Ravi works in Dubai and wants a flat in Pune near his parents. His sister in Toronto wants to sell the house she inherited in Kochi and move the money to Canada. Both are asking the same questions: what can an NRI buy, how should the money come in, how much tax is cut on a sale, and how much can go back abroad? The rules on NRI property sit in two places, the foreign exchange rules administered by the RBI and the Income-tax Act, and both matter at every step.
This guide covers what NRIs and OCIs can buy and inherit, how to pay, how home loans for NRIs work, the TDS a buyer must deduct when an NRI sells, how a lower deduction certificate helps, and how to take sale proceeds out of India within the limits. It is general information; for a specific deal, a chartered accountant and your bank’s NRI desk are worth consulting.
What NRIs and OCIs can buy in India
Under the RBI’s Master Direction on acquisition or transfer of immovable property under FEMA, a non-resident Indian (NRI) or an Overseas Citizen of India (OCI) can buy any immovable property in India other than agricultural land, plantation property or a farm house. Residential flats, houses and commercial property such as shops and offices are all allowed, and there is no limit on the number of properties you can buy.
The rules on other ways of acquiring property are:
- Gift: an NRI or OCI can receive any immovable property other than agricultural land, plantation property or a farm house as a gift from a person resident in India, or from an NRI or OCI who is a relative as defined in the Companies Act, 2013.
- Inheritance: an NRI or OCI can inherit any immovable property, including agricultural land, from a person resident in India, or from a person resident outside India who acquired it lawfully under the foreign exchange law in force at the time.
- Foreign spouse: a spouse of an NRI or OCI who is not an NRI or OCI may buy one immovable property, other than agricultural land, a farm house or plantation property, jointly with the NRI or OCI spouse, subject to conditions in the Master Direction.
If you hold agricultural land, a farm house or plantation property through inheritance, you can transfer it to a person resident in India. You cannot sell or gift it to another NRI or OCI. Citizens of some neighbouring countries need RBI permission to buy property in India, but that restriction does not apply to OCIs.
How to pay for NRI property purchases
The payment route decides what you can take back later, so plan it before you sign anything. The Master Direction allows NRIs and OCIs to pay only out of:
- Funds received in India through banking channels by inward remittance from abroad, or
- A debit to your NRE, FCNR(B) or NRO account.
Payment cannot be made by traveller’s cheques, foreign currency notes or any other mode. Keep the bank’s inward remittance certificates and account statements showing the flow of money into the builder’s or seller’s account. They are your evidence when you sell and want to repatriate the proceeds.
| Source of payment | Allowed? | Effect on repatriation when you sell |
|---|---|---|
| Inward remittance through a bank | Yes | Counts as foreign exchange paid; repatriable within the rules |
| NRE or FCNR(B) account | Yes | Counts as foreign exchange paid; repatriable within the rules |
| NRO account | Yes | Proceeds go through the USD 1 million a year NRO route |
| Home loan repaid from abroad or from NRE/FCNR(B) | Yes | Repayments treated as foreign exchange received |
| Traveller’s cheques or foreign currency notes | No | Not applicable |
To compare what an amount abroad works out to in rupees, use the currency converter.
Home loans for NRIs
The RBI’s Master Direction on rupee borrowing and lending between residents and NRIs or persons of Indian origin (updated as on 8 September 2026) allows a bank authorised to deal in foreign exchange, or a housing finance institution approved by the National Housing Bank, to give a housing loan to an NRI for buying a residential property in India. The main conditions:
- The loan amount, margin money and repayment period must be at par with housing loans to residents.
- The loan must be fully secured by an equitable mortgage of the property being bought, and if necessary by a lien on your other assets in India.
- The loan cannot be credited to your NRE, FCNR(B) or NRNR account.
- Instalments can be paid by remittances from abroad, from your NRE, FCNR(B), NRNR, NRO or NRSR account, out of rent from the property, or by a relative in India through an account-to-account transfer to your loan account.
Repaying from abroad or from an NRE or FCNR(B) account has a second benefit: the RBI rules treat such repayments as equivalent to foreign exchange received, which helps when you later repatriate the sale proceeds. Lenders set their own rates and eligibility, so compare offers. To estimate the monthly instalment, try the EMI calculator.
Tax on capital gains from NRI property sales
When you sell, the gain is taxed in India. CBDT’s FAQs on the capital gains changes that apply to transfers from 23 July 2024 say that immovable property must be held for more than 24 months for the gain to be long-term. Long-term gains are now taxed at 12.5% without indexation, against 20% with indexation earlier, and the FAQs mention parity between residents and non-residents as one aim of the change. Short-term gains are added to your income and taxed at slab rates.
