Buy Property in India as an NRI

Can NRIs Buy Property in India? 

Yes. A Non-Resident Indian (NRI) can buy property in India. The Reserve Bank of India (RBI) grants general permission under the Foreign Exchange Management Act (FEMA) for NRIs to acquire immovable property in India without seeking specific approval in each case.

For the purpose of Indian property law, an NRI is an Indian citizen who ordinarily resides outside India. Overseas Citizens of India (OCI) cardholders and Persons of Indian Origin (PIO) are treated broadly similarly to NRIs for property purchase purposes, though certain specific conditions apply and these should be verified at the time of purchase.

Foreign nationals with no Indian origin, for example, a non-Indian UK citizen, are not entitled to purchase property in India on the same basis. Non-Indian nationals can inherit Indian property but generally cannot purchase it without RBI approval.

What Types of Property Can an NRI Buy? 

The type of property an NRI can buy in India is not unlimited. The FEMA general permission extends to residential and commercial property. It does not extend to agricultural land, plantation property, or farmhouses.

Residential property: NRIs can purchase flats, houses, villas, and plots in residential zones. There is no restriction on the number of residential properties an NRI can hold. An NRI can buy a property for personal use, for rental income, or as an investment.

Commercial property: NRIs can purchase offices, shops, warehouses, and other commercial premises. As with residential property, there is no numerical limit.

Agricultural land, plantation property, and farmhouses: NRIs cannot purchase these categories of property in India. This restriction applies regardless of the NRI’s state of origin or family history. The only route by which an NRI can acquire agricultural land is through inheritance. An NRI who inherits agricultural land can hold and eventually sell it (subject to the restriction that it can only be sold to an Indian resident), but cannot purchase it.

Do NRIs Need RBI Permission to Buy Indian Property?

For residential and commercial property, no. The RBI’s general permission covers NRI purchases of residential and commercial property in India. No specific application to the RBI is required for these transactions.

RBI permission is required in three situations. First, where a foreign national (non-NRI, non-OCI) wishes to purchase property in India. Second, where an NRI wishes to purchase agricultural land, a plantation property, or a farmhouse. Third, where funding for the purchase comes from sources or accounts that fall outside the permitted channels.

Provided the property is residential or commercial, the funding comes through permitted banking channels, and the buyer qualifies as an NRI, the purchase can proceed without contacting the RBI.

How to Buy Property in India from Abroad: Step by Step

The purchase process for an NRI broadly mirrors the process for a resident Indian, but with additional steps around funding, compliance, and representation.

Step 1: Establish Your NRI Status and Obtain a PAN Card

Before searching for property, confirm you have the documents that identify you as an NRI and authorise you to purchase property in India. A current Indian passport is the primary identity document. An OCI card, if you hold one, should also be available.

A PAN (Permanent Account Number) card is mandatory for any NRI purchasing property in India. It is required for the sale deed, for paying stamp duty, and for future tax filing. If you do not have a PAN card, apply for one before beginning the purchase process.

Step 2: Open the Correct Bank Account

NRI property purchases must be funded through Indian bank accounts in specific categories, either an NRE (Non-Resident External) account or an NRO (Non-Resident Ordinary) account. Funding a property purchase directly from a foreign bank account without routing through the correct Indian account is not FEMA-compliant.

Opening an NRE or NRO account requires documentation including your passport, visa, address proof, and NRI status declaration. This can be done before you select a property.

Step 3: Identify the Property and Conduct Initial Research

Once you have your PAN card and banking in place, you can search for property. Use a reputable registered estate agent or developer.

Before spending time on a specific property, carry out a preliminary check: confirm the property type (to ensure it is within the permitted residential or commercial categories), verify the basic ownership claim, and check that the project, if new-build, is registered under RERA (the Real Estate Regulation and Development Act). These early checks filter out problematic properties before significant time or money is invested.

Step 4: Conduct Full Due Diligence

Due diligence on Indian property is more complex than the UK equivalent, and more important, Indian title can be disputed across generations, and defects discovered after purchase are difficult and expensive to resolve. A qualified Indian property lawyer should conduct a full title search.

Step 5: Execute a Power of Attorney (if applicable)

If you will not be travelling to India to sign documents in person, execute a Power of Attorney authorising a named representative to act on your behalf. The POA must cover the specific acts required for the purchase: signing the sale agreement, executing and registering the sale deed, making payments, and dealing with the sub-registrar’s office. See the POA section below.

