NRI Buying Property in India: FEMA Rules, TDS & Power of Attorney (2026)
Purchasing real estate in India as an NRI involves navigating strict FEMA boundaries, special banking channels, and complex withholding taxes. We detail what property types are legal, how to execute a POA, and how to avoid TDS traps.
FEMA boundaries: What an NRI can and cannot buy
Under the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019, an NRI or OCI cardholder enjoys general permission from the Reserve Bank of India to purchase residential and commercial real estate in India. No prior approval from the RBI or state governments is required for residential apartments, villas, or commercial office spaces.
However, NRIs and OCIs are strictly prohibited from purchasing agricultural land, plantation property, or farmhouses in India. This restriction applies unconditionally, regardless of whether the buyer was born in India or holds an Indian passport.
Real estate eligibility & transaction rules for NRIs
| Property Category | Purchase Permitted? | Inheritance Permitted? | Funding Channel | Repatriation Rights |
|---|---|---|---|---|
| Residential Property (Apartment / Villa) | Yes (Unlimited units) | Yes | Inward remittance via NRE / FCNR / NRO account | Sale proceeds of up to two residential units repatriable freely via NRE |
| Commercial Real Estate (Offices / Retail) | Yes (Unlimited units) | Yes | NRE / FCNR / NRO banking channels | Fully repatriable up to original inward foreign exchange remittance |
| Agricultural Land & Plantations | STRICTLY NO | Yes (Permitted via inheritance only) | Cannot purchase | Subject to USD 1M annual LRS repatriation via NRO with Form 15CA/CB |
| Farmhouses | STRICTLY NO | Yes (Permitted via inheritance only) | Cannot purchase | Subject to USD 1M scheme with CA certification |
The Section 195 TDS trap: Buying from an NRI seller
If you purchase real estate in India from a resident Indian seller, the transaction is governed by Section 194-IA: the buyer deducts a simple 1% TDS on transactions exceeding ₹50,00,000 using a Form 26QB challan.
However, if you purchase property from another NRI seller, Section 195 applies. The buyer is legally required to withhold tax at the full capital gains tax rate — typically 12.5% to 20% plus applicable surcharge and cess (effective 14.95% to 23.92%) on the entire sale consideration, unless the seller obtains a Lower Deduction Certificate (Form 13) from the Assessing Officer.
Executing a Power of Attorney (POA) from abroad
If you cannot travel to India for the physical registration deed at the Sub-Registrar's office, you can execute a Specific Power of Attorney authorizing a trusted family member or legal representative:
- Draft the POA document specifying exact property details and limits of authority (registration, signing deeds, banking).
- Sign the POA before a Consular Officer at the Indian Embassy / Consulate, or sign before a public notary and obtain an official Apostille seal under the Hague Convention.
- Courier the physical original document to India.
- Within 90 days of receipt in India, the POA holder must present the document to the local District Registrar / Sub-Registrar office for mandatory adjudication and stamp duty payment.
