NRI Property Buying and Selling in India: Tax, FEMA and Compliance Guide (2025)
Everything an NRI needs to know about buying or selling property in India — FEMA rules on types of property, how to fund the purchase, capital gains tax on sale, TDS obligations, and repatriation of proceeds.
What Property Can NRIs Buy in India?
NRIs (Non-Resident Indians) and PIOs (Persons of Indian Origin) can freely purchase and hold: residential properties (flats, houses, villas), and commercial properties (shops, offices). NRIs CANNOT purchase: agricultural land, plantation property, or farmhouse (unless inherited or received as gift from a resident Indian). There is no limit on the number of properties an NRI can own.
How Can NRIs Fund Property Purchase?
NRIs can fund property purchase using: (1) NRE account funds — freely repatriable, (2) NRO account funds — repatriable up to USD 1 million per FY with CA certificate, (3) Foreign currency remittance — inward remittance through banking channels, (4) Home loan from Indian bank — NRIs can take home loans from banks and HFCs in India. All payments must be through banking channels — no cash payments allowed.
TDS on Purchase from NRI Seller (Buyer's Obligation)
When buying property from an NRI seller, the buyer MUST deduct TDS under Section 195: 20% + surcharge + cess for long-term capital gains (property held > 24 months) or 30% + surcharge + cess for short-term capital gains. This is on the FULL sale value, not just the gain. The NRI seller can apply for a lower TDS certificate (Form 13) to reduce TDS to the actual tax on capital gains. TDS must be deposited using Form 27Q, not the regular Form 26QB used for purchases from residents.
Capital Gains Tax on NRI Property Sale
Capital gains tax on NRI property sale follows the same rules as residents: LTCG at 12.5% without indexation (or 20% with indexation for properties bought before July 23, 2024 — choose whichever is lower). STCG at slab rates. Section 54 exemption applies — if you reinvest LTCG in another residential property in India within the specified timeframe, the gain is exempt.
Repatriating Property Sale Proceeds
Repatriation limits and requirements: (1) If property was purchased from NRE/FCNR funds — sale proceeds fully repatriable. Repatriate up to original purchase cost + LTCG (after tax). (2) If property was purchased from NRO/local funds or inherited — USD 1 million per FY limit. Requires Form 15CA (self-declaration) and Form 15CB (CA certificate). Must be routed through NRO account.
Need expert help applying this to your situation?
Our CA team reviews your numbers and gives you a clear answer — usually within hours.
WhatsApp our CA