Most NRI property questions we get start the same way: “Can I buy this flat?” The answer is usually yes. The trouble tends to come later, when a client learns the land their father left includes a farm, or that the money from selling a third apartment can’t all go abroad at once.
This guide sets out the NRI property rules RBI and the government apply under the Foreign Exchange Management Act, 1999 (FEMA). The operative rules today sit in the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019, read with the RBI’s Master Direction on acquisition and transfer of immovable property. If you are asking “can an NRI buy property in India under FEMA,” the short answer is yes, with three hard exceptions.
Who Counts as an NRI or OCI for Property Purposes
An NRI is an Indian citizen who is resident outside India. An OCI is a foreign citizen registered as an Overseas Citizen of India cardholder. Your passport alone doesn’t decide your status under FEMA. Where you live and why you are there matter too.
For property, FEMA treats NRIs and OCIs almost the same way. A Ministry of Home Affairs notification in March 2021 confirmed OCIs have parity with NRIs for buying non-agricultural property. A foreign citizen without an OCI card is in a different position and generally needs RBI approval to buy anything beyond a lease.
What you can buy
You can buy residential and commercial property in India without RBI permission. There is no cap on the number of units. An NRI in Toronto can own two flats in Gurugram and an office in Pune, and each purchase is lawful on its own.
Payment has to come through proper channels:
- Inward remittance from abroad through a bank
- Funds in your NRE, FCNR(B) or NRO account
You cannot pay in foreign currency notes or traveller’s cheques. Keep the bank remittance certificates. You will need them when you sell.
A home loan from an Indian bank or housing finance company is also allowed, and you can repay it from your NRE, NRO or FCNR(B) account.
What you Cannot buy
Three categories are off the table for purchase:
- Agricultural land
- Plantation property
- Farmhouses
This isn’t a matter of extra paperwork. FEMA simply doesn’t permit the purchase. Buying through a relative’s name or a company you control doesn’t fix it either, and the penalty under Section 13 of FEMA can run up to three times the amount involved.
Classification follows the revenue records, not the brochure. A plot sold as a “weekend villa” that is still recorded as agricultural land counts as agricultural land. We check the land records before any client signs.
Inheritance and Gifts
The rules here are wider than for purchase.
Inheritance: You can inherit any immovable property in India, agricultural land included, from a person resident in India. You can also inherit from someone resident outside India, provided that person acquired the property lawfully under the foreign exchange rules in force at the time.
Gifts: You can receive residential or commercial property as a gift from a relative, whether that relative lives in India or is also an NRI or OCI. “Relative” follows the definition in the Companies Act, 2013, which covers spouses, parents, children, siblings and their spouses, among others. Agricultural land, plantations and farmhouses cannot come to you as a gift.
Joint Ownership with a Foreign Spouse
If your spouse is a foreign citizen and holds no OCI card, they can still own one property in India jointly with you. The property can’t be agricultural land, a plantation or a farmhouse. The marriage must be registered and must have lasted at least two years before the purchase.
Selling and Transferring Property
You can sell or gift residential and commercial property to a resident Indian, an NRI or an OCI.
Agricultural land, plantations and farmhouses you inherited can be sold or gifted only to an Indian citizen who is resident in India. This catches many families off guard when an NRI heir wants to pass a farm to a sibling who also lives abroad.
Taking the Money out of India
Repatriation depends on how you paid for the property.
Bought with foreign funds (inward remittance, NRE or FCNR). You can repatriate sale proceeds up to the amount you originally paid in foreign exchange. For residential property this applies to two properties only. Proceeds from a third residential property go to your NRO account.
Bought with NRO funds, inherited, or bought while you were resident. Proceeds go to your NRO account. From there you can remit up to USD 1 million per financial year across all NRO balances, after tax, with your bank’s approval. Amounts above that need RBI permission.
Tax is a separate layer. When an NRI sells, the buyer has to deduct tax at source, and your bank will ask for the chartered accountant’s certificate and tax forms before it sends money abroad. Plan the tax side before you agree a sale price, not after.
Citizens of Neighbouring Countries
Citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, Bhutan, Hong Kong, Macau and North Korea need prior RBI approval to buy or transfer property in India, other than a lease of up to five years. If you hold, or once held, citizenship of one of these countries, speak to a lawyer before you sign anything.
Where NRI Property Deals Usually go Wrong
From files we’ve handled, these are the repeat problems:
- Paying part of the price in cash or from a relative’s resident account
- Buying land that was never converted from agricultural use
- Assuming all sale proceeds can be sent abroad in one go
- Keeping no record of the original inward remittance
- Letting a resident sibling “hold” property on the NRI’s behalf
Each one can be fixed more cheaply before the transaction than after it.
Conclusion
FEMA gives NRIs and OCIs wide room to own property in India. You can buy homes and offices in any number, inherit almost anything, and receive residential or commercial property as a gift from family. The limits sit at the edges: no buying farmland, plantations or farmhouses, a cap on how much sale money can leave the country, and strict rules on how the purchase is paid for. Most of the problems we see come from getting one of these details wrong at the start, often with no bad intent. Before you sign an agreement or accept a gift deed, have FEMA lawyers check the land records, the payment route and your repatriation position, so the property you own in India stays yours to keep, sell or pass on without trouble.
FAQs
Can an NRI buy property in India under FEMA without RBI approval?
Yes. An NRI can buy residential or commercial property in India without asking the RBI first. The only exceptions are agricultural land, plantation property and farmhouses, which an NRI cannot buy at all.
Is there a limit on how many properties an NRI or OCI can own?
No. You can own as many residential and commercial properties as you like. The limit shows up only when you sell, since proceeds from just two residential properties bought with foreign funds can be repatriated in full.
Can an OCI cardholder buy a flat in India?
Yes. OCI cardholders have the same rights as NRIs to buy residential and commercial property. They face the same bar on agricultural land, plantations and farmhouses.
Can an NRI inherit agricultural land in India?
Yes. Inheritance is the one route by which an NRI or OCI can hold agricultural land. You can keep it, but if you sell or gift it, the buyer or recipient must be an Indian citizen resident in India.
Can I pay for an Indian property from my NRO account?
Yes. NRO, NRE and FCNR(B) accounts are all accepted, as is a direct bank remittance from abroad. The account you use affects repatriation later. Money paid from NRO funds comes back only under the USD 1 million per year limit.
What happens if an NRI buys agricultural land by mistake?
The purchase breaches FEMA. The penalty can go up to three times the amount involved, and the Enforcement Directorate can act on it. In some cases the breach can be compounded, so speak to a FEMA lawyer before you try to reverse the sale yourself.