Step 6: Agree Terms and Sign the Sale Agreement

Once due diligence is satisfactory, negotiate the purchase price and terms. The sale agreement (agreement to sell) sets out the agreed price, the payment schedule, the possession date, and the obligations of both parties. It is legally binding on both sides but does not itself transfer title. The sale agreement is typically accompanied by a booking deposit, confirming the amount and the conditions under which it is refundable before signing.

Where the property is under construction, the agreement will include a construction schedule and penalty provisions for delay. Confirm the RERA registration number of the project and check the RERA portal to verify the developer’s compliance status before signing.

Step 7: Fund the Purchase

Transfer the purchase funds from abroad through normal banking channels into your NRE or NRO account in India, or arrange an NRI home loan from an Indian bank.

Step 8: Pay Stamp Duty and Register the Sale Deed

Stamp duty is a state tax on property transactions, and rates vary significantly across India. Registration charges of approximately 1% of the sale value also apply. Both are paid at the time of registering the sale deed at the sub-registrar’s office.

The sale deed is the document that formally transfers ownership. It must be executed in the presence of witnesses, signed by both parties (or their representatives under a POA), and registered. The registered sale deed is the primary evidence of your ownership.

Step 9: Mutate the Property

Mutation is the process of updating the government’s land and revenue records to reflect the new owner’s name. It does not transfer title, that is achieved through registration of the sale deed, but it is an important administrative step that establishes your name in local revenue records. Without mutation, utility connections and property tax assessments remain in the previous owner’s name, creating practical difficulties.

Mutation is applied for at the local municipal corporation or panchayat office, and the required documents include a copy of the registered sale deed, proof of identity, and payment of the applicable mutation fee.

If you are buying a property in India and would like professional advice on your situation, call our Indian Legal Team on 0208 757 5751 our use our Contact Form. 

How NRIs Can Fund an Indian Property Purchase

FEMA sets out the channels through which NRIs can fund an Indian property purchase. The rules matter both at the point of purchase and when you eventually decide to sell, because the funding source affects your repatriation rights.

From an NRE (Non-Resident External) account: Funds in an NRE account originate from foreign earnings transferred to India. Purchasing property using NRE funds is FEMA-compliant, and critically, the equivalent amount can be repatriated from the sale proceeds when you eventually sell. NRE funds are in Indian rupees but represent foreign currency investment for FEMA purposes.

From an FCNR (Foreign Currency Non-Resident) account: FCNR accounts hold foreign currency deposits. Property can be purchased using FCNR funds, and as with NRE funds, the equivalent amount can be repatriated on eventual sale.

From an NRO (Non-Resident Ordinary) account: NRO accounts receive India-sourced income, rental income, dividends, income from employment in India. Purchasing property using NRO funds is permitted but carries a different repatriation position: on eventual sale, the proceeds sit in the NRO account and are subject to the USD 1 million annual repatriation limit.

Home loan from an Indian bank: NRIs are eligible for home loans from Indian banks and housing finance companies. Loan repayments must be made from an NRE, NRO, or FCNR account.

Due Diligence Before Buying

Title defects, undisclosed encumbrances, land use violations, and incomplete builder compliance are all common in the Indian property market. Due diligence conducted before the sale agreement is signed, not after, protects the buyer from committing to a transaction they cannot complete or that is later challenged.

Title search and verification: A qualified Indian property lawyer conducts a search of the property’s title history, typically going back 30 years. The purpose is to establish an unbroken chain of ownership, confirm that the current seller has the legal right to sell, and identify any claims, disputes, or encumbrances that affect the title.

Encumbrance Certificate: This is obtained from the sub-registrar’s office and lists all registered transactions against the property, mortgages, charges, sale agreements, within a specified period. A clear Encumbrance Certificate confirms no undisclosed financial burden is attached to the property.

Land use and zoning: Confirm that the property is designated for the use you intend. A property marketed as residential must be in a zone designated for residential use by the local planning authority. Agricultural-to-residential conversion requires specific government approval, and purchasing a property where this approval is pending or absent is a significant risk.

RERA registration check: For any new-build or under-construction property, check the RERA registration on the relevant state’s RERA portal. The registration will show the developer’s details, the approved plan, the project timeline, and whether the developer has met their reporting obligations. A project that is not RERA-registered should be treated with caution, RERA registration provides the buyer with legal protections and a dispute resolution mechanism that are not available for unregistered projects.

Approved building plan: Request and review the approved building plan for the property. Confirm that the construction matches what has been approved by the local authority. Unauthorised construction, extra floors, extended balconies, encroachments, can result in legal notices or demolition orders that affect the property’s value and usability.

