End-to-End Guide for NRIs Buying Residential Property in India

Non-Resident Indians continue to invest significantly in Indian real estate, drawn by familiarity, potential returns and plans for eventual return. Reforms like RERA have boosted transparency and buyer protection, making the process smoother.

NRIs enjoy broad rights to acquire residential and commercial properties without RBI approval. Restrictions apply to certain categories and careful planning around funding, taxes and documentation ensures hassle-free ownership.

This guide covers eligibility, allowed properties, due diligence, funding, taxes and practical steps. For complex cases or legal support, professionals at ezyLegal can help.

Properties NRIs Can and Cannot Buy

NRIs (and OCIs) have near-equal rights to residents for most real estate under FEMA.

Allowed Without Approval:

• Any number of residential properties (houses, apartments).
• Commercial properties (offices, shops).

Restricted (Purchase Prohibited):

• Agricultural land, plantation property, farmhouses, cannot be acquired by purchase or gift. Inheritance permitted.

Leasing properties is allowed (up to 5 years for restricted categories without approval).

Property Type	Purchase Allowed?	Notes
Residential (houses/apartments)	Yes	Unlimited numbers
Commercial	Yes	No restrictions
Agricultural/Plantation	No	Inheritance only
Farmhouses	No (if agricultural)	Residential use doesn’t override ban

Essential Documents

Common requirements:

• Valid Indian passport (or OCI card + foreign passport).
• PAN card (mandatory for transactions >₹50 lakh).
• Address proof (overseas utility bill/bank statement).
• Visa/work permit.
• Power of Attorney (PoA) if not present in India, attested/apostilled abroad or executed here.
• Income proof for loans (salary slips, ITR).

Document	Purpose	Notes
Passport/OCI Card	Identity	Mandatory
PAN Card	Tax compliance	Required for high-value deals
PoA	Authorize representative	Attested if executed abroad
Income Proof	Loan eligibility	Salary slips, bank statements
Encumbrance Certificate	Clear title verification	From sub-registrar

Step-by-Step Process

1. Research & Select: Use portals, agents; prioritize RERA-registered projects.
2. Due Diligence: Lawyer verifies title, approvals, encumbrances.
3. Agreement: Sign builder-buyer/sale agreement.
4. Funding: Remit or use NRI accounts/loan.
5. Registration: Execute sale deed; pay stamp duty.
6. Possession: Obtain OC/CC; mutate records.

Offline execution is common; PoA enables remote handling.

Funding Options

• Own Funds: Remit to NRE/NRO; pay in INR.
• Home Loans: Up to 80-85% from banks/HFCs; rates competitive. Repay via remittances or NRI accounts.
• NRI Accounts: Use NRE (repatriable), NRO (limited).

Payments via traveller’s cheques/foreign currency are prohibited.

Tax Implications

• Rental Income: Taxable; 30% standard deduction + municipal taxes.
• Capital Gains: LTCG (24+ months) 12.5% with indexation (from FY24); STCG slab rates.
• TDS on Purchase: 1% if >₹50 lakh.
• Home Loan Benefits: Deductions on interest (no limit self-occupied), principal (80C).
• Sale Repatriation: Up to USD 1M/FY from NRO after taxes.

No inheritance tax; capital gains apply on sale.

Tax Aspect	Treatment
Rental Income	Taxable after deductions
LTCG (post-24 months)	12.5% with indexation
Home Loan Interest	Deductible
TDS on Purchase	1% (>₹50 lakh)

Due Diligence Checklist

• RERA registration/OC/CC.
• Clear title (30-year encumbrance).
• Approved plans/no violations.
• Builder track record.
• Society NOC if resale.

Engage local lawyer, critical for remote buyers.

Real-World Scenarios

1. First Investment: NRI in UAE buys an apartment via a loan/PoA, rents for income.
2. Retirement Planning: Gulf returnee purchases home; uses NRE funds.
3. Luxury Segment: US NRI invests in a gated community for appreciation.
4. Inheritance: Receives agricultural land, can hold but not purchase more.
5. Resale Complications: Discovers title issue, lawyer resolves via due diligence.

These highlight PoA and professional help’s value.

Practical Tips

• Prioritize RERA projects for protection.
• Execute PoA abroad (apostille) or during visit.
• Compare loan offers (SBI, HDFC, ICICI popular).
• Plan repatriation if selling later.
• DIY possible with PoA; lawyer essential for safety.

These steps minimize risks and costs.

Need assistance with PoA, due diligence or loans? Contact ezyLegal.

Frequently Asked Questions on NRIs Buying Residential Property in India

Q1. Can NRIs buy residential property in India?

Ans1. Yes, unlimited residential/commercial without RBI approval.

Q2. Can NRIs purchase agricultural land?

Ans2. No, purchase prohibited; inheritance allowed.

Q3. What documents are needed?

Ans3. Passport/OCI, PAN, PoA, address/income proof.

Q4. Are home loans available to NRIs?

Ans4. Yes, up to 80-85%; repay via NRI accounts/remittances.

Q5. How to fund from abroad?

Ans5. Remit to NRE/NRO or use loan; INR only.

Q6. Is PoA necessary?

Ans6. Recommended if not present; must be attested/registered.

Q7. What taxes on rental income?

Ans7. Taxable; deductions for interest, 30% standard, municipal taxes.

Q8. LTCG tax rate for NRIs?

Ans8. 12.5% with indexation (held >24 months).

Q9. Can NRIs sell and repatriate proceeds?

Ans9. Yes, up to USD 1M/FY after taxes/documentation.

Q10. Differences for OCI cardholders?

Ans10. Same as NRIs for purchase.

Q11. RERA protection for NRIs?

Ans11. Yes, applies equally; check project registration.

Q12. TDS when buying?

Ans12. 1% if transaction >₹50 lakh.

Q13. Farmhouse purchase allowed?

Ans13. No if agricultural; residential only.

Q14. Inheritance of restricted property?

Ans14. Allowed, can hold inherited agricultural land.

Q15. Best cities for NRI investment?

Ans15. Mumbai, Bengaluru, Pune, Hyderabad are popular for growth/rentals.

Q16. Repatriation on sale?

Ans16. From NRO; CA certificate needed.

Q17. Loan repayment options?

Ans17. Remittances, NRE/NRO debit, rental credits.

Q18. Risks without due diligence?

Ans18. Title disputes, delays, financial loss.

Q19. Online property search reliable?

Ans19. Yes, cross-verify with RERA portal.

Q20. Returning NRI implications?

Ans20. Becomes resident; tax rules change.