Falling entry prices in select micro-markets, a maturing RERA regime and an emotional pull toward home have made Indian real estate one of the most popular investments for Non-Resident Indians. But “can an NRI buy property in India?” is only half the question. The half that trips people up is the tax and FEMA angle — how you are allowed to fund the deal, the TDS you must deduct as the buyer, the GST on an under-construction flat, the home-loan tax breaks you can (and cannot) claim, and what happens to the money when you eventually sell and want to send it back abroad.
By the numbers: Any buyer of Indian immovable property — resident or NRI — must deduct 1% TDS under Section 194-IA when the consideration is ₹50 lakh or more (FY 2025-26). When the seller is an NRI, the buyer instead deducts under Section 195 at 12.5% (long-term) or slab rates (short-term), plus surcharge and 4% cess. Source: Income Tax Department, Government of India.
TDS an NRI buyer must deduct — depends on who the seller is
| Seller status | Section | TDS rate on sale value | TAN needed? | Return |
|---|---|---|---|---|
| Resident Indian | 194-IA | 1% (if value ≥ ₹50 lakh) | No | Form 26QB |
| NRI — long-term (held > 24 months) | 195 | 12.5% + surcharge + 4% cess | Yes | Form 27Q |
| NRI — short-term (held ≤ 24 months) | 195 | Slab rate + surcharge + 4% cess | Yes | Form 27Q |
“The single costliest mistake I see is an NRI buyer treating a purchase from another NRI like a normal 1% TDS deal. It is not — you need a TAN and must deduct under Section 195, or you personally become liable for the shortfall plus interest.” — CA Juber Attar, TaxFetch e-CA Tax Expert
This TaxFetch guide walks through every tax and compliance step of an NRI buying property in India in 2026 — updated for the latest FEMA position, the Budget 2024 capital-gains overhaul and the new Income-tax Act, 2025 that takes effect from 1 April 2026. Whether you are buying your first flat in Pune or a second commercial unit in Bengaluru, you will find the exact rules below.
📑 What’s inside this guide
- Who counts as an NRI / OCI for property purchases
- Can an NRI buy property in India?
- Types of property an NRI can and cannot buy
- How an NRI must fund the purchase (FEMA rules)
- The big one: TDS you must deduct as a buyer
- Stamp duty, registration and GST
- Home loans and tax benefits (24b, 80C)
- If you rent it out: tax on rental income
- Buying remotely: Power of Attorney
- Tax when you sell later — 2024 capital-gains changes
- Sending the money back: repatriation rules
- Avoiding double tax: DTAA relief
- NRI property purchase checklist
- Common mistakes to avoid
- Frequently asked questions
- TaxFetch bottom line
1. Who counts as an NRI / OCI for property purchases
Your ability to buy Indian property — and the tax treatment — depends on your residential status, which has two separate definitions you should not mix up:
- Under FEMA (which governs whether you can buy): you are a Non-Resident Indian if you reside outside India for employment, business or an uncertain-duration stay. This is intent-based, not day-count based.
- Under the Income-tax Act (which governs how you are taxed): status is decided by the number of days you spend in India in the year.
An OCI (Overseas Citizen of India) cardholder and a PIO are placed on the same footing as an NRI for acquiring residential and commercial immovable property. So for the purchase rules below, “NRI” includes OCI/PIO buyers unless stated otherwise.
2. Can an NRI buy property in India?
Yes. Under the FEMA (Non-debt Instruments) Rules, an NRI or OCI can freely purchase residential and commercial property in India without any prior approval from the Reserve Bank of India, and there is no limit on the number of such properties you can own.
There is no NRI-specific extra tax simply for buying — the stamp duty, registration charges and (for under-construction homes) GST are the same as for a resident buyer. The differences show up in how you pay (FEMA banking channels), what you must deduct (TDS as a buyer) and what happens on exit (capital gains and repatriation).
3. Types of property an NRI can and cannot buy
| Property type | Can an NRI / OCI buy? |
|---|---|
| Residential property (flat, house, plot for a house) | ✅ Yes, freely |
| Commercial property (office, shop, warehouse) | ✅ Yes, freely |
| Agricultural land | ❌ No (can only be acquired by inheritance) |
| Plantation property | ❌ No (inheritance only) |
| Farmhouse | ❌ No (inheritance only) |
4. How an NRI must fund the purchase (FEMA rules)
This is where compliance really begins. The purchase consideration and all related charges must be paid only through legitimate banking channels in Indian rupees. Permitted sources are:
- Inward remittance from abroad through normal banking channels.
- Funds held in your NRE (Non-Resident External) account.
- Funds held in your NRO (Non-Resident Ordinary) account.
