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Table of Contents
- 1. FEMA Rules — What NRIs Can & Cannot Buy
- 2. Step-by-Step Buying Process for NRIs
- 3. Power of Attorney — Buying Property Remotely
- 4. NRI Bank Accounts & Payment Channels
- 5. NRI Home Loans — Rates & Eligibility
- 6. Tax Implications — TDS, Capital Gains & Double Taxation
- 7. Repatriation of Sale Proceeds
- 8. Karnataka-Specific Rules & Stamp Duty
- 9. NRI Property Buying Checklist
- 10. Frequently Asked Questions
1. FEMA Rules — What NRIs Can & Cannot Buy
The Foreign Exchange Management Act (FEMA) governs all property transactions by NRIs and OCIs in India. Understanding these rules is the first step before investing in Indian real estate.
Properties NRIs Can Buy
From Indian Bank Accounts
Limit from NRO Account
in Karnataka
What NRIs CAN buy
- Residential property — Apartments, villas, independent houses, plots in approved layouts. No limit on the number of properties.
- Commercial property — Office spaces, shops, retail units, warehouses. No limit on number.
- Under-construction property — Directly from RERA-registered developers with proper agreements.
- Joint ownership — NRIs can jointly purchase with another NRI, OCI, or Indian resident.
What NRIs CANNOT buy
Restricted Properties Under FEMA
Agricultural land, plantation property, and farmhouses cannot be purchased by NRIs or OCIs. These can only be acquired through inheritance. If you inherit agricultural land, you can hold it but must seek RBI approval to sell it to a resident Indian.
Payment rules
- Payment must be made through NRE (Non-Resident External), NRO (Non-Resident Ordinary), or FCNR (Foreign Currency Non-Resident) bank accounts
- Payment by foreign currency, traveller's cheques, or cash is not permitted
- Inward remittance through banking channels is accepted
- Post-dated cheques and bank drafts drawn on NRE/NRO accounts are valid
2. Step-by-Step Buying Process for NRIs
Buying property from abroad follows a structured process. Here's the step-by-step guide:
Open NRE/NRO Bank Account
If you don't already have one, open an NRE or NRO account with a major Indian bank. NRE accounts allow full repatriation of funds; NRO accounts have a USD 1 million/year repatriation limit. Most banks offer online account opening for NRIs.
Research & Shortlist Properties
Use platforms like Estate Hive to browse RERA-verified projects. Focus on developer reputation, RERA registration number, possession timeline, and location fundamentals. Verify all claims on the Karnataka RERA portal (rera.karnataka.gov.in).
Appoint a Power of Attorney (if needed)
If you cannot travel to India for registration, execute a Power of Attorney (POA) in your country of residence. Get it apostilled under the Hague Apostille Convention (India has been a member since 2005) or attested by the Indian embassy for non-signatory countries. More details in Section 3 below.
Legal Due Diligence
Hire a local property lawyer to verify: title deeds (minimum 30 years of chain), encumbrance certificate (EC), RERA registration, approved building plan, land-use conversion (khata), and any pending litigation. This is the most critical step.
Book & Sign Agreement
Pay the booking amount via your NRE/NRO account. Sign the Agreement to Sell (or Builder-Buyer Agreement for under-construction). Ensure RERA-mandated clauses are included — penalty for delayed possession, carpet area specification, payment schedule linked to construction milestones.
Pay Stamp Duty & Register
Pay stamp duty (2%/3%/5% tiered by property value in Karnataka) and registration charges (2%) on the property value or government guidance value, whichever is higher. Registration must be done at the Sub-Registrar office in the property's jurisdiction. Your POA holder can do this on your behalf.
Complete Payment & Take Possession
Complete remaining payments as per the agreement schedule. Collect the sale deed, possession certificate, occupancy certificate, and all NOCs. Update the khata (property tax records) to your name at the BBMP office.
3. Power of Attorney — Buying Property Remotely
A Power of Attorney allows a trusted person in India to act on your behalf for property transactions. This is essential for NRIs who cannot travel to India for every step of the process.