Society NOC and documentation: For flats in residential societies, obtain a no-objection certificate from the housing society confirming there are no outstanding dues and that they have no objection to the sale. Also obtain the share certificate, maintenance receipts, and any other documents held by the society in relation to the flat.

Litigation search: A court record search in the relevant district will reveal any litigation involving the property or its previous owners that may affect title. Property-related litigation in India can take years to resolve, and buying into a property that is already the subject of a dispute is a situation best avoided.

Developer credibility check: Where purchasing from a developer, research their track record. Past projects delivered on time, RERA compliance history, and reputation in the market are relevant indicators. An NRI purchasing off-plan is particularly dependent on the developer’s reliability.

Power of Attorney for NRI Property Purchases 

Most UK-based NRIs do not travel to India for each stage of a property purchase. A Power of Attorney allows a named representative to sign documents, attend the sub-registrar’s office, and deal with banks and developers on your behalf.

For a property purchase, a specific (or special) POA limited to the transaction in question is strongly preferred over a general POA. A specific POA names the property, defines the permitted acts, and limits the risk of the authority being used for any purpose beyond the transaction.

The POA should explicitly authorise the representative to: sign the sale agreement and any amendments; execute the sale deed; appear before the sub-registrar; make and receive payments; deal with the housing society; and carry out any related administrative steps.

A POA executed in the UK requires notarisation by a UK notary public and apostilling by the Foreign, Commonwealth and Development Office (FCDO). Some Indian banks and sub-registrar offices also require attestation by the Indian High Commission in London, so confirm what the specific institution requires before the POA is executed. A deficient POA, one that has not been through the full apostille process, or that does not cover the specific acts required, will be rejected, causing delay.

Documents Required to Buy Property in India as an NRI

Prepare these documents before you begin the purchase process. Missing documents at the wrong stage cause delays.

• PAN Card – Mandatory for all property transactions in India, regardless of the NRI’s country of residence. Required for the sale deed and for future tax filings.
• Passport – Your current Indian passport (or OCI card if applicable) is the primary identity document throughout the transaction.
• Address Proof – Both a current address in the UK and an Indian address (if available) may be required by the bank and the sub-registrar. Acceptable documents include recent utility bills, bank statements, or official correspondence.
• NRI Status Proof – A valid visa, work permit, or employment documentation confirming residence outside India. The specific document required varies by bank and context.
• NRE or NRO Bank Account Details – Confirmed account details for the Indian account through which the purchase funds will flow. The bank account must be in the NRI’s own name.
• Income Proof (for home loan applicants) – Payslips, employer letter, self-assessment tax returns, or equivalent documentation from the country of employment, covering the last two to three years. Bank statements for the same period.
• Indian Power of Attorney – If not attending in person: a notarised, apostilled (and where required, attested) specific POA in favour of your named representative. The POA must be presented at the sub-registrar’s office at the time of registering the sale deed.
• Sale Agreement – Executed with the seller before completion. Retain the original.
• Title Documents of the Seller – As part of due diligence, you will receive and review the seller’s chain of title documents. 
• Encumbrance Certificate – Obtained during due diligence. Retain for your records.
• RERA Registration Number – For new-build or under-construction properties. Confirm on the state RERA portal.

Taxes on Buying Property in India as an NRI

Several taxes arise at the point of purchase. Understanding them in advance avoids surprises at completion.

Stamp Duty

Stamp duty is the primary tax on property transactions in India. It is a state-level tax and rates vary significantly across India — from around 3% in some states to 8% or more in others, applied to the higher of the sale price or the government’s published circle rate (also called the ready reckoner rate or guidance value) for the area.

The circle rate is the minimum value set by the state government for calculating stamp duty. If you agree a sale price below the circle rate, stamp duty is still calculated on the circle rate. This is an important point for NRIs negotiating purchases at below-market prices: stamp duty follows the government’s value, not the agreed price.

Stamp duty is typically paid by the buyer. Registration charges — usually around 1% of the transaction value — are paid separately at the time of registering the sale deed.

GST on Under-Construction Properties

Where the property purchased is under construction (i.e., not yet complete and not yet issued a completion certificate), Goods and Services Tax (GST) applies at 5% of the sale value for standard residential properties, or 1% for properties qualifying as affordable housing. GST applies in addition to stamp duty.

GST does not apply to the purchase of completed, ready-to-move-in residential properties. Confirming whether a property has received its completion certificate is therefore relevant to the total tax cost of the transaction.

