FEMA Eligibility — Who Can Buy?
The Foreign Exchange Management Act (FEMA) governs NRI property purchases in India. The rules are clear and permissive for residential property:
An Indian citizen residing outside India. Can buy residential and commercial property freely. No RBI approval needed. No limit on number of properties.
Treated at par with NRIs for property purchase purposes. OCI cardholders can buy residential and commercial property without restriction.
PIOs (persons of Indian origin who are not Indian citizens) can purchase residential property. Note: Most PIOs now hold OCI cards (PIO cards merged into OCI from 2015).
Citizens of countries other than India without Indian origin require specific RBI permission. Spouses of NRIs who are foreign nationals are treated differently — consult a CA.
Important Restriction
NRIs and OCIs cannot purchase agricultural land, farmhouses, or plantation properties in India. Only Indian residents can buy these categories. Any such purchase requires prior RBI approval and is rarely granted.
Payment Rules — How to Fund the Purchase
All payments for property purchase by NRIs must be made through normal banking channels — either from NRE (Non-Resident External) or NRO (Non-Resident Ordinary) accounts, or via inward remittance in foreign currency. Cash payments are illegal and void the transaction.
NRE Account (recommended)
Currency: INR (from foreign source)
Repatriation: Fully repatriable
Principal and interest are fully repatriable. Sale proceeds funded from NRE can be repatriated without restriction up to the purchase amount.
NRO Account
Currency: INR (from India income)
Repatriation: USD 1M/year cap
Funds from India-sourced income (rent, dividends). Repatriation capped at USD 1