Important: This guide is general information, written in plain English to help you prepare. It is not legal, tax or financial advice. FEMA, RBI and income-tax rules change from time to time, and your situation may differ. Please confirm the current position with a qualified chartered accountant or legal advisor before you act.
Who counts as an NRI, OCI or PIO?
Property purchases by people living outside India are governed by the Foreign Exchange Management Act, 1999 (FEMA) and the rules made under it - principally the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 - together with directions issued by the Reserve Bank of India (RBI).
- Non-Resident Indian (NRI) - an Indian citizen who is a "person resident outside India" under FEMA. Broadly, this covers Indian citizens who have gone abroad for employment, business or any other purpose indicating an intention to stay outside India for an uncertain period. Note that residency under FEMA is a different test from residency under the Income-tax Act.
- Overseas Citizen of India (OCI) cardholder - a foreign citizen of Indian origin registered as an OCI under the Citizenship Act, 1955.
- Person of Indian Origin (PIO) - the separate PIO card scheme was merged into the OCI scheme in 2015. Former PIO cardholders should convert to an OCI card; for property purposes the OCI rules apply.
Foreign nationals who are not of Indian origin are subject to much stricter rules and generally need RBI approval, so this guide focuses on NRIs and OCIs.
What NRIs and OCIs can buy
| Type of property | Purchase allowed? | Notes |
|---|---|---|
| Residential (apartments, builder floors, villas, residential plots) | Yes | No limit on the number of properties. |
| Commercial (shops, offices, SCO plots) | Yes | No limit on the number of properties. |
| Agricultural land | No | Can be held only if inherited. |
| Plantation property | No | Can be held only if inherited. |
| Farmhouse | No | Can be held only if inherited. |
NRIs and OCIs may also inherit any immovable property in India (including agricultural land) from a person resident in India, or from a person who acquired it legally. They may receive residential or commercial property as a gift from a relative. Always check the current rules before a gift or inheritance transfer - and remember that some states have additional land laws.
How to pay
FEMA requires that the purchase price is paid through normal banking channels. The permitted routes are:
- Funds received in India by inward remittance through banking channels, or
- Funds held in your NRE (Non-Resident External), FCNR(B) (Foreign Currency Non-Resident) or NRO (Non-Resident Ordinary) account in India, or
- A home loan from an Indian bank or housing finance company, with repayments made through the routes above.
You cannot pay in foreign currency cash, by travellers' cheques, or in any other foreign currency directly. Payments are made in rupees.
The payment route matters later. If you pay from NRE/FCNR(B) funds or fresh inward remittances, the sale proceeds are generally easier to repatriate. Keep every bank statement and the Foreign Inward Remittance Certificate (FIRC) or bank advice for each payment - you will need them when you sell. See our taxation and repatriation guide.
NRE vs NRO in one minute
- NRE account - holds money earned abroad; balance and interest are freely repatriable and interest is tax-free in India.
- NRO account - holds income earned in India (rent, dividends, pension, sale proceeds); interest is taxable in India and repatriation is subject to limits and documentation.
Step-by-step: buying property in India from abroad
- Set your goals and budget. End use, rental income or capital growth? Include stamp duty, registration, GST (on under-construction homes), maintenance deposits and interiors in the budget.
- Check your banking set-up. Open or activate an NRE and/or NRO account. Make sure your PAN is active and linked to your bank records.
- Shortlist projects. Compare developer track record, RERA registration, approvals, location, payment plan and possession date.
- Verify RERA registration. Look the project up on the state RERA website. Check the registered completion date, quarterly progress updates and any complaints.
- Visit - in person or virtually. A video walkthrough can show the site, the sample flat and the surroundings.
- Arrange finance if needed. Get an in-principle loan sanction before you book. See NRI home loans.
- Book the unit. Pay the booking amount from your NRE/NRO account or by remittance. Get a written receipt and allotment letter.
- Review and sign the Agreement for Sale. Under RERA, a developer cannot take more than 10% of the cost as an advance before a registered agreement for sale. Have a lawyer review the agreement.
- Power of Attorney (if you cannot be present). Execute a specific POA abroad in favour of a trusted person. See our POA guide.
- Pay as per the plan. Pay instalments from permitted accounts; keep all statements and receipts.
- Registration. Pay stamp duty and registration fees and register the sale deed (or conveyance deed) at the sub-registrar's office, in person or through your POA holder.
- Possession and mutation. Inspect the unit, take possession, and apply for mutation/khata and utility transfers in your name.
Costs to budget for
- Stamp duty and registration fees - set by each state and vary (some states offer concessions for women buyers).
- GST - applies to under-construction properties; there is no GST on a ready property sold after the completion certificate is issued.
- TDS when buying - if you buy from a resident seller and the price is ₹50 lakh or more, you (the buyer) must deduct TDS at 1% and deposit it. If you buy from an NRI seller, TDS under Section 195 applies at much higher rates - see the tax guide.
- Other costs - maintenance deposits, club or parking charges, legal fees, loan processing fees and interiors.
Documents you will usually need
- PAN card
- Passport (and visa/residence permit) or OCI card
- Proof of overseas address
- NRE/NRO bank statements and remittance proofs
- Passport-size photographs
- Power of Attorney, if someone acts on your behalf
Our NRI documents checklist has the full list for purchase, loan, registration and sale.
Common mistakes to avoid
- Paying any part of the price in cash or from a third party's account.
- Booking a project that is not RERA-registered, or relying only on brochures.
- Signing a general Power of Attorney with wide powers when a specific one would do.
- Not keeping remittance proofs - this makes repatriation harder years later.
- Forgetting tax obligations in India on rental income and capital gains.
Have a question about your situation? Speak to an NRIVEST advisor.