Buying property in India as an NRI

The rules are more permissive than most NRIs assume. The friction is operational — payments, power of attorney and tax — not regulatory.

What you may buy

• Any residential or commercial property, with no cap on the number.
• No RBI permission is required. The general permission under FEMA covers it.
• Agricultural land, plantation property and farmhouses are excluded — you cannot buy them, though you may inherit them.

How the money moves

Payment must be made in Indian rupees through normal banking channels, from an NRE, NRO or FCNR account, or by inward remittance. No traveller's cheques, no foreign currency handed over in India. Home loans from Indian lenders are available to NRIs at rates broadly matching resident rates, with a shorter maximum tenure and repayment required from an NRE/NRO account or by remittance.

Repatriation

• Sale proceeds of up to two residential properties may be repatriated, provided the purchase was made in foreign exchange through banking channels or from an NRE/FCNR account.
• The repatriable amount cannot exceed what was originally remitted in.
• Beyond that, up to USD 1 million per financial year may be remitted from an NRO account, subject to Forms 15CA and 15CB from a chartered accountant.

The two taxes people get wrong

First, TDS on purchase. If you buy from a resident seller for over ₹50 L you deduct 1% under Section 194-IA. But if you buy from an NRI seller, the rate is entirely different — TDS under Section 195 at 20% plus surcharge and cess on long-term capital gains, deducted on the whole consideration unless the seller produces a lower-deduction certificate. Buyers who apply the 1% rule to an NRI seller inherit the shortfall personally.

Second, your own gains on eventual sale. Long-term capital gains (holding over 24 months) are taxed at 12.5% without indexation for transfers on or after 23 July 2024, with relief available under Sections 54 and 54EC. Short-term gains are at slab rates. The buyer will deduct TDS from your sale proceeds; apply for a lower-deduction certificate in advance rather than claiming it back a year later.

Power of attorney

If you cannot be present for registration, execute a specific — not general — power of attorney naming the exact property and the exact acts permitted. Sign it before the Indian consulate in your country of residence, or notarise and apostille it, then adjudicate and stamp it in India within three months of receipt. A loosely drafted general PoA is the single most common way NRI property is misappropriated by a relative.