Non-Resident Indians (NRIs) are playing a significant role in India's real estate market. A recent SBNRI survey shows that 52% of NRIs are increasingly investing in Indian commercial real estate (CRE), driven by improved transparency, technology, and regulatory reforms. 

Developers are responding by targeting NRIs through roadshows in key markets like the UAE, UK, and Singapore, offering tailored investment opportunities. 

In this blog, we will cover key insights on how NRIs can invest in Indian real estate, financing options, tax implications, and strategies for maximising returns.

TL; DR

• NRI Share in Property: NRIs account for 18-20% of property purchases in India by 2025.

• Legal Framework: NRIs can buy residential/commercial properties but need RBI approval for agricultural land.

• Financing Options: Home loans are available from banks like SBI, HDFC, and ICICI, with up to 20 years of repayment.

• Tax Responsibilities: 30% TDS on rental income, 12.5% TDS on long-term capital gains, with exemptions for reinvestment.

• Challenges: Fraud and remote property management can be addressed with legal help and property services.

Legal Framework for NRI Property Ownership

For NRIs, purchasing property in India is governed by the Foreign Exchange Management Act (FEMA), which outlines the rules for foreign investments in Indian real estate.

The law defines the types of properties that NRIs can purchase and outlines the procedures for handling financial transactions. 

Eligibility Criteria for NRIs to Buy Property in India

• Residential and Commercial Properties: NRIs can buy both residential and commercial properties in India without restrictions.

• Agricultural Land, Plantations, and Farmhouses: NRIs cannot directly purchase agricultural land, plantations, or farmhouses unless special approval is granted by the Reserve Bank of India (RBI).

• Payment Methods: Payments must be routed through NRE (Non-Resident External), NRO (Non-Resident Ordinary), or FCNR (Foreign Currency Non-Resident) accounts or via direct foreign remittance.

NRI Status and Residential Requirements

• To purchase property in India, the buyer must be a Non-Resident Indian (NRI), which is defined as an Indian citizen who resides outside India for more than 182 days during the preceding financial year.

• NRIs can also buy property in India jointly with other NRIs, PIOs, or OCIs. 

Minimum Age Requirement

NRIs must be at least 18 years old to buy property in India. There is no maximum age limit for owning property, but financial institutions may have their own age criteria when granting home loans.

Now that we know the basic eligibility requirements, let’s delve into the specific ownership criteria for NRIs when purchasing property in India.

Also Read: NRI Investment Plans and Options in India

Property Ownership Criteria for NRIs

NRIs can own both residential and commercial properties in India. There are no restrictions on the number of properties they can own, with joint ownership also being permitted. 

However, restrictions exist for agricultural properties. NRIs cannot directly purchase agricultural land, plantations, or farmhouses without prior approval from the RBI. 

While they can inherit or receive such properties as gifts, buying these types of properties remains highly regulated.

Important Considerations:

• NRIs can inherit agricultural land, plantations, or farmhouses, but direct purchases are restricted.

• Ensure compliance with stamp duty and registration fees, which can vary from state to state.

For NRIs looking to invest in India’s real estate market, BCD India’s expert team can guide you through property selection, financing, and tax compliance, ensuring a seamless and informed investment experience.

Next, we'll delve into the funding options and financial regulations that can help NRIs secure property in India.

Funding and Financial Regulations for NRIs

NRIs are playing a significant role in driving India’s real estate boom, with their share in property purchases increasing from 7–10% in 2015–2018 to 18–20% in 2025. Securing financing for property purchases is relatively simple for NRIs, as several Indian banks offer home loans specifically designed for them. 

Leading lenders like SBI, HDFC, and ICICI provide competitive interest rates and flexible loan terms, making it easier for NRIs to invest in the Indian real estate market.

Key Points to Remember:

• Home loans are available for purchasing, constructing, or refurbishing residential properties.

• NRE, NRO, and FCNR accounts are the only legal channels for routing payments for property transactions.

• Loans can be repaid through these accounts, and repayment terms generally span up to 20 years.

