NRI Guide

Property continues to be a top investment choice for NRIs in India, especially as the Indian government rolls out key reforms, including changes to the Land Acquisition Act, the Real Estate Regulatory Bill, and relaxed FDI norms.
However, before committing to an investment, it's essential to consider critical factors such as the credibility of the realtor, the project's legal status, location advantages, amenities offered, payment plans, and other important details.
A2Z Investment offers secure and high-return investment opportunities in North India, with a strong focus on the rapidly developing tri-city region—Chandigarh, Panchkula, Mohali, and Zirakpur.

Who is an NRI?

A Non-Resident Indian (NRI) is an Indian citizen who resides outside India for more than 180 days in a financial year. This is usually due to employment, business, education, or permanent settlement abroad. Despite living overseas, NRIs retain the right to invest in India, including in the country’s booming real estate sector.

Overview of FEMA

The Foreign Exchange Management Act (FEMA), 1999, governs foreign exchange transactions in India. This includes the purchase, transfer, and repatriation of property by NRIs. Enacted on December 29, 1999, FEMA supports India’s liberal economic policies and facilitates smoother cross-border investments while maintaining legal oversight.

FEMA Guidelines for NRIs Purchasing Property in India

Before buying property in India, NRIs must adhere to specific FEMA rules that define eligibility, permissible property types, payment norms, and transfer regulations. These guidelines ensure a transparent and compliant investment process.

Eligibility Criteria

NRIs and Persons of Indian Origin (PIOs) can buy any immovable property in India except:

Agricultural land
Plantation property
Farmhouses

Permissible Property Types

NRIs can invest in:

Residential properties (apartments, villas, plots)
Commercial properties (offices, retail spaces)

They cannot buy:

Agricultural land
Plantation land
Farmhouses

Acquisition Methods

NRIs can acquire property:

By purchase from Indian residents, NRIs, or OCIs
Through inheritance from a resident or legally eligible non-resident
As a gift (excluding agricultural/farm/plantation lands)

Payment Guidelines

Payments must be made in Indian Rupees (INR) via regular banking channels.
Accepted sources: NRE, NRO, or FCNR(B) accounts.
Payments through traveler’s cheques or foreign currency notes are not permitted.
Transactions must be documented with proper proof of funds for compliance.

Rules for PIOs Buying Property

PIOs can purchase property in India (excluding agricultural land, plantations, and farmhouses):

Through funds remitted to India via approved banking channels.
As a gift from an Indian resident, NRI, or another PIO.
By inheritance from a legal owner.

Special Restrictions for Certain Nationalities

Citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, and Bhutan require prior RBI approval to acquire or transfer property in India (except for leaseholds of up to 5 years).

Advantages of NRIs Investing in Indian Real Estate

1. Currency Value Advantage: The strong value of foreign currencies (e.g., $1 ≈ ₹84) allows NRIs to gain better real estate returns compared to savings or fixed deposits abroad.
2. High Return Potential: Real estate offers more stable and appreciating returns compared to gold, FDs, or equities. It also enables steady rental income.
3. Simplified Process: The process for NRIs to buy property in India is now more streamlined, with easy fund transfers, tax exemptions, and digital documentation.
4. Diverse Options: From affordable apartments to luxury villas, India’s real estate market caters to all budgets and preferences.
5. Demand-Driven Market: With India’s growing population and urbanization, demand for rental and owned properties is high—benefiting NRIs through consistent appreciation and rental income.

Key Considerations Before Buying Property in India

Legal Due Diligence: Verify the title, land use permissions, and ensure there are no legal disputes.
Location Assessment: Evaluate infrastructure, growth potential, and connectivity.
Financial Planning: Use NRE/NRO accounts or NRI home loans. Account for taxes and additional costs.
Developer Reputation: Check the builder’s past record, RERA registration, and project approvals.
Tax Implications: Be aware of taxes such as TDS, capital gains, and property tax.

