8-Point Checklist For NRIs Buying Or Selling Property In India

NRI Checklist

Nothing makes Indians feel more secure as owning real estate do. It is precisely why NRIs continue to pour their dollar savings in Indian property markets. The lure of relatively cheap home prices and pull of emotions makes non-resident Indians a significant contributor to the profits of Indian real estate developers. We want to keep you informed and have prepared a checklist of laws, rules and general guidelines for NRIs looking to buy or sell property in India.

1. Permission- RBI has issued a notification granting a general permission to NRIs for purchase of immovable properties (Read more ) in India eliminating the need to obtain any special approvals.

2. Number of properties- There is absolutely no restriction on the number of immovable properties an NRI or a PIO may purchase for either residential or commercial purposes.

3. PAN- Make sure you have a PAN number. It will be required to file income return if you get rental income from the property. It is also needed at the time of registering the property.

4. Home loan- NRIs are eligible to take home loan from an Indian lender for buying a property in the country. It is easily available and often comes with special schemes from multinational banks. However, different lenders may have restrictions on the countries they are allowed to deal with.

5. Tax treatment- The mere acquisition of property does not attract income tax. However, any income accruing from the ownership of it, in the form of rent or capital gains (short term or long term) arising on the sale of this house is taxable in the hands of the owner.

6. Repatriation- Although no additional permissions are required to buy a property, it needs the prior approval of RBI to repatriate the sale proceeds. Please note that this is in case you have acquired this property by way of purchase. However, in case the property sold was acquired by way of inheritance or out of a rupee fund, an NRI can remit a sum equivalent to $1 million per financial year. Remittances exceeding the permitted amount require permission from RBI.

7. DTAA- NRIs also benefit from India’s Double Tax Avoidance Agreements (DTAA) with many countries such as UAE, USA, etc., making it efficient to set off taxes paid in one country against the other.

8. Power of Attorney- An NRI can execute a POA from abroad in the name of a close relative or friend residing in India in case he/she cannot come down to complete the formalities. The Power of Attorney will enable the person to become a signatory for the purposes of purchase and registration in his/her absence. This POA has to be signed by the person (who is giving the power) in presence of the consulate officer or a notary based in the resident country and it will have to be attested by them.

Edited by Nikhil Narayan Sivadas


2,473 thoughts on “8-Point Checklist For NRIs Buying Or Selling Property In India

  1. Dear Sir,I am planning to sell me 2bhk flat (new) in Ambernath,Thane bought in 2014 in NRI loan which is cleared now. The total amount I invested all trhough NRI money but some of money I have paid through my indian normal account coz at that point of time i didn't hv NRI account.Can I get the sold amount tax free except the capital gain?Regards,Ajit Kumar 

  2. You forgot to mention that NRIs have to pay 20% TDS on the SALE PRICE (not on CAPITAL GAINS) at the time of selling a property. This has to be paid by the buyer, but recovered from the seller. Say you buy a property worth 50L (with VAT, stamp duty, Service Tax, and registration, it will come to 55L) and sell it for 60L, you have made 10L profit (ignoring the Indexed Cost of Acquisition). The Long Term Capital Gains Tax is 20% of the profit, or Rs 2 Lakhs.But for NRIs, the TDS is 20% of Sale price, or 20% x 60L = 12L. So you get back only Rs 48L, i.e. you have paid Rs 10 Lakhs extra to the government and you have made a neat loss of Rs 2L. That is why the government wants NRIs to invest in India. So stupid NRI fools will be drawn by sentimental attraction to India, make losses and pay lakhs of rupees more to the government of India. Note that the TDS for Residents is only 1% for property above 50L.Furthermore, the TDS has to be paid to the buyer and not to the government, and the buyer has to deposit your 12 Lakhs. So you have to hope the buyer pays TDS. If he just decides to keep the money, or makes a mistake in paying this huge amount of tax, the NRI is screwed, screwed, screwed.All in all, investing in Indian property is pure stupidity. 

    1. Absolutely correct, the small print is never explained. It is always at the time of sale (Propoerty) or for Insurance linked Investments(ICICI), NRI's have to pay 33% of the capital gain. The current Govt. has changed rules (Insurance linked investments) with  retro effective, which should be considered by NRI while making any Investments in India.NRI's are only milking cows, and are looked to  during currency crisis. 

  3. In your next edition of this blog, could you please elaborate on the repatriation of funds from India to other countries. Apprantly the process of moving the money from a sale proceed from India to abroad is nightmare. Please elaborate on that and ways to the effectively and speedily. 

  4. Hi Neetika,I am a OCI card holder from the US. My father needs to transfer a flat in my name. No sells involved as it is resedential property.  Is it necessary for me to have PAN card?Thank youVivek

  5. Hi, I  am buying a house worth 28lakhs which is an NRI property. Should I have to pay the Tds of 20.66%?or they should pay the capital gains? Please help me with this.. Do we have to pay Tds even if the worth of the flat is below 50lakhs?

  6. Hi, I  am buying a house worth 28lakhs which is an NRI property. Should I have to pay the Tds of 20.66%?or they should pay the capital gains? Please help me with this.. Do we have to pay Tds even if the worth of the flat is below 50lakhs?Pls explain me

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