An NRI can buy a flat in Bengaluru or an office in Gurugram without asking the RBI for permission. The FEMA rules for NRI buying property in India give that general permission, but they also set limits on what you can buy, how you pay for it and who can hold it with you. Get the payment route wrong and you may struggle to send the money back abroad when you sell.
This guide explains the FEMA property rules for NRIs and OCI cardholders as they stand in September 2026, including the tax and TDS changes that came with the Income-tax Act, 2025.
Which law Governs NRI Property Purchases?
Property purchases by NRIs and OCI cardholders are governed by Chapter IX (Rules 24 to 33) of the Foreign Exchange Management (Non-debt Instruments) Rules, 2019, framed under the Foreign Exchange Management Act, 1999. These rules have applied since 17 October 2019 and replaced the older RBI regulations for this category of buyers. The RBI guidelines for NRI property purchases and bank procedures sit on top of them.
Two points to know at the start:
- No RBI approval or filing is needed for a permitted purchase. The bank and the registration office are your compliance points.
- The rules apply by residential status, not passport. An Indian citizen living abroad (NRI) and a foreign citizen holding an OCI card are treated almost the same. A foreign citizen of Indian origin without an OCI card is not covered by the general permission.
What NRIs and OCIs can and Cannot buy
| Property type | Allowed? | Notes |
|---|---|---|
| Residential flat, house or plot | Yes | No limit on the number of properties |
| Commercial property (office, shop, warehouse) | Yes | No limit on number; rental income goes to NRO account |
| Agricultural land | No | Needs specific RBI approval; can be inherited |
| Plantation property | No | Needs specific RBI approval; can be inherited |
| Farmhouse | No | Needs specific RBI approval; can be inherited |
So an NRI buying residential property in India faces no cap on how many homes they own, and an NRI buying commercial property in India can hold offices or shops for rental income. The restriction is on agricultural land, plantation property or a farmhouse. You can still receive these by inheritance, and you can sell them only to a person resident in India who is an Indian citizen.
Buying and selling land as a business is a different matter. Real estate business is closed to foreign investment, so if you plan to trade in plots rather than hold property as an investment, take advice before you start.
OCI property purchase in India
OCI cardholders have the same property rights as NRIs under FEMA: residential and commercial property is allowed, agricultural land, plantation property and farmhouses are not. The OCI card itself is your proof of eligibility at registration, together with your foreign passport and PAN. Aadhaar is not mandatory for an OCI buyer.
Buying jointly with a foreign spouse
A foreign-national spouse who is neither an NRI nor an OCI can buy one property jointly with their NRI or OCI spouse if the marriage has been registered and has lasted at least two years before the purchase. Payment must come through the same channels listed below. This does not apply to citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, Bhutan, Macau, Hong Kong or North Korea, who need prior RBI approval.
Gift and inheritance
- Gift: an NRI or OCI can receive residential or commercial property as a gift from a person resident in India, or from an NRI or OCI who is a relative.
- Inheritance: an NRI or OCI can inherit any property, including agricultural land, from a person resident in India, or from someone outside India who bought it legally.
NRI Property Purchase Payment Rules
The payment route is where most FEMA problems start. The price must be paid out of:
- money sent to India through normal banking channels (inward remittance), or
- funds held in your NRE, FCNR(B) or NRO account.
Payment in traveller’s cheques or foreign currency notes is not allowed, and neither is payment from a bank account outside India directly to the seller in foreign currency. The seller must receive rupees in India.
| Source of payment | What it means when you sell |
|---|---|
| Inward remittance or NRE / FCNR(B) account | Sale proceeds can be sent back up to the amount paid in foreign exchange, outside the USD 1 million cap (up to two residential properties) |
| NRO account (Indian income such as rent, pension, dividends) | Sale proceeds go through the USD 1 million per financial year NRO route |
| Home loan repaid from NRE or inward remittance | Counts as foreign-exchange payment |
| Home loan repaid from NRO or rental income | Counts as rupee payment |
NRE account property purchase or NRO account property purchase?
Both are legal. The difference shows up years later when you want to repatriate the sale proceeds. If you have money abroad, paying through your NRE account or a direct inward remittance keeps the purchase price fully repatriable. Use NRO funds when you already hold Indian income and have no plans to take the money out of India. If you are unsure whether to pay from NRE or NRO, decide before the first payment, because you cannot change the record afterwards.
Keep every Foreign Inward Remittance Certificate (or bank advice) and NRE statement showing the payments. Banks ask for them at the time of sale, sometimes twenty years later.
Home Loans for NRIs
NRIs and OCIs can take an NRI home loan from Indian banks and housing finance companies to buy residential property. Loans for commercial property are more limited and depend on the lender. EMIs can be paid by inward remittance, from NRE, FCNR(B) or NRO accounts, from rental income of the property, or by close relatives in India paying directly into the loan account. The loan cannot be disbursed to you abroad; it goes to the seller or builder in India.
Tax and TDS when an NRI buys Property
As a buyer, your tax duty is TDS on the price you pay. Which rule applies depends on the seller:
- Seller is resident in India: deduct 1% TDS under Section 393(1) of the Income-tax Act, 2025 (earlier Section 194-IA) if the price is ₹50 lakh or more. Deposit it with your PAN through Form 141 (earlier Form 26QB). You need a PAN; no TAN is required.
- Seller is an NRI: deduct TDS under Section 393(2) (earlier Section 195) on the full sale price at the capital gains rate, 12.5% plus surcharge and cess for long-term property, unless the seller gives you a lower TDS certificate in Form 128. The relief from 1 October 2026 that removes the TAN for buying property from an NRI covers only resident individual and HUF buyers. If you are an NRI buying from another NRI, you still need a TAN and must file TDS returns.
Stamp duty and registration charges are the same for NRIs as for residents and vary by state. Rent from the property is taxable in India, and a tenant who pays rent to an NRI landlord has to deduct TDS.
Checks Before you pay
- Confirm your status and PAN. Your PAN must be active and your residential status updated with your bank.
- Run a property title search covering at least 30 years, plus encumbrance, mutation and approved building plan checks. Under-construction projects should be RERA registered.
- Plan the payment route (NRE, FCNR(B), NRO or inward remittance) and keep records of every instalment.
- Arrange a power of attorney if you cannot be in India for registration. A property POA signed abroad needs attestation at the Indian mission or an apostille, and stamping in India within three months of arrival.
- Deduct and deposit TDS before or at registration, depending on the seller’s status.
- Register the sale deed and apply for mutation in municipal and revenue records.
Distance makes NRIs frequent targets of property fraud, usually through forged title papers or a seller who sells the same flat twice. The title search is the step that catches both.
Buying Property in India from Abroad
The FEMA rules for NRI buying property in India are straightforward once you know them: buy residential or commercial property, stay away from agricultural land, pay through banking channels or NRI accounts, and keep the paper trail. Most problems we see come from the payment route and the title, not from FEMA itself. A. Agarwalla & Co.’s real estate lawyers and FEMA lawyers handle title checks, sale deeds, powers of attorney and TDS compliance for NRI and OCI buyers. Book a consultation before you sign the agreement to sell.