NRI Property Purchase in India: Complete Tax and Legal Guide

NRI Property Purchase Guide

NRIs (Non-Resident Indians) are significant participants in the Indian property market. Here is a comprehensive overview of the rules and processes.

What NRIs Can Buy

NRIs can buy residential and commercial property in India without limit. They cannot buy agricultural land, plantation property, or farmhouses. NRIs of Pakistani or Bangladeshi origin need RBI approval.

Payment Rules

Payment must be through normal banking channels from an NRE, NRO, or FCNR account. Cash payment is not permitted. Home loans are available from Indian banks (typically at slightly higher rates than resident loans). Power of Attorney can be given to a family member for execution.

Tax Implications

TDS at 20% (plus surcharge) on long-term capital gains (property held 2+ years) or 30% (plus surcharge) on short-term gains is deducted by the buyer when you sell. Rental income is taxed in India and must be declared in your country of residence (DTAA benefits may apply).

Repatriation

Sale proceeds can be repatriated (up to 2 properties) if the property was purchased through banking channels and all Indian taxes are paid. CA certificate and documentation from the bank are required.

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