5 Key Essentials for Buying Property in India

Buying property in India is a popular investment choice for Non-Resident Indians (NRIs), driven by emotional ties, favorable policies, and financial opportunities. However, navigating the process requires a good understanding of regulations, financing options, and tax implications. Here’s what NRIs should know before making a real estate purchase in India.

1. Understanding Regulations

NRIs must comply with the Foreign Exchange Management Act (FEMA) and Reserve Bank of India (RBI) guidelines when purchasing property in India. While they can buy residential and commercial properties, agricultural land, farmhouses, and plantations are generally restricted.

For under-construction properties, it’s essential to check Real Estate Regulatory Authority (RERA) registration and verify the property’s title. A Permanent Account Number (PAN) card is also required for tax and financial transactions.

2. Home Loan & Financing Options

Indian banks offer home loans to NRIs, covering 80-85% of the property value, with repayment terms ranging from 10 to 20 years. Lenders require:

• A valid passport and visa
• Proof of overseas residence
• A PAN card

NRIs can also buy property outright without a loan by making payments through NRE, NRO, or FCNR accounts, but cash payments, travelers’ cheques, and foreign currency are not allowed. Loan repayments must be made in Indian Rupees via NRE or NRO accounts.

3. Power of Attorney (PoA)

Since NRIs may not always be physically present in India for transactions, granting Power of Attorney (PoA) to a trusted person—such as a family member or legal representative—is recommended.

A Specific PoA (limited rights) is safer than a General PoA (broad control). The PoA document must be registered and notarized as per Indian law to be valid. This ensures smooth handling of property-related tasks like registration, rental agreements, and home loan formalities.

4. Owning Multiple Properties

NRIs can own multiple properties in India. For self-occupied homes, the taxable value is typically considered zero, meaning no tax is levied on potential rental income.

The Union Budget 2025 proposes allowing taxpayers to treat two properties as self-occupied, offering potential tax benefits for NRIs looking to own more than one home.

5. Taxation & TDS Rules

NRIs must be aware of Tax Deducted at Source (TDS) when purchasing property. If the property value exceeds ₹50 lakh, a 1% TDS applies, which the buyer must deduct and deposit with the Indian Income Tax Department.

NRIs can also apply for a reduced TDS rate or exemption under specific conditions. However, aside from TDS, there are no direct taxes on property purchases.

For NRIs, investing in Indian real estate is a promising opportunity, but understanding legal and financial obligations is crucial. Consulting real estate and financial experts can help ensure a smooth, compliant, and profitable transaction.