowing.

• Loan-to-value: Typically 75–80% of property value, so budget for a 20–25% down payment plus stamp duty and registration.
• Tenure: Usually shorter than resident loans. Where residents get 30 years, NRIs often get 15–20 years.
• Repayment: EMIs must be paid through NRE/NRO accounts or by inward remittance. You cannot service the loan from a foreign account directly.
• Documentation: Overseas employment contract, salary slips, overseas bank statements, valid visa/work permit, and often a Power of Attorney to a trusted person in India.

Interest rates for NRIs are usually the same as for resident borrowers, floating with the repo rate. As of the current cycle, expect something in the 8.5–9.5% range depending on the lender and your profile. A Power of Attorney (PoA) is almost always required so someone in India can sign documents and handle formalities while you're abroad. Get it drafted carefully and get it attested at the Indian consulate in your country of residence, then adjudicated in India.

NRE vs NRO vs FCNR: which account should fund your purchase?

The account you use shapes your entire repatriation experience. Here's how they compare on the criteria that actually matter for property.

Criteria	NRE Account	NRO Account	FCNR(B) Deposit
Source of funds	Foreign income only	Indian income (rent, dividends) + foreign	Foreign currency deposit
Currency held	INR	INR	Foreign currency (USD, GBP, etc.)
Repatriation of principal	Freely repatriable	Up to USD 1 million/FY	Freely repatriable
Interest taxable in India?	No (tax-free)	Yes	No (tax-free)
Best for property when	You want easy future repatriation	Buying with rental/Indian income	Hedging currency risk on deposits

For most NRIs buying with money earned abroad and planning to eventually sell and repatriate, NRE is the clear winner. NRO comes into play when you're using rental income or funds already sitting in India.

How much sale money can an NRI repatriate out of India?

This is the question everyone should ask before buying, not after. Repatriation rules depend on how you funded the purchase.

If bought with NRE/FCNR funds: You can repatriate the original principal amount for up to two residential properties without the USD 1 million cap applying to that principal. Capital gains portion still goes through the NRO route.

If bought with NRO funds or Indian income: Repatriation is capped at USD 1 million per financial year (April–March) across all your NRO balances combined, and you must have paid all applicable taxes.

To actually move the money, your bank will require:

1. Form 15CA — self-declaration filed online on the income tax portal.
2. Form 15CB — a certificate from a Chartered Accountant confirming that applicable taxes have been paid on the remitted amount.
3. Sale deed, TDS proof, and the bank's remittance forms.

Common Mistake: Selling first and thinking about repatriation later. If you sell a third residential property funded from NRE money, the capital gains are always subject to the USD 1 million NRO limit, and the entire principal repatriation benefit only covers two properties. Plan which properties you'll repatriate from before you list them.

A worked example: Rahul's Bengaluru flat

Let me make this concrete. Rahul is an OCI cardholder working in San Francisco. In 2019 he bought a 3BHK in Whitefield, Bengaluru, for ₹1.1 crore, funding the entire amount from his NRE account. He kept the property, earned rent that went into his NRO account, and paid tax on that rental income each year.

In 2025 he sold the flat for ₹2 crore. Here's how the numbers played out:

• Holding period: Over 24 months, so long-term capital gains apply.
• Buyer's TDS obligation under Section 195: Without an LDC, the resident buyer would have had to deduct ~20% plus surcharge and cess on the full ₹2 crore, locking up roughly ₹41.6 lakh.
• What Rahul actually did: His CA filed Form 13 on TRACES and got a Lower Deduction Certificate. The LDC pegged deduction to his estimated actual gains rather than the whole sale value, so only about ₹18 lakh was withheld.

On repatriation, because he originally paid from NRE funds and this was one of his two eligible residential properties, Rahul could repatriate the original ₹1.1 crore principal without hitting the USD 1 million cap. The capital gains portion, after tax, went out through the NRO route with Form 15CA and 15CB. Total time from sale deed to money landing in his US account: about seven weeks, most of which was the LDC and remittance paperwork.

Had he skipped the LDC, he'd have had ₹41.6 lakh sitting with the tax department for over a year, only recoverable via a refund after filing his return. That's the difference a bit of planning makes.

Step-by-step: the NRI property purchase process

Here's the sequence I recommend, and it's detailed enough that you could brief your lawyer or broker directly.

1. Confirm eligibility. Verify the property is residential or commercial, and pull the land classification. Reject anything showing agricultural status.
2. Set up your banking. Ensure you have an active NRE and/or NRO account. Decide which will fund the purchase (favour NRE if you'll repatriate later).
3. Execute a Power of Attorney. If you can't be present, draft a PoA to a trusted person, get it attested at the Indian consulate abroad, then adjudicated and stamped in India.
4. Do legal due diligence. Title search for the last 30 years, encumbrance certificate, RERA registration of the project, approved building plan, and occupancy certificate for ready properties.
5. Verify tax status of the seller. If buying from another NRI, remember your TDS obligation is under Section 195, not the flat 1%.
6. Deduct and deposit TDS. For a resident seller above ₹50 lakh, deduct 1% and file Form 26QB within 30 days.
7. Register the sale deed. Pay stamp duty (varies by state, typically 5–7%) and registration charges at the sub-registrar's office.
8. File FEMA reporting if applicable. Keep remittance records; your bank handles most reporting, but retain everything for future repatriation.

