by THO
Forty-one-year-old Rahul Vyas, a London-based professional, is considering investing in a property in India for his retirement. Like him, many Non-Resident Indians (NRIs) look to invest in properties back home, driven by favorable government policies, easier access to home loans, and a strong emotional connection to their homeland. If you’re an NRI planning to invest in property in India, here’s what you need to know.
1.Basic Requirements
When buying a property in India, NRIs need to understand FEMA and RBI guidelines. “The Foreign Exchange Management Act (FEMA) governs NRI investments in India. While commercial and residential investments can be made, investments in agricultural land and plantations are restricted,” says Deepak Mishra, Director, Residential Transaction Services at Colliers India, a real estate services company.
Under construction property should be registered with the Real Estate Regulatory Authority (RERA). NRIs also need to ensure that such properties are pre-approved by national banks for loans. NRIs should also ensure that the title of the property is clean and duly verified.
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It is also crucial for NRIs to have a valid PAN card, as it is required for tax and financial purposes. “Additionally, a certificate verifying NRI status is typically necessary. Property purchases must align with Indian land laws, as certain areas have specific restrictions on agricultural land and property ownership for non-residents,” says Prashant Khandelwal, CEO, Agami Realty, a Mumbai-based real estate firm.
2.Financing Options
Indian banks allow NRIs to obtain home loans by issuing financing worth 80-85% of the property value during a 10 to 20-year period. Indian institutions have specific rules about home loans for NRIs that set requirements regarding employment abroad and income levels.
NRIs can also make full payment without a home loan, in which case they can remit money through authorised banking channels. They can also use money from their Non-Resident/ Non-Resident Ordinary External (NRE/NRO) or Foreign Currency Non-Resident (FCNR) account. It is important to remember that travellers’ cheques and foreign currency are not allowed as means of payment.
“Lenders demand valid passports combined with valid visas and evidence of overseas address and the Permanent Account Number (PAN) card. The repayment of home loans requires Indian Rupees through either NRE or NRO accounts,” says Ram Naik, co-founder and director, The Guardians Real Estate Advisory.
3.Power Of Attorney
Granting a Power of Attorney (PoA) is highly recommended for NRIs, especially if they cannot be physically present in India to manage real estate transactions. A PoA allows a trusted individual (such as a family member or legal representative) to handle property purchases, registrations, sales, rent agreements, and home loan formalities on behalf of the NRI.
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“The PoA must be legally registered and notarized as per Indian laws to be valid. Opting for a Specific PoA (which grants limited rights) rather than a General PoA (which provides broad control) is advisable to minimize risks. Having a PoA saves time and reduces logistical challenges for NRIs managing assets from abroad,” says Anupam Rastogi, Co-Founder and Chief Business Officer, Square Yards.
4.Buying Multiple Properties
For self-occupied properties, the annual value is typically treated as zero, meaning taxpayers are exempt from paying tax on potential rental income from the property or if the property is left vacant.
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“In the Union Budget 2025, a proposal has been put forward suggesting that taxpayers be given the option to treat two properties as self-occupied without any conditions, thereby allowing exemption for more than one property used for personal purposes,” says Khandelwal. This will make owning more than one property tax efficient.
5.Tax Matters
“When an NRI buys property from a resident Indian, Tax Deducted at Source (TDS) is deducted at 1% of the sale consideration if it exceeds ₹50 lakh,” says Mishra. However, NRIs can apply for reduced TDS or TDS exemption. This needs to be deducted by the buyer and deposited with the income tax department.
Apart from TDS there is no direct tax when an NRI purchases a property in India.
Anagh Pal is a personal finance expert who writes on real estate, tax, insurance, mutual funds and other topics
