NRI Buying Property in India: A Complete 2025 Guide

Introduction

For Non-Resident Indians (NRIs), investing in Indian real estate is both a sentimental and strategic decision. The process, however, involves a unique set of regulations, documentation, and financial considerations. This comprehensive guide on NRI buying property in India will walk you through FEMA rules, home loan options, tax implications, and step-by-step procedures—empowering you to invest confidently and compliantly in 2025.

Understanding NRI Property Investment in India

Who Qualifies as an NRI under FEMA?

An NRI is defined under the Foreign Exchange Management Act (FEMA) as an Indian citizen residing outside India for employment, business, or any other purpose for an uncertain period. Persons of Indian Origin (PIOs) and Overseas Citizens of India (OCIs) are also eligible to invest in Indian real estate under similar guidelines.

FEMA Regulations for NRIs Investing in Indian Real Estate

NRIs can freely buy residential and commercial properties in India.

No RBI permission is required for these purchases.

The payment must be made in Indian Rupees through normal banking channels or via NRE/NRO/FCNR accounts.

NRIs cannot buy agricultural land, plantation property, or farmhouses unless inherited or with special RBI approval.

Types of Properties NRIs Can Buy in India

Residential apartments, houses, and plots

Commercial properties (shops, offices, warehouses)

Industrial properties

Can NRIs Invest in Agricultural or Plantation Land?

No, NRIs are not allowed to purchase agricultural land, plantation property, or farmhouses directly. Such property can only be inherited or gifted, not purchased.

Legal and Financial Aspects of Buying Property as an NRI

Key Legal Considerations Before Purchasing Property

Verify the title and ownership of the property.

Ensure the property is not under litigation or encumbrance.

Confirm that all approvals (RERA registration, building plan, occupancy certificate) are in place.

Check for a clear title and obtain a No Objection Certificate (NOC) from relevant authorities or the housing society.

Documents Required for an NRI Property Purchase

Valid Indian passport or OCI/PIO card

PAN card (mandatory for property transactions)

Proof of overseas address (utility bill, bank statement)

Passport-size photographs

Power of Attorney (if not present in India)

Sale agreement and title deed

Role of RBI and FEMA in NRI Real Estate Transactions

FEMA governs all foreign exchange transactions related to property investment. The Reserve Bank of India (RBI) regulates the repatriation of sale proceeds, payment channels, and compliance. All payments must be routed through NRE/NRO/FCNR accounts.

How to Verify Property Ownership and Title Clearance

Conduct a title search for the past 30 years.

Obtain an Encumbrance Certificate.

Verify the property’s RERA registration and municipal approvals.

Home Loan & Financing Options for NRIs

Eligibility Criteria for NRI Home Loans in India

Applicants must be NRIs/PIOs/OCIs aged 18–55 years.

Stable employment or business income abroad is required.

The property must be located in India and meet the lender’s criteria.

Best Banks Offering Home Loans to NRIs

State Bank of India (SBI)

HDFC Ltd.

ICICI Bank

Axis Bank

Federal Bank

These banks offer competitive interest rates, flexible tenures (up to 20 years), and dedicated NRI services.

What is the Maximum Loan Tenure for NRIs?

Most banks offer a maximum tenure of 20 years for NRI home loans, subject to the applicant’s age and income profile.

Loan Repayment Options & Tax Benefits for NRIs

Repayment must be made through NRE/NRO accounts using inward remittance.

NRIs are eligible for tax deductions on home loan interest (Section 24b) and principal repayment (Section 80C), similar to resident Indians.

Tax Implications for NRIs Buying Property in India

TDS on NRI Property Transactions

If an NRI buys property worth over ₹50 lakh, TDS at 1% is deducted when buying from a resident seller.

When selling property, TDS is 20% for long-term capital gains and 30% for short-term gains if the seller is an NRI.

Tax Exemptions & Deductions Available for NRIs

NRIs can claim deductions on home loan interest and principal repayment.

Exemptions under Sections 54 and 54F apply for reinvestment of long-term capital gains.

Capital Gains Tax When Selling Property

Long-term capital gains (after 24 months) are taxed at 20% with indexation benefits.

Short-term gains are taxed as per the applicable income tax slab.

How Double Taxation Avoidance Agreements (DTAA) Help NRIs

DTAA allows NRIs to avoid paying tax on the same income in both India and their country of residence. NRIs can claim credit for taxes paid in India while filing returns abroad.

Step-by-Step Process for NRIs Buying Property in India

Determine your eligibility and property type (residential/commercial)

Check legal compliance (FEMA, RBI, RERA)

Get a PAN card (mandatory for all property transactions)

Choose financing & home loan options (compare NRI loan products)

Verify property documents and ownership (title deed, encumbrance certificate)

Obtain No Objection Certificate (NOC) if required

Sign the Sale Agreement & make payment via NRE/NRO account

Register the property and complete legal formalities at the local sub-registrar office

Repatriation of Funds: Selling and Transferring Property Earnings

How NRIs Can Transfer Money from India After Property Sale

Sale proceeds can be repatriated up to the amount originally paid for the property, provided the purchase was made using foreign funds. Funds must be transferred through NRE/NRO/FCNR accounts and are subject to RBI guidelines.

RBI Guidelines on Fund Repatriation for NRIs

Up to two residential properties’ sale proceeds can be repatriated.

Repatriation is allowed for up to $1 million per financial year, including all assets.

Proper documentation (sale deed, tax payment proof, CA certificate) is required.

Tax Deductions While Repatriating Funds Abroad

TDS and capital gains tax must be paid before remitting funds.

Submit Form 15CA/CB and obtain a Chartered Accountant’s certificate for large remittances.

Common Mistakes NRIs Should Avoid When Buying Property in India

Not Verifying Property Ownership and Legal Status

Skipping due diligence can lead to legal disputes, loss of investment, or buying encumbered property.

Ignoring Taxation Rules and FEMA Regulations

Non-compliance can result in penalties, blocked transactions, or repatriation issues.

Not Consulting a Real Estate Lawyer or Advisor

Expert guidance ensures compliance, protects your interests, and streamlines the process.

Best Cities for NRIs to Invest in Indian Real Estate

Mumbai, Delhi-NCR, Bengaluru – High Appreciation Areas

These metros offer robust infrastructure, high rental yields, and strong appreciation potential.

Pune, Chennai, Hyderabad – Affordable Property Markets

These cities provide a balance of affordability, growth, and lifestyle, making them attractive for long-term investment.

Goa, Kerala – Ideal for Retirement and Second Homes

Scenic locations, relaxed regulations, and tourism-driven demand make these regions popular among NRIs seeking holiday or retirement homes.

Conclusion

NRI buying property in India is a rewarding opportunity, but it requires a clear understanding of FEMA rules, home loan options, tax implications, and legal procedures. By following the steps outlined in this guide, consulting experts, and staying compliant, NRIs can invest confidently and maximize returns in the Indian real estate market.

Key Takeaways:

NRIs can buy residential and commercial property in India, but not agricultural land.

All transactions must comply with FEMA and RBI regulations.

Proper documentation, due diligence, and expert advice are critical for a smooth investment experience.

Ready to invest in Indian real estate?

Reach out to AurumPropTech for end-to-end advisory, compliance, and tech-enabled solutions tailored for NRIs.