NRIs for long have been active investors in the Indian realty market and the sector is only becoming a worthy bet with each passing day for them

A Non-Resident Indian (NRI), as per India’s Foreign Exchange Management Act 1999 (FEMA), is an Indian citizen or foreign national of Indian origin who is a resident outside India for purposes of employment, business or vocation in circumstances as would indicate an intention to stay outside India for an indefinite period. According to recent statistics, Rs 1,150 crore of investment by NRIs is expected to make its way into the residential markets across cities in 2017, against Rs 600 crore in 2013.

But can NRIs invest in real estate? What laws govern property purchases by NRIs? Is the current environment favourable for them? Let’s get an answer to all these questions and more…

Can an NRI purchase or own property in India?

According to Grant Thornton India LLP, An NRI can purchase any immovable property in India, other than agricultural land/plantationproperty/farm house; Payment for the acquisition of immovable property can be made out of funds received in India through normal banking channels by way of inward remittance from any place outside India or by debit to his/her NRE/ FCNR (B)/ NRO account. However, such payments cannot be made by traveller’s cheque or foreign currency notes; In the event of sale of immovable property other than agricultural land/ farm house/ plantation property in India by an NRI, the Authorised Dealer (AD) may allow repatriation of the sale proceeds outside India, provided in the case of residential property, the repatriation of sale proceeds is restricted to not more than two such properties.

According to Mona Jalota, director, NRI and international – residential services, Colliers International India, if you are an NRI looking to invest in your dream abode, keep the following five pointers in mind: Reputation and track-record of the developer; In the event an NRI cannot be present in person at the time of execution and registration of the purchase document, he/she may appoint a trusted person to be his lawful constituted attorney; Depending on the individual’s need, he/she should take a call on whether the money should be parked in an underconstruction property or a ready-to-move-in flat; Appreciation potential of the area (read: if it is a matured market or an upcoming one); Infrastructure status of the area; demand-supply dynamics; purpose of buying; the repatriation process (if need be) and legal documents — are some of the key areas, which cannot be ignored.


“Every NRI who has acquired property in India can claim a principal deduction of 30 per cent, further deduction on property taxes, and avail benefits on the interest deduction (if applicable) under a home loan. Such NRIs are further allowed a deduction for principal repayment under Section 80C of the Income Tax Act. Stamp duty and registration charges paid on the acquisition and registration of a property/purchase document can also be claimed under Section 80C of the Income Tax Act. Rental income from property is taxed at slab rates as prescribed yearly by the Income Tax Department,” mentions Nishit Dhruva, managing partner, MDP & Partners.

Experts also go on to mention that NRIs are governed by the rules and regulations governing the citizens of India such as the Transfer of Property Act, Registration Act, RERA, and the Indian Stamps Act 1899. In addition to these laws that are applicable to all the citizens of India, NRIs have to follow the specific guidelines laid down by the Ministry of External Affairs, the RBI guidelines with respect to the remittance of money, the Foreign Exchange Management Act and the Foreign Exchange Management Regulations, 2000 (Acquisition and Transfer of Immovable Property in India).


NRIs looking to buy a property continue to generate a decent demand in the real estate market and there are dedicated projects launched by numerous developers catering to such segments and going ahead, the market will only become more organised and transparent, thus making real estate an attractive proposition for buyers and investors alike. Also, with the current market achieving stability and the rupee getting stronger, real estate will only provide long-term gains.

Take note:

An NRI can purchase (other than agricultural land/farmhouse/ plantation, etc) from a resident/NRI; An NRI can acquire a property as a gift (other than agricultural land/ farmhouse/ plantation, etc) from a NRI/resident/PIO; An NRI can acquire (any IP) as inheritance from any person who has acquired it under laws in force.


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