NRI & Foreign Buyers
NRI Buying Property in India: The Complete Guide
You can buy a flat in Bengaluru without asking anyone's permission. You cannot buy a field. And the difference between those two sentences is a penalty of three times what you paid.
The short answer
An NRI or OCI can freely buy RESIDENTIAL and COMMERCIAL property in India. No RBI permission needed. No limit on how many.
You CANNOT buy agricultural land, a plantation, or a farmhouse. No exceptions. The penalty under FEMA is up to THREE TIMES the amount involved, and the property can be confiscated.
And the money must move through the right accounts — because that decides whether you can ever get it out again.
What you can and cannot buy
| You CAN buy | You CANNOT buy |
|---|---|
| Residential property — any number | Agricultural land |
| Commercial property — any number | Plantation property |
| From a resident, another NRI, or an OCI | Farmhouses |
| No RBI permission required | No workaround. None. |
There is no limit on the NUMBER or the VALUE of residential and commercial properties an NRI may own. The restriction is on the TYPE of land, not on how much of it you have.
An NRI or OCI may NOT purchase:
• Agricultural land
• Plantation property — tea, coffee, rubber, cardamom
• Farmhouses
There are no exceptions, and the workarounds do not work:
• You cannot buy it intending to convert it later.
• You cannot buy it through a company.
• You cannot buy it in a relative's name and hold the beneficial interest — that is a benami transaction, and it carries its own, worse, consequences.
You CAN inherit it. That is treated entirely separately.
How the money must move — and this is where people get caught
FEMA does not only care what you buy. It cares how you paid for it.
The purchase must be funded through one of:
- Inward remittance through normal banking channels
- NRE account — funded from your foreign earnings
- NRO account — your Indian income
- FCNR(B) account — a foreign-currency deposit
Not through a friend's account. Not through a relative who will 'sort it out'. Not in cash.
Every rupee must be traceable through a banking channel, and you must be able to prove it, years later, when you want to take the money out.
The source-of-funds trail is not bureaucratic tidiness. It is the thing that determines whether you can ever repatriate the proceeds. Lose it, and the money is stuck in India.
The tax — and the structural penalty for being an NRI
The Finance (No. 2) Act 2024 abolished indexation and cut LTCG to 12.5%.
It then gave resident individuals and HUFs a concession: for property bought before 23 July 2024, they may pay the lower of 12.5% without indexation, or 20% with it.
That concession explicitly does not extend to NRIs.
You are locked into 12.5% without indexation — however long you have held the property.
For an NRI who has held a Mumbai flat since 2008, that is a materially worse outcome than a resident neighbour who bought the identical flat on the same day. It is one of the real structural disadvantages of NRI status, and no change since has touched it.
The other tax points:
- Rental income is taxable in India, and your tenant must deduct TDS at a much higher rate than for a resident landlord.
- Sections 54, 54F and 54EC exemptions ARE available to NRIs — reinvest and you can exempt the gain.
- DTAA — check the treaty with your country of residence. You may get credit at home for tax paid in India.
- You may need to file an Indian return even though you live abroad.
Getting the money out — plan this BEFORE you put it in
Bought with NRE / FCNR funds, or inward remittance?
You may repatriate up to the amount you originally brought in, for a maximum of two residential properties. Freely.
Bought with NRO funds (Indian income)?
Repatriation is capped at USD 1 million per financial year from the NRO account — with a CA's certificate (Form 15CB) and a declaration (Form 15CA).
This is why the account you buy from matters enormously, and why it must be decided before you send the down payment — not afterwards, when you want the money back.
Talk to a CA before you remit a rupee.
The order to do things in
- Confirm your residential status — for FEMA and for tax. They are different tests. Get it in writing from a CA.
- Open the right accounts. NRE for foreign earnings, NRO for Indian income. Before anything else.
- Get a PAN. Mandatory for any property transaction.
- Decide the funding route — with a CA, thinking about repatriation on the way out.
- Do the due diligence. All of it. Title, RERA, khata, approvals. You are not there to see the flat, which makes this more important, not less.
- Execute a SPECIAL Power of Attorney — apostilled or consularised, then adjudicated and stamped in India within 3 months.
- Buy. Pay only through banking channels. Keep every SWIFT confirmation.
- Register the sale deed. Apply for mutation.
- Keep the file for as long as you own it — sale deed, source of funds, TDS certificates, Form 26AS. That file is your repatriation.
- REVOKE the POA when the job is done. In writing. Registered.
FEMA rules, tax rates and repatriation limits are amended by Budget, by RBI Master Direction, and by circular — sometimes more than once a year.
We have written this against the position as we understand it, and checked it. But we are not chartered accountants or lawyers, and this is not advice.
Before an NRI property transaction, engage a CA who does NRI work. On a transaction of this size, in a regime with a three-times penalty for getting it wrong, it is the cheapest insurance available.
Frequently asked questions
Can an NRI buy property in India?
Yes — residential and commercial property, in any number, with no RBI permission required. But NOT agricultural land, plantation property or farmhouses, and there is no workaround: you cannot buy intending to convert later, you cannot buy through a company, and buying in a relative's name while holding the beneficial interest is a benami transaction with worse consequences.
What is the penalty if an NRI buys agricultural land?
Under Section 13 of FEMA, up to three times the sum involved — and the property can be confiscated. In one 2024 case an OCI cardholder who bought agricultural land for Rs 13.68 lakh was penalised Rs 41.04 lakh, even after cooperating and selling the land.
Do NRIs get the 20% with indexation option on capital gains?
No, and this matters. The Finance (No. 2) Act 2024 gave RESIDENT individuals and HUFs the option to pay the lower of 12.5% without indexation or 20% with it, on property bought before 23 July 2024. That concession explicitly does not extend to NRIs, who are locked into 12.5% without indexation however long they have held the property. No change since has touched it.
How should an NRI pay for property in India?
Only through banking channels — inward remittance, or an NRE, NRO or FCNR account. Never in cash, and never through a third party's account. Every rupee must be traceable, and you must be able to prove it years later, because the source-of-funds trail is what determines whether you can ever repatriate the proceeds.
How much can an NRI repatriate from a property sale?
It depends how you paid. If you bought with NRE/FCNR funds or inward remittance, you may repatriate up to the amount you originally brought in, for a maximum of two residential properties. If you bought with NRO funds, repatriation is capped at USD 1 million per financial year, with Forms 15CA and 15CB. Decide the funding route BEFORE you remit — not when you want the money back.