Types of POA
| Type | Scope | Recommended? |
|---|---|---|
| Specific POA | Limited to a specific property transaction — signing sale deed, paying stamp duty, registering property | Yes — Safer |
| General POA | Broad authority over all property and financial matters | No — Too risky |
Hague Apostille Convention (Simplified Process)
India Is a Member of the Hague Apostille Convention (Since 2005)
India acceded to the Hague Apostille Convention on October 26, 2004, with the convention entering into force on July 14, 2005. NRIs in signatory countries (USA, UK, Canada, Australia, Singapore, Germany, and 100+ others) can get their POA apostilled by the designated authority in their country of residence. This eliminates the need for Indian embassy/consulate attestation, saving significant time and hassle. The apostilled POA must then be registered at the Sub-Registrar office in India within 3 months.
POA execution process
- Draft the POA with your Indian lawyer — specify the exact property, transaction details, and limits of authority
- Sign it before a Notary Public in your country of residence
- Get it apostilled by the designated authority (e.g., Secretary of State in the USA, DFAT in Australia, FCO in UK)
- Send the original apostilled POA to your representative in India
- Your representative registers the POA at the Sub-Registrar office (adjudication + registration)
- POA becomes valid for use in the property transaction
Need Help with NRI Property Purchase?
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chat WhatsApp Us4. NRI Bank Accounts & Payment Channels
All property payments must be routed through proper banking channels. Here's a comparison of the three account types:
| Feature | NRE Account | NRO Account | FCNR Account |
|---|---|---|---|
| Currency | INR (converted from foreign currency) | INR (Indian income) | Foreign currency (USD, GBP, EUR, etc.) |
| Source of Funds | Overseas earnings only | Indian income (rent, dividends, etc.) | Overseas earnings |
| Repatriation | Fully repatriable | Up to USD 1M/year | Fully repatriable |
| Tax on Interest | Tax-free in India | Taxable in India | Tax-free in India |
| Can Buy Property? | Yes | Yes | Yes |
| Best For | Buying property with full repatriation option | Using Indian rental income for EMIs | Parking foreign currency, fixed deposits |
Pro Tip: Use NRE Account for Property Purchase
If you plan to sell the property later and repatriate the funds, purchasing through an NRE account is ideal. The entire sale proceeds of up to 2 residential properties are freely repatriable (capital gains portion routed via NRO). If you use NRO funds, repatriation is capped at USD 1 million per financial year.
5. NRI Home Loans — Rates & Eligibility
Most major Indian banks and housing finance companies offer home loans to NRIs. Here are the current rates and terms:
| Bank | Interest Rate (2026) | Max Loan Amount | Max Tenure | LTV Ratio |
|---|---|---|---|---|
| ICICI Bank | 7.45% onwards | Based on eligibility | 30 years | 90%/80%/75% (tiered) |
| Bank of Baroda | 7.65% onwards | Up to ₹5 Cr | 30 years | 90%/80%/75% (tiered) |
| HDFC Bank | 7.90% onwards | No upper limit | 15 years (NRI) | 90%/80%/75% (tiered) |
| SBI | 8.00% onwards | No upper limit | 30 years | 90%/80%/75% (tiered) |
| Axis Bank | 8.35% onwards | Based on eligibility | 25 years | 90%/80%/75% (tiered) |
RBI LTV Ratio (Loan-to-Value) Guidelines
LTV ratio for NRI home loans follows the same RBI-mandated tiered structure as resident loans: Up to 90% for loans under ₹30 lakhs, up to 80% for ₹30-75 lakhs, and up to 75% for loans above ₹75 lakhs. This means for a ₹1 crore property, maximum loan is ₹75 lakhs — you must fund at least ₹25 lakhs from your own NRE/NRO/FCNR account.
Documents required for NRI home loan
- Valid Indian passport and visa/work permit of country of residence
- Overseas employment contract or appointment letter
- Last 6 months' bank statements (overseas account)
- Last 3 years' salary certificates or tax returns from country of residence
- Property documents — sale agreement, title deed, approved plan, EC
- NRE/NRO account statements
- PAN card and Aadhaar card (if available)
- Passport-size photographs
EMI Payment Options
NRI home loan EMIs can be paid from NRE or NRO accounts. If you have rental income from the property, it can be credited to your NRO account and used for EMI payments. Some banks also allow EMI payments through Electronic Clearing Service (ECS) mandate from your NRE/NRO account.
