An NRI living in Dubai or London can buy an apartment in Pune or a shop in Noida without writing to the RBI. FEMA grants a general permission for most property purchases. That permission comes with conditions on the type of property, the source of funds and the co-owner, and a mistake on the payment side can block you from taking the sale money out of India later.

This article sets out the rules for NRIs and OCI cardholders as of September 2026, along with the TDS changes under the Income-tax Act, 2025.

The Law That Applies

NRI and OCI property purchases fall under Chapter IX (Rules 24 to 33) of the Foreign Exchange Management (Non-debt Instruments) Rules, 2019, made under the Foreign Exchange Management Act, 1999. These rules took effect on 17 October 2019 and replaced the earlier RBI regulations for these buyers. RBI guidelines and bank procedures work alongside them.

Keep two things in mind before you begin:

• No RBI approval or filing for permitted purchases. Your bank and the sub-registrar’s office handle compliance.
• Status decides eligibility, not passport. An Indian citizen resident abroad (NRI) and a foreign citizen with an OCI card are treated almost identically. A foreign citizen of Indian origin who does not hold an OCI card cannot use the general permission.

Property You Can and Cannot Buy

You may own as many homes or commercial units as you like. The bar applies only to agricultural land, plantation property and farmhouses. You can still inherit these, but a sale is permitted only to an Indian citizen resident in India.

Holding property as an investment is different from dealing in it. Real estate business is closed to foreign investment, so an NRI who wants to buy and sell plots as a trade should get legal advice first.

OCI Cardholders

OCI cardholders have the same FEMA rights as NRIs. They can buy residential and commercial property and cannot buy agricultural land, plantation property or farmhouses. At registration, the OCI card serves as proof of eligibility, with the foreign passport and PAN. An OCI buyer does not need Aadhaar.

Joint Purchase With a Foreign Spouse

A spouse who is a foreign national and is neither an NRI nor an OCI can co-own one property with their NRI or OCI spouse. The marriage must be registered and must have subsisted for at least two years before the purchase, and payment must follow the permitted routes below. Citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, Bhutan, Macau, Hong Kong and North Korea need prior RBI approval.

Property Received by Gift or Inheritance

An NRI or OCI can accept residential or commercial property as a gift from a resident Indian, or from a relative who is an NRI or OCI. Inheritance is wider. Any property, agricultural land included, can be inherited from a resident Indian or from a person outside India who acquired it lawfully.

How the Purchase Must Be Paid

Most FEMA trouble in property deals starts here. The price has to come from one of two sources:

• inward remittance through normal banking channels, or
• balances in your NRE, FCNR(B) or NRO account.

Traveller’s cheques and foreign currency notes are not accepted. You also cannot pay the seller from an overseas account in foreign currency. The seller must be paid in rupees in India.

Choosing Between NRE and NRO

Both accounts are lawful sources. The choice matters when you sell and want the money abroad. Paying from an NRE account or by direct remittance keeps the full purchase price repatriable. NRO funds make sense if you already have Indian income and intend to keep the proceeds in India. Settle this before the first instalment, since the payment record cannot be changed afterwards.

Save every Foreign Inward Remittance Certificate or bank advice, and every NRE statement showing the payments. Your bank will ask for them when you sell, which could be decades later.

Home Loans

Indian banks and housing finance companies lend to NRIs and OCIs for residential property. Commercial property loans are harder to get and depend on the lender. EMIs can be paid by inward remittance, from NRE, FCNR(B) or NRO accounts, from the property’s rent, or by close relatives in India depositing into the loan account. The loan amount is paid to the seller or builder in India and cannot be disbursed to you overseas.

TDS and Other Taxes for the Buyer

The buyer’s tax obligation is to deduct TDS from the price. The rule depends on who is selling.

Resident seller: Deduct 1% TDS under Section 393(1) of the Income-tax Act, 2025 (formerly Section 194-IA) when the price is ₹50 lakh or above. Pay it against your PAN through Form 141 (formerly Form 26QB). A TAN is not needed.

NRI seller: Deduct TDS under Section 393(2) (formerly Section 195) on the full sale price at the capital gains rate, which is 12.5% plus surcharge and cess for long-term property. A lower rate applies only if the seller produces a certificate in Form 128. From 1 October 2026, resident individual and HUF buyers no longer need a TAN for such purchases. That relief does not extend to NRI buyers, so an NRI buying from another NRI must still obtain a TAN and file TDS returns.

Stamp duty and registration fees are the same for NRIs and residents and differ from state to state. Rent earned from the property is taxable in India, and tenants paying an NRI landlord must deduct TDS from the rent.

Checklist Before Making Payment

1. Make sure your PAN is active and your bank records show your NRI or OCI status.
2. Get a title search going back at least 30 years, along with encumbrance, mutation and sanctioned plan checks. For under-construction property, confirm RERA registration.
3. Fix the payment route (NRE, FCNR(B), NRO or inward remittance) and keep proof of each instalment.
4. If you cannot travel for registration, execute a power of attorney. A POA signed abroad must be attested at the Indian mission or apostilled, then stamped in India within three months of its arrival.
5. Deduct and deposit TDS before or at registration, as the seller’s status requires.
6. Register the sale deed and apply for mutation in municipal and revenue records.

Buyers who live overseas are frequent targets of property fraud, most often through forged title documents or a seller who sells the same unit to two people. A proper title search is what exposes both.

Planning Your Purchase From Abroad

For most NRIs, FEMA compliance comes down to a few decisions: buy only residential or commercial property, pay through banking channels or NRI accounts, and keep every record. In our experience, disputes arise far more often from the payment trail and defective titles than from FEMA itself. A. Agarwalla & Co.’s real estate and FEMA lawyers assist NRI and OCI buyers with title verification, sale deeds, powers of attorney and TDS compliance. Speak to us before you sign the agreement to sell.