Buying Property in India as an NRI: A Complete Guide (2026)

Short answer: Yes, a Non-Resident Indian (NRI) or Overseas Citizen of India (OCI) can buy residential and commercial property in India without any special permission. However, you cannot buy agricultural land, farmhouses, or plantation properties. Funding must be from legitimate sources like inward remittances or NRE/NRO accounts. The buyer must comply with Indian tax laws, including deducting Tax at Source (TDS) on the purchase.

What types of property can an NRI buy in India?

An NRI or OCI can freely purchase any number of residential or commercial properties in India. The general permission is granted by the Reserve Bank of India (RBI) under the Foreign Exchange Management Act (FEMA). There is no restriction on the number of properties you can own.

However, the rules strictly prohibit the purchase of:

• Agricultural land
• Plantation property
• Farmhouses

To purchase these prohibited properties, you would require specific prior approval from the RBI and the Government of India, which is rarely granted. An NRI can, however, inherit such prohibited properties from a person resident in India.

How can an NRI fund a property purchase in India?

An NRI must use proper banking channels to fund a property acquisition in India. The payment cannot be made in foreign currency directly. It must be routed through the NRI's Indian bank accounts.

Funding Source	Description
Inward Remittance	Funds transferred from your overseas bank account to your Indian NRE/NRO account through normal banking channels like SWIFT or wire transfer. This is the most common method.
NRE Account	Funds held in a Non-Resident External (NRE) account can be used. These funds are freely repatriable.
NRO Account	Funds held in a Non-Resident Ordinary (NRO) account, which may include income earned in India (like rent, dividends), can be used. Repatriation from NRO accounts is subject to limits (currently USD 1 million per financial year) and requires tax clearance.
FCNR (B) Account	Funds from a Foreign Currency Non-Resident (Bank) account can also be used for property purchase.
Home Loan in India	NRIs are eligible to take home loans in Indian Rupees (INR) from Indian banks or authorised Housing Finance Companies (HFCs). The loan repayment must be made through inward remittance or by debiting the NRE/NRO account. See our guide on home loan tax benefits.

What are the tax implications when an NRI buys property?

When an NRI buys property, the primary tax obligation is deducting Tax at Source (TDS). The rules for TDS depend entirely on the residential status of the seller.

• If the Seller is a Resident Indian: If the property's sale consideration is ₹50 lakh or more, the NRI buyer must deduct TDS at 1% of the sale value under Section 194-IA of the Income-tax Act. The buyer must have a PAN card, deduct the tax, deposit it with the government using Form 26QB, and issue Form 16B to the seller.

• If the Seller is also a Non-Resident (NRI/OCI): This is a critical distinction. Section 194-IA does not apply. Instead, the buyer must deduct TDS under Section 195. The tax is deducted on the seller's capital gains, not the entire sale value. The rate is 20% (plus applicable surcharge and cess) for long-term capital gains or 30% for short-term gains. To comply, the buyer must obtain a Tax Deduction Account Number (TAN), deduct the tax, file Form 27Q quarterly, and issue Form 16A to the seller. The NRI seller can apply to an Income Tax Officer for a lower TDS certificate.

Additionally, the buyer must pay stamp duty and registration fees as per state laws, which are the same for residents and non-residents.

Can an NRI take a home loan in India?

Yes, an NRI can avail of a home loan in Indian Rupees from a bank or a registered Housing Finance Company (HFC) in India. The loan eligibility, amount, and interest rates are determined based on the applicant's income, credit history, and other factors. Repayment of the loan must be made either through inward remittances from abroad or by debiting the NRI's NRE or NRO account. The property being purchased is typically mortgaged to the lending institution as security for the loan.

What happens when an NRI sells a property in India?

When an NRI sells property, any profit or gain is subject to capital gains tax in India. The tax depends on the holding period:

• Long-Term Capital Gain (LTCG): If the property is held for more than 24 months, the gain is considered long-term. LTCG is taxed at 12.5% (plus surcharge and cess). NRIs can claim exemptions by reinvesting the gains in a new residential property in India (Section 54) or in specified bonds (Section 54EC).
• Short-Term Capital Gain (STCG): If the property is held for 24 months or less, the gain is short-term and is taxed at the applicable income tax slab rates for the NRI.

Repatriation of Sale Proceeds: An NRI can repatriate the proceeds from the sale of property, subject to certain conditions. You can repatriate up to USD 1 million per financial year from your NRO account, which includes the sale proceeds. However, if the property was originally purchased using foreign exchange (inward remittance or NRE/FCNR funds), you can repatriate an amount equivalent to the original foreign exchange used for the purchase without this limit applying.

Can an NRI gift or inherit property in India?

Yes, the rules for gifting and inheritance are quite liberal for NRIs and OCIs.

• Inheritance: An NRI/OCI can inherit any immovable property in India, including agricultural land, a farmhouse, or plantation property, from a person resident in India or from another NRI.
• Gifting: An NRI/OCI can gift a residential or commercial property to any person resident in India or to another NRI/OCI. However, they cannot gift agricultural land/farmhouse/plantation property to another NRI/OCI.

Worked example

Mr. Anand, an NRI residing in Singapore, decides to buy a flat in Bengaluru's Whitefield area in October 2026. The agreed purchase price is ₹1.2 Crore.