- Funds held in your FCNR(B) deposit account.
You cannot pay using foreign currency notes, traveller’s cheques, or by remitting money into anyone else’s account. A home loan from an Indian bank/HFC is also allowed (see section 7), and the EMIs can be serviced from NRE/NRO/FCNR funds or by inward remittance.
5. The big one: TDS you must deduct as a buyer
Most NRIs know sellers face capital-gains tax. Far fewer realise that the buyer is legally responsible for deducting TDS and depositing it with the government — and getting this wrong lands the buyer, not the seller, with the penalty. What you deduct depends entirely on the seller’s status.
5.1 Buying from a RESIDENT seller — Section 194-IA (1%)
- If the property value is ₹50 lakh or more, deduct 1% TDS on the total sale consideration (including stamp-duty value where higher).
- No TAN required — you deduct against the seller’s PAN.
- Deposit the TDS and file Form 26QB within 30 days from the end of the month of deduction, then issue Form 16B to the seller.
- If the seller does not furnish a PAN, TDS jumps to 20%.
5.2 Buying from an NRI seller — Section 195 (higher, needs a TAN)
If you buy from another NRI, the ₹50 lakh threshold and the 1% rate do not apply. You must deduct under Section 195 on the capital-gains portion (or, in practice, on the whole sale value unless the seller obtains a lower/nil-deduction certificate):
| Nature of gain | Base TDS rate | Plus surcharge | Plus cess |
|---|---|---|---|
| Long-term (property held > 24 months) | 12.5% (no indexation) | 10%–15% based on sale value | 4% health & education cess |
| Short-term (held ≤ 24 months) | Seller’s applicable slab rate | As applicable | 4% cess |
- You must obtain a TAN (Tax Deduction Account Number) before deducting.
- Deposit the TDS by the 7th of the next month and file a quarterly Form 27Q, then issue Form 16A.
- The NRI seller can apply to the Assessing Officer for a lower/nil TDS certificate under Section 197 (Form 13) so tax is deducted only on the actual gain, not the full value — but that is the seller’s job, not yours.
6. Stamp duty, registration and GST
These are the same for NRIs as for residents, but they add materially to your cost:
- Stamp duty: a state-specific charge, typically 5%–7% of the property value. Several states offer a small concession for female buyers.
- Registration charges: usually around 1% of the property value.
- GST (under-construction property only): 5% without input-tax credit for non-affordable homes, and 1% for affordable housing. A ready-to-move-in property that already has a completion certificate attracts no GST.
7. Home loans and tax benefits (Sections 24b & 80C)
NRIs are eligible for home loans from Indian banks and housing finance companies, usually up to 75%–80% of the property value, repayable from NRE/NRO/FCNR funds or inward remittance. If you have taxable income in India, you can claim the same deductions as a resident — but only under the old tax regime:
| Deduction | Section | Maximum | Condition |
|---|---|---|---|
| Home-loan interest (self-occupied) | 24(b) | ₹2,00,000 / year | Old regime only |
| Principal repayment | 80C | ₹1,50,000 / year | Old regime only; shared with other 80C items |
| Interest on a let-out property | 24(b) | No cap (loss set-off capped at ₹2L/yr) | Old regime only |
8. If you rent it out: tax on rental income
Rental income from a property located in India is taxable in India, regardless of where you live. Key points for an NRI landlord:
- You get the standard 30% deduction under Section 24(a) on the annual value, plus a deduction for municipal taxes paid and home-loan interest under 24(b).
- A tenant paying rent to an NRI must deduct TDS under Section 195 at 30% (plus surcharge and cess) — not the 5% that applies when paying a resident landlord. The tenant needs a TAN and files Form 27Q.
- You can claim credit for this TDS and a refund by filing your Indian income-tax return; a lower-deduction certificate can reduce the upfront deduction.
9. Buying remotely: Power of Attorney
If you cannot travel for the registration, you can execute a Power of Attorney (PoA) in favour of a trusted person in India. Best practice:
- Draft a specific PoA (limited to this transaction) rather than a general one.
- Get it signed before the Indian Embassy/Consulate in your country of residence, or notarised and then apostilled/attested.
- Have it adjudicated and stamped in India within the prescribed time after it reaches the country.
10. Tax when you sell later — the 2024 capital-gains changes
Your exit tax was rewritten by Budget 2024, and NRIs are affected differently from residents:
- Holding period: immovable property is long-term if held for more than 24 months.
- LTCG rate: for transfers on or after 23 July 2024, long-term gains are taxed at a flat 12.5% without indexation.
- No grandfathering for NRIs: the choice to instead pay 20% with indexation (for property bought before 23 July 2024) was given only to resident individuals and HUFs. NRIs must use 12.5% without indexation.
