What an NRI can and cannot buy
Under the Foreign Exchange Management Act (FEMA), an NRI or PIO (Person of Indian Origin) can buy: - Residential apartments, villas, plotted developments - Commercial property (offices, retail) - Investments in REITs
An NRI cannot buy: - Agricultural land - Plantation property - Farmhouses
How to pay
Funds must come through banking channels. The three permitted modes:
1. NRE (Non-Resident External) account — fully repatriable, holds foreign currency 2. NRO (Non-Resident Ordinary) account — limited repatriation (USD 1 million per financial year) 3. FCNR (Foreign Currency Non-Resident) deposit — foreign currency, fully repatriable
Cash payments above ₹2 lakh are illegal under Section 269ST. Always pay via cheque, DD or wire transfer from one of the above accounts.
Power of Attorney (POA)
Most NRIs cannot fly in for every step (site visits, registration, Khata mutation, possession handover). A Specific Power of Attorney to a trusted family member or your real estate agent makes this manageable.
POA execution from abroad: 1. Draft POA in India, mail to NRI 2. Get it notarised by an Indian Embassy / Consulate, OR get it apostilled per Hague Convention if your country is a signatory 3. Mail back to India 4. Adjudicate at the local sub-registrar office (~₹500–2,000 stamp duty)
TDS — the 1% buyers must deduct
If the property value exceeds ₹50 lakh, the buyer is legally required to deduct 1% TDS at the time of payment to the seller, deposit it via challan ITNS-281, and file Form 26QB. For NRI sellers, the TDS rate is much higher — 20%+ on long-term capital gains. Most agents will help coordinate this.
Capital gains and repatriation
When you sell, long-term capital gains (held > 24 months) are taxed at 12.5% post-2024 budget changes (was 20% with indexation). Short-term gains are taxed at slab rates.
Repatriation of sale proceeds: up to USD 1 million per financial year via NRO; unlimited for NRE-funded purchases (subject to original investment proof).
Practical workflow
1. Pre-decision (week 1-2): discuss budget, locality, lender, BHK with agent over video call 2. Shortlist (week 2-3): agent sends 5-7 video walkthroughs and a comparison sheet 3. Site visits (week 4): either in-person trip or POA-holder visits with live video 4. Token & agreement (week 5): draft sale agreement reviewed by an Indian lawyer, token paid from NRE/NRO 5. Bank loan (week 6-8): if financing, HDFC NRI / SBI NRI / ICICI NRI all have dedicated NRI desks 6. Registration (week 8-10): either in person or via POA holder 7. Khata mutation & handover (week 10-14): automated by agent