• The down payment requirement typically involves a margin amount, which the borrower must contribute from their own funds.

Now, here's a list of essential documents NRIs need to gather for a smooth transaction.

Essential Legal Documentation for NRI Property Acquisition

Before proceeding with a property purchase, NRIs must ensure that they have the necessary legal documents to validate their identity and property status.

Documents Required for Property Purchase:

• PAN card (mandatory for all property transactions)

• Passport and visa (proof of NRI status)

• Proof of overseas employment or residence

• Clear property title (ensure the property is free from legal disputes)

• Sale deed and relevant documents for transaction verification

If an NRI is unable to be physically present in India during the transaction, they must appoint a Power of Attorney (PoA). 

A Special PoA should be created for property transactions, notarised abroad, and registered in India for legality.

Let's now examine the tax responsibilities NRIs must fulfill when investing in property in India.

Understanding Tax Responsibilities for NRIs in Real Estate

Tax compliance is a key aspect of owning property in India. NRIs are eligible for tax deductions on home loan interest and principal repayments, but there are specific tax obligations they must meet.

1. Rental Income Taxation

• TDS Rate: Rental income earned by NRIs is subject to 30% TDS.

• Filing Requirement: If rental income exceeds the tax-exempt threshold (₹2.5 lakh for the old regime or ₹3 lakh for the new regime), NRIs must file an income tax return.

2. Capital Gains Tax

• Long-Term Capital Gains (LTCG): Taxed at 12.5% (without indexation).

• Short-Term Capital Gains (STCG): Taxed at 30%.

3. Self-Occupied Properties

• If an NRI owns multiple properties, only one property can be treated as self-occupied for tax purposes.

• The remaining properties will be taxed as let-out properties, even if they are not rented out.

Now, let’s discuss property registration and management strategies to help NRIs keep their investments in order.

Property Registration and Management Tips

Managing property from abroad can be challenging, but engaging property management services can help mitigate these challenges. These services ensure that NRIs' properties are maintained, tenants are managed, and legal compliance is maintained.

For NRIs, managing property in India involves several essential steps to ensure legal compliance and safeguard their investments.

1. Property Registration

   
   

   • NRIs are required to register their property under the Indian Registration Act. The process includes verifying the title of the property, signing the sale deed in the presence of a registrar, and paying the applicable stamp duty and registration fees.

   • It's crucial to appoint a power of attorney (PoA) for property-related matters in India if the NRI cannot be physically present. The PoA can handle registration, payments, and other documentation processes on the NRI’s behalf.
     
     

2. Title Verification and Due Diligence

Before purchasing property, ensure thorough due diligence is done. This involves verifying the title, ensuring the property is free from legal disputes, and confirming that the property is not part of any encumbrances or mortgages.

3. Tax Implications and Compliance

NRIs must comply with tax laws related to property, such as income tax on rental income, capital gains tax upon sale, and property taxes. Consulting with a tax advisor can ensure timely payment of taxes and avoidance of penalties.

4. Property Management

   
   

   • Managing the property remotely can be challenging. Hiring a property management company or local manager can help with maintenance, rent collection, and regular inspections, ensuring the property remains in good condition.

   • If renting out the property, it’s crucial to draft proper rental agreements and ensure compliance with local rental laws to avoid any future disputes.
     
     

5. Regular Monitoring

NRIs should periodically check on their property or rely on trusted family members or property managers to oversee its condition. Additionally, ensuring the property is adequately insured against risks like fire, theft, or natural disasters is essential.

These strategies will help NRIs maintain control over their property investments in India, ensuring long-term security and profitability.

Also Read: NRI Home Loan Eligibility and Interest Rates 

Repatriating Funds from Property Sales

NRIs can repatriate the proceeds from property sales back to their home country, but there are limits and processes to follow. 

The Reserve Bank of India (RBI) allows the repatriation of up to USD 1 million ( around 8.65 crore rupees) per financial year, provided taxes have been paid and the correct documentation is submitted.

