NRIs (Non-Resident Indians) can freely purchase residential and commercial property in India under FEMA (Foreign Exchange Management Act) regulations — with a few important exceptions.
What NRIs Can Buy
- Residential properties (flats, houses, villas)
- Commercial properties (shops, offices)
- Plots in residential or commercial zones
No prior approval from RBI is required for these purchases.
What NRIs Cannot Buy
- Agricultural land
- Plantation property
- Farmhouses
These require special RBI permission and are rarely granted.
Payment Rules
All payments must be made through: - NRE (Non-Resident External) account - NRO (Non-Resident Ordinary) account - FCNR (Foreign Currency Non-Resident) account - Foreign inward remittance through banking channels
**Important:** Cash payments are strictly prohibited under FEMA.
Repatriation of Sale Proceeds
When you sell the property: - Up to 2 properties can be repatriated freely - Amount limited to original investment amount - Repatriation from NRO account limited to $1 million per year - Capital gains tax must be paid before repatriation
Documentation Required
1. Passport copy 2. OCI/PIO card (if applicable) 3. PAN card (mandatory for transactions above ₹50,000) 4. Address proof in India 5. NRE/NRO bank account details 6. Source of funds declaration
Power of Attorney
If you cannot be present in India for the purchase, you can execute a Power of Attorney (POA) in favour of a trusted person. The POA must be: - Notarised in the country of residence - Apostilled (for Hague Convention countries) - Adjudicated at the Sub-Registrar office in India
MNR Space assists NRI clients with the complete POA process.
Tax Implications
- TDS of 20% on long-term capital gains for NRIs
- 30% TDS on short-term capital gains
- Can claim indexation benefit for long-term gains
- Double taxation avoidance agreements (DTAA) may reduce tax burden
This article is for informational purposes only. Consult a qualified CA or legal advisor for your specific situation.
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