Buying Property in India as an NRI: The FEMA Rules, the Funding Trap, the POA Risk, and Getting Your Money Back Out

You have decided to buy a flat in Pune or a commercial unit in Bengaluru, and the broker is already sending you floor plans. Then the questions start. Can you even buy it as an NRI. Can the money come from your salary account in Dubai or does it have to route through a specific Indian account. Will you fly back for the registration or can your brother sign for you. And the one that nobody mentions until it is too late: if you sell this in ten years, can you actually take the money back out, or does it sit trapped in a rupee account waiting for an annual quota.

None of those are paperwork details. They are FEMA questions, and the cost of getting them wrong is not a fee. Under Section 13 of FEMA, a contravention attracts a penalty of up to three times the amount involved, and the RBI also has the power to confiscate the property outright. The expensive mistakes here are almost never the purchase itself. They are made silently on day one, in how you fund it, and only surface a decade later when you try to sell.

The 30-second answer: Under FEMA, an NRI or OCI can freely buy residential and commercial property in India, with no cap on the number of units, but cannot buy agricultural land, plantation property, or a farmhouse without specific RBI approval. The purchase must be funded only through banking channels: an NRE, NRO, or FCNR account, or inward remittance from abroad. No foreign currency cash. Home loans are available, repaid in rupees from an NRE or NRO account, at roughly 75% to 90% LTV and 8% to 9.5% in 2026. You can register through a registered power of attorney, but it must be apostilled or consular-attested then stamped and registered in India, or it can be challenged. When you sell, repatriation of sale proceeds is uncapped for up to two residential properties funded in forex; beyond that, and for rupee-funded or commercial property, you use the USD 1 million per financial year NRO route with Forms 145 and 146 (the renumbered 15CA and 15CB from April 2026).

This guide walks the whole arc the way it actually unfolds: what you may buy and the agricultural-land line you cannot cross, how the money has to move and why that single choice decides your exit, how an NRI home loan really works, how to register without flying back without leaving a POA that collapses later, the TDS you become liable to deduct as a buyer, and the repatriation rules that determine whether you ever see the money abroad again. It assumes you already know what NRE and NRO accounts are; if not, read the accounts guide first, because the funding section below leans on that distinction.

The agricultural-land bar is absolute, and it follows the asset forever

Everything sits on one foundational line. The Foreign Exchange Management Act, through the rules notified under it, lets an NRI or OCI buy residential and commercial property freely, with no restriction on the number of units. One flat or ten, an apartment and an office floor, FEMA does not blink, and it treats NRIs (Indian citizens abroad) and OCI cardholders identically for this purpose. What you cannot buy, by purchase, is agricultural land, plantation property, or a farmhouse. That prohibition is not a soft preference you can negotiate. It requires specific prior RBI approval, examined case by case, and effectively never granted for an ordinary acquisition. The stated policy is to keep farmland with resident cultivators; you do not have to agree with it to be bound by it.

The part that surprises people is that the bar is sticky in both directions. Farmland can still reach your name without the word "purchase": you can inherit it from a person resident in India, you can receive it as a gift from a resident relative, or you can keep land you already owned as a resident before you emigrated. FEMA permits all three. But the restriction then attaches to the asset on exit. If you come to own agricultural land by inheritance or gift, the buyer when you eventually sell must be a resident Indian citizen. You cannot sell inherited farmland to another NRI or an OCI. So an inherited field is something you can hold and one day exit only to a resident, never an asset you can trade in the NRI market, and that illiquidity is worth pricing in before you assume an inherited plot is "money in the bank".

The way this rule actually gets broken is mundane and dangerous. A relative suggests buying a weekend farmhouse "in your cousin's name", or splitting the payment so the transaction looks like something other than what it is. That is precisely the structure that unravels at sale, at succession, or at a bank's compliance review, and the consequence is not a slap on the wrist: the penalty under Section 13 is up to three times the amount involved, with an additional Rs 5,000 per day while the contravention continues, and the property itself can be confiscated. There is no version of the farmhouse purchase that is worth that exposure.

