NRI Buying Property in India: FEMA Rules, Loans, POA and Tax

A software engineer in Dallas can book a flat in Hyderabad's Kokapet from her laptop, pay from her NRE account and never ask the Reserve Bank for permission. She can't buy a farm plot outside the city, and if she pays the wrong way, getting the money back out later becomes difficult. The rules on NRI buying property in India are more permissive than many people assume, but they're strict about three things: what you buy, how you pay and how the tax is handled when you sell.

Who counts as an NRI, and does OCI make a difference

For property purposes, FEMA treats two groups alike: Non-Resident Indians (Indian citizens living outside India) and Overseas Citizens of India (OCI cardholders). Both can buy residential and commercial property without RBI approval. Citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, Bhutan, Macau, Hong Kong and North Korea need RBI permission, even if they're otherwise eligible.

A foreign-national spouse of an NRI or OCI can buy one property jointly with that spouse, subject to conditions. Note that your status under FEMA and your residential status for income tax are decided by different tests. You can be an NRI for one and resident for the other in the same year.

NRI buying property in India: what you can and can't buy

What people get wrong: the "farm plot" or "managed farmland" sold near big cities. If the land is still recorded as agricultural, an NRI can't buy it, whatever the brochure says. Check the land use in the revenue records before paying a booking amount.

How to pay: the channels that are allowed

Payment must come through normal banking channels:

• Inward remittance from abroad, or
• Funds in your NRE, FCNR(B) or NRO account in India.

RBI is clear that you can't pay using traveller's cheques or foreign currency notes. Cash is out of the question anyway.

The account you pay from matters later. Money paid from abroad or from NRE or FCNR(B) accounts is what you can take back out when you sell (see repatriation, below). Keep the bank's foreign inward remittance certificates and the statements that show each payment. Ask the builder for receipts that state the account the money came from.

Home loans for NRIs

Indian banks and housing finance companies lend to NRIs on broadly the same terms as residents, with RBI's loan-to-value caps applying in the same way: up to 90% for loans up to ₹30 lakh, 80% up to ₹75 lakh and 75% above that. Expect extra paperwork:

• Passport with valid visa or OCI card, and overseas address proof.
• Overseas employment contract, recent salary slips and bank statements, and sometimes a credit report from your country of residence.
• A resident co-applicant or a local power of attorney holder, which many lenders ask for.

EMIs must be paid from an NRE, NRO or FCNR account, or by remittance. Rent from the property can go towards them. Tenures are often shorter for NRIs, and some lenders have minimum income thresholds, so compare two or three lenders. Our home loans page and home affordability calculator give you a starting number.

Buying from abroad with a power of attorney

You don't have to fly in for every step. A specific power of attorney lets a family member or trusted person sign the agreement, appear for registration and take possession on your behalf.

1. Draft the POA in India so it matches local registration requirements. Name the property precisely and list the acts allowed. Avoid a general POA covering everything you own.
2. Sign it before an Indian embassy or consulate, or before a local notary with an apostille if you're in a Hague Convention country.
3. Once it reaches India, get it stamped (adjudicated) under the state's Stamp Act within three months of receipt. Many sub-registrars also want it registered or verified before they'll accept it.

Cancel the POA in writing once the job is done. An old POA left in circulation is a common cause of disputes over NRI-owned property.

Tax when you rent the property out

Rent from Indian property is taxable in India whatever your residential status. The tenant must deduct TDS on rent paid to a non-resident landlord at 30% plus surcharge and cess, with no minimum threshold. If your actual tax is lower, apply for a lower-deduction certificate rather than waiting for a refund. You can deduct 30% of the annual value as a standard deduction and the interest on a home loan for that property.

Tax and TDS when an NRI sells

Long-term gains (property held over 24 months) are taxed at 12.5% without indexation. The option of paying 20% with indexation on property bought before 23 July 2024 is for residents only, so it isn't available to NRIs. Short-term gains are taxed at slab rates.

The buyer must deduct TDS on the gain at those rates, plus surcharge and cess. Until 30 September 2026 a buyer purchasing from an NRI needs a TAN. From 1 October 2026, resident individual and HUF buyers can deposit the TDS with their PAN, the same way as for a resident seller. This removes a step that used to put some buyers off NRI-owned flats.

Reinvesting the gain in another house in India, or up to ₹50 lakh in capital gain bonds within six months, can reduce the tax. If you plan to do that, get a lower-deduction certificate before the sale so the buyer doesn't deduct the full amount. Your country of residence may tax the gain too; the tax treaty with India usually lets you claim credit for Indian tax paid.

Taking the money out: repatriation

• Sale proceeds of up to two residential properties can be repatriated, limited to the amount originally paid in foreign exchange or from NRE or FCNR(B) accounts.
• Anything above that, such as the gain or money paid from NRO funds, goes into your NRO account. From there you can remit up to USD 1 million per financial year, after paying tax and with a chartered accountant's certificate.
• Property you inherited can also be repatriated within the same USD 1 million limit.

Where NRI buyers are looking

Bengaluru, Hyderabad and Pune draw a lot of NRI interest from the IT workforce abroad. Among projects listed on IndiProp in September 2026, indicative median asking rates are about ₹10,300 per sq ft in Bengaluru, ₹10,500 in Hyderabad and ₹11,500 in Pune. These are listed prices, not registered sale values. See Hyderabad property rates, Bengaluru property rates and Kokapet for the locality detail.

Whichever city you choose, check the project's RERA registration and the builder's delivery record yourself, or through someone you trust on the ground. Don't book off a video call alone. Ask for the price sheet, the draft agreement and the RERA number in writing before you send a rupee.

Frequently asked questions

Can an NRI buy property in India without RBI permission?

Yes. NRIs and OCI cardholders can buy residential and commercial property without RBI approval. They cannot buy agricultural land, farmhouses or plantation property, though they can inherit them.

Can NRIs pay for property from an NRO account?

Yes. Payment can come by inward remittance or from NRE, FCNR(B) or NRO accounts. Payment from NRO funds affects repatriation later, since only amounts paid in foreign exchange or from NRE/FCNR(B) accounts can be taken out outside the USD 1 million NRO limit.

How much TDS is deducted when an NRI sells property?

The buyer deducts TDS on the capital gain at 12.5% for long-term gains or 30% for short-term gains, plus surcharge and cess. From 1 October 2026 resident individual buyers can deposit it using their PAN instead of a TAN.

Do NRIs need to be in India to register a property?

No. An NRI can authorise someone in India through a specific power of attorney signed at an Indian consulate, or notarised and apostilled abroad, and then stamped in India within three months of receipt.

Sources: RBI FAQs: Purchase of immovable property · RBI: Acquisition and transfer of immovable property in India by NRIs and OCIs · TaxGuru: TAN requirement removed to ease property purchase from non-residents · TaxGuru: Finance Act 2026, key income tax amendments