As an illustration, say you bought a flat for ₹70 lakh and sell it after five years for ₹1.2 crore. Ignoring transfer costs and improvements, the long-term gain is ₹50 lakh, and tax at 12.5% comes to ₹6.25 lakh, plus surcharge and cess as applicable. Reinvesting the gain in a new house or in specified bonds can reduce or remove the tax, subject to conditions, as the CBDT FAQs note.
You will need a PAN for the sale, and you should file an income tax return in India for the year of sale to report the gain and claim credit for the tax deducted. Tax year 2026-27 is the first under the Income-tax Act, 2025, so the section numbers on forms and certificates differ from those you may have seen before.
TDS on sale by an NRI and the lower deduction certificate
When the seller is a non-resident, the buyer must deduct income tax at source from the payment and deposit it with the government. The tax is deducted at the rates in force on the income included in the payment, which for a long-term gain on property means the 12.5% rate plus surcharge and cess. The buyer carries the responsibility, so buyers are cautious. Because a buyer usually cannot verify your cost of purchase, the deduction is often worked out on the whole sale price, which can block far more money than your actual tax.
The fix is a certificate from the Assessing Officer. Under section 395 of the Income-tax Act, 2025, the seller (payee) can apply for tax to be deducted at a lower rate or not at all, if the income justifies it. The buyer can also apply for the Assessing Officer to decide what portion of the payment is chargeable to tax. Once a certificate is issued, the buyer deducts tax at the rate it specifies for as long as it is valid.
Apply well before the sale deed, with the purchase deed, the sale agreement, proof of payment and a computation of the gain. Without a certificate, the excess deduction can only be recovered as a refund after you file your return.
Repatriating NRI property sale proceeds
How much you can take out depends on how you paid for the property and how you got it.
Property bought with foreign exchange
Under the Master Direction, a bank may allow an NRI or OCI to repatriate the sale proceeds of property other than agricultural land, a farm house or plantation property if the property was acquired lawfully and was paid for in foreign exchange through banking channels or out of NRE or FCNR(B) funds. Home loan repayments made from abroad or from NRE or FCNR(B) accounts count as foreign exchange. For residential property, this repatriation is restricted to not more than two properties.
Inherited property, NRO-funded purchases and other cases
Money that does not qualify for the route above goes to your NRO account. The RBI’s FAQ on non-resident accounts says NRIs and persons of Indian origin can remit up to USD 1 million per financial year (April to March) from NRO balances, along with their other eligible assets, under the Foreign Exchange Management (Remittance of Assets) Regulations, 2016. Funds can also be moved to an NRE account within this USD 1 million limit. Remittances above it need the RBI’s permission.
While the money sits in India, an NRO or NRE fixed deposit can earn interest; the NRI FD calculator shows the maturity value.
Form 145 and Form 146: the paperwork for sending money abroad
Before your bank remits sale proceeds abroad, the tax department needs a record. For remittances under the Income-tax Act, 2025, Form 145 replaces the old Form 15CA and Form 146 replaces the old Form 15CB. Form 145 must be submitted on the e-filing portal before the money is sent, and a copy goes to the bank. It has four parts:
- Part A: taxable remittances that do not exceed ₹5 lakh during the tax year.
- Part B: taxable remittances above ₹5 lakh where a certificate under section 395 has been obtained from the Assessing Officer.
- Part C: taxable remittances above ₹5 lakh backed by a Form 146 certificate from a chartered accountant, who confirms that the correct tax has been paid.
- Part D: remittances that are not taxable under the Act.
For most property sales, the chartered accountant reviews the sale deed, the tax computation and the TDS certificates before issuing Form 146. Gather these early so the remittance is not held up.
Checklist for NRI property deals
- Confirm the property is not agricultural land, a farm house or plantation property.
- Pay only by inward remittance or from NRE, FCNR(B) or NRO accounts, and keep every bank record.
- For a home loan, repay from abroad or from NRE/FCNR(B) if you may want to repatriate later.
- Before selling, compute the gain and apply for a lower deduction certificate under section 395.
- Make sure the buyer deducts TDS correctly and gives you the certificate.
- File your Indian tax return for the year of sale.
- For repatriation, note the two-property limit for residential property bought in foreign exchange and the USD 1 million a year NRO limit.
- Arrange Form 146 from a chartered accountant where needed, and file Form 145 before the remittance.
Handled in the right order, buying or selling NRI property is mostly paperwork. Done in a hurry, it can tie up your money for months.
