Non-resident individuals are allowed broad rights to acquire property in India, though specific restrictions apply based on the type of property and the mode of acquisition. These rules fall under the Foreign Exchange Management Act (FEMA) and the regulatory oversight of the Reserve Bank of India.
- Buying Property in India: Rules for NRIs
Permitted Property Types NRIs can freely purchase:
Residential property
Commercial property
Non-agricultural land or plots, based on state regulations
Prohibited Property Types NRIs cannot purchase:
Agricultural land
Plantation property
Farmhouses
These may only be acquired through inheritance or gift from eligible relatives.
Payment Requirements (FEMA-Compliant)
All consideration must be routed through Indian banking channels:
NRE account
NRO account
FCNR account
Inward remittance from abroad through normal banking routes
Cash payments are not permitted.
RBI Permission
No specific permission from the Reserve Bank of India is required for an NRI to buy residential or commercial property.
The purchase must comply with FEMA regulations and Indian tax laws.
Repatriation of Sale Proceeds
NRIs may repatriate property sale proceeds up to USD 1 million annually.
Proof that taxes have been paid
CA-certified Form 15CB and Form 15CA
Documentation showing the property was acquired through permissible funds
For properties purchased using NRE or FCNR accounts, repatriation is permissible for up to two residential properties without major restrictions.
- Gifting Property in India: Rules for NRIs
Who an NRI May Gift Property To
NRIs may gift:
Residential property
Commercial property
To:
Any resident Indian
Another NRI
PIO/OCI holders
Agricultural Land and Farmhouse Gift Restrictions
Agricultural land, plantation land, and farmhouse property can only be gifted to "close relatives" as defined under the Income Tax Act, such as:
Spouse
Siblings
Parents and grandparents
Children and grandchildren
Documentation for Gifting
A registered Gift Deed is mandatory to legally transfer ownership. Stamp duty must be paid according to state regulations.
Taxation of Gifted Property
Gifts to relatives are exempt from income tax.
Gifts from non-relatives exceeding ₹50,000 in value are taxable for the recipient under “Income from Other Sources.”
- Inheriting Property in India: Rules for NRIs
Property Types Allowed Through Inheritance
NRIs may inherit:
Residential property
Commercial property
Agricultural land
Plantation property
Farmhouses
They may inherit from:
Resident Indians
Other NRIs
OCI/PIO cardholders
Even foreign nationals, provided the property was legally owned.
Taxation on Inheritance
There is no inheritance tax in India.
However, tax becomes applicable only upon the sale of the inherited property.
Selling Inherited Property
NRIs can sell inherited residential and commercial property to residents, NRIs, or PIOs.
Inherited agricultural or farm/plantation property may only be sold to a resident Indian. Selling such property to an NRI/PIO requires approval.
Capital Gains Tax
If the inherited property is held for more than two years, long-term capital gains apply.
LTCG is taxed at 20 per cent with indexation, or 10 per cent without indexation in certain cases.
- Key Compliance Requirements for NRIs
Documentation
Registered Sale Deed, Gift Deed, or Transfer Deed
Mutation in Municipal and Revenue Records
Power of Attorney Documents (Apostilled or Consular Attested if executed outside the Country)
Legal Heir Certificate, Will, or Succession Certificate in case of Inherited Assets
Banking Compliance
An NRO Account is Mandatory for Local Transactions like Rent Collection or Sale Proceeds.
NRE and FCNR accounts provide better repatriation facilities.
Tax Compliance
TDS on Rental Income by NRIs is 30%.
TDS has to be deducted by the Buyer when an NRI sells the property.
Filing an Income Tax Return is Mandatory when Rental Income or Capital Gains are earned.
- Summary
NRIs Can Freely Buy
Residential property
Commercial property
Non-agricultural land
NRIs Cannot Buy
Agricultural land
Plantation land
Farmhouses
NRIs Can Gift
Residential and commercial property to NRIs, residents, and PIO/OCI holders
Agricultural or farmhouse property is only defined for close relatives
NRIs Can Inherit
All categories of property from any eligible person
Repatriation Limit
Up to USD 1 million per financial year from the NRO account, with compliance and documentation.