Funding the purchase is really a decision about your exit, made years early

The second rule looks like plumbing and is in fact the most consequential choice in the entire transaction. Every rupee of the consideration must come through legitimate banking channels, and FEMA recognises exactly four sources: an inward remittance from abroad, funds in an NRE account, funds in an FCNR account, and funds in an NRO account. That is the complete list. What is conspicuously absent is foreign currency cash. You cannot hand over dirhams, pounds, or dollars in notes for any part of the price, and you cannot route money through a resident friend's account to make it look domestic. Travellers' cheques and foreign cash are not valid consideration for property under FEMA.

The trap is not that you might use a forbidden source. It is that two of the permitted sources are not equivalent, and the difference is invisible at purchase and decisive at sale. Money that enters as foreign currency, through inward remittance or from an NRE or FCNR balance, keeps its repatriable character. Money paid from an NRO account is rupee money, and the property is then treated as rupee-funded, which pushes its eventual sale proceeds into the tighter USD 1 million annual cap. Two NRIs can buy identical flats in the same building on the same day, one funding from NRE and one from NRO, and a decade later the first can wire the full sale proceeds abroad while the second is rationing it out at a million dollars a year. The flats are the same. The funding histories are not, and the funding history is frozen the moment you pay.

This is where your country and residency status quietly change the calculus. A UAE-based NRI typically has the cleanest path: dirham salary remitted into an NRE account, no home-country tax friction, forex funding straightforward. A US or Canada resident should be deliberate, because the dollars or Canadian dollars they remit into an NRE account are post-tax home-country money and the paper trail matters at home as well as in India. And anyone in the awkward RNOR window, the two-or-three-year transition after returning to India when you are not yet an ordinary resident, should fund before the window closes if repatriability matters, because once you are a full resident again the NRE account itself must be redesignated and the forex character of new funding is harder to preserve. The single instruction that covers all of them: if there is any chance you will want the eventual proceeds abroad, fund in forex and keep the paperwork. That means the Foreign Inward Remittance Certificate (FIRC) and the bank statements showing the source of every payment. These are the documents that, ten years on, prove how the property was funded and unlock the repatriation route you are entitled to. Lose them and you can be forced down the capped route even though you funded correctly.

How an NRI home loan actually works, and where planning goes wrong

You do not have to fund the whole purchase out of pocket, and a loan itself counts as funding through a banking channel, so it sits cleanly inside FEMA. Indian banks and housing finance companies lend to NRIs for residential property, and in 2026 the market is competitive: SBI, HDFC and the larger lenders are quoting NRI home loan rates in roughly the 8% to 9.5% band depending on amount, profile, and whether the applicant is salaried, with women borrowers often a few basis points cheaper. Expect financing of about 75% to 90% of the property value, with the higher end on smaller tickets and 75% to 80% common above Rs 30 lakh, so you contribute the remaining 10% to 25% as a down payment from your own funds. Tenures run shorter than the 30 years a resident might get, frequently 15 to 20 years, structured so the loan closes around age 60.

The number people misjudge is not the rate, it is the down payment plus duties. The loan covers the property value, not the stamp duty and registration, and those still have to come from your NRE, NRO, or inward remittance. On an Rs 80 lakh flat at 80% LTV, you are not arranging Rs 16 lakh, you are arranging closer to Rs 22 lakh once 6% stamp duty and 1% registration are added, all from your own forex if you want the property to stay repatriable.

The repayment mechanic is the other classic mistake. The EMI must be paid in Indian rupees, debited from your NRE or NRO account. You cannot service an Indian home loan directly from your overseas salary account. The flow is: remit into your NRE or NRO account, EMI is drawn from there. A close relative in India can remit on your behalf into the loan, but the loan stays yours. And the loan never overrides the property restriction, so no bank will fund a farmhouse for an NRI, because the underlying purchase is not permitted in the first place.

A power of attorney that has not been stamped and registered is a liability, not a convenience

Most NRIs cannot fly to India for every signature the registration demands, so they use a power of attorney authorising someone they trust, usually a parent, sibling, or spouse, to sign and present documents at the Sub-Registrar's office. The risk is not in using a POA. It is in using one that has been signed but not put through the two steps that make it enforceable, and discovering the gap only when the document is challenged later, by which point a property you paid for is sitting on a defective authority.

