NRI Buying Property in India: Legal & Tax Checklist
Property remains one of the most popular investments for NRIs in India — for personal use, rental income, or long-term appreciation. But the purchase, funding, and eventual sale are all governed by FEMA and the Income Tax Act. This guide is a practical legal and tax checklist for NRIs buying property in India.
What Property Can an NRI Buy?
Under FEMA, an NRI or OCI can freely purchase residential and commercial property in India. However, an NRI cannot purchase agricultural land, plantation property, or a farmhouse — these can only be acquired through inheritance or gift, not by purchase.
How to Fund the Purchase
Payment must be made through banking channels — from an NRE, NRO, or FCNR account, or by inward remittance. Payment cannot be made in foreign currency cash or through travellers’ cheques. NRIs can also avail home loans from Indian banks, repaid from NRE/NRO accounts or rental income. See NRE vs NRO vs FCNR accounts.
Documents Required
- Passport and OCI/PIO card (if applicable).
- PAN card (mandatory for property transactions).
- Address proof (overseas and Indian, if any).
- Power of Attorney, if the NRI cannot be present (registered and properly executed).
Tax on Buying Property
When an NRI buys property, the main considerations are stamp duty and registration charges (state-specific). If buying from a resident, normal TDS rules apply. Holding the property generates rental income, which is taxable in India and subject to TDS by the tenant.
Tax on Selling Property (Capital Gains)
This is where NRIs must be careful. On sale:
- Long-term capital gains (property held over 24 months) are taxed at a concessional rate; short-term gains are taxed at slab rates.
- The buyer must deduct TDS on the sale consideration paid to an NRI — at higher rates than for residents.
- NRIs can apply for a lower/nil TDS certificate from the Income Tax Department to avoid excess deduction.
Read more in our guide to NRI tax filing, TDS and refunds.
Repatriating Sale Proceeds
Sale proceeds can be repatriated within the USD 1 million per year NRO limit, subject to conditions on how the property was originally acquired, with Form 15CA/15CB. See repatriation of funds by NRIs.
NRI Property Checklist
| Stage | Key Action |
|---|---|
| Eligibility | Residential/commercial only (not agricultural) |
| Funding | Banking channels / NRE-NRO-FCNR / home loan |
| Documents | Passport, PAN, PoA if needed |
| On sale | Capital gains tax, TDS, lower-TDS certificate |
| Repatriation | Within USD 1 mn, Form 15CA/15CB |
Frequently Asked Questions
Can an NRI buy agricultural land?
No. Agricultural land, plantations, and farmhouses cannot be purchased; they can only be inherited or gifted.
Is PAN mandatory for NRIs buying property?
Yes — PAN is required for the transaction and for tax purposes.
How is TDS on sale by an NRI different?
TDS on sale by an NRI is deducted at higher rates; a lower-TDS certificate can reduce it.
Can an NRI use a Power of Attorney?
Yes, a duly executed and registered PoA allows someone in India to act on the NRI’s behalf.
Buy and Sell Property Tax-Smart
S. Choudhary & Co. advises NRIs on property transactions, capital gains, lower-TDS certificates, and repatriation. Explore our international taxation services or call +91 90248 28295 · sushil@sushilchoudhary.com.
