Step-by-Step Guide for NRIs to Buy Property in India

The Indian real estate market has shown strong growth, attracting significant interest from NRIs (Non-Resident Indians). Driven by emotional ties, stable returns, and rapid urbanisation, NRI investment in Indian property exceeds $13 billion annually. However, buying property in India requires careful planning. NRIs must follow RBI and FEMA regulations, complete due diligence, and arrange finances, legal documents, and post-purchase compliance. This guide covers the entire NRI property purchase process, from financing to registration and property management, ensuring a secure and profitable investment.

Before beginning the property search, NRIs must organise finances and essential documents:

Obtain PAN Card: Mandatory for property transactions and tax compliance.

Open NRI Bank Accounts: Maintain NRE and NRO accounts to manage fund transfers and comply with FEMA norms.

Arrange Home Loan or Financing: Indian banks offer home loans in INR, repayable through NRE/NRO accounts.

Prepare KYC and Property Documents: Passport, address proof, and other identification documents must be verified.

Execute Power of Attorney (PoA): If residing abroad, assign a trusted Indian resident to complete registrations and legal procedures.

Check Eligibility under FEMA: NRIs, OCIs, and PIOs can legally buy residential and commercial properties, but not agricultural or plantation lands (unless inherited).

Selecting the right property ensures long-term value and satisfaction:

Identify Preferred Location and Property Type: Decide between residential or commercial properties. For example, apartments, villas, or office spaces.

Shortlist Reputed Builder and Verified Projects: Choose developers with transparent dealings and a proven track record.

Verify RERA Registration: Ensures builder accountability and legal compliance.

Hire a Property Lawyer: To review contracts and confirm compliance with property and FEMA laws.

Check Essential Property Documents:

Title Deed – confirms ownership

Encumbrance Certificate – ensures no liens or disputes

Building Plan Approvals – validates sanctioned construction

Occupancy/Completion Certificate – confirms legal possession

Negotiate and Finalise Terms: Payment schedules, possession dates, and additional charges must be clear.

The legal transfer of property requires several steps:

Draft and Sign Sale Agreement: Clearly outlines property specifications, payment milestones, and possession timelines.

Pay Stamp Duty and Registration Fees: Mandatory in each state for legal ownership.

Register Sale Deed at Sub-Registrar: Either buyer or PoA holder must appear in person.

Transfer Payments Through Authorised Channels: Payments via NRE, NRO, or inward remittance comply with RBI rules.

Take Possession of Property: Obtain keys, documents, and utility transfers.

Ongoing responsibilities for NRIs include:

Pay Property Tax and Utility Bills: Maintain clear records and avoid penalties.

File Income Tax for Rental Income: Rental earnings are taxable under Indian law.

Understand Capital Gains Tax: Selling property is taxable, with exemptions under Sections 54 and 54EC.

Hire Property Management Services: For NRIs living abroad, to manage tenants, maintenance, and rent collection.

Follow FEMA Guidelines for Repatriation: Sale proceeds can be repatriated for up to two residential properties with tax clearances.

Essential documents for property purchase include:

PAN Card, Passport, OCI/PIO Card – identity and NRI status verification

Proof of Overseas Residence – visa/work permit

NRE/NRO/FCNR Account Statements – source of funds, remittance compliance

Power of Attorney – authorises representative if buying remotely

Title Deed, Encumbrance Certificate, Building Plan Approval, Occupancy Certificate – verifies ownership and construction compliance

Sale Agreement and Home Loan Sanction Letter – confirms financial and contractual terms

Property Tax Receipt, TDS Certificate – confirms payments and tax compliance

Skipping title and builder verification

Using non-compliant bank accounts for payments

Improper or unregistered Power of Attorney

Ignoring tax and TDS obligations

Purchasing non-RERA-registered properties

Wealth Creation and Appreciation – long-term capital growth

Rental Income – consistent earnings from residential or commercial properties

Diversification of Investment Portfolio – mitigates risk

Maintaining Personal and Family Ties – accommodation during visits and inheritance

Repatriation Benefits – up to $1 million per year in compliance with RBI rules

Loan Facilities – NRI home loans with competitive rates enable easier acquisition

Home loans offered by Indian banks are disbursed in INR

EMI payments through NRE, NRO, or FCNR accounts

Ensure all payments and repatriation comply with RBI and FEMA guidelines

Stamp duty and registration fees vary by state

GST applies to under-construction properties

TDS applies on rental income (30%) and property sales (20% LTCG / 30% STCG)

Exemptions available for reinvestment under Sections 54 and 54F

Sale proceeds from up to two residential properties may be repatriated abroad

Requires CA certificate (Form 15CA/15CB) and tax clearance

Compliance with FEMA and RBI regulations is essential

Buying property in India as an NRI involves careful financial planning, legal compliance, and documentation. NRIs can invest in residential and commercial properties, use NRE/NRO accounts, and avail home loans in INR. Key steps include verifying builders, checking RERA registration, preparing documents, executing Power of Attorney, registering the sale deed, and complying with tax and repatriation rules. Benefits include capital appreciation, rental income, and portfolio diversification. Following RBI and FEMA regulations ensures a secure and profitable NRI property investment in India.