6. Tax Implications — TDS, Capital Gains & Double Taxation
Understanding tax obligations is critical for NRI property buyers. India's tax rules for NRI real estate transactions differ significantly from resident Indians.
TDS (Tax Deducted at Source) on property sale
| Holding Period | Type of Gain | TDS Rate | Notes |
|---|---|---|---|
| Less than 2 years | Short-Term Capital Gains (STCG) | 30% + surcharge + 4% cess | Added to total income, taxed at slab rate (30% for most NRIs) |
| More than 2 years | Long-Term Capital Gains (LTCG) | 12.5% + surcharge + 4% cess | Reduced from 20% in Union Budget 2024. No indexation benefit. |
Budget 2024 Change: LTCG Rate Reduced but Indexation Removed
The Union Budget 2024 (effective July 23, 2024) reduced the LTCG tax rate on property from 20% to 12.5%, but simultaneously removed the indexation benefit. LTCG is now calculated as: Sale Price minus Original Purchase Price (no inflation adjustment), taxed at 12.5%. Important for NRIs: A transition provision allowing the lower of the two methods (20% with indexation vs 12.5% without) applies only to resident Indians — NRIs must use the flat 12.5% without indexation rate regardless of when the property was purchased. For long-held properties, this can result in higher effective tax than the old regime.
Capital Gains Tax Exemptions
NRIs can claim the same capital gains exemptions as resident Indians:
- Section 54: Reinvest LTCG in another residential property within 2 years of sale (or 1 year before sale). Maximum exemption for properties valued up to ₹10 crore.
- Section 54EC: Invest LTCG in specified bonds (NHAI, REC, PFC, IRFC) within 6 months. Maximum ₹50 lakhs per financial year. Lock-in period: 5 years.
- Section 54F: If selling a non-residential property, reinvest entire sale consideration in a residential property for full exemption.
Double Taxation Avoidance Agreement (DTAA)
India has DTAA with over 90 countries including USA, UK, Canada, Australia, UAE, Singapore, and Germany. Under DTAA:
- Tax paid in India can be claimed as a credit in your country of residence (and vice versa)
- You will not be taxed twice on the same income
- You must obtain a Tax Residency Certificate (TRC) from your country of residence to claim DTAA benefits
- File Indian tax returns (even if TDS covers your liability) to claim refunds or carry forward losses
Lower TDS Certificate (Section 197)
If your actual tax liability is lower than the TDS being deducted (e.g., you're eligible for Section 54 exemption), you can apply to the Income Tax department for a lower/nil TDS certificate under Section 197. This prevents excessive TDS and avoids the hassle of claiming large refunds later. Apply before the transaction to the Assessing Officer with supporting documents.
7. Repatriation of Sale Proceeds
Repatriation — transferring sale proceeds back to your overseas account — has specific rules based on how the property was originally purchased.
| Original Purchase Funding | Repatriation Limit | Conditions |
|---|---|---|
| NRE / FCNR funds | Entire sale proceeds freely repatriable (max 2 residential properties) | Original investment amount freely repatriable; capital gains portion routed via NRO account (USD 1M/year cap). Capital gains tax must be paid. |
| NRO funds / inherited property | Up to USD 1 million per financial year | All taxes must be cleared; CA certificate (Form 15CB) required. Excess requires RBI approval. |
| 3rd+ residential property (any funding) | Up to USD 1 million per financial year | Falls under NRO route regardless of original funding source |
Repatriation process
- Pay all applicable taxes — Capital gains tax, TDS. Obtain proof of tax payment.
- Obtain CA Certificate (Form 15CB) — A Chartered Accountant certifies that taxes have been paid and the remittance is in compliance with the Income Tax Act.
- File Form 15CA online — Submit on the Income Tax e-filing portal before the remittance date.
- Submit to your bank — Provide Form 15CA, Form 15CB, sale deed, tax payment receipts, and original purchase documents to your bank.
- Bank processes the remittance — Funds transferred from NRO account to your overseas account.