Getting it right starts with where you live. If you are in a Hague Apostille Convention country, which includes the USA, the UK, and the UAE as of 2026, you sign the POA before a local notary public and then have it apostilled by the designated authority, which certifies the notary's signature so Indian authorities accept it. If you live in a non-Hague country, the POA must instead be attested by the Indian Embassy or Consulate there. Either way, the document is not done when it lands in India. It must be adjudicated and stamped at the Sub-Registrar's office, typically within three months of arriving, with the applicable stamp duty paid, and where it grants authority over immovable property, especially the power to sell, it must be registered under the Registration Act, 1908. An unstamped, unregistered POA over property is exactly the kind of defect a disgruntled co-heir or a future buyer's lawyer will surface, and it can stall a sale or a succession for years.

Two disciplines reduce the downside to near zero. First, complete the stamping and registration in India before your attorney acts on the document, not after the deal is done. Second, keep the POA narrow: name the specific property, the specific transaction, and the specific acts you need, signing the sale deed, presenting for registration, taking possession. A broad general POA over all your Indian affairs is convenient on the day and a standing risk for years, because it hands one person open-ended authority over assets you cannot easily supervise from abroad. The narrow, transaction-specific POA is the one that does its job and then expires harmlessly.

You become a tax collector the moment you buy, and the seller's status changes everything

Here is the rule that catches NRI buyers off guard, because it makes you responsible for the seller's tax. When you buy property, you, the buyer, must deduct tax at source from the payment and deposit it with the government, and the rate is not a footnote. It can swing from a trivial 1% to a Section 195 deduction more than ten times larger, depending on a single fact: whether the seller is a resident or an NRI. So the first thing to nail down, in writing, is the seller's residential status, because getting it wrong leaves you liable for the shortfall plus interest, not the seller.

Buying from a resident seller is the easy case: you deduct 1% TDS under Section 194-IA when the consideration is Rs 50 lakh or more. Buying from another NRI is a different animal. You deduct under Section 195, and three features make it bite. There is no Rs 50 lakh threshold, so it applies to any value, even a Rs 20 lakh flat. The rate is the seller's actual tax: for a long-term gain on property held over 24 months, that is 12.5% without indexation, plus a surcharge that scales with the sale consideration and 4% health and education cess, an effective 14.95% where no surcharge applies and higher as the value climbs (the surcharge steps up at Rs 50 lakh and again at Rs 1 crore). And critically, the correct base is the capital gain, but a buyer with no way to compute the seller's gain, and a cautious bank, routinely deducts on the entire sale value to be safe, which over-withholds badly and leaves the seller chasing a refund for a year.

The fix lives with the seller but protects you both: a lower-deduction certificate under Section 197 tells the buyer the exact tax on the actual gain, so you deduct that and nothing more. On any meaningful NRI-to-NRI deal, insist the seller obtain it before completion. There is also a real 2026 simplification, but get the date right, because the draft advice circulating online conflates two of them. The renumbering of remittance forms to Forms 145 and 146 took effect April 1, 2026 under the Income Tax Act 2025. The separate change letting a buyer deposit Section 195 TDS using their own PAN instead of obtaining a TAN takes effect October 1, 2026. Before that October date, an NRI buyer purchasing from another NRI still has to apply for a TAN to discharge the deduction, so for a 2026 transaction, check which side of October you are on.

Stamp duty and registration, by contrast, hold no NRI surprise. They are state subjects, you pay the same rates as a resident for the same property, and there is no NRI surcharge. Rates generally fall between 3% and 7% of market value (or the higher of agreement value and circle rate) for stamp duty, plus around 1% registration, paid from your own funds through the permitted channels and not covered by the loan. On an Rs 1 crore flat that is roughly Rs 6 lakh to Rs 8 lakh on top of your down payment. Several states give a small stamp-duty concession when the property is registered in a woman's name, which is worth structuring around if your spouse is a co-owner.

Two deals, end to end, where the funding and the TDS decide the outcome

Abstract rules only become real when you run cash through them, so take two NRIs making the two most common moves.

