NRIs and OCI cardholders can buy residential and commercial property in India without RBI permission, but not agricultural land, plantation property or farmhouses. Payment must come from abroad through banking channels or from an NRE, FCNR or NRO account. A sale or purchase can be completed through an attorney holder under a power of attorney signed and legalised abroad. On a sale by an NRI, the buyer must deduct TDS, and proceeds can be repatriated within RBI limits.
- Rules
- FEMA (Non-Debt Instruments) Rules 2019
- Not allowed to buy
- Agricultural land, plantation, farmhouse
- Transfer document
- Registered sale deed
- NRO repatriation
- Up to USD 1 million per financial year
Who can buy what under FEMA
The Foreign Exchange Management (Non-Debt Instruments) Rules 2019 set out what persons resident outside India may acquire:
| Buyer | Residential and commercial | Agricultural land, plantation, farmhouse |
|---|---|---|
| NRI (Indian citizen living abroad) | Yes, any number, no RBI approval | No purchase; may inherit |
| OCI cardholder | Yes, any number, no RBI approval | No purchase; may inherit |
| Foreign national not of Indian origin, resident outside India | Generally no, except by inheritance from a person who acquired it lawfully, or lease up to five years | No |
An NRI or OCI may also acquire property by gift from a relative resident in India or from another NRI or OCI, but not agricultural land, plantation property or farmhouse. Joint purchase with a spouse who is a foreign national is permitted in limited cases. If you hold an OCI card, it is the card, not the passport, that brings you within these rules.
Buying property: the sequence that protects you
A safe purchase usually follows this order:
- Title and approvals check before any token payment beyond a small refundable amount. See title search and due diligence.
- Agreement to sell recording the price, payment schedule, conditions (clear title, approvals, vacant possession) and refund on failure.
- Payment by inward remittance or from your NRE, FCNR or NRO account. Cash and payment in foreign currency notes are not permitted. Keep bank certificates and foreign inward remittance records; you will need them to repatriate later.
- Sale deed on the correct stamp paper or e-stamp, presented for registration at the sub-registrar. Section 32A of the Registration Act requires the photographs and fingerprints of the persons presenting the deed, so your attorney holder attends in your place.
- Mutation in municipal and revenue records in your name, which many buyers forget.
If you are buying a flat in an under-construction project, check that the project is registered with the state RERA and that the agreement for sale follows the state's RERA model. Delays can then be pursued through RERA complaints.
Selling property from abroad
An NRI or OCI can sell residential or commercial property to a resident, an NRI or an OCI. Agricultural land, plantation property or a farmhouse held by an NRI or OCI can be sold only to an Indian citizen resident in India.
The sale is completed by a registered sale deed. Your attorney holder can sign and present it under a specific power of attorney that names the property and authorises the sale and receipt of money. After the Supreme Court's decision in Suraj Lamp and Industries v. State of Haryana (2011), title passes only through a registered conveyance; general power of attorney sales, agreements and wills do not transfer ownership, so a buyer will not accept anything less.
The power of attorney must be executed before a notary abroad and apostilled, or attested at the Indian mission where your country is not an apostille partner. It is stamped in India within three months of arrival. Many sub-registrars also verify that the principal is alive on the date of registration, so expect a short video call or a fresh affidavit.
Tax, TDS and lower deduction certificates
When an NRI sells, the buyer must deduct tax at source on the capital gains element, and in practice deducts on the full sale price unless you produce a lower deduction certificate from the Income Tax Department. The rate for long-term capital gains is now 12.5% plus surcharge and cess, and short-term gains are taxed at slab rates, so TDS can be a large share of the price. The buyer needs a TAN to deduct and deposit it.
Applying for a lower deduction certificate before the sale, based on your actual gain, is often worth the time. Treaty relief in your country of residence may need the Indian TDS certificate. We coordinate this with our tax team; see TDS on NRI property sale.
Getting the money out
Sale proceeds are credited to your NRO account, or to NRE where the rules allow. For property bought with foreign exchange or from NRE or FCNR funds, the amount originally paid can be repatriated for up to two residential properties. Beyond that, and for inherited property, repatriation is through the NRO route, up to USD 1 million per financial year, supported by Form 15CA and a chartered accountant's certificate in Form 15CB. Keeping the purchase documents and remittance proofs together is what makes this straightforward.
