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The NRI Guides Team regularly reviews this article to ensure the content is up-to-date and accurate. The last editorial review and update were on 22 October 2023.
The Indian property market is becoming more and more popular with Non-Resident Indian (NRI) investors. The country has strong economic prospects and low prices for real estate that make it an attractive investment opportunity – something like this could be just what you’re looking to do!
Buying property in India can be complicated, especially for NRIs. Before you can complete the purchase, there are many steps to follow, and it is essential to ensure you are familiar with all relevant laws and regulations. This article attempts to answer all your questions about NRI buying property in India.
The below information has been prepared after studying the guidelines issued by the Ministry of External Affairs and Reserve Bank of India.
First, let’s get to the most crucial question:
Yes, Non-Resident Indians (NRI) and Overseas Citizens of India (OCI) are fully eligible to buy property in India and do not need any special permission to purchase a property.
However, contrary to popular belief, NRIs are not allowed to buy all types of properties as Resident Indians can. Reserve Bank of India (RBI) guidelines and foreign exchange regulations restrict NRIs from purchasing certain types of properties.
If you are an NRI, you cannot purchase any agricultural land, farmhouse, or plantation property. You can have ownership of such property only if they’ve been inherited (received as an heir at the death of the previous holder).
Other than agricultural land, farmhouses, and plantation properties, NRIs can purchase all kinds of immovable properties in India. To buy agricultural land, plantation property or farmhouse in India, NRIs have to get approval from the RBI and the government.
RBI has recently clarified that NRIs/OCIs are governed by provisions of FEMA 1999 and do not require prior approval of RBI for acquisition and transfer of immovable property in India, other than agricultural land/farmhouse/ plantation property,
If you are a resident owning a property in India and you become an NRI, you can continue holding the property. NRIs are also allowed to keep a farmhouse, an agricultural land, or a plantation they owned before becoming an NRI.
They can also let out their property on rent irrespective of when the property was acquired. Tax as applicable in the country should be paid on such receipts.
In order to purchase property, you must obtain and submit a number of documents, so it is important to make sure all the required documents are in hand before you begin the process.
The important documents you need to verify include:
*only applicable in some cases
Checking the past property documents (at least for the last 15-20 years) with the help of an expert is good to avoid future issues. Even when you book or buy an apartment (flat) it is a must to check the past property documents.
NOTE: Some states have specific paperwork that you need to know. It is always safer to hire a qualified property lawyer or notary.
The property deeds must be checked carefully before making any decisions. The last thing you want to do is buy a plot and find out later that it was once used for agriculture and hence ineligible for home construction.
If you are an NRI who lives outside of India, you have the option to give Power of Attorney (PoA) authorizing a relative or friend residing in India to complete transactions on your behalf.
The PoA can be general, meaning it covers all sorts of things they’re allowed to do for you; or specific about the rights your representative will exercise.
Please note that to execute a property transaction, you will need a special power of attorney, which is registered, and notarized. A general power of attorney is not enough for property transactions.
If you are preparing the PoA from abroad, it will need to be signed by you in the presence of a consulate officer in your country of residence, and it will also have to be attested by them. You will usually need to have two witnesses available to sign your PoA.
During the property registration, the PoA holder signs on the NRI’s behalf by producing a copy of the PoA to the appropriate authorities.
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NRIs can purchase a property in India using the funds received through inward remittances. Under the Foreign Exchange Management Act (FEMA) and the Reserve Bank of India (RBI) regulations, these funds must be maintained in a non-resident bank account.
The payment must be through banking channels using Indian currency (Rupees) and not traveller’s cheques or foreign currency. An NRI can also obtain a home loan from an Indian bank if required.
If you are buying property from another NRI, you should deduct TDS (tax deducted at source) at 20.6% in case of long-term capital gains. However, if the property is being sold before two years, TDS shall be deducted at 30.9% as a short-term capital gains tax.
If you are buying property from a Resident, and the property is worth more than Rs 50 lakh, you should deduct TDS at 1% of the transaction value.
In addition to purchasing property, an NRI is also allowed to acquire any residential or commercial property as a gift from any of his NRI, OCI or a resident relative. Though an NRI is not allowed to buy agricultural land etc., in India, he is allowed to inherit the same from any person resident in India.
The process may seem daunting, but you should remember that India hosts some of the world’s most beautiful and affordable properties. With careful planning and expert advice, purchasing property in India can be a smooth and successful process.
Yes, NRIs can own property jointly with other NRIs or Indian Residents. However, if the Indian resident is otherwise ineligible to buy real estate (due to any legal reason), the joint purchase is also not allowed.
Under the Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations, 2018, NRIs are not permitted to purchase agricultural land or plantation property or farmhouses in India. However, under exceptional circumstances, the RBI may allow an NRI to invest in agricultural property after reviewing their case.
There are no restrictions on the number of residential/commercial properties that can be purchased.
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Aneesh, the Founder & Editor of DG Pixels, holds a Master’s Degree in Communication & Journalism, and has two decades of experience living in the Middle East. Since 2014, he and his team have been sharing helpful content on travel, visa rules, and expatriate affairs.
