Can an NRI buy property in India? FEMA rules, documents required, and payment routes explained
What property an NRI, OCI or PIO can legally buy in India, which types need RBI approval, documents required, valid payment routes, Power of Attorney setup, and repatriation basics.
PropWatch Editorial7 min read
Yes — an NRI can buy residential and commercial property in India without any prior permission from the Reserve Bank of India. The FEMA framework permits this outright. What it prohibits, without a specific RBI approval, is the purchase of agricultural land, plantation property, and farmhouses. That single carve-out accounts for a disproportionate share of the disputes and regulatory complications NRI buyers encounter.
Who qualifies as NRI, OCI, and PIO under FEMA
The terms matter because the rules differ between them. Under the Foreign Exchange Management Act, 1999 (FEMA) and the RBI Master Direction on Acquisition and Transfer of Immovable Property (re-issued June 2022), three categories of overseas Indians have property rights in India.
- NRI (Non-Resident Indian) — an Indian citizen who stays outside India for 183 days or more in a financial year for employment, business or any other purpose indicating an intention to stay outside India for an uncertain period. Indian passport is retained.
- OCI (Overseas Citizen of India) — a foreign national of Indian origin who has been granted OCI status under Section 7A of the Citizenship Act, 1955. Since January 2015, the earlier PIO card has been subsumed into the OCI card; all PIO cardholders are treated as OCI cardholders.
- PIO (Person of Indian Origin) — as a standalone category, PIO cards are no longer issued. Existing PIO cardholders are deemed OCI. The term still appears in older sale deeds and documents; for compliance purposes, treat a PIO card holder as an OCI card holder.
NRIs and OCI holders have broadly equivalent property rights in India under current FEMA rules. Foreign nationals who are not NRI or OCI have a materially different and more restricted regime.
What an NRI or OCI can buy — and what requires RBI approval
The RBI Master Direction (June 2022) explicitly permits NRIs and OCI holders to acquire residential and commercial immovable property in India without any prior approval. There is no ceiling on the number of properties that may be acquired.
The prohibition is categorical for three property types: agricultural land, plantation property, and farmhouses. An NRI who wants to acquire any of these must obtain specific approval from the Reserve Bank of India. In practice, such approvals are rare. Properties marketed as 'farmhouses' on the outskirts of cities — but classified commercially or residentially in the municipal or revenue records — fall outside this prohibition if the classification is legitimate. Verify the land-use record, not the marketing label.
Documents required for an NRI to buy property in India
The document requirement for an NRI buyer is largely the same as for a resident buyer, with a few additions. What the sub-registrar's office will require at registration:
- Valid Indian passport — for NRIs retaining Indian citizenship.
- OCI card — for OCI holders; the card must be valid and match the passport.
- PAN card — mandatory for all property transactions above threshold under the Income Tax Act. NRIs can hold and obtain a PAN; many banks require it before opening an NRE or NRO account.
- Overseas address proof — utility bill, bank statement, or official document confirming the country of residence. Some sub-registrars require this to be notarised.
- Recent passport-size photographs.
- NRE, NRO, or FCNR account details — to confirm the payment route complies with FEMA (see below).
- Tax Residency Certificate (TRC) — useful but not universally mandatory at registration; may be required by the seller or their CA to determine TDS obligations under Section 195 of the Income Tax Act.
For a resale property, the buyer's advocate will additionally require the full title chain from the seller. For a new project, the builder's RERA registration and title documents for the underlying land are the primary diligence items — the same as for a resident buyer.
Valid payment routes under FEMA
Payment for property in India must go through one of three channels. No cash in foreign currency. No informal hawala route. The FEMA regulations are explicit.
- NRE account (Non-Resident External) — holds foreign earnings converted to rupees. Freely repatriable. Payments from an NRE account are fully FEMA-compliant for property purchase.
- NRO account (Non-Resident Ordinary) — holds rupee income earned in India (rent, dividends, etc.). Repatriation from NRO is capped at USD 1 million per financial year and requires Form 15CA/15CB filings. NRO funds can be used for property purchase.
- FCNR(B) account (Foreign Currency Non-Resident Bank) — holds foreign currency deposits. Can be used directly or after conversion to rupees for property payment.
- Inward remittance through normal banking channels — a direct international wire from the NRI's overseas bank account to the seller's Indian bank account, clearly routed through authorised dealer banks.
Payment by demand draft drawn on a Non-Resident account, or by cheque issued on a designated NRE/NRO/FCNR account, is standard. A buyer who pays by cash or through any channel that does not leave a FEMA-compliant banking trail creates a compliance problem that surfaces at the repatriation stage — often years later.
Power of Attorney for a remote purchase
Most NRI buyers cannot travel to India for every step of the transaction. A Special Power of Attorney (SPA) authorising a trusted person in India to sign documents, appear at the sub-registrar's office, and manage the purchase is the standard mechanism.
Execution of the SPA from abroad: the NRI executes the SPA before a notary public in the country of residence, and either has it attested by the Indian Embassy or Consulate in that country, or apostilled if the country is a party to the Hague Apostille Convention. The authenticated SPA must then be stamped and registered at the relevant sub-registrar's office in India within three months of its arrival in the country.
A general POA is broad and difficult to revoke in practice. An SPA limited to a specific property and a defined set of transactions reduces the risk of misuse. We document the recurring NRI POA misuse patterns in the NRI property section of PropWatch; the short version is that an SPA limited to one property and one transaction is meaningfully safer than an open-ended general power.
TDS on the purchase — the NRI seller complication
This post covers the buyer side — what an NRI must do to acquire property. If the seller in your transaction is an NRI, the TDS obligations are different and fall on the buyer. The Section 195 trap — where a buyer deducts 1% under Section 194IA when the correct rate is 12.5% or higher under Section 195 — is one of the costliest compliance errors in Indian property transactions. PropWatch has covered this separately in the TDS guide on Section 194IA and Form 26QB. Read it before completing any transaction where the seller's residency status is unclear.
Repatriation of sale proceeds — the brief version
When an NRI sells a property acquired using inward remittances or NRE account funds, the sale proceeds can generally be repatriated outside India, subject to conditions. The RBI Master Direction limits repatriation to the amount originally remitted for the purchase, in the case of residential property, for up to two such properties. Proceeds above that amount, or from properties acquired using NRO funds, are subject to the annual repatriation cap from NRO accounts (USD 1 million per financial year) and require Form 15CA and Form 15CB from a chartered accountant.
Capital gains tax on the sale — 12.5% for long-term gains on property held over 24 months, without indexation, under the Finance Act 2024 rules — applies regardless of resident status. TDS at the applicable rate is deducted by the buyer at the time of payment to an NRI seller. The repatriation process and the tax computation together require a chartered accountant who handles NRI transactions; this is not a form-filling exercise.