NRI Buying / FEMA / Loans / Repatriation

FEMA Rules for NRI Property Purchase: What You Can and Cannot Buy

2026-06-16 · PropXplor

Here is the short answer you came for: as an NRI, you can freely buy residential and commercial property in India — as many units as you like — without any special permission from the Reserve Bank of India. What you cannot buy is agricultural land, a farmhouse, or a plantation. That single distinction sits at the heart of the Foreign Exchange Management Act (FEMA), and most of the confusion around NRI property purchases dissolves once you understand it.

But the rules don't end at "what." FEMA also governs how you pay, which bank account the money flows through, and how much you can later send back abroad. Get the compliance trail right at the point of purchase, and a future sale or repatriation becomes routine. Get it wrong, and you can find your own money trapped in India for years. This guide walks you through all of it in plain English, written to one buyer — you.

Modern residential apartment towers against a clear sky in an Indian metro FEMA lets NRIs own unlimited residential and commercial property across India's metros.

What FEMA actually is — and why it applies to you

FEMA is the law that governs all foreign-exchange transactions involving India, and that includes an NRI sending money home to buy a flat in Powai or an office floor in Pune. The RBI administers it through a set of regulations on the acquisition and transfer of immovable property.

The good news for you: the framework is permissive for genuine residential and commercial real estate. You don't file applications, you don't seek prior approval, you don't wait on a bureaucrat. The "general permission" route covers you automatically as long as you stay inside the defined boundaries. Both NRIs (Indian passport holders living abroad) and OCIs (Overseas Citizens of India) enjoy the same rights here.

What you CAN buy

Under FEMA's general permission, you are free to purchase:

Residential property — apartments, villas, builder floors, independent houses. There is no cap on the number of homes you may own.
Commercial property — offices, retail units, shops, warehouses, and the like. You may buy these to occupy, to lease out, or purely as an investment.

You can also rent out any of these and earn income in India, and you can inherit or gift property between relatives — including categories you couldn't otherwise buy. Inheritance is the one legitimate doorway into owning agricultural land as an NRI.

What you CANNOT buy

FEMA expressly bars NRIs and OCIs from purchasing three categories of property:

Agricultural land
Farmhouses
Plantation property (tea, coffee, rubber estates and similar)

The intent is to protect India's farming land base from foreign-exchange-funded acquisition. The only routes to legally holding these as an NRI are inheritance or a specific, case-by-case approval from the RBI — which is rarely granted and never something to bank on. If a seller or agent tells you a "farmhouse plot" is fine for an NRI to buy outright, treat it as a red flag and verify the land classification in the revenue records before you go a step further. A property marketed as a weekend "farmhouse" may legally be agricultural land, and that makes the purchase void for you.

Rule of thumb: if it grows crops or is zoned agricultural, an NRI cannot buy it. If people live or work in it, you can.

How you must pay — the money trail matters

FEMA doesn't only care what you buy; it cares how the rupees arrive. Your purchase must be funded through legitimate banking channels — never cash. The accepted sources are:

Inward remittance from abroad through normal banking channels, or
Funds held in your NRE (Non-Resident External), NRO (Non-Resident Ordinary), or FCNR account in India.

You can also fund the purchase with a home loan from an Indian bank or housing finance company, with EMIs serviced from your NRE/NRO account or via inward remittance. What you may not use is foreign currency in cash, travellers' cheques, or any payment outside the banking system. Every rupee should be traceable.

This is where the account you choose quietly shapes your future. Money that enters through an NRE or FCNR account or fresh inward remittance is fully repatriable — you can later send the entire sale proceeds back abroad. Money routed through an NRO account is subject to a repatriation cap (covered below). The decision you make at the buying stage determines how freely you can take money out years later, so plan the funding source deliberately.

Glass commercial office building reflecting a city skyline Commercial property is fully open to NRIs — to occupy, lease, or hold as an investment.

