NRI Property in India: Buying, Selling and Repatriation
Any property except agricultural land, plantations and farm houses, paid through banking channels, with repatriation capped at two homes.
An NRI or OCI can buy a flat in Pune or an office in Gurugram without any RBI approval. What they cannot buy is agricultural land, a plantation property or a farm house. That one exclusion, and the rules on how the price is paid and how sale money leaves India, make up most of this topic.
The rules sit in the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 and are compiled for banks in RBI's Master Direction on acquisition and transfer of immovable property. They do not apply to a lease of five years or less.
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What an NRI or OCI May Do With Property in India
Purchase
Permitted for
Any immovable property
Agricultural land, plantation, farm house?
Not permitted
Receive as gift
Permitted for
From a resident, or from an NRI or OCI who is a relative
Agricultural land, plantation, farm house?
Not permitted
Inherit
Permitted for
From a resident, or from a non-resident who acquired it lawfully
Agricultural land, plantation, farm house?
Permitted (any property)
Sell or transfer to a resident
Permitted for
Any immovable property
Agricultural land, plantation, farm house?
Permitted
Sell or transfer to an NRI or OCI
Permitted for
Any property except the excluded types; a gift needs the transferee to be a relative
Agricultural land, plantation, farm house?
Not permitted
| Transaction | Permitted for | Agricultural land, plantation, farm house? |
|---|---|---|
| Purchase | Any immovable property | Not permitted |
| Receive as gift | From a resident, or from an NRI or OCI who is a relative | Not permitted |
| Inherit | From a resident, or from a non-resident who acquired it lawfully | Permitted (any property) |
| Sell or transfer to a resident | Any immovable property | Permitted |
| Sell or transfer to an NRI or OCI | Any property except the excluded types; a gift needs the transferee to be a relative | Not permitted |
Terms the Rules Turn On
- Relative
- As defined in section 2(77) of the Companies Act, 2013. A gift between non-residents is allowed only between relatives in this sense.
- Section 6(5) property
- Property a person bought while resident in India, or inherited from a resident, which they may keep holding after becoming non-resident. Its sale proceeds cannot be repatriated without RBI's prior permission, though the owner may use the Remittance of Assets facility.
- Transfer
- Includes sale, purchase, mortgage, exchange, pledge, gift, loan or any other transfer of right, title, possession or lien.
How the Price Must Be Paid
Payment must come from funds received in India through banking channels as an inward remittance from abroad, or by debit to the buyer's NRE, FCNR(B) or NRO account. Traveller's cheques and foreign currency notes are specifically not allowed, and no other mode is.
A foreign-national spouse of an NRI or OCI (who is not an NRI or OCI themselves) may acquire one property jointly with that spouse, other than the excluded types, if the marriage has been registered and has subsisted for at least two continuous years immediately before the purchase.
Gift, inheritance and repatriation traps, with explanations.
Repatriating Sale Proceeds: The AD Bank's Checks
When an NRI or OCI sells property other than agricultural land, plantation or farm house, the AD bank may allow the proceeds to go abroad if:
- 1
The property was acquired lawfully
In line with the foreign exchange law in force at the time the seller acquired it.
- 2
It was paid for in foreign exchange
Through banking channels or from an FCNR(B) or NRE account. Housing loan instalments repaid by inward remittance or from NRE/FCNR(B) count as foreign exchange.
- 3
Residential property count is checked
For residential property, repatriation is limited to not more than two properties.
How CCFE Tests This
Two traps recur. First, the NRO account: it may pay for a purchase, but rupee funds from NRO do not qualify the property for the foreign exchange repatriation route above, so candidates who pick NRO as a qualifying source lose the mark. Those proceeds can still leave through the NRO facility of up to USD 1 million under the Remittance of Assets Regulations. Second, gifts: the question gives an NRI gifting a flat to a non-resident friend, and the right answer is that the donee must be a relative.
FAQs
Can an NRI buy agricultural land in India?expand_more
No. NRIs and OCIs may buy any immovable property except agricultural land, plantation property and farm houses. They may, however, inherit such property.
Can an NRI pay for property in India from an NRO account?expand_more
Yes. Payment may come by inward remittance or by debit to an NRE, FCNR(B) or NRO account. It cannot be paid by traveller's cheques or foreign currency notes.
How many properties can an NRI repatriate sale proceeds for?expand_more
For residential property, repatriation of sale proceeds is restricted to not more than two properties, and only where the purchase was funded in foreign exchange through banking channels or from NRE or FCNR(B) accounts.
Can an NRI sell inherited agricultural land?expand_more
Yes, but only to a person resident in India. Agricultural land, plantation property and farm houses cannot be transferred to another NRI or OCI.
Next steps
- Loans to NRIsarrow_forward
- Remittance of Assetsarrow_forward
- NRI Investmentarrow_forward
- Property Abroadarrow_forward
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