Over 23% of Indian real estate transactions now involve NRIs, with investments growing at 12% annually. While the process shares similarities with resident purchases, key differences in documentation, taxation, and repatriation rules demand careful attention. This guide walks through the entire process from eligibility to property registration.
1. Understanding NRI Eligibility
Key regulations under FEMA:
- Permitted: Residential/commercial properties
- Prohibited: Agricultural land, plantation property
- Special Cases: Inheritance/gift of restricted property allowed
Definition: You qualify as NRI if spending 182+ days abroad in a financial year.
2. Financing Options
Available funding sources:
- NRE Account: Tax-free transfers, full repatriation
- NRO Account: Taxable income, limited repatriation
- Home Loans: 75-80% LTV, rates 0.5-1% higher than resident loans
- Foreign Currency: Only for commercial properties
3. Essential Documentation
Beyond standard requirements:
- Passport copies (all pages with stamps)
- Overseas address proof (utility bills/bank statements)
- PAN card (mandatory regardless of tax residency)
- POA if buying remotely (notarized + apostilled)
4. Tax Implications
Critical considerations:
- TDS: 20-30% on rent/lease income
- Capital Gains: 20% after indexation if sold after 2 years
- DTAA Benefits: Potential to avoid double taxation
- GST: 5-12% on under-construction properties
Repatriation Rules
Limits on transferring sale proceeds abroad:
- Residential: Up to $1M/year from NRO account
- Commercial: No limit if bought in foreign currency
- Original Investment: Full amount repatriable from NRE funds
Strategic Approach
Successful NRI property purchases require:
- Engaging a specialized NRI real estate attorney
- Maintaining separate NRE/NRO accounts for clean fund trails
- Planning exit strategies before purchase (rental vs resale)
Remember: While the process involves additional compliance, Indian real estate remains one of the most stable investment avenues for NRIs – especially when navigated with proper guidance and documentation.