NRI Guide

Everything you need to know about owning property in India.

A practical, plain-English guide to FEMA regulations, tax obligations, power of attorney, and repatriation — written for NRI property owners.

01Legal Framework

FEMA Regulations & Legal Status

NRIs and PIOs holding valid OCI cards can acquire immovable property in India under the Foreign Exchange Management Act (FEMA). This includes residential and commercial real estate, and there is no upper limit on the number of properties you can own.

Key Restriction: NRIs cannot purchase agricultural land, plantation property, or farmhouses without specific RBI approval. They can, however, inherit such properties.

Payment must be made exclusively from funds received in India through normal banking channels — either by way of inward remittance from abroad, or by debit to your NRE, FCNR(B), or NRO accounts. Direct payment from foreign accounts to an Indian seller is not permitted under FEMA.

Key facts

  • Residential and commercial property: fully permitted for NRIs and OCI holders
  • Agricultural land / plantation / farmhouses: require special RBI approval to purchase
  • Inheritance of any property type (including agricultural) is permitted
  • Payment must route through NRE / NRO / FCNR accounts or inward remittance
  • No restriction on the number of properties an NRI can own in India
How Verta Helps

Our legal team advises on FEMA-compliant transaction structures, reviews sale deeds, and coordinates with your chartered accountant to ensure every purchase or sale adheres to applicable regulations. We also flag any encumbrances or title issues before you commit.

02Tax Obligations

Taxation: TDS & Rental Income

Taxation is one of the most misunderstood — and costly — areas for NRI property owners. There are two critical TDS obligations you must be aware of.

TDS on Property Sale: When an NRI sells property to a resident Indian, the buyer is legally required to deduct TDS at approximately 20–23% (for Long Term Capital Gains, depending on the applicable surcharge and cess). This is non-negotiable and the buyer bears the liability.

TDS on Rental Income (Section 195): Any tenant paying rent to an NRI must deduct TDS at 31.2% (30% tax + 4% health and education cess) before remitting rent. Most residential tenants find this compliance extremely burdensome — they must obtain a Tax Deduction Account Number (TAN), file quarterly TDS returns, and issue Form 16A to the landlord.

Verta routinely helps clients obtain Lower Deduction Certificates — reducing their effective TDS rate from 31.2% to as low as 0–5%.

Key facts

  • TDS on sale: 20–23% deducted by the buyer (Long Term Capital Gains rate)
  • TDS on rent: 31.2% deducted by the tenant per Section 195
  • Tenant must obtain TAN and file quarterly TDS returns — very high compliance burden
  • Rental income must be disclosed in your Indian Income Tax Return
  • A Lower Deduction Certificate (LDC) can legally reduce the TDS rate significantly
How Verta Helps

We assist all managed-property clients in applying for a Lower Deduction Certificate (LDC) from the Income Tax Department. An LDC can reduce the applicable TDS rate from 31.2% to as low as 0–5%, significantly increasing the net rental income you receive. We also manage all tenant TDS compliance and ensure timely filing.

03Remote Management

Managing Remotely: Power of Attorney

A Power of Attorney (PoA) is the cornerstone of remote property management for NRIs. It allows a trusted representative on the ground to act on your behalf — executing leases, handling maintenance, even filing legal suits — without you needing to travel to India.

We strongly recommend a Specific PoA limited to rental management and maintenance tasks — not a General PoA, which grants overly broad powers and creates unnecessary risk.

If executed abroad, the PoA must be attested by the Indian Embassy or Consulate in your country, then adjudicated in India within 3 months of arrival.

Key facts

  • Specific PoA (not General) is recommended for rental management
  • PoA executed abroad requires Embassy/Consulate attestation
  • Adjudication in India must happen within 3 months of the PoA entering India
  • Police verification of tenants is mandatory in Hyderabad under Telangana law
How Verta Helps

We guide you through the entire PoA process from preparation to adjudication. All Verta-managed properties are covered by a properly executed PoA, enabling us to act swiftly and legally on your behalf in any situation.

04Repatriation

Repatriation of Funds: The USD 1 Million Scheme

NRIs can repatriate up to USD 1 million per financial year from their NRO account. This includes property sale proceeds, rental income, and other Indian assets.

Two forms are required before any remittance can leave India:

Form 15CA: Self-declaration by the remitter confirming that applicable taxes have been paid.
Form 15CB: Certificate from a Chartered Accountant confirming tax compliance before the money leaves India.

Key facts

  • Annual repatriation limit: USD 1 million per financial year from NRO account
  • Includes: property sale proceeds, rental income, inherited assets
  • Form 15CA (self-declaration) and Form 15CB (CA certificate) are both mandatory
  • Rental income must be net of applicable TDS before remittance
How Verta Helps

We coordinate with your Chartered Accountant to ensure all remittances are properly documented, Form 15CA/CB are filed accurately, and your annual repatriation stays within FEMA limits. Our goal: maximum legal transfer, minimum paperwork burden on you.

Common Questions

Frequently Asked

Can an NRI buy property in India?

Yes. NRIs and OCI holders can purchase any residential or commercial property in India. The only exceptions are agricultural land, plantation property, and farmhouses — these require RBI approval. There is no limit on the number of properties you can own.

What is the best type of Power of Attorney for NRIs?

A Specific PoA limited to the tasks you need — rental management, lease execution, maintenance authorisation — is strongly preferred over a General PoA. A General PoA grants very broad powers and creates unnecessary risk if the holder acts outside your interests.

How is my rental income taxed in India?

Your tenant is required to deduct TDS at 31.2% before paying you rent. You must declare this income in your Indian Income Tax Return. However, you can apply for a Lower Deduction Certificate (LDC) to reduce this TDS rate significantly — often to 0–5% — which substantially increases your net income.

Can I sell my Indian property and transfer money abroad?

Yes. After paying applicable Capital Gains Tax (approximately 20–23% for long-term holdings), you can repatriate up to USD 1 million per financial year from your NRO account. You'll need Form 15CA (self-declaration) and Form 15CB (from a CA) to complete the transfer.

Quick Reference

Legal DisclaimerThis guide is for informational purposes only and does not constitute legal or tax advice. Consult a qualified legal and tax professional before making decisions about your property.

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