Can NRIs Buy Property in India? Rules & Restrictions Explained

The Legal Watch
Jun 13
3 min read

Non-Resident Indians (NRIs) often wonder whether they can invest in property back home. The good news is that NRIs can buy both residential and commercial properties in India, but there are specific rules and restrictions to follow.

This guide explains everything NRIs need to know about property purchase, financing, taxation, and repatriation of funds.

1. Can NRIs Buy Property in India?

✅ Yes! NRIs can freely purchase:

Residential properties (apartments, villas, plots).
Commercial properties (offices, shops, warehouses).

❌ No! NRIs cannot buy:

Agricultural land (unless inherited or gifted).
Plantation property (farmland, orchards).

2. How Can NRIs Buy Property in India?

A. Direct Purchase

NRIs can buy property using:
- NRE (Non-Resident External) Account (tax-free foreign income).
- NRO (Non-Resident Ordinary) Account (Indian earnings like rent, dividends).
- Foreign funds remitted to India via banking channels (must follow RBI guidelines).

B. Home Loans for NRIs

Indian banks & NBFCs offer home loans to NRIs (up to 80% of property value).
Interest rates are slightly higher than for residents.
Repayment must be via NRE/NRO account or foreign remittances.

3. Documents Required for NRI Property Purchase

For Buying	For Home Loan
Passport & Visa Copy	Salary Slips (if salaried)
PAN Card	Bank Statements (last 6 months)
OCI/PIO Card (if applicable)	Employment Contract
Power of Attorney (if buying via representative)	Property Documents (sale agreement, title deed)

4. Tax Implications for NRIs Buying Property

A. Stamp Duty & Registration

Same as for Indian residents (varies by state – typically 4-8% of property value).

B. Capital Gains Tax on Sale

Short-term (if sold within 2 years): 30% + cess.
Long-term (after 2 years): 20% with indexation benefit.

C. TDS (Tax Deducted at Source)

Buyer must deduct 1% TDS on property purchase (if value exceeds ₹50 lakhs).
For NRI sellers, TDS is 20-30% (unless reinvested under Section 54/54F).

5. Can NRIs Sell Property in India?

✅ Yes! NRIs can sell property to:

Indian residents
Other NRIs
Foreign nationals of Indian origin (OCI/PIO holders)

Repatriation of Sale Proceeds

Residential property: Up to $1 million per financial year (after taxes).
Commercial property: Full amount can be repatriated (subject to tax clearance).

6. Inheritance & Gift of Property to NRIs

NRIs can inherit agricultural/plantation land (unlike direct purchase).
NRIs can receive property as a gift from relatives (no tax if from close family).

7. Power of Attorney (PoA) for NRIs

If an NRI cannot be present for registration, they can appoint a PoA holder.
Types of PoA:
- General PoA (broad authority).
- Specific PoA (only for property transactions).