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Can an NRI Buy Property in India? Here’s What You Need to Know

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Can An NRI Buy Property in India
Property investment in India continues to be a preferred destination, not just for locals but also for non-resident Indians (NRIs) looking to reconnect with their roots or grow their financial portfolios. If you’re an NRI wondering whether you’re legally allowed to buy real estate in India, the answer is yes—but there are rules and procedures you must follow. This article covers how can an NRI buy property in India legally, including the laws that apply and the necessary measures.
Let’s break it down into a simple guide covering everything: from property types to payment methods, legal documentation, and taxation for property investment in India.

What Kind of Property Can NRIs Purchase?

As per current Indian laws, NRIs are eligible to buy:

  • Residential property: flats, villas, apartments, and houses
  • Commercial property: office spaces, shops, and showrooms

These are fully permitted under the law and form the bulk of NRI real estate investments.

What Property Types Are Restricted?

NRIs cannot purchase:

  • Agricultural land
  • Plantation property
  • Farmhouses

However, they can inherit or receive these through gifts from relatives in India.

Legal Framework: Laws Governing NRI Property Purchase

  1. FEMA Rules
    The Foreign Exchange Management Act (FEMA) governs all NRI property transactions involving foreign nationals.
    Here’s what it means for you:
  • Property purchase must be in Indian Rupees
  • Payment should go through banking channels only
  • The funds must be routed through an NRE, NRO, or FCNR account.

You can’t use foreign money or cash for any transactions.

  1. Reserve Bank of India (RBI) Regulations

The RBI permits NRIs to buy immovable property, but reporting may be required in some cases. Always check for updates or consult a financial/legal expert to ensure compliance.

How Should NRIs Pay for the Property?

  • Property can be purchased either individually by an NRI or jointly with another NRI.
  • Co-owning with someone living in India is also allowed.
  • Co-owning with a foreign citizen is not permitted unless they hold OCI or PIO status

Joint Property Ownership Rules:

  • Property can be purchased either individually by an NRI or jointly with another NRI.
  • Co-owning with someone living in India is also allowed.
  • Co-owning with a foreign citizen is not permitted unless they hold OCI or PIO status

Full Guide for NRIs Investing in Indian Property

Step 1: Define Your Objective

Are you planning to live in the property, rent it out, or hold it as an investment? Your goal helps determine the location and property type.

Step 2: Shortlist a Legally Clear Property

 Ensure that the property has:

  • A clear ownership title
  • Approved building permissions
  • An Occupancy Certificate (for completed projects)

Legal verification is a must—never skip this step.

Step 3: Appoint a Legal Expert

Hire a real estate lawyer familiar with NRI transactions. They’ll help you verify documents, draft agreements, and navigate regulatory hurdles.

Step 5: Property Registration

Register your purchase at the local Sub-Registrar Office. If you’re living outside India, you can give someone the legal right to act for you by creating a Power of Attorney (PoA).

What Is a Power of Attorney (PoA) and Why Is It Useful?

If you’re unable to visit India, a PoA allows a trusted person (friend or family) to:

  • Sign sale deeds and agreements
  • Attend property registration
  • Handle legal formalities on your behalf

Note: To be legally valid in India, the PoA must be notarized in your country of residence and attested by the Indian Embassy or Consulate.

Taxation Guidelines for NRIs

  • If you earn money by renting out your property in India, you have to pay tax on that money.
  • You can save tax on the interest paid for your home loan under Section 24.

Rental Income

TDS on Property Purchase

  • A 1% TDS applies when buying property costing more than ₹50 lakh

Capital Gains Tax (on resale)

  • Short-Term Capital Gains (STCG) apply if the property is sold within 2 years of purchase.
  • Long-Term Capital Gains (LTCG): Applies if held for 2+ years; eligible for indexation benefits

Repatriating Funds: Selling and Sending Money Abroad

If you sell the property later, you can send the money back to your home country (repatriate the proceeds) under certain rules:

  • You can send money abroad by selling two properties every year
  • The money must be from your NRE account or other eligible foreign income sources
  • Inherited property requires legal clearance before repatriation

Tips for NRIs Buying Property in India

  ✔ Always go through reputed builders or developers
  ✔ Verify RERA registration and all legal documents
  ✔ Keep track of currency exchange rates if paying from abroad
  ✔ Stay updated with RBI circulars for NRIs
  ✔ Maintain a record of all transactions and tax receipts

Final Thoughts

Yes, NRIs have complete rights for property investment in India — and many do! But understanding the legal process, financial regulations, and documentation is key to making a smart and safe investment. With the right guidance, owning a home or commercial property in India can be emotionally satisfying and financially rewarding.

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