Suppose you are considering buying a property in India. In that case, you will need to bear in mind that the legal system and steps to follow are different from those you may have experienced in your home country or any other country. While many foreigners enjoy visiting India as a holiday destination and do not have to follow any strict restrictions, foreigners’ requirements to buy property in India are all together with a different ball game. 


Buying property in India is ranked as one of the biggest dreams and non-resident Indians (NRIs) and foreigners are among the top investor communities in India. So, no matter which part of the world you live in, owning a property in India is everyone’s dream and for some apparent reasons. While India’s real estate sector has seen a price correction in the recent past, people’s natural affinity to the region and favorable currency rates appears to be why the NRI community and foreigners have an increasing appetite for real estate investment in India.

But before you start dreaming about building your empire in India, there are other essential factors to be considered. From getting all the required documents in place and assisting with your financial planning to organizing Power of attorney or sorting out your succession planning, and for all this a sound knowledge is what you’d require. 

This article will give you the lowdown on everything that you need to know if you are a foreigner or an NRI looking forward to buying a property in India

How difficult is the property purchase process in India?

When it comes to buying a property in India, there are different rules for NRIs and foreigners. Read ahead as we further break it to make it easier for you to understand the requirements and procedure to buy property in India

Process To Buy Property In India – For NRI (Non-Resident Indian)

While buying a property in India, there is a set of rules established by India’s Constitution under the FEMA Act (Foreign Exchange Management Act) that NRIs need to follow. As per FEMA, an NRI can own as many commercial and residential properties in India as they want. However, they are not allowed to purchase agricultural land, farms, and plantations in India.

They can possess such properties, only if it is inherited. An NRI (Non-Resident Indian) is bound to provide a Power of attorney (PoA) from the developer that favors them in case tan NRI plan to buy an under-construction property. According to the FEMA rule, an NRI is eligible to sell residential, commercial, agricultural properties, plantation, or inherited land to Indian residents to buy it. 

Additionally, some specific RBI guidelines for the repatriation of the sale must be followed when selling a property in India. The rules say that if someone wants to repatriate, they must come in foreign currency from a bank account abroad, a Non-Resident Rupee account. Also, it cannot exceed the amount of money paid through banking channels while buying the property.

Procedure to buy property in India – For Foreign Nationals

Foreign nationals residing outside India are not allowed to buy any immovable property in India. It would be considered illegal for foreign nationals to own a property in India unless they meet the residency requirement of 182 days in a financial year. However, foreign nationals residing in India can buy a property in India without RBI approval. In case you’re a citizen of Pakistan, Bangladesh, Sri Lanka, Nepal, Afghanistan, China, or Bhutan, you must obtain special permission from India’s RBI and Government.

 As per the FEMA Act, the foreigners must comply with two conditions to buy property in India:

The foreign national must reside in India for more than 182 days during the financial year. 

During this tenure, they can either stay as an employer or doing business, vacation, or any other reason, which would prove their intention of staying in India. 

Power of Attorney (PoA)

Being an NRI (Non-resident Indian), it’s obvious that the said person cannot be physically present every time, and hence, to rescue the Power of Attorney is there. NRIs have an option to give Power of attorney (PoA) to someone close to them, like any relative or friend, to complete the property purchase process in India on their behalf.

Home Loan For NRIs While Buying Property In India

Any NRI who wants to invest in a property in India but doesn’t have the funds ready can apply for a home loan. RBI now grants permission to banks and housing finance institutions registered with the National Housing Bank to provide home loans to NRIs to buy property in India.

However, there’s a catch in this; whatever would be the loan amount, it would not be credited to the bank account of an NRI; it can be disbursed directly to either the seller’s or the developer’s bank account. However, the loan can be repaid using the NRIs Non-Residential Ordinary/ Non-Resident External account or even using the Fixed Deposit Foreign Currency account deposits. 

What Income Taxes Are Applicable On Properties In India?

As per the Income Tax Act in India, if a resident or an NRI owns more than one house property, only one property will be deemed self-occupied. There’s no income tax levied on self-occupied property; however, the one whether you rent it out or not, you will have to calculate the deemed rental income on the second property. 

The Income Tax Act does not specify if either or both the properties necessarily need to be in India. With people moving and settling abroad, the rule of more than one property applies to global properties. It means if an NRI owns only one property globally and it is in India, then he/she does not have to pay any tax, but if an NRI has a property in India but own and lives in a house in London, then they would have to pay income tax on deemed rent in India. 

Documents and Agreements Required For Buying Property In India 

For the right advice, it is advisable to consult an excellent legal advisor who can help you with all the necessary documents. It is worth considering a good lawyer well in advance before making any property investment in India. However, to help you get started here’s a handy checklist of documents you can prepare before the property purchase:

  • Pan Card (permanent account number);
  • Passport (in case of NRI);
  • OCI/PIO card;
  • Passport size photographs;
  • Land titles/ necessary approvals from authorities/ construction permits;
  • Title clearance certificate;
  • Income Tax clearance;
  • Sale or Purchase Agreement;
  • Proof of residential address
  • Stamp duty and registration;
  • Society clearance and membership proof

Transaction Cost 

The transaction cost is the round-trip transaction costs, including all the expenses that trigger when a real estate transaction occurs – lawyer’s fees, notaries, registration fees, taxes, agent’s fees, etc.

Stamp Duty – 5% – 8% (buyer)

Registration Fees – 1% (buyer)

Legal fees – 1.5% (buyer & seller both)

Real Estate Agent’s Commission – 1% – 2% (buyer & seller both)