Selling later: TDS and the repatriation rules

When you eventually sell, two FEMA-and-tax realities kick in.

TDS at sale. The buyer of your property must deduct tax at source before paying you. For an NRI seller, this is 12.5% on long-term capital gains (property held more than two years) plus applicable surcharge and cess — the buyer commonly deducts and deposits this and files Form 27Q. Short-term gains (property sold within two years) are taxed at your slab rate, with TDS up to 30% plus surcharge and cess. If your actual gain is lower than the deducted amount, you can apply to the Income Tax Department for a lower/nil-deduction certificate so you aren't over-deducted — a step worth taking on large transactions.

Repatriation limits. How much you can send abroad depends on how you originally paid:

If you bought using NRE/FCNR funds or inward remittance, you may repatriate the entire sale proceeds of up to two residential properties.
If you bought using NRO/rupee funds, repatriation is capped at USD 1 million per financial year (across all sources combined).

To move funds out, your bank will need Form 15CA (your declaration) and Form 15CB (a chartered accountant's certificate confirming taxes are paid) for remittances above the prescribed threshold. This is precisely why the funding decision at purchase, and clean documentation throughout, pay off at exit.

The compliance trail to keep — your checklist

FEMA compliance isn't a single form; it's a clean paper trail you build from day one. Keep:

Proof of payment through banking channels — remittance advices, NRE/NRO statements.
The registered sale deed and encumbrance certificate confirming clear title.
RERA registration details of the project (mandatory for under-construction and most new developments — verify the project on your state RERA portal before paying).
Stamp duty and registration receipts (rates vary by state — broadly 5–7% stamp duty plus 1% registration in Maharashtra and Karnataka).
Your PAN card, and a registered Power of Attorney if someone in India will sign on your behalf — register the PoA properly; an informal one will not hold up at the sub-registrar's office.
Tax records — TDS certificates, capital-gains computation, and the 15CA/15CB pair for any future repatriation.

A buyer who keeps this trail tidy from the start never has to reconstruct it under pressure years later when a sale or remittance is on the clock.

Where curation quietly protects you

The single biggest FEMA risk for an NRI isn't the law — it's being shown the wrong property by someone whose incentive is to close a sale, not to protect you. A mis-classified "farmhouse," a project not registered under RERA, a title that doesn't survive scrutiny: these are avoidable with the right diligence before you commit a rupee.

This is exactly the gap PropXplor is built to close. As a buyer-side advisory — we represent you — every property we bring you is independently vetted, and our PropScore report runs more than 80 data points across legal title, RERA status, land classification, builder track record and locality. Your dedicated advisor handles the curated shortlist so the homes that reach you are already clean on the fundamentals FEMA cares about. You see only what's genuinely worth your attention.

Frequently asked questions

Can an NRI buy agricultural land in India? No. FEMA prohibits NRIs and OCIs from purchasing agricultural land, farmhouses, or plantation property. You can only come to own such land through inheritance or a specific RBI approval, which is rarely granted.

Does an NRI need RBI permission to buy a flat in India? No. Buying residential or commercial property falls under FEMA's general permission. No prior RBI approval is required as long as the purchase is funded through proper banking channels.

How many properties can an NRI own in India? There is no limit on the number of residential or commercial properties an NRI can own. The only limit is on repatriation — full repatriation of sale proceeds is allowed for up to two residential properties bought with foreign funds.

Can an NRI take a home loan in India? Yes. Indian banks and housing finance companies offer home loans to NRIs, typically up to 75–80% of the property value, with EMIs serviced from your NRE/NRO account or through inward remittance.

How much money can an NRI send back abroad after selling property? If you bought with NRE/FCNR funds or inward remittance, you can repatriate the full sale proceeds of up to two residential properties. If you bought with NRO/rupee funds, repatriation is capped at USD 1 million per financial year, supported by Forms 15CA and 15CB.