Priya, an NRI in Dubai, is buying a ready-to-move flat in Pune for Rs 1,20,00,000 entirely from her own funds, no loan, and she wants the eventual sale proceeds to be repatriable. She funds it deliberately in forex: the Rs 1,20,00,000 consideration comes by inward remittance into her NRE account and is paid to the builder from there, the 6% Maharashtra stamp duty of Rs 7,20,000 and the 1% registration of Rs 1,20,000 also come from the NRE account, a total outflow of Rs 1,28,40,000, every rupee through NRE or inward remittance. Because the seller is a builder, a resident company, Priya deducts only 1% TDS under Section 194-IA on the Rs 1,20,00,000, that is Rs 1,20,000, deposits it, and pays the balance. The move that matters is invisible on the day: every rupee carried forex character, and she keeps the FIRC and NRE statements. Years later, because this is one of her first two residential properties and it was forex-funded, she can repatriate the full sale proceeds with no USD 1 million cap, needing only to settle the tax and file Forms 145 and 146. Had she paid even the stamp duty out of an NRO rupee balance, that portion would have been apportioned into the capped route. The clean exit was bought on day one for the price of a little discipline.

Arjun, an NRI in London, is buying a resale flat in Bengaluru for Rs 80,00,000 from another NRI, and he cannot travel for the registration, so two complications stack: he needs a loan and a POA, and the seller's NRI status changes his TDS sharply. His bank sanctions an NRI home loan at 80% LTV, Rs 64,00,000, and he funds the Rs 16,00,000 down payment plus stamp duty and registration from his NRE account, with the EMI to be drawn in rupees from that account and topped up from his London salary. On the tax, because the seller is an NRI and the gain is long-term, Arjun must deduct under Section 195, not the gentle 1%. The seller, sensibly, obtains a Section 197 certificate showing the actual long-term gain is Rs 30,00,000. Arjun therefore deducts 12.5% of Rs 30,00,000, which is Rs 3,75,000, plus 4% cess of Rs 15,000, a total of Rs 3,90,000, deposits it, and pays the seller the net. The counterfactual is the whole point: with no Section 197 certificate, the prudent deduction is on the full Rs 80,00,000, roughly Rs 11,96,000 at the same effective rate, leaving the seller to chase back over Rs 8 lakh for a year. The certificate saved real cash flow on both sides. For the POA, Arjun signs a property-specific document in London before a notary, has it apostilled because the UK is a Hague country, couriers the original to his father in Bengaluru, who has it adjudicated, stamped, and registered before presenting the sale deed. Arjun never boards a flight, and the authority underneath the deal is clean.

The edge cases that sit just outside the clean rules

A handful of situations break the tidy general picture and are worth naming, because each one quietly reroutes either the TDS or the repatriation. A joint purchase with a resident relative is permitted, but each co-owner's funding source and TDS position is assessed on their own share, so document who paid what or you muddy both sides. Buying from a builder who is itself an NRI or a foreign company drops you into Section 195 even though it feels like an ordinary primary purchase, so check the seller's status rather than assuming "developer means resident". A gift of property to or from an NRI is allowed for residential and commercial property between relatives, with income-tax gift rules applying separately, but agricultural land can only be gifted to you, never sold to you. If you bought as a resident and later emigrated, you simply keep the property with no fresh FEMA permission, and your repatriation rights on eventual sale follow how it was originally funded. Mixed forex-and-rupee funding apportions your repatriation, the forex slice taking the freer route and the rupee slice the capped one, which is exactly why Priya kept her funding pure. And the USD 1 million cap is shared, not per asset: it covers all your NRO repatriation in a financial year across property proceeds, rent, dividends, and other India income together, so one large property sale can swallow the whole year's headroom and crowd out everything else you wanted to remit.