TDS When Buying from an NRI Seller

Where an NRI is buying property from another NRI seller (rather than from a resident Indian), the buyer must deduct TDS from the payment made. The applicable TDS rate for payments to NRI sellers differs from the rate for resident sellers. This obligation falls on the buyer and must be factored into the payment process. Failure to deduct and deposit TDS correctly exposes the buyer to penalties.

Where an NRI purchases from a resident Indian, the TDS obligations are lower and the rate is fixed at 1% for transactions above INR 50 lakhs — the same rate that applies to resident-to-resident transactions.

Future Capital Gains Tax

Buying property in India creates a future capital gains tax liability when you eventually sell. The purchase price (plus acquisition costs, legal fees, and improvement costs) forms the base cost for calculating the capital gain. The date and price at which you buy therefore directly affect the capital gains tax payable on a future sale.

For properties held for more than two years, long-term capital gains tax currently applies at 12.5% without indexation. Keeping clear records of the purchase price, all costs of acquisition, and any subsequent improvement expenditure simplifies the capital gains calculation at the point of future sale.

Common Mistakes NRIs Make When Buying Indian Property

The combination of distance, unfamiliarity with Indian property law, and reliance on informal networks creates predictable patterns of error.

Not conducting independent due diligence

Relying on the seller’s lawyer, the developer’s agent, or a family contact to verify title is not sufficient. The due diligence must be conducted by an independent legal adviser acting for you. A conflict of interest between the adviser and the seller — even a well-intentioned one — can result in a title defect being missed.

Paying cash or bypassing Indian banking channels

FEMA requires that property payments flow through permitted Indian bank accounts. Cash transactions or payments from a foreign bank directly to the seller’s account violate FEMA regulations and can expose both buyer and seller to penalties. The transaction may also be challenged or voided.

Not checking RERA registration for new-build purchases

Purchasing from an unregistered developer provides none of the protections RERA confers — no escrow requirement, no construction timeline commitment, no regulated portal for progress updates. The risk of delay, fund diversion, or project abandonment is substantially higher.

Buying at below-circle-rate prices to reduce stamp duty

Some buyers agree a nominal transaction price to reduce stamp duty, with an unwritten understanding that additional funds change hands separately. This is both illegal and counterproductive: it reduces the base cost of the property for capital gains purposes (increasing the future tax liability), it violates tax law, and it creates risk of the transaction being challenged.

Using a general POA where a specific POA is appropriate

A general Power of Attorney grants the holder authority over all the principal’s affairs. For a property purchase, a specific POA limited to the transaction limits risk and is appropriate. A broadly worded general POA held by the wrong person has been the route through which NRI properties have been fraudulently transferred.

Neglecting to apply for a PAN card in advance

PAN card applications from abroad take time. NRIs who begin the purchase process without a PAN card ready frequently face delays at critical points — the sale deed cannot be registered, TDS cannot be calculated, and the bank account required for the transaction may not be fully operational.

Not considering the repatriation position before funding

The funding method, NRE, NRO, or home loan, determines the repatriation options on eventual sale. Choosing an NRO-funded purchase for convenience and later discovering that repatriation is capped is an avoidable outcome. The repatriation implications should be discussed and understood before the funding is committed.

Overlooking agricultural land restrictions

NRIs occasionally discover, sometimes mid-transaction, that the property they are purchasing includes or contains land classified as agricultural. This does not arise from bad faith on the seller’s part in every case: land classification records in India are not always current or clearly understood by the parties. A proper due diligence check will identify the land classification early.

How Whytecroft Ford Can Help

Buying Indian property from the UK involves Indian property law, tax compliance, PAN card requirements, and careful structuring of the funding to preserve future repatriation rights. Our team advises UK-based NRIs and OCI holders on the full process, from assessing the legal position before you commit, to preparing the documents you need to conduct the transaction from abroad.

We prepare Powers of Attorney for NRI property purchases, advising on the scope of authority required and managing the notarisation, apostille, and attestation process in the UK. 

To discuss a planned property purchase, call us on +44 (0)208 757 5751 or complete our Contact Form and a member of our team will be in touch.

Related Links

• Indian Property Transfer
• Indian Property Inheritance
• Sell Indian Property From Abroad
• Indian Property Disputes
• NRI Civil Litigation in India

Useful Links

• Indian Law Advice Service
• Permanent Account Number (PAN) Card Services
• Overseas citizenship of India (OCI) Card Services
• Indian Power of Attorney (POA) Services