8. Karnataka-Specific Rules & Stamp Duty
If you're buying property in Bangalore (Karnataka), here are the state-specific details:
| Charge | Rate | Details |
|---|---|---|
| Stamp Duty (below ₹21L) | 2% | On property value or government guidance value, whichever is higher |
| Stamp Duty (₹21L–₹45L) | 3% | On property value or government guidance value, whichever is higher |
| Stamp Duty (above ₹45L) | 5% | On property value or government guidance value, whichever is higher |
| Registration Charge | 2% | Increased from 1% to 2% effective September 2025 |
| NRI Surcharge | None | NRIs pay the same stamp duty as Indian residents in Karnataka |
RERA verification for NRI buyers
Karnataka RERA (rera.karnataka.gov.in) is one of the most active state RERA authorities. As an NRI buyer, always verify:
- RERA registration number — Every project selling apartments must be registered
- Approved building plan — Match the plan with what the developer is selling
- Project completion timeline — RERA tracks delays and penalises developers
- Developer track record — Check past projects' RERA compliance history
- Escrow account — 70% of buyer payments must go into a dedicated escrow account
Verified RERA Projects for NRI Buyers
Browse our curated collection of RERA-verified projects in Bangalore from trusted developers like Prestige, Godrej, Sobha, Brigade & more.
explore Explore Projects9. NRI Property Buying Checklist
Use this checklist to ensure you don't miss any critical step:
Before You Buy
- Open NRE/NRO bank account with a major Indian bank
- Obtain PAN card (mandatory for property transactions in India)
- Decide on funding — own funds, home loan, or a mix
- Research locations, developers, and RERA-verified projects
- Appoint a trusted local representative (family member or lawyer)
During the Transaction
- Execute Power of Attorney (if buying remotely) — apostilled/attested
- Hire a local property lawyer for due diligence
- Verify title deeds, EC, RERA registration, khata, and approved plans
- Sign Agreement to Sell — ensure RERA-compliant clauses
- Make all payments through NRE/NRO/FCNR account only
- Pay stamp duty (2%/3%/5% tiered) and registration (2%) in Karnataka
- Register the sale deed at the Sub-Registrar office
After Purchase
- Update property tax records (khata transfer) at BBMP
- Get utility connections transferred — BESCOM, BWSSB, Piped Gas
- Arrange property management if you're abroad (for rental income)
- File Indian income tax returns (mandatory if you own property in India)
- Keep all original documents safe — sale deed, EC, tax receipts, loan papers
- Inform your overseas bank about the Indian property (for compliance)
Related Guides
10. Frequently Asked Questions
Under FEMA regulations, NRIs and OCIs can buy residential and commercial property in India without any limit on the number of properties. However, NRIs cannot buy agricultural land, plantation property, or farmhouse. These can only be acquired through inheritance. Payment must be made through NRE, NRO, or FCNR bank accounts.
For long-term capital gains (property held more than 2 years), TDS is 12.5% plus surcharge and cess (reduced from 20% in Budget 2024). For short-term capital gains (less than 2 years), TDS is 30% plus surcharge and cess. NRIs can apply for a lower TDS certificate under Section 197 if their actual tax liability is lower.
NRIs can use a Power of Attorney (POA) to authorise a trusted person in India to act on their behalf. Since India is a member of the Hague Apostille Convention (since 2005), NRIs in signatory countries can get their POA apostilled locally, eliminating the need for Indian embassy attestation. A specific POA (limited to the property transaction) is recommended over a general POA.
Yes, most major Indian banks offer NRI home loans. ICICI Bank offers rates from 7.45%, Bank of Baroda at 7.65%, HDFC Bank at 7.90%, SBI at 8.00%, and Axis Bank at 8.35% (as of early 2026). LTV ratio is tiered per RBI norms — up to 90% for loans under ₹30L, 80% for ₹30-75L, and 75% above ₹75L. Tenures range from 15-30 years depending on the bank.
Yes. If the property was purchased using NRE/FCNR funds, the entire sale proceeds of up to 2 residential properties are freely repatriable (capital gains portion via NRO). From NRO account, repatriation is capped at USD 1 million per financial year. Repatriation requires CA certificate (Form 15CB), Form 15CA, and all applicable taxes must be paid first.
NRIs pay the same stamp duty as Indian residents in Karnataka. Rates are tiered: 2% for properties below ₹21 lakh, 3% for ₹21-45 lakh, and 5% for properties above ₹45 lakh. Registration charge is 2% (increased from 1% in September 2025). There is no additional NRI surcharge in Karnataka.