- STCG: short-term gains are taxed at your applicable slab rate.
- Exemptions still apply: reinvestment reliefs under Section 54 (buy another house) and Section 54EC (invest up to ₹50 lakh in specified bonds) remain available to reduce or defer LTCG.
Remember: when you sell, your buyer will deduct TDS under Section 195 on the sale value, so plan for a temporary cash-flow squeeze until you claim the excess back through your return or a lower-deduction certificate.
11. Sending the money back: repatriation rules
- Sale proceeds of up to two residential properties can be repatriated, provided the property was originally bought with foreign-sourced funds (inward remittance or NRE/FCNR).
- Repatriation from an NRO account is subject to the overall USD 1 million per financial year limit and payment of all applicable Indian taxes.
- You must file Form 15CA (and a CA’s Form 15CB) certifying that taxes have been paid before your bank remits the funds abroad.
12. Avoiding double tax: DTAA relief
Rental income and capital gains taxed in India may also be taxable in your country of residence. India’s Double Taxation Avoidance Agreements (DTAAs) let you claim relief — usually a foreign tax credit for the Indian tax paid — so the same income is not taxed twice. Keep your Indian TDS certificates and return acknowledgement; your overseas tax adviser will need them.
13. NRI property purchase checklist
- ✅ Confirm your FEMA status and that the property is residential/commercial (not agricultural).
- ✅ Obtain a PAN (and a TAN if buying from an NRI seller).
- ✅ Verify the seller’s residential status in writing to fix the correct TDS section.
- ✅ Fund the deal only via NRE/NRO/FCNR or inward remittance; keep FIRCs.
- ✅ Deduct and deposit the right TDS (Form 26QB or Form 27Q) on time.
- ✅ Budget for stamp duty, registration and GST (if under-construction).
- ✅ Execute a properly attested PoA if buying remotely.
- ✅ File your Indian ITR to claim TDS credit and any refund.
14. Common mistakes to avoid
- Deducting only 1% when the seller is an NRI — the most expensive error, and it’s the buyer who pays.
- Paying in foreign currency or cash — a FEMA violation; always route funds through your NRE/NRO/FCNR account.
- Ignoring stamp-duty value — TDS and capital gains can be computed on the higher of agreement value and stamp-duty value.
- Assuming the new regime gives home-loan deductions — it doesn’t; you need the old regime for 24(b) and 80C.
- Buying agricultural land through a “workaround” — not permitted and legally risky.
15. Frequently asked questions
Can an NRI buy property in India without coming to India?
Yes. You can complete the entire purchase remotely by giving a specific, properly attested Power of Attorney to a trusted representative in India who signs and registers on your behalf.
Does an NRI need RBI permission to buy a flat in India?
No. RBI permission is not required to buy residential or commercial property. Approval is only relevant for restricted categories such as agricultural land, plantations and farmhouses — which NRIs generally cannot purchase at all.
Is there any extra tax for an NRI just to buy property?
No special purchase tax applies to NRIs. Stamp duty, registration and GST (for under-construction homes) are identical to a resident’s. The NRI-specific angles are the funding rules, the TDS you deduct as a buyer, and the capital-gains/repatriation position when you sell.
How much TDS should I deduct if I buy from a resident for ₹80 lakh?
Deduct 1% under Section 194-IA (i.e. ₹80,000) because the value exceeds ₹50 lakh, deposit it via Form 26QB within 30 days and issue Form 16B to the seller. No TAN is needed.
Can an NRI claim a home-loan tax deduction in India?
Yes, if you have taxable income in India and opt for the old regime — up to ₹2 lakh of interest under Section 24(b) and ₹1.5 lakh of principal under Section 80C. These are not available under the new regime.
Can I repatriate the money after selling my Indian property?
Yes, within limits — sale proceeds of up to two residential properties bought with foreign funds can be repatriated, subject to the USD 1 million/year NRO ceiling and after clearing taxes via Form 15CA/15CB.
16. The TaxFetch bottom line
Buying property in India as an NRI is straightforward on paper — residential and commercial property is open to you with no RBI approval and no cap on numbers. The risk sits in the details: fund the deal only through banking channels, deduct the right TDS based on the seller’s status, keep the old regime if you want home-loan deductions, and preserve your remittance trail for repatriation later. Get those four right and the rest is ordinary conveyancing.
Not sure which TDS section applies to your deal, or whether the old or new regime saves you more on the home loan? Try the TaxFetch Income Tax Calculator, or talk to our in-house chartered accountant through TaxFetch e-CA consultation for a document-backed answer on your specific purchase.