Essential Documents for NRIs Buying Property in India

Valid Passport
PAN Card
OCI/PIO Card (if applicable)
Power of Attorney (POA) – for transaction handling if abroad
Proof of Address Abroad
Title & Legal Clearances – including NOCs and approvals from authorities

Understanding Taxation for NRIs

Stamp Duty & Registration: Varies by state, typically 5%-7%.

Capital Gains Tax:

LTCG: 20% with indexation if held >2 years
STCG: Taxed as per income tax slab if held ≤2 years

TDS:

1% TDS for purchases above ₹50 lakh from a resident
20% TDS on LTCG for resale by NRI
30% TDS on rent payments to NRIs

Funding Options for NRI Property Purchases

NRE/NRO Accounts: For inward remittance and transactions
NRI Home Loans: Offered by Indian banks with flexible EMI options
Self-Funding: Using savings held abroad, transferred legally

Repatriation of Funds

NRIs can repatriate:

Proceeds from up to two residential properties
Rental income after applicable taxes

Repatriation must comply with FEMA and requires:

Chartered Accountant’s certificate
Tax clearance documentation

12-Step Guide to Property Purchase for NRIs

Check Eligibility – Confirm you’re allowed to invest
Choose Property Type – Residential/commercial
Understand FEMA Guidelines
Get a PAN Card
Choose Financing (Home Loan/Self-funding)
Prepare Documentation
Hire a Real Estate Consultant
Research Location & Developer
Verify Legal Titles & Encumbrances
Secure NOC (if applicable)
Sign Sale Agreement & Register Property
Obtain Occupancy Certificate

For NRIs, buying property in India is not just about emotional and cultural ties—it's a strategic financial decision. With government reforms, transparent regulations, and a robust real estate market, NRIs can confidently invest in Indian properties. By following FEMA guidelines and conducting due diligence, this opportunity can yield impressive long-term returns.

NRI FAQ’s

Can NRIs Invest in Real Estate in India?

Yes, Non-Resident Indians (NRIs) are allowed to invest in residential and commercial real estate in India without any restrictions. However, they are not permitted to purchase agricultural land, plantation properties, or farmhouses.

To initiate a property transaction, NRIs must provide the following documents:

Valid passport
PAN card
Proof of overseas address
Recent passport-sized photographs If the NRI is unable to be physically present in India, they can execute the transaction through a Power of Attorney (PoA) granted to a trusted representative.

How Many Properties Can an NRI Purchase in India?

There is no restriction on the number of residential or commercial properties an NRI can buy in India under the automatic route. NRIs are free to invest in multiple properties, as long as the transactions comply with FEMA regulations and other applicable laws.

Which Accounts Can NRIs Use for Property Transactions?

Property investments by NRIs must be funded through:

Inward remittances via regular banking channels

Funds held in:

NRE (Non-Resident External) Account
FCNR (Foreign Currency Non-Resident) Account
NRO (Non-Resident Ordinary) Account

NRIs are also eligible to apply for home loans from Indian banks and housing finance institutions. Repayment of these loans must be made through:

NRE/NRO accounts
FCNR accounts
Direct remittances from abroad

Can NRIs Transfer Property in India to Others?

Yes, NRIs are allowed to transfer property in India to:

Another NRI
An Overseas Citizen of India (OCI)
A resident Indian Transfers can be made through sale or gift, subject to adherence with FEMA guidelines and local property laws.

What Are the Current Trends in the Indian Real Estate Market for NRIs?

NRIs exploring property investment in India should be aware of the following key market trends:

Growing demand for luxury and high-end residential properties in metro cities
Rapid expansion of affordable housing, driven by urban migration and government incentives
Increased interest in commercial real estate, particularly co-working spaces and retail hubs
Digital transformation in real estate, with online portals and virtual property tours simplifying the buying process

Are There Any Tax Benefits for NRIs Investing in Indian Real Estate?

Yes, NRIs can avail multiple tax benefits when investing in real estate in India. Some key advantages include:

Deduction under Section 80C: NRIs can claim tax deductions on principal repayments of home loans, up to Rs. 1.5 lakh per financial year.
Deduction under Section 24: Interest paid on home loans is eligible for deduction up to Rs 2 lakh annually for self-occupied property.
Double Taxation Avoidance Agreement (DTAA): India has DTAA treaties with several countries, allowing NRIs to avoid being taxed twice on the same income—once in India and once in their country of residence.