Repatriating the sale proceeds, the rule that should shape today's decisions

This is the rule that should govern choices you make at purchase, not the day you sell. Two regimes exist, and which one applies turns entirely on how you funded the buy. The freest path is the two-property forex route: if you bought a residential property with foreign currency, inward remittance, or NRE or FCNR funds, you can repatriate the sale proceeds with no annual cap, for up to two residential properties. Note the shape of that allowance, because it trips people up. The cap is on the count of properties, two residential, and it is effectively a lifetime allowance, not a renewing annual one. Use it on two modest flats early and a later, larger sale falls outside it. The other path is the USD 1 million NRO route, which catches your third residential property onwards, all commercial property, and anything bought with rupee or NRO funds. Repatriation there is capped at USD 1 million per financial year, aggregated across all your NRO remittance, and going beyond it in a year needs specific RBI approval through your authorised dealer bank.

Whichever route applies, the mechanical sequence is fixed. The proceeds first land in your NRO account, the tax and TDS are settled, and the bank will not release money abroad until you file the CA-certified declaration. As of April 1, 2026 that is Form 145 (your declaration) supported by Form 146 (a chartered accountant's certificate, carrying a mandatory UDIN, confirming the nature of the income, the DTAA position, and that the correct tax has been paid). These are the renumbered Forms 15CA and 15CB under the Income Tax Act 2025; the substance is unchanged, only the numbers and section references moved. Form 146 is required once remittances cross Rs 5 lakh in a financial year, which a property sale always will. The honest sequence to internalise is short: fund in forex, keep the FIRC, sell within the two-property lifetime allowance, settle the tax, file 145 and 146. Each link protects the next, and the first link is the one you forge on the day you pay.

The closing read

The honest read is that buying property in India as an NRI is genuinely simple, as long as you respect three lines the system will not let you cross and stop treating the fourth as paperwork. You can buy residential and commercial freely and you cannot buy farmland, plantations, or farmhouses, even through a cousin's name, because the penalty runs to three times the amount and the property can be confiscated. The money must move through NRE, NRO, FCNR, or inward remittance, never foreign cash. And the choice between NRE and NRO money on the day you pay silently fixes your repatriation rights for a decade.

So for most NRIs the recommendation is unambiguous: if there is any realistic chance you will want the proceeds abroad, fund the purchase in forex, keep every remittance certificate, and stay inside the two-property residential lifetime allowance. Pay even the stamp duty from NRE money, not NRO, so nothing gets apportioned into the capped route. The exception is the NRI who is genuinely building India-only wealth, with no intention of repatriating, perhaps planning to retire in India, for whom NRO funding and the USD 1 million route are perfectly adequate and the forex discipline is wasted effort. Know which one you are before you wire the first payment, because that single decision is irreversible once made.

The two obligations people consistently underestimate are the TDS when buying from another NRI, where a flat 1% balloons into a Section 195 deduction near 15% and lands on you, the buyer, if you get the seller's status wrong, and the POA, which is a defect waiting to be exploited unless it is apostilled or consular-attested and then stamped and registered in India before anyone acts on it. Handle those two correctly and the rest is conveyancing. And if you are buying as an investment rather than a home, run the rental yield and the tax on that rent before you fall for the floor plan, because Indian residential yields are modest and the holding costs are real; the maths for that is in tax on Indian rental income.

Related guides

• Selling Property in India as an NRI
• Repatriating Investment Proceeds from India
• Building an India Corpus as an NRI
• Tax on Indian Rental Income for NRIs
• Capital Gains Tax for NRIs on Shares and Mutual Funds
• NRI Residency and RNOR Rules
• ITR Filing for NRIs, AY 2026-27
• NRE, NRO, and FCNR Accounts Explained
• The NRO Repatriation Process
• Joint Accounts and Mandates for NRIs
• All Taxation Guides
• All Banking Guides
• All Investments Guides

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This guide is general information, not personal financial, legal, or tax advice. FEMA rules, TDS rates, stamp duty, and repatriation procedures change, and your position depends on your residential status, the state where the property sits, and your country of residence. The Forms 15CA/15CB to 145/146 transition took effect April 1, 2026 and the PAN-based TDS deposit rule under Section 195 takes effect October 1, 2026; confirm the procedure in force on your transaction date. Verify the rules at the time of your transaction and consult a qualified chartered accountant or legal advisor before you buy, register, or repatriate.