What FEMA Says
The Foreign Exchange Management Act (FEMA) governs all property transactions by NRIs in India. Under FEMA, NRIs can freely purchase residential and commercial properties without RBI permission. The payment must be made through banking channels — NRE account, NRO account, or FCNR deposits. Cash transactions are strictly prohibited.
Repatriation Rules
NRIs can repatriate the sale proceeds of up to two residential properties purchased from NRE/FCNR funds. The repatriation is limited to the amount paid from these accounts. For properties purchased through NRO accounts, repatriation is capped at USD 1 million per financial year under the RBI's Liberalised Remittance Scheme.
Power of Attorney
A General or Special Power of Attorney (PoA) allows a trusted person in India to execute property transactions on your behalf. The PoA must be notarized and apostilled in your country of residence, then adjudicated in India. It's advisable to use a Special PoA that limits the agent's authority to specific transactions.
Tax Compliance
NRIs must obtain a PAN card and file Indian tax returns if their property income exceeds the basic exemption limit. TDS at 20% (long-term) or 30% (short-term) is deducted by the buyer at the time of property sale. Tax planning through DTAA provisions can significantly reduce the effective tax burden.
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