NRI Buying Property in India: What Is Allowed and What Is Not

An NRI buying property in India may purchase residential and commercial property freely, but may not buy agricultural land, a plantation or a farmhouse. Payment must come through Indian banking channels or an NRE, NRO or FCNR(B) account, and there are limits on how much of a future sale you can take back abroad. Everything else in this guide is detail around those three sentences.

Who counts as an NRI or OCI for these rules

The Foreign Exchange Management Act (FEMA) and the RBI's regulations under it decide what a non-resident may own in India. Two groups get the same general permission: Non-Resident Indians (Indian citizens living abroad) and Overseas Citizens of India (foreign passport holders with an OCI card). Both can buy under the rules below without asking the RBI first.

Foreign nationals who are neither NRI nor OCI are a different case. Citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, Bhutan, Macau, Hong Kong and North Korea need prior RBI permission to acquire or transfer immovable property in India. If your family holds such a passport, take advice before you pay a token.

What an NRI may buy, and what is off-limits

Under general permission an NRI or OCI can:

• Buy residential or commercial property from a resident, an NRI or an OCI.
• Hold any number of such properties. The RBI's FAQ is explicit that there is no cap and no filing with the RBI after purchase.
• Receive residential or commercial property as a gift from a relative who is resident, NRI or OCI.
• Inherit any immovable property, including agricultural land, from a person who acquired it lawfully.

What an NRI or OCI cannot do is buy agricultural land, plantation property or a farmhouse. It does not matter whether the seller is a resident or another NRI; the purchase is simply not permitted. Inherited farmland can be kept, but if you sell or gift it, the buyer must be a person resident in India who is an Indian citizen.

This matters in Braj because a lot of cheap "plots" advertised around Mathura are agricultural khasras with no land-use change. For an NRI that is not a bargain; it is a transaction you are not allowed to make. Our post on agricultural land versus an approved plot explains how to tell the two apart. Every layout on our /projects page is residential land.

How the money must move

FEMA cares about the payment channel as much as the asset. The rules are:

• Funds must be received in India through normal banking channels as an inward remittance from abroad, or paid out of an NRE, NRO or FCNR(B) account maintained in India.
• Traveller's cheques and foreign currency notes are not acceptable. Nor is paying the seller outside India.
• Housing loans from Indian banks and registered NBFCs are permitted for NRIs and OCIs.

Ask your bank for a foreign inward remittance certificate or the account debit advice for every payment, including the token. When you sell years later, the bank handling repatriation will want this trail, and reconstructing it from memory is painful.

Joint names with a resident spouse

Many NRI families want the plot in two names. The rules allow a spouse who is not an NRI or OCI (for example, a foreign citizen married to an NRI) to acquire one immovable property jointly with the NRI or OCI spouse, as long as it is not agricultural land, a farmhouse or plantation. A resident Indian spouse or parent can of course be a joint holder on ordinary terms. Joint holding does not change the payment rule: the NRI's share must still come from permitted funds.

Taking the money back abroad

You can sell to a resident, an NRI or an OCI (an OCI-to-OCI transfer needs RBI permission). Repatriating the proceeds has two limits:

Question	Rule
How many residential properties' sale proceeds can be repatriated?	At most two
Annual cap on remittance from an NRO account	USD 1 million per financial year
Condition	Property acquired as per FEMA and paid from permitted funds

For most families buying one plot in Govardhan or Vrindavan to build a home, these limits never bite. They matter if you are accumulating several properties as investments and plan to exit them all in one year. Capital gains tax applies on sale as well; see the basics in capital gains tax when you sell a plot.

Signing from abroad: the power of attorney

You do not need to fly in for registry. The usual route is a power of attorney (POA) in favour of a family member in India:

1. Draft a special POA that names the exact plot, the layout and the acts allowed (sign the sale deed, present it for registration, receive possession). Avoid a general "all my property matters" POA.
2. Sign it before an Indian consular officer, or before a notary and get an apostille if you live in a Hague Convention country. Some sub-registrar offices still prefer consular attestation, so ask before you choose.
3. Courier the original to India. It must be stamped (adjudicated) within three months of arriving, under Section 18 of the Indian Stamp Act, or it cannot be used for registration.
4. Have it registered at the sub-registrar office where the plot lies. Since the Supreme Court's 2011 Suraj Lamp judgment, treat any POA touching immovable property as needing registration.

Note the difference between using a POA to sign your own purchase deed (fine) and buying a plot from someone who only holds a POA (risky). We explain the second case in buying a plot on power of attorney.

Tax points to keep in view

Two tax rules attach to NRI transactions and neither is a FEMA rule:

• When a resident buys from an NRI seller, the buyer must deduct tax at source under Section 195 of the Income-tax Act at the capital-gains rate rather than the 1% that applies to resident sellers. If you ever sell your Vrindavan plot from abroad, expect this. Details in TDS when buying property from an NRI seller.
• Rental income and capital gains in India are taxable in India, with treaty relief depending on where you live.

What this means for you

If you are an NRI or OCI, an approved residential plot in Govardhan or Vrindavan is a purchase you may make freely: pay from your NRE or NRO account, register through a properly stamped and registered POA, and keep every bank advice. Steer clear of agricultural land, however tempting the rate. For the remote process end to end, read the NRI's guide to buying a plot in Vrindavan, or ask our team through /contact for a video walkthrough of a layout.

This is general information, not legal or tax advice. Please confirm with your advocate or chartered accountant.