NRI & Foreign Buyers
NRI vs OCI vs PIO: Who You Are Decides What You May Buy
Three labels, two of which now mean the same thing — and one distinction that decides whether you may buy at all.
The short answer
NRI = an Indian citizen living abroad. Indian passport.
OCI = a foreign citizen of Indian origin holding an OCI card. Foreign passport.
PIO = the old scheme. It has been merged into OCI. If you still hold a PIO card, convert it.
For PROPERTY, NRIs and OCIs have essentially the same rights. Both may buy residential and commercial. Neither may buy agricultural land.
Who is who
| NRI | OCI | PIO | |
|---|---|---|---|
| Citizenship | Indian | Foreign | Foreign |
| Passport | Indian | Foreign | Foreign |
| Definition | An Indian citizen residing outside India | A foreign national of Indian origin holding an OCI card | The old scheme. Merged into OCI. |
| Status today | Current | Current | DISCONTINUED. Convert to OCI. |
| Can vote in India? | Yes (in principle) | No | No |
| Needs a visa? | No — Indian passport | No — the OCI card is a lifelong visa | — |
Property rights — and they are almost identical
| NRI | OCI | |
|---|---|---|
| Buy residential property | Yes, any number, no RBI permission | Yes, same |
| Buy commercial property | Yes, any number | Yes, same |
| Buy agricultural land / plantation / farmhouse | NO | NO |
| Inherit any property, including agricultural | Yes | Yes |
| Take a home loan from an Indian bank | Yes | Yes |
| Let the property out | Yes — rental income taxable in India | Yes, same |
| Repatriate sale proceeds | Yes, within FEMA limits | Yes, same |
| Sell to a resident, NRI or OCI | Yes | Yes |
For immovable property, the practical answer is: NRI and OCI are treated the same. The distinction that actually matters is not NRI-versus-OCI. It is RESIDENT versus NON-RESIDENT.
PIO has been merged into OCI
The Person of Indian Origin scheme has been merged into the OCI scheme.
If you still hold a PIO card, convert it to OCI, or you will need a regular visa to enter India — and you may run into difficulty proving your status in a property transaction, where a sub-registrar or a bank will want to see current, valid documentation.
Your property rights are essentially unchanged. But the paperwork is not, and a transaction is a poor moment to discover that.
The distinction that actually matters
It is not about citizenship. It is not about where your family is. It is not about where you consider home.
It is about DAYS SPENT IN INDIA, and it is tested separately under FEMA and under the Income Tax Act — and the two tests are not the same.
Which means you can be a resident under one and a non-resident under the other, in the same year.
Someone can hold an Indian passport, own an Indian flat, have their whole family in Chennai — and still be a non-resident for tax.
Get your residential status confirmed, in writing, by a CA, before you transact. It determines:
• Whether you may buy agricultural land
• Which bank accounts you may hold
• What TDS your buyer must deduct when you sell — and getting this wrong makes THEM liable
• Whether you get the indexation option on capital gains (as an NRI, you don't)
• How much you can repatriate
If you are buying from someone, their residential status is your problem.
Buy from a resident: deduct 1% TDS. Buy from an NRI: deduct under Section 195 — at a far higher rate, on the whole sale consideration.
Get a written declaration of residential status, and a passport copy, before you pay a rupee. If you get it wrong, the shortfall is your liability — and the seller is abroad, with your money.
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
What is the difference between an NRI and an OCI?
An NRI is an Indian CITIZEN living abroad, holding an Indian passport. An OCI is a FOREIGN citizen of Indian origin, holding a foreign passport and an OCI card (which functions as a lifelong visa). For immovable property, their rights are essentially identical: both may buy residential and commercial property freely, and neither may buy agricultural land.
Does PIO still exist?
No — the PIO scheme has been merged into OCI. If you still hold a PIO card, convert it, or you will need a regular visa to enter India and may struggle to prove your status in a property transaction. Your property rights are essentially unchanged, but the paperwork is not.
Can an OCI buy property in India?
Yes — residential and commercial property, in any number, with no RBI permission required, exactly as an NRI can. And, exactly as an NRI, an OCI may not buy agricultural land, plantation property or a farmhouse.
How is my residential status determined?
By days spent in India — and it is tested separately under FEMA and under the Income Tax Act, and the two tests are not the same. Which means you can be a resident under one and a non-resident under the other in the same year. It has nothing to do with citizenship or where you consider home. Get it confirmed in writing by a CA before you transact.
Why does the seller's residential status matter to a buyer?
Because it decides your TDS obligation, and the liability is yours. Buying from a resident, you deduct 1%. Buying from an NRI, you deduct under Section 195 — at a far higher rate, on the whole sale consideration. Get a written declaration and a passport copy before you pay anything: if you get it wrong, you are liable for the shortfall while the seller is abroad with your money.