Stamp duty, registration costs and home loans
The buyer normally pays stamp duty and registration fee, at rates set by each state. Duty is charged on the higher of the agreed price and the government guideline value of the property (called circle rate, collector rate or ready reckoner rate depending on the state). Some states give a concession for women buyers or for joint purchase with a woman. Budget for these costs at the outset, because the sub-registrar will not register an under-stamped deed.
The guideline value also matters for income tax. Where a property is sold for less than its stamp duty value, the tax law can treat the stamp duty value as the seller's sale consideration and tax the shortfall in the buyer's hands as income, subject to a small tolerance band. A price agreed well below the guideline value therefore creates tax exposure on both sides, and is a common sign of an undisclosed cash component.
NRIs and OCI cardholders can take a home loan from an Indian bank or housing finance company to buy residential property in India. Instalments must be paid from an NRE, FCNR or NRO account, by inward remittance, or out of rent from the property. Lenders usually ask for overseas salary slips, employment letters and credit reports from your country of residence, and some insist on a co-applicant or a power of attorney holder in India. If you plan to repatriate the sale proceeds later, remember that amounts repaid out of foreign funds count as foreign-exchange investment, while loan repayments from rent or NRO funds generally do not.
Mistakes we see in cross-border deals
- Paying a large advance on the strength of photocopies, before a title search.
- Using a general power of attorney that does not specifically mention the property or the right to receive money.
- Leaving the power of attorney unstamped beyond three months, which leads to penalties at adjudication.
- Accepting part of the price in cash, which creates tax and FEMA problems and weakens the seller's position later.
- Forgetting to apply for a lower deduction certificate, so excess TDS is locked up until a refund is processed.
- Not updating mutation after purchase, which leaves you exposed to a fraudulent resale.
Documents you need
Exact documents vary by state and property type. These are the usual starting set.
- Passport, visa or OCI card copy
- PAN card (required for property transactions)
- Title deed and chain documents
- Encumbrance certificate and revenue records
- Approved building plan and completion or occupation certificate
- Bank statements or remittance certificates for payments
- Power of attorney signed and legalised abroad
- Address proof abroad and in India
How we handle it for you
Scoping call
We discuss the property, your residency and tax position, and the timeline in your time zone.
Title and FEMA check
We verify title and approvals and confirm that the transaction is permitted.
Power of attorney
Drafted for the specific deal and signed and legalised in your country.
Agreement and payment
We negotiate the agreement and track payments through proper banking channels.
Registration and after
Sale deed registered, mutation filed, and TDS and repatriation papers prepared.
Why clients choose ProudLegal
Built for clients abroadVideo calls in your time zone and documents signed where you live.
Advocates who appear in Indian courtsYour case is drafted and argued by enrolled advocates in India.
Written fee quote firstScope and fees confirmed in writing before any work starts.
Updates after every stepScans of every filing and order on WhatsApp and email.
Frequently asked questions
Can an OCI cardholder buy a flat in India?
Yes. OCI cardholders can buy residential and commercial property without RBI approval, on the same footing as NRIs. They cannot buy agricultural land, plantation property or farmhouses.
Do I need to be in India to sign the sale deed?
No. Your attorney holder can sign and present the deed for registration under a properly executed and stamped power of attorney.
Can I pay for the property from my foreign bank account?
Yes, by inward remittance through normal banking channels, or from your NRE, FCNR or NRO account. Cash and foreign currency notes are not allowed.
Can a foreign citizen of non-Indian origin buy property in India?
Generally not, if resident outside India. They may inherit property from someone who held it lawfully, and may take a lease of up to five years.
How much TDS will the buyer deduct when I sell?
Usually tax on the full sale price at the capital gains rate plus surcharge and cess, unless you obtain a lower deduction certificate based on your actual gain.
Can I repatriate the full sale price?
Often yes, but in stages. The original foreign-exchange investment can be repatriated for up to two residential properties, and other amounts through the NRO route up to USD 1 million per financial year.
Can I sell inherited agricultural land as an NRI?
Yes, but only to an Indian citizen resident in India.
Is a general power of attorney sale valid?
No. After Suraj Lamp (2011), ownership passes only by a registered sale deed. A power of attorney only authorises someone to execute that deed for you.