The Complete NRI Guide to Indian Real Estate: FEMA, Tax, and Everything In Between

If you are an NRI, property in India usually carries something extra: distance, a relative "handling it," and two separate sets of rules that do not talk to each other. This guide walks through both: what you are allowed to do under FEMA, and what you will owe under the tax law, so you go in informed. It is general guidance, not tax advice, so confirm specifics with a qualified CA before you act.

What you can, and cannot, buy

Under FEMA, an NRI can freely buy residential and commercial property in India, with no limit on how many. What you cannot buy is agricultural land, plantation property, or a farmhouse, though you can inherit these. That single distinction catches a lot of buyers off guard, so confirm the land classification before anything else.

Paying for it

Fund the purchase through your NRE, NRO, or FCNR account, or by normal inward remittance through banking channels, not foreign currency in cash. NRIs are also eligible for home loans from Indian banks (typically up to 80% of value), repaid through those same accounts or via post-dated remittances.

The tax that surprises everyone: selling

This is where NRIs get caught, because the rules are stricter than for resident sellers.

Holding period sets the category. Hold the property more than 24 months and the gain is long-term; sell within 24 months and it is short-term.

The 2024 change matters. For sales on or after 23 July 2024, long-term capital gains on property are taxed at a flat 12.5% (no indexation), plus surcharge and cess. Importantly, the resident-taxpayer option to choose "20% with indexation vs 12.5%" does not apply to NRIs: you are on the flat 12.5% regime. Short-term gains are taxed at your applicable slab, up to 30%.

TDS is the real cash-flow shock. When an NRI sells, the buyer must deduct tax at source under Section 195. Unlike the 1% a resident seller faces, for NRIs it is deducted at the capital-gains rate on, often, the entire sale value: roughly 12.5% plus surcharge and cess (up to about 14.95%) for long-term, and 30% or more for short-term. On a ₹1 crore sale that can mean ₹12 to ₹15 lakh withheld upfront, even if your actual tax is far lower.

How to legally pay less

• Lower or Nil TDS Certificate. Apply to the tax department (Form 13, now Form 128 under the Income Tax Act 2025) to have TDS deducted on the actual gain rather than the full sale value. For most NRI sellers this is the single most valuable step.
• Reinvestment exemptions. Section 54 (reinvest gains in a residential property in India), 54EC (specified bonds, up to ₹50 lakh), and 54F can reduce or eliminate the gain. Reinvestment must be in India; buying abroad does not qualify.
• DTAA. If your country of residence has a Double Taxation Avoidance Agreement with India, you can often avoid being taxed twice, with a Tax Residency Certificate and Form 10F.
• File a return. If TDS exceeded your real liability, you claim the refund by filing an Indian ITR.

Getting your money home: repatriation

Sale proceeds can generally be repatriated up to USD 1 million per financial year from your NRO account, and proceeds from up to two residential properties are repatriable subject to conditions. You will need a CA-certified Form 15CA/15CB for the remittance.

The practical checklist

• Keep a valid PAN. Without it, TDS and compliance get punishing.
• Use a Power of Attorney with someone you trust if you cannot be present, but scope it carefully.
• Verify RERA status, title, and approvals exactly as a resident buyer should. Distance makes independent verification more important, not less.
• Date-stamp your tax assumptions: the Income Tax Act 2025 takes effect 1 April 2026, so confirm current forms and sections.

The rules are not a reason to avoid investing in India. They are very manageable once you know them. They are a reason not to rely on a cousin and a broker to handle a seven-figure decision.

FAQ

Can an NRI repatriate the full sale proceeds of a property?

Generally you can repatriate up to USD 1 million per financial year from your NRO account, covering proceeds from up to two residential properties, subject to conditions. The remittance needs a CA-certified Form 15CA/15CB, and the original purchase should have been made through proper banking channels.

Can an NRI buy property in India through a Power of Attorney?

Yes. If you cannot be present, you can authorise someone you trust through a Power of Attorney to complete the purchase and registration. Scope it carefully and narrowly and have it attested properly, because a broad POA over a seven-figure asset is a real risk.

Can an NRI inherit agricultural land in India?

Yes. While an NRI cannot buy agricultural land, plantation property, or a farmhouse, you are allowed to inherit them. Confirm the land classification and the title chain before assuming anything about what you can later do with it.

Do NRIs pay higher tax than residents when selling property?

The long-term capital-gains rate is the same flat 12.5% for sales on or after 23 July 2024, but NRIs cannot use the resident option of 20% with indexation, and the TDS withheld at sale is far higher: the full capital-gains rate, often on the entire sale value, rather than the 1% residents face. You reclaim any excess by filing a return.

This is general information current as of 2026 and not legal or tax advice. Tax rates and FEMA rules change, and the Income Tax Act 2025 takes effect 1 April 2026, so verify with a qualified chartered accountant and the Income Tax Department or RBI before acting.