NRI Property Purchase & FEMA Compliance

Residential property

Freely permitted — no RBI approval required. No limit on number of properties.

Permitted

Commercial property

Freely permitted — office premises, shops, warehouses. No RBI approval required.

Permitted

Agricultural land

NOT permitted without prior RBI approval. Applies to plantation property, farmhouses, and agricultural land.

RBI Approval Required

Property gifted to NRI

Gift of property to NRI by a resident relative is permitted. "Relative" as per Section 2(77) of the Companies Act, 2013.

Permitted (relative)

Inherited property

NRI inheriting property from a resident is permitted. No separate FEMA approval needed for inheritance.

Permitted

TDS on NRI property sale — Section 195

When an Indian buyer purchases property from an NRI, TDS at 20% (LTCG) or applicable slab rate (STCG) applies on the entire sale consideration — NOT just the gain. This is Section 195, not Section 194-IA (which applies at 1% only for resident sellers). The buyer must deduct TDS, obtain TAN, and file Form 27Q. The NRI seller should apply for a lower TDS certificate (Form 13 under Section 197) to avoid excess deduction.

Form 15CA and Form 15CB

For repatriation of property sale proceeds to a foreign bank account, Form 15CB (CA certificate confirming TDS compliance) and Form 15CA (online declaration by the remitter/authorised dealer) are required under Section 195 read with Rule 37BB. Without Form 15CB, no authorised dealer bank will transfer proceeds abroad.

Capital gains computation

NRI property capital gains are computed as sale consideration minus indexed cost of acquisition (for LTCG held >2 years) or actual cost minus sale price (for STCG held ≤2 years). LTCG rate: 12.5% (without indexation, post Finance Act 2024 for property sold after 23 July 2024). Section 54 exemption (reinvest in another residential property within 2 years) and Section 54F (invest in residential property) are available to NRIs.

Repatriation limits

Sale proceeds of property acquired in India from NRO account: repatriable up to USD 1 million per financial year (from all NRO sources combined), subject to payment of applicable taxes and RBI reporting via Form A2. Property acquired from NRE account or inward remittance: proceeds repatriable without limit (but capital gains tax must be paid first).

Does an NRI need RBI permission to buy a flat in India?

No. NRIs and OCIs can purchase residential and commercial property in India without any RBI permission under FEMA (Non-Debt Instruments) Rules, 2019. The purchase must be funded through permitted payment channels (NRE/NRO/FCNR accounts or inward remittance via authorised dealer banks). RBI approval is required only for agricultural land, plantation property, and farmhouses — these categories are restricted for NRI purchase without prior approval.

Can an OCI card holder buy property in India?

Yes. Overseas Citizens of India (OCI) card holders have the same property purchase rights as NRIs under FEMA. OCIs can freely purchase residential and commercial property in India without RBI approval. The agricultural land restriction applies to OCIs as well. OCI card holders are treated on par with NRIs for most FEMA-related property transactions.

What is Form 15CB and who issues it?

Form 15CB is a certificate issued by a Chartered Accountant confirming that the applicable income tax provisions and DTAA treaty provisions have been complied with, and that TDS has been correctly deducted (or is not applicable) before remittance of funds abroad. It is required under Rule 37BB of the Income Tax Rules, 1962, read with Section 195, for remittances exceeding ₹5 lakh (Form 15CA Part C requires Form 15CB as supporting document). Only a practising Chartered Accountant can issue Form 15CB — it must carry a UDIN.

How much property sale proceeds can an NRI repatriate?

Repatriation of sale proceeds depends on how the property was originally acquired. If acquired from NRE account or inward remittance, the entire sale proceeds (net of taxes) can be repatriated without a ceiling. If acquired from NRO account or from funds accumulated in India, repatriation is capped at USD 1 million per financial year (from all NRO account sources combined). The remittance requires a CA certificate (Form 15CB) and Form 15CA filing.