Many people working in the Gulf, Singapore, the US or the UK want a first home back in India. Sometimes it is for themselves, for the day they return. Often it is for parents who need a comfortable, safe place close to family. The good news: for an ordinary home, the rules are clear and you usually do not need special approval. The care lies in how you pay and what papers you keep.
This is general information, not legal or tax advice. Rules can change, so confirm details with your bank and a chartered accountant before you pay.
Who these rules cover
- NRI: an Indian citizen who is resident outside India under the foreign exchange law.
- OCI: a foreign citizen registered as an Overseas Citizen of India.
The governing framework is the Foreign Exchange Management Act, 1999 (FEMA) and the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 made under it. Your income tax position is a separate question, decided under the Income-tax Act, 1961.
What you can buy
An NRI or OCI can buy residential or commercial property in India under general permission, without applying to the Reserve Bank of India. There is no FEMA limit on the number of homes you can own.
What you cannot buy: agricultural land, a farm house or plantation property. You can still inherit such property from a person resident in India.
A practical point for Bengaluru's outskirts: much new housing sits on land that was once farmland. Check that the project land has been lawfully converted for non-agricultural use. Our post on DC conversion explains what to look for.
If your spouse is a foreign national
The rules allow a foreign-national spouse of an NRI or OCI to buy one property jointly with the NRI or OCI spouse, provided the marriage is registered and has lasted at least two continuous years before the purchase, and payment comes through permitted channels. Some nationalities are excluded, so check the current rule.
How to pay
Payment must come by inward remittance through normal banking channels, or from your NRE, FCNR(B) or NRO account in India. Traveller's cheques and foreign currency notes are not allowed.
| Account | What it holds | Why it matters later |
|---|---|---|
| NRE | Money earned abroad, held in rupees | Supports taking money back out when you sell |
| FCNR(B) | Deposits kept in foreign currency | Same as NRE for repatriation |
| NRO | Income earned in India, like rent | Falls under a separate annual limit for sending money abroad |
Avoid paying from a relative's account in India without a clear record, and never in cash. The problem rarely shows up at purchase. It shows up years later, when your bank asks how the original payment was funded.
Taking money back out later
If you paid from abroad or from NRE or FCNR(B) funds, sale proceeds can generally be repatriated up to the amount you paid in foreign exchange. For residential property, this is limited to two properties. Balances in an NRO account, including other sale proceeds, can be remitted abroad up to USD 1 million per financial year, after tax, with the certification your bank requires.
The lesson: how you pay on day one decides what you can take back years later. Keep every remittance advice and bank statement, permanently.
RERA protects you from abroad too
The Real Estate (Regulation and Development) Act, 2016 applies to NRI buyers just as it does to residents. Before booking:
- Find the project's registration number and search it yourself on the State RERA website.
- Make sure the registration covers the building or phase you are buying in.
- Check the promoter's name matches your agreement for sale.
- Read the latest quarterly update under section 11(1).
- Confirm the carpet area in the agreement matches the registered details.
If possession is delayed, section 18 lets you claim a refund with interest or monthly delay interest, and you can file with the authority wherever you live.
Paperwork to keep ready
- Passport, or OCI card.
- PAN.
- Overseas address proof.
- Bank records for every payment: remittance advices and NRE, NRO or FCNR(B) statements.
- A transaction-specific power of attorney if you will not be present to register. Ask a lawyer how it must be executed and authenticated where you live.
From the builder, ask for the RERA details, sanctioned plan, land title papers, conversion order where relevant, and an encumbrance certificate. Your lawyer should review these.
Tax points to plan for
- When buying from a resident seller, you deduct TDS under section 194-IA. If the seller is non-resident, section 195 applies.
- Rent from the home, if you let it out, is taxable in India.
- When you eventually sell, the buyer may deduct tax from your proceeds.
A worked example (illustrative)
Round numbers, only to show the arithmetic. Not a Reeva price, and not tax advice.
Say you buy a home for your parents for ₹80,00,000 from a resident builder.
- You pay ₹30,00,000 from your NRE account and ₹50,00,000 through a home loan from an Indian bank, repaid from your NRE account.
- Because the price is ₹50 lakh or more, you deduct 1% TDS under section 194-IA: ₹80,000. You deposit it with the government and give the builder the TDS certificate.
- Years later you sell. The amount you can generally take back abroad is linked to what you paid in foreign exchange, including loan repayments made from NRE funds. That is why every remittance record matters.
If, instead, ₹10,00,000 had come from your NRO account (say, from rent on another flat), that part would fall under the separate NRO limit when you remit later.
Step by step, from abroad
- Decide whose name the home will be in, and whether a parent or sibling will be a joint owner.
- Choose your payment accounts and tell your bank the purpose before the first transfer.
- Get a home loan approval in principle, if you need one.
- Shortlist RERA-registered projects and check them online.
- Ask a family member to visit the site at different times of day, with a video call if you cannot be there.
- Have a lawyer in India review title, approvals and the draft agreement.
- Sign a transaction-specific power of attorney if needed.
- Pay no more than 10% before the agreement for sale is registered, as section 13 of RERA requires.
- Deduct TDS where it applies and keep the certificates.
- File every remittance advice, statement and receipt in one folder, digital and paper.
Common mistakes NRI buyers make
- Letting a relative pay "for now" and settling up later. It muddies the payment trail.
- A general power of attorney that gives far wider powers than the purchase needs.
- Skipping TDS because the builder did not mention it. The duty is the buyer's.
- Not checking land conversion on the city's edges.
- Relying only on photos. Ask someone you trust to walk the site and the approach road.
- Forgetting your parents' daily life: lifts, ramps, a nearby hospital and a pharmacy matter more than a long amenity list.
Before you sign: a short checklist
- Payment accounts decided and records kept.
- RERA registration verified online.
- Title and approvals reviewed by your own lawyer.
- TDS planned, if due.
Buying for family from afar is very doable with the right order of steps. Our first home guide sets them out simply, and you can call us on +91 91838 91839 if you would like the paperwork for a specific home explained.