What you can and cannot buy
The framework is a general permission with a narrow exclusion.
| Can acquire by purchase | Cannot acquire by purchase |
|---|---|
| Residential apartments | Agricultural land |
| Residential plots in approved layouts | Plantation property |
| Commercial property | Farmhouses |
| No limit on the number of properties | (These may still be inherited) |
A general summary of the position under the FEMA framework. Rules change and individual circumstances differ. Verify with a chartered accountant and a property lawyer before you transact.
Two points that trip people up:
- No specific approval is needed for residential or commercial property. The general permission covers it, so there is no application to make before you buy.
- The exclusion is about land classification, not property type. A residential villa plot in an approved layout is not agricultural land. That is why a plotted development such as Sumadhura Panorama in Devanahalli is generally open to an NRI buyer, subject to confirming the classification and layout approval for that specific project. Layout approval checks matter more here than anywhere.
How payment must be routed
Everything must move through normal banking channels, in Indian rupees. The permitted sources:
- Inward remittance through normal banking channels.
- NRE account (Non Resident External), funded from overseas earnings and freely repatriable.
- NRO account (Non Resident Ordinary), typically holding India sourced income such as rent, with repatriation subject to limits.
- FCNR account (Foreign Currency Non Resident), a foreign currency term deposit held in India.
Record which account every payment came from, and keep the bank advices. When you eventually sell and want to take the proceeds out, repatriation depends on being able to demonstrate how the purchase was funded. Reconstructing that years later is painful and sometimes impossible.
Whether the purchase was funded from NRE or NRO money also affects what you can repatriate, so this is not a filing formality.
Home loans for NRIs
Indian banks and housing finance companies lend to NRIs. The structure is familiar, the detail differs.
- Currency. Sanctioned, disbursed and repaid in Indian rupees.
- Repayment route. Normally through an NRE or NRO account, by remittance from abroad, or from rental income on the property.
- Tenure. Usually shorter than for a resident borrower, often linked to age and remaining working life.
- Documentation. Heavier. Expect passport and visa, overseas employment contract, overseas salary slips and bank statements, and often an overseas credit report. Several lenders also want a local contact or a power of attorney holder.
- Disbursement for under construction purchases works the same way as for residents: in tranches against verified construction progress. That interacts directly with your payment plan, which is why the lender disbursement question in a 50:50 plan is worth settling before you commit.
Power of attorney: the practical centrepiece
You can buy without one. You will struggle to complete without one, because registration and several formalities need a person physically present in India.
Make it specific, not general
A specific power of attorney limited to this transaction and this property, naming the acts the holder may perform. A broad general power hands over far more authority than the purchase requires.
Choose the holder carefully
Usually a family member. This person can sign and register on your behalf. Choose for reliability and availability, not for seniority.
Execute it correctly abroad
A power executed outside India is generally notarised and then either apostilled, where the country is party to the Hague Apostille Convention, or attested at the Indian embassy or consulate.
Stamp and, where required, register it in India
On arrival the document needs the applicable stamp duty, and depending on its scope may need registration. Your property lawyer should confirm what is required for your specific document.
Check the lender and developer accept it
Before you rely on it. Both may have their own requirements about wording and scope, and discovering a problem at registration is an expensive way to find out.
Start this early. The notarisation, apostille or attestation, and courier cycle takes weeks, and it tends to sit on the critical path of the whole purchase.
Buying from overseas?
The project team can send the price sheet, floor plans, payment schedule and the documentation list for an NRI purchase, and arrange a video walkthrough of the site.
Tax, in outline
What follows is the shape of the obligations, not the numbers. Rates, thresholds, surcharges and treaty relief all change and all depend on your circumstances and your country of residence. Engage a chartered accountant with NRI experience before you transact. This is not tax advice.
Four things to have advice on:
- Tax deducted at source on purchase. A buyer is generally required to deduct tax from the payment to the seller and deposit it. The rate differs depending on whether the seller is resident or non resident, and the obligation sits on you as the buyer. Getting this wrong is a buyer side problem, not a seller side one.
