Buying Property in India as an NRI: Step-by-Step Guide 2025

What Property Can NRIs Buy in India?

Under FEMA Schedule I, NRIs may purchase the following types of immovable property in India without any prior RBI approval:

• Residential properties (apartments, villas, flats)
• Commercial properties (offices, shops, commercial spaces)

NRIs cannot purchase the following without special RBI permission:

• Agricultural land
• Plantation property
• Farmhouses

However, NRIs can inherit agricultural land and can purchase it through a resident Indian Power of Attorney in certain states (though this is a grey area). If you receive agricultural land as inheritance, you may hold it — you just cannot purchase it directly.

Payment Rules: Which Accounts Can Be Used?

FEMA mandates that all property payments by NRIs must be made through Indian banking channels:

• NRE account: Funds from NRE are repatriable, so property purchased with NRE funds retains repatriability of sale proceeds (up to the original NRE investment).
• NRO account: Can be used, but sale proceeds are subject to the USD 1M/year repatriation limit.
• FCNR account: Can be used to fund property purchase. Like NRE, repatriation of original investment is permitted.
• Foreign currency direct payment: NOT permitted. You cannot wire USD or EUR directly to the seller. Funds must first reach an Indian account.

NRI Home Loan: Eligibility and Documentation

All major Indian banks (SBI, HDFC, ICICI, Axis) offer home loans to NRIs. Key requirements:

• Minimum 6 months of employment or business abroad.
• Income documents: last 3 months' salary slips, bank statements (foreign and NRO), employment contract or appointment letter.
• Loan-to-value: typically 75–80% of property value (you bring 20–25% as down payment).
• EMI must be serviced from NRO or NRE account — direct foreign bank transfer to the lender is not permitted.
• Processing is done via the NRI branch or online portal; you do not need to be physically present in India for most banks.

Power of Attorney for Remote Purchase

NRIs commonly execute a registered Power of Attorney (POA) in favour of a trusted family member in India to handle the property registration. The POA must be:

• Notarised at the Indian embassy or consulate in your country of residence.
• Apostilled or attested depending on the state's requirement.
• Registered at the Sub-Registrar's office in India (for it to be valid for property registration in most states).

TDS on Purchase from NRI Seller

If you are buying property from an NRI seller, you (the buyer) must deduct TDS at:

• 12.5% + surcharge + cess on Long-Term Capital Gains (property held > 24 months by seller).
• 30% + surcharge + cess on Short-Term Capital Gains (property held ≤ 24 months).

The effective TDS rate can reach 22–23% for LTCG on higher-value properties after surcharge and cess. The NRI seller can apply for a lower deduction certificate from the IT department if their actual tax liability is less.

Property Registration Process

1. Agree on sale price and sign the Sale Agreement (not the final deed yet).
2. Pay stamp duty (varies by state: 4–8% of property value) and registration fee (~1%).
3. Execute the Sale Deed in the presence of a Sub-Registrar (POA holder can sign on your behalf).
4. Register the deed at the Sub-Registrar's office — registration is mandatory for the transfer of ownership to be legally valid.
5. Obtain the registered sale deed and update the property tax records to your name.

Use the NRI Tools Property Tracker to monitor your Indian property's value, estimated rental yield, and projected appreciation — open the property tool.