Documents Required for Repatriation:

• Sale deed

• Proof of original acquisition

• Income tax returns

• Forms 15CA and 15CB (certification of tax payment)

These funds must be routed through an NRO account, and all financial transfers must comply with RBI regulations.

Let’s shift our focus to the factors driving the demand for NRI property investment in India.

Factors Boosting Demand for NRI Property Investment in India

Investing in property in India is becoming a popular choice for NRIs, driven by both investment potential and a desire to remain connected to their cultural roots. 

In 2024, NRIs accounted for 15%–25% of buyers in newly launched residential projects across key cities, including Delhi-NCR, Mumbai, Bengaluru, Pune, Hyderabad, Chennai, and Kolkata. 

Some key factors include: 

1. Economic Growth and Infrastructure Development

Cities like Hyderabad, Bangalore, and Pune have seen increased demand for both residential and commercial properties due to India's economic growth and infrastructure projects, including smart cities and affordable housing schemes.

2. Strong Currency Exchange Rates 

Favourable exchange rates make property more affordable for NRIs, increasing their purchasing power and improving returns when selling property or repatriating funds.

3. Attractive Home Loan Interest Rates

Competitive interest rates on home loans offered by banks like SBI, HDFC, and ICICI make property investment more accessible for NRIs. Lower borrowing costs encourage more NRIs to invest in real estate.

4. Tax Benefits and Government Incentives

NRIs can benefit from tax incentives on home loan interest and principal repayments. The RERA ensures transparency, while the Affordable Housing scheme offers further tax relief.

5. Digitalisation of Real Estate Transactions

Online property portals, virtual tours, and digitised property records have made it easier for NRIs to view, research, and finalise property deals remotely with greater transparency.

6. Changes in Global Taxation and Regulations

The Double Taxation Avoidance Agreement (DTAA) helps NRIs avoid double taxation, and reductions in capital gains tax (LTCG now at 12.5%) make property investments more attractive.

Finally, let’s explore the common challenges NRIs face in real estate investment and how they can be mitigated.

Overcoming Common Challenges in NRI Real Estate Investment

NRIs often face challenges when purchasing property in India, including the risk of fraudulent sellers or involvement in benami transactions. 

The table below outlines some common challenges and the strategies to mitigate them.

Working with RERA-registered agents and escrow accounts can significantly reduce the risk of fraud in property transactions.

Conclusion

NRIs are making significant strides in India's real estate market, driven by favourable regulatory changes, improved transparency, and targeted investment opportunities. With increasing interest in both residential and commercial properties, NRIS must understand the financing options and tax implications to make well-informed investment decisions.

Want more insights on India’s property market trends, homebuying strategies, and investment opportunities? Subscribe to Ashwinder R Singh’s newsletter for weekly tips, real estate intelligence, and expert perspectives on the evolving Indian real estate market. 

FAQs:

Q: Can NRIs purchase property through a Power of Attorney (PoA)?
A: Yes, NRIs can appoint a Power of Attorney (PoA) to complete property transactions in India. The PoA should be notarised abroad and registered in India to ensure its legal validity for property dealings.

Q: Are NRIs allowed to invest in commercial real estate (CRE) in India?
A: Yes, NRIs are permitted to invest in commercial real estate in India. The growing demand for commercial properties, particularly in urban areas, makes them an attractive option for NRIs seeking higher returns.

Q: What is the process for getting a lower TDS certificate for property sales?
A: NRIs can apply for a Lower TDS Certificate under Section 197 of the Income Tax Act if they believe their actual tax liability will be lower than the TDS deducted. This application should be made to the Income Tax Department in advance of the sale.

Q: Can NRIs buy property in India without visiting in person?
A: Yes, NRIs can purchase property remotely without being physically present in India. They can use Power of Attorney for the transaction, and legal and financial documentation can be handled via digital platforms and by employing property management services.

Q: What happens to the property if the NRI passes away?
A: In case an NRI passes away, their property in India can be transferred to their legal heirs. The property transfer process involves verifying the succession certificate and complying with applicable inheritance laws, which may vary depending on whether the property was held jointly or solely owned.