- Rental income from an Indian property is taxable in India, with the usual deductions available.
- Capital gains on a later sale are taxable in India, with the treatment depending on how long you held the property.
- Double taxation relief. Where India has an agreement with your country of residence, it may affect how the same income is treated in both places. This is the part most worth professional advice.
Taking money back out
Repatriation of sale proceeds is permitted within a framework rather than freely, and the detail depends on how the purchase was funded.
The broad shape:
- Where the property was acquired in accordance with the applicable foreign exchange rules, sale proceeds may be repatriated, subject to conditions and limits.
- Repatriation of proceeds for residential property is subject to a limit on the number of properties, so this is worth knowing before you buy a second or third.
- Remittance from an NRO account is subject to an annual ceiling and to the applicable tax clearance and certification.
- Documentation of the original funding is central, which is the point made earlier about keeping records from day one.
Confirm the current limits and conditions with your bank and your chartered accountant. They change, and the cost of assuming is high.
Documents to assemble
Start collecting these before you shortlist, not after you book:
- Passport, and OCI or PIO card where applicable.
- Visa or residence permit for your country of residence.
- PAN card. You need this for the transaction and for tax filings.
- Overseas address proof.
- NRE, NRO or FCNR account details and recent statements.
- For a loan: overseas employment contract, salary slips, overseas bank statements, and often an overseas credit report.
- Passport sized photographs.
- The executed, apostilled or attested power of attorney.
Running the purchase remotely
Three habits make a distant purchase behave like a local one:
- Verify documents yourself rather than through a relative's reassurance. The Karnataka RERA portal is public and works from anywhere. So does checking the declared possession date and the quarterly progress filings. You can do the single most important due diligence step from your own desk.
- Engage your own professionals. A property lawyer and a chartered accountant working for you, not introduced by the seller. This is the highest return spending in the whole transaction.
- Ask for a live walkthrough, not a render. A video call from the actual floor, facing the actual direction, tells you what a brochure cannot. If you are weighing floors, what changes with height is worth reading before that call so you know what to ask them to point the camera at.
And read what your money is buying on the same terms a local buyer would: which area basis you were quoted, and what construction stage the project is actually at.
Can an NRI buy property in India?
Yes. Under the general permission in the FEMA framework, a non resident Indian may acquire residential and commercial immovable property in India without seeking specific approval from the Reserve Bank of India. The restriction is on agricultural land, plantation property and farmhouses, which cannot be purchased, though they may be inherited.
Can an NRI buy a villa plot?
A residential plot in an approved layout is not agricultural land, so it is generally available to an NRI on the same basis as other residential property. Because the restriction turns on the land's classification, confirm the classification and the layout approval for the specific project before you commit.
How should an NRI pay for property in India?
Through normal banking channels in Indian rupees, funded by inward remittance or from an NRE, NRO or FCNR account held in India. Payment in foreign currency cash, or directly from an overseas account outside banking channels, is not permitted. Keep clean records of every payment and the account it came from, as you will need them if you later repatriate sale proceeds.
Do NRIs get home loans in India?
Yes, Indian banks and housing finance companies offer NRI home loans. They are sanctioned, disbursed and repaid in Indian rupees, typically through an NRE or NRO account. Tenures are usually shorter and documentation heavier than for resident borrowers, often including overseas income proof, employment contract and passport and visa documents.
Do I need a power of attorney to buy property in India as an NRI?
Not legally required, but in practice it is what makes a remote purchase workable, because registration and many formalities need someone present. A specific power of attorney, limited to the named transaction and the named property, is the normal approach. Executed abroad it generally needs to be notarised and apostilled or attested at an Indian mission, then stamped in India.
What tax applies when an NRI buys property in India?
The buyer is generally required to deduct tax at source from the payment to the seller, at a rate that differs depending on whether the seller is resident or non resident. Rental income and capital gains on a later sale are also taxable in India, with the position affected by any applicable double taxation avoidance agreement. Rates and thresholds change, so get the figures from a chartered accountant for your specific transaction.