Anisha Kumari | Jun 4, 2025 |
5 Key Things NRIs Should Know Before Buying Property in India
Buying of property in India can be a very practical and smart move for NRIs. Those who plan to return in the future or visit often, owning a home in India not only provides a personal space for NRIs during their visits but can be seen as a long term investment. Many NRIs buy residential flats or houses in major cities to stay during holidays or to use after retirement. The Indian real estate market has been growing very fast in the recent years, property ownership can provide good returns over time. However, there are many important things to take in consideration before making a purchase. One should have a proper understanding of RBI and FEMA rules to make proper paperwork and knowing the latest tax laws. NRIs also need to think about how they will fund the purchase, whether through money sent from abroad or using Indian income. Choosing the right location, builder, and verifying legal documents is key to a smooth and safe investment.
NRIs are allowed to buy residential and commercial properties in India as per FEMA rules. But they are not allowed to buy agricultural land, plantation land, or farmhouses unless those properties are inherited or approved by the Reserve Bank of India. For example, an NRI’s cannot but Farm house in India as per RBI Regulations
If an individual is buying the property using their money from abroad, the funds must be sent to an NRE (Non-Resident External) account. The payment should be made through this account, and bank statements must be saved as proof of the source of funds. This is important if the NRI plans to sell the property later and send the money back.
Home loans from Indian banks and housing finance companies are available for NRIs. Loan repayments must be made using NRE or NRO accounts, as per RBI rules. If they are purchasing using their Indian money, any normal Indian bank account can be used.
While purchasing the buyer should deduct TDS from the payment to the seller. This step is important even if the NRI doesn’t file regular tax returns. It’s also advised to file income tax returns every year after buying the property, even if the income is low. This will help in easy tax processing when the property is sold later. Tax benefits like deductions under Section 80C (home loan principal) and Section 24(b) (home loan interest) are available under the old tax regime if there is taxable income in India.
The tax on remittances by non-US citizens is 3.5% which makes the overseas transfers expensive. India does not tax inward remittances so NRIs should send extra money to cover this charge. They can also reduce this cost by Joint remittances with a US citizen family member.
NRIs must have proper documents like passport, PAN card, address proof, and OCI/PIO card. It is important to check property title, confirm no legal issues exist, confirm government approvals, and get legal advice before taking this important decision of purchasing a property in India. It is also a good idea to choose a trusted builder and a city that has jobs, good roads and facilities, and an international airport.
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