These provisions make property investment more tax-efficient for NRIs. However, to fully benefit from these exemptions, it’s important to comply with Indian tax laws. Consulting a qualified tax advisor is strongly recommended for personalised guidance.

How Is Rental Income from Indian Properties Taxed for NRIs?

Rental income earned by NRIs from properties in India is taxed at a flat rate of 30% (plus applicable cess and surcharge) after deducting municipal taxes.

Additional considerations include:

Deductions: NRIs can claim a standard 30% deduction on rental income for maintenance and repairs.
Power of Attorney (PoA): Appointing a trusted resident Indian under PoA can simplify property management and assist in claiming eligible deductions.
TDS: Tenants are required to deduct TDS at 30% when paying rent to NRIs and deposit it with the Indian tax authorities.

Proper tax planning and documentation ensure that rental income is handled efficiently and legally.

What Challenges Do NRIs Face When Investing in Indian Real Estate?

While Indian real estate presents attractive opportunities for NRIs, several challenges can arise:

Remote Property Management: Handling property affairs from abroad can be difficult, especially when it comes to maintenance, tenant issues, or legal matters.
Finding Reliable Tenants: Without a local presence, screening tenants and ensuring timely rent collection may pose a challenge.
Legal and Regulatory Complexities: Navigating property laws, registration procedures, and tax compliance can be complicated without expert assistance.

To overcome these issues, NRIs are advised to:

Hire professional property management services for end-to-end handling.
Appoint a trusted friend, family member, or Power of Attorney (PoA) holder to manage property-related responsibilities on their behalf.

What Are the Repatriation Rules for Property Sale Proceeds?

NRIs are allowed to repatriate the sale proceeds of residential and commercial properties in India, subject to certain conditions:

Repatriation without RBI approval is allowed for up to two residential properties, provided the funds used to purchase them were remitted through foreign currency channels or NRE/FCNR accounts.
If the property was purchased using rupee funds (via NRO account or income earned in India), repatriation is limited to $1 million per financial year, including all eligible assets and investments.
For amounts exceeding the original investment or sales beyond the second property, prior approval from the Reserve Bank of India (RBI) may be required.
Tax clearance certificates and proper documentation must be submitted to process repatriation under FEMA guidelines.

It is advisable for NRIs to consult with a financial advisor or tax consultant to ensure smooth and compliant fund transfers.

At A2Z Investment, our strength lies in the deep expertise and diverse backgrounds of our founding team. Together, they bring a powerful blend of real estate know-how, financial acumen, and global business experience. Their collective vision is to be a trusted guide (“A2Z Investment”) in your journey toward smart property and financial investments.

Fuelled by high demand and limited land availability, the Tricity region — Chandigarh, Mohali, and Panchkula—is witnessing a substantial real estate boom, driving significant property price increases and establishing it as a prime realty hub for buyers and investors.

Real estate experts said that better connectivity, robust infrastructure, good air quality and proximity to hill stations like Kasauli and Shimla, are helping cities like Chandigarh, Panchkula and Mohali lead the shift toward premium living in Tier-II cities.

They said that housing prices, especially luxury homes, had witnessed a significant increase in the range of 15-20 percent in the Tricity region in the last 2-3 years which has transformed these Tier-II cities into investment hotspots for NRIs and professionals.According to market observers, Panchkula, Mohali and Chandigarh are drawing HNIs, professionals and investors as they look for better air quality and open spaces. To tap the growing real estate demand, several major and branded developers have come up with different types of projects ranging from luxury group housing and townships to plotted developments. One of defining features of the Tricity region is its commitment to green spaces and a tranquil environment. Panchkula, in particular, has emerged as a sanctuary for those seeking a holistic lifestyle. The stunning views of the Shivaliks, lush riverbanks, and the serene Morni Hills create a peaceful ambiance.