Read this before you buy a property in India

Contrary to popular belief, NRIs are not allowed to buy all types of properties as resident Indians can. There are Reserve Bank of India guidelines and Foreign Exchange regulations that restrict NRIs from buying certain types of properties.

If you are an NRI, you cannot purchase any agricultural land, farm house or plantation property. You can have ownership of such property only if they’ve been inherited (received as an heir at the death of the previous holder).

However you can own both residential as well as commercial properties in India and there is no restriction on the number of properties you can buy.
The Reserve Bank of India website has detailed explantations on each type of property transaction. In order to simplify and make it easier to understand, here is a table we have compiled for NRIs:
[table id=2 /]

Check the property deed

Eventhough your proposed property may look like a housing plot, check the property deeds carefully to see if it has been identified in the past as an agricultural land, farm house or plantation property.
Checking the past property documents (at least for last 20-25 years) with the help of an expert is good to avoid future issues.
Even when you book or buy an apartment (flat) it is a must to check the past property documents.


Payment can be made by NRI out of:

  • funds remitted to India through normal banking channels OR
  • funds held in NRE / FCNR (B) / NRO account maintained in India.

No payment can be made either by traveller’s cheque or by foreign currency notes or by other mode except those specifically mentioned above.

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31 thoughts on “Read this before you buy a property in India”

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  1. I have just come across news papers about TDS on purchase of immovable properties over Rs 50 Lakhs.
    It is understood that the payments is to be made by purchaser and certificate to be provided to seller or builder. Is there any way to comply to this requirement , as it is seems complicated being Non resident and out of India. Seller may not educate buyer because this is not his responsibility and buyer will land up paying income tax for builder and heavy penalty for delay too.

  2. How much tax is payment for the Seller and buyer in this case. I am NRI and seller of a flat to another NRI and buyer in Mangalore. Any information would be great help. The flat is below 50lacs

    1. Hi Govind, There is no difference in Stamp Duty / Taxes for NRIs and residents. Usually the buyer has to pay around 6-8% of the value in most states. For latest rates in Mangalore, please check with a local authority as we are not sure.

  3. Agricultural lands are converted & sold legally as non-agricultural plot for residence purpose only. Would such residential plots be termed as agricultural & legally not suitable for NRIs?
    Appreciate your clarification.

    1. Hi Girish, The land status should have been officially converted to non-agricultural land in the official records. Please get the title deed checked by a lawyer and confirm it has been done.

  4. Is it legally permitted for me to fund agricultural property purchase by my father / father-in-law from my NRE funds?

    1. Hi Shyam, If your father/father-in-law buys agricultural land under their name, there is no issue. It is not related to you. However please note that they cannot claim your NRE account as source of fund. They can say that you gave this amount to them as personal loan.

  5. Great Post and Nice Article.Its Very Informative Post.I had never know this Idea before.I like it.Thanks for Sharing.

  6. Hello NRI cafe
    I am buying a underconstruction flat in India.Builder is asking for Address proof. I want to give my DOHA isuued Indian passport which has my Indian permanent address. Do you think there will be any problem for registration of property as I am NRI but buying property with Indian address.

    1. Hi Prabhakar, Indian passport with permanent address is good enough. You should always give Indian address in such transactions as your Doha address is not permanent.

  7. Is the law NRI cannot but agricultural land in india applicable in Kerala also. And what is the solution for those NRI’s already purchased Agricultural land in Kerala

    1. Dear Firos, The law is applicable in Kerala also. Those who have already purchased agricultural land are liable to pay penalty (usually happens only if someone raises a complaint or a government body notices this). However an NRI is free to sell or transfer the land which he already purchased. More details are available on RBI website :

  8. Could you let us know the applicable taxes for purchasing property in Kerala. Are there any additional taxes for NRI’s. I have heard that if the property’s documented value is above 50 lakhs, an additional 1% tax needs to be be paid somewhere.. Is this authentic information?

    1. Dear Basil,
      As per 2014 Kerala Budget, the stamp duty is 6% and registration charge is 2%. There are no special taxes for NRIs.
      There was a proposal for 1% TDS on properties above 50 lakhs, but we don’t think it exists now. Please check with a documents professional.
      Also note that 6% + 2% charge may or may not change after the new Kerala budget this month.

  9. can we pay the property’s documented price through personal NRE cheque in lieu of demand draft since demand draft charges are very high. Eg: to take a demand draft of 50 lakhs, the bank commission charges are around 20,000 Rs in State Bank of India. Therefore, is there any alternative payment method for property’s documented price?

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