Scenario 1: The seller is a Resident Indian.

1. Legal Due Diligence: Mr. Anand engages a lawyer to verify the property title, check the Encumbrance Certificate, and ensure it has a valid 'A' Khata. For more on this, see our guide on A Khata vs B Khata.
2. Funding: Mr. Anand transfers the equivalent of ₹1.2 Crore from his Singapore bank account to his NRE account in India.
3. TDS Compliance: Since the sale price exceeds ₹50 lakh and the seller is a resident, Mr. Anand must deduct TDS under Section 194-IA.
   • TDS Amount: 1% of ₹1,20,00,000 = ₹1,20,000.
4. Payment to Seller: Mr. Anand pays the seller ₹1,18,80,000 (₹1.2 Cr - ₹1.2 Lakh).
5. Government Deposit: He deposits the ₹1,20,000 TDS with the government via Form 26QB and issues Form 16B to the seller.
6. Stamp Duty & Registration (Bengaluru):
   • Stamp Duty: 5% of ₹1,20,00,000 = ₹6,00,000
   • Cess on Stamp Duty: 10% of Stamp Duty (as BMRDA cess) = ₹60,000
   • Surcharge: 2% of Stamp Duty = ₹12,000
   • Registration Fee: 1% of ₹1,20,00,000 = ₹1,20,000
   • Total Stamp Duty & Registration: ₹7,92,000
7. Total Outflow for Mr. Anand: ₹1,20,00,000 (to seller) + ₹7,92,000 (govt fees) = ₹1,27,92,000.

Scenario 2: The seller is also an NRI.

In this case, the TDS calculation changes completely. Mr. Anand cannot use Section 194-IA. He must deduct TDS under Section 195 on the seller's long-term capital gain. Assuming the seller's indexed cost of acquisition is ₹70 lakh, the capital gain is ₹50 lakh. Mr. Anand must deduct TDS at 20% (+ surcharge & cess) on this ₹50 lakh gain. This process is complex and often requires professional assistance to compute the gain and ensure correct compliance.

Common mistakes

1. Buying Agricultural Land: Attempting to buy agricultural land, a farmhouse, or plantation property directly, which is prohibited without specific RBI approval.
2. Incorrect TDS Deduction: Confusing Section 194-IA (for resident sellers) with the more complex Section 195 (for non-resident sellers), leading to incorrect tax deduction and potential penalties.
3. Not Using a Power of Attorney (PoA): Not appointing a trusted person in India through a valid Power of Attorney. A PoA is essential for handling registration formalities and other logistical steps if you cannot be physically present.
4. Ignoring Rental Income Tax: Assuming that rental income from Indian property is not taxable in India. It is taxable, and the NRI owner must file an Indian Income Tax Return. See our guide on tax on rental income.
5. Poor Title Search: Not conducting thorough legal due diligence on the property title, leading to future disputes, especially in cities like Bengaluru with complex land records.

How SP & SC helps

Navigating the legal and financial landscape of property purchase as an NRI can be complex. SP & SC Legal and Taxation Services provides end-to-end assistance to ensure your investment is safe and compliant. We conduct comprehensive property title verification, draft and review your Sale Agreement and Sale Deed, and provide precise guidance on TDS compliance under both Section 194-IA and Section 195. Our team manages the entire process, from due diligence to final registration, providing you peace of mind. For a seamless property transaction, you can explore our Property Legal Opinion services.

Frequently asked questions

Q1. Do I need a PAN card to buy property in India as an NRI?

Yes, a Permanent Account Number (PAN) card is mandatory for any property transaction in India exceeding ₹10 lakh. It is essential for TDS compliance, registration, and all future tax filings related to the property.

Q2. Can I buy a property jointly with my spouse who is a foreign national?

An NRI can buy property jointly with another NRI/OCI. However, if your spouse is a foreign national of non-Indian origin, they cannot be a joint owner without prior RBI approval. The rules for a Person of Indian Origin (PIO)/OCI cardholder are more relaxed and are similar to those for an NRI.

Q3. Can I use a Power of Attorney to complete the purchase?

Absolutely. You can execute a Power of Attorney (PoA) authorizing a trusted person in India to sign the sale deed and appear before the Sub-Registrar on your behalf. If the PoA is executed outside India, it must be apostilled (in Hague Convention countries) or legalized by the Indian Embassy/Consulate and then adjudicated in India by paying the required stamp duty.

Q4. Is rental income from my Indian property repatriable?

Yes, rental income, after the payment of applicable Indian income tax, can be freely repatriated outside India. This should be supported by a certificate from a Chartered Accountant (Form 15CB) and a declaration by you (Form 15CA).

Q5. Can an NRI buy property in the name of a trust or company?

An NRI can invest in an Indian company that owns property. However, directly buying property in the name of an overseas entity or a trust often requires specific RBI approval and involves a different set of regulations under FEMA.

Get a fixed-fee quote

Before you invest your hard-earned money, ensure the property's legal status is perfect. Share your property documents with us for a comprehensive review and a written fixed-fee quote. Contact SP & SC or message us on WhatsApp at +91 90356 74566. We handle all aspects of property due diligence, documentation, and tax compliance, end to end.