How NRIs Can Invest in Indian Commercial Real Estate (Rules and Returns)
If you are an NRI watching a 3–4% deposit yield abroad while a Grade-A office in Bengaluru rents at 7–9%, the maths is hard to ignore. Indian commercial real estate (CRE) is one of the few asset classes where you can earn rupee rental income, hold a tangible asset, and still repatriate your money home — legally and in dollars.
The short answer: yes, an NRI can buy commercial property in India without RBI approval, with no cap on the number of properties. What you actually need to get right is how you fund it, how the rent is taxed, and how much you can send back each year. This guide walks you through all three, plus the returns you can realistically expect.
Can an NRI legally buy commercial property in India?
Under FEMA (Foreign Exchange Management Act), an NRI or OCI cardholder can freely purchase both residential and commercial property in India. No prior permission from the Reserve Bank of India is required, and there is no limit on the number of properties you can own.
The boundaries are clear and worth memorising:
- Allowed: offices, retail/high-street shops, warehouses, industrial units, and any built commercial space.
- Not allowed: agricultural land, plantation property, and farmhouses. You can only acquire these by inheritance or gift, never by purchase.
So for the asset class you care about — Grade-A offices, pre-leased commercial units, warehousing — the door is fully open.
How NRIs must fund a commercial purchase
This is where most first-time NRI buyers slip up. Under FEMA, every rupee of your purchase consideration must move through banking channels — no foreign currency cash, no payment from abroad directly to the seller. You fund the deal through one of three NRI accounts:
- NRE (Non-Resident External): for money you bring in from foreign earnings. Fully repatriable, interest is tax-free in India. This is the cleanest account to buy with if you want frictionless repatriation later.
- NRO (Non-Resident Ordinary): for income earned within India (rent, dividends). Repatriation is capped (more below).
- FCNR (B): a foreign-currency fixed deposit; funds and interest are tax-free, useful for parking money before you deploy it.
Practical tip: if your goal is to one day take the sale proceeds fully back out of India, buy using NRE funds and keep clean records of the inward remittance. That paper trail is what makes repatriation smooth.
Can NRIs take a loan for commercial property?
Yes. Indian banks and NBFCs offer NRI loans against commercial property. The loan must be disbursed in India and serviced through your NRE/NRO account or via inward remittance. Loan-to-value, tenure and rates are tighter than for residents, so factor that in. The interest you pay is deductible against your rental income — a genuine tax shield.
What returns can you actually expect?
This is the part that makes NRIs look twice at India. In 2025, Grade-A office rental yields stabilised in the 7%–9% band, with Bengaluru and Hyderabad at the higher end (7.5–8.5%) and Mumbai, Gurugram and Pune close behind. Mumbai led rental growth with the steepest quarterly rise among major cities.
Three ways an NRI typically enters Indian CRE:
- Direct purchase of a pre-leased Grade-A unit — you buy an office already let to a strong tenant, so rent starts from day one with a contracted lease and built-in escalations.
- Listed REITs — fully passive, liquid, and regulated by SEBI. India's listed REITs drew roughly USD 3 billion of foreign portfolio inflows in 2025.
- SM REITs / fractional ownership — newer SEBI-regulated structures that let you own a slice of a large institutional-grade asset for a smaller ticket.
For an NRI who wants a tangible, controllable asset with the highest yield, direct pre-leased commercial remains the headline play — provided the tenant covenant, lease terms and locality are vetted properly.
How rental income is taxed for NRIs
Rent from Indian property is taxable in India, and the mechanics are specific:
- The tenant must deduct 30% TDS on rent paid to an NRI before transferring it. The rent must be credited to your NRO account.
- You can claim a standard deduction of 30% of the annual value for repairs and maintenance, plus deduct municipal taxes paid and any home/commercial loan interest.
- After deductions, your actual tax liability is usually far lower than the 30% TDS. You file an Indian income-tax return to claim the refund.
Two moves that save real money:
- Apply to the Income Tax Department for a Lower/Nil TDS certificate (Section 197) so the tenant deducts at your true effective rate, not the flat 30% — this protects your cash flow.
- Use the Double Taxation Avoidance Agreement (DTAA) between India and your country of residence so you are not taxed twice on the same rent.
Repatriation: sending your rent and sale proceeds home
You can take money out of India, but within RBI's framework:
- Rental income is credited to your NRO account. From there you may repatriate up to USD 1 million per financial year (covering rent and other current income), after taxes and with a CA's Form 15CA/15CB certification.
- Sale proceeds also flow through this USD 1 million NRO limit. If you originally bought the asset with NRE/FCNR funds, the principal portion can generally be repatriated more freely — another reason to fund cleanly upfront.
In practice the USD 1 million ceiling is comfortably above what most individual investors repatriate annually, so for a single or even multiple commercial assets it is rarely a binding constraint.
What changed on capital gains (and why it matters)
If you sell after holding for more than 24 months, gains are long-term. Post the Finance (No. 2) Act 2024, long-term capital gains on property are taxed at 12.5% without indexation (the older 20%-with-indexation regime applies only to properties acquired before 23 July 2024). TDS on the sale is deducted accordingly. Short-term gains are taxed at slab rates. Build this into your exit maths before you buy.
The single biggest risk for an NRI buyer
It is not the rules — it is information asymmetry. You are often 8,000 km away, relying on a builder's brochure, a broker who earns commission from the seller, and a video walkthrough. The yield on paper can quietly evaporate through an over-quoted rent, a weak tenant, a soft micro-market, or a title that does not stand up.
This is exactly the gap a buyer-side advisory closes. At PropXplor, we represent you. Every shortlisted asset is independently scored through PropScore — an 80+ data-point report covering title, RERA status, locality demand, tenant strength, true achievable yield and exit liquidity — and a dedicated human advisor brings only the curated, architect-verified options to your inbox. You see what survives scrutiny, not what someone wants to sell.
FAQ
Can an NRI buy commercial property in India without RBI approval? Yes. NRIs and OCIs can buy residential and commercial property freely under FEMA, with no RBI approval and no limit on quantity. Only agricultural land, plantations and farmhouses are off-limits to purchase.
Where must NRI rental income be deposited? Rent must be credited to your NRO account after the tenant deducts 30% TDS. You can then claim deductions and file a return to recover excess TDS, or pre-empt it with a Lower TDS certificate.
How much can an NRI repatriate from rent each year? Up to USD 1 million per financial year from your NRO account, after applicable taxes and with CA-certified Form 15CA/15CB documentation.
What rental yield do Indian Grade-A offices offer NRIs? In 2025, Grade-A office yields ranged 7%–9%, with Bengaluru and Hyderabad at the top end — typically well above foreign deposit and bond returns.
Can an NRI take a loan to buy commercial property in India? Yes. Indian banks offer NRI commercial property loans, serviced via NRE/NRO accounts or inward remittance, and the interest is deductible against rental income.
Bring curated Indian commercial assets to your doorstep
You should never have to bet rupee lakhs on a brochure and a phone call. Tell us your target yield, ticket size and preferred cities — Mumbai, Thane, Navi Mumbai, Pune or Bangalore — and we will independently verify and shortlist Grade-A commercial assets worth your money.
Book a free consultation or explore the PropXplor buyer membership (Rs 4,499 / 6 months) to get your dedicated advisor and PropScore reports.
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