NRI buying property in India: full guide

If you’re a NRI (non-resident Indian) or PIO (person of Indian origin) considering buying property in India from the USA, this guide is for you.

We’ll cover all you need to know about buying a house in India, including the documents required for an NRI to buy property in India and how to arrange a power of attorney for an NRI to buy property in India without being in the country.

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📑 Table of Contents
What types of immovable property can NRIs/PIOs buy? Procedure for NRI to buy property in India NRIs buying property in India: financial aspects

What types of immovable property can NRIs/PIOs buy?

As an NRI buying property in India, you're free to purchase most types of real estate. Residential and commercial properties are both approved for NRI and PIO purchases, as long as the process follows FEMA (Foreign Exchange Management Act) rules¹.

The key exception is buying agricultural land, plantations and similar properties. In this case you’d need to seek extra permissions before buying, with approval granted on a case by case basis.

This also means that NRIs and Green Card holders can’t buy agricultural properties, such as the farmhouses attached to agricultural land, without official permission.

Can you continue owning land or property after becoming a non-resident?

If you buy a property in India when you’re a resident there and subsequently leave the country, you’re entitled to hold onto the property — even if it’s agricultural land, and would otherwise not be available to purchase by an NRI.

Procedure for NRI to buy property in India

The steps you’ll take to buy property as an NRI are similar to those followed by residents in India — the main difference will be in the need to acquire power of attorney if you’re not already in the country.

Get good local advice if you’re not in India yourself, to make sure you’re following all legal requirements when buying a property, and to avoid any unnecessary risk.

🎯 Here are the basic steps you’ll take
Engage a local solicitor and notary Find a realtor in the location you want to buy Arrange power of attorney if you’ll not be in India for the purchase Find a property and agree a sale price Your solicitor will complete due diligence checks and create a sale agreement Sign the sale deed in person of via your representative Registration of the property purchase

Documents required for NRI to buy property in India

Here’s a rundown of the documents usually required when buying a property in India as an NRI:

Passport — if you hold a non-Indian passport you’ll also need proof you’re an NRI such as a PIO or OCI (Overseas Citizen of India) card PAN (Permanent Account Number) card Power of attorney if you’re not completing the transaction personally Proof of address and identity will be required when you register the purchase of the property

Getting a power of attorney for NRI to buy property in India

If you’re not able to travel to India to complete your property purchase personally, you can still buy property in India as an NRI by giving power of attorney (PoA) to a representative. This entitles your representative to act on your behalf in legal matters such as completing the property purchase.

You can arrange power of attorney via your nearest Indian Embassy or Consulate. The process may vary slightly between locations, but you’ll usually need to have 2 witnesses available to sign your PoA and will need to provide your OCI/PIO card and recent passport sized photos².

NRIs buying property in India: financial aspects

Buying a property can be a great investment — but it’s also a big commitment. Let’s take a quick look at some financial considerations when buying a property in India.

Getting a home loan in India as a NRI

As an NRI you may be able to get a home loan in India. However, banks will set their own eligibility rules, so whether or not you’re allowed to take a mortgage may depend on the type, value and location of the property as well as how you intend to use it.

It’s common for NRIs to be asked to provide a higher deposit amount compared to residents. The interest rates offered to NRIs may also be inferior to those given to residents of India.

Documents required to get a NRI home loan

If you’re entitled to get a home loan in India you’ll need to provide a suite of supporting documents.

Exactly what is required will vary from bank to bank — but you can expect to be asked for:

Your passport and PIO/OCI card Proof of legal status in your country of residence Evidence of your income and any pre-existing debts Credit score from your country of residence

Paying for property in India as an NRI

Whether you’re taking a home loan or buying your property outright, you’ll likely need to make a payment upfront when you close the deal.

Under RBI rules you must pay for your property either through remitting a payment from overseas in INR, or from the balance held in your NRE/NRO or FCNR account.

You can’t pay for a property in India by presenting foreign currency for example.

Repatriation of funds from abroad

If you sell your property in India you’ll be able to remit the funds overseas subject to RBI rules.

To repatriate funds you’ll need to demonstrate you acquired the property under FEMA rules, and you’ll have to pay any relevant local taxes.

If you’re selling more than 2 properties you may need to seek RBI approval before remitting funds¹.

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Tax implications for NRIs buying property in India

When you buy a property in India you’ll be liable for several local taxes including stamp duty, registration fees and legal costs³. You may also need to pay a realtor’s fees, depending on how you’ve arranged the transaction.

If you buy a property in India but retain your NRI status it’s likely that you’ll only need to pay income tax in India on income accrued in India⁴.

If you change your status to become a tax resident in India your tax obligations will also change. In any case, it’s worth taking professional advice to make sure you’re fulfilling all tax requirements both in India and in your country of residence.

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Whether you’re buying a property in India to live in or as an investment, use this guide as a starting point to understand the process involved.

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Sources:

1. RBI - FAQ
2. Indian Embassy USA
3. Global Property Guide - India buying guide
4. Tax Summaries - Taxes on personal income

Sources checked on 01.26.2022