If you're weighing whether now is the right time to enter the market, our take on whether it's a buyer's market right now and the negotiation playbook for India's unsold inventory are worth a read before you commit. For a curated look at what's available, browse properties for sale in India on eDarpan Properties.

Where should NRIs actually invest right now?

The classic answer used to be "Bengaluru or Mumbai." But yields in prime metros have compressed, and NRIs chasing rental income are increasingly looking at Tier-2 markets and newer commercial formats. Our analysis of emerging tech hubs beyond Bengaluru covers where the demand is genuinely shifting.

For NRIs who want commercial exposure without managing a whole property, fractional ownership has matured a lot. If you'd rather own a slice of a Grade-A office asset than deal with a single tenant, read our guide on fractional ownership of commercial property in India. And if you're buying to rent out, understand the paperwork first with our breakdown of rent agreement registration in Delhi-NCR.

Whatever you choose, eDarpan can help you find and evaluate the right asset. Explore eDarpan Properties for buying, renting, and investing, or if you're generating rental income, our rental property listings give a sense of realistic yields in your target city.

How eDarpan supports NRI investors and their businesses

Many of the NRIs I work with aren't just buying a home; they're setting up or scaling a business back in India at the same time. If that's you, a few things worth knowing.

To register a company or get GST without a physical office, a virtual office address for GST and company registration is the cleanest route, and it's fully compliant. If you're building the tech side of an India operation, our IT consulting and custom software development teams handle everything from architecture to deployment, and cloud migration and managed services keep your infrastructure lean.

For businesses managing tenants, buyers, or leads remotely, we set up WhatsApp Business API and bulk SMS flows, and even an AI voicebot to handle inbound calls in your absence. Email and collaboration run smoothly on Google Workspace or Microsoft 365, both of which we license and configure. Have a look at the full eDarpan services overview or just get in touch to talk through your situation.

Frequently asked questions

Can NRIs buy agricultural land in India?

No. Under FEMA general permission, NRIs and OCIs cannot purchase agricultural land, plantation property, or farmhouses. You may inherit such property, but you cannot buy it. Specific RBI approval would be required for any exception, and it is rarely granted.

Do NRIs need to be physically present in India to buy property?

Not necessarily. You can authorise a trusted person through a Power of Attorney to sign documents and complete registration on your behalf. The PoA should be attested at the Indian consulate in your country and adjudicated in India before use.

How much TDS is deducted when an NRI sells property in India?

For long-term capital gains (property held over 24 months), TDS is 20% plus surcharge and cess, up to roughly 24% on the sale value. For short-term gains, TDS is at your income tax slab rate. Apply for a Lower Deduction Certificate under Section 197 to reduce the amount locked up.

What is the maximum an NRI can repatriate from selling property?

From your NRO account, repatriation is capped at USD 1 million per financial year across all balances, subject to tax payment and Form 15CA/15CB. If you bought with NRE or FCNR funds, the original principal for up to two residential properties can be repatriated without this cap applying to that principal.

Can an NRI get a home loan in India?

Yes. Banks like SBI, HDFC, and ICICI offer NRI home loans, usually up to 75–80% of property value with 15–20 year tenures. EMIs must be paid through NRE/NRO accounts or inward remittance, and a Power of Attorney is typically required.

Is rental income from Indian property taxable for NRIs?

Yes. Rental income is taxable in India and should be credited to your NRO account. The tenant may be required to deduct TDS on the rent. You can claim standard deductions and offset the tax against treaty benefits under the DTAA between India and your country of residence.

Which account is best for an NRI to buy property in India?

If you plan to eventually repatriate the money abroad, fund the purchase from your NRE account, since it offers the cleanest repatriation of principal. Use NRO funds when buying with rental or other India-sourced income, keeping in mind the USD 1 million annual repatriation limit.

Final word

Done properly, an NRI buying property in India is a straightforward, rewarding exercise. Done carelessly, it turns into blocked registrations, lakhs locked in TDS, and money you can't get out of the country. The three things that separate the two outcomes are simple: confirm FEMA eligibility before you pay a rupee, choose the right funding account with repatriation in mind, and bring in a CA early enough to apply for a Lower Deduction Certificate before you sell.

Get those right and the rest is process. If you want help finding the right property, structuring the purchase, or setting up the business and tech infrastructure that often comes with an India move, reach out to eDarpan or learn more about how we work. We've walked plenty of NRIs through exactly this.

Image credit: Kolkata Properties - Real Estate India -Siddha Xanadu Interiors by nancyarora2020 via flickr (BY-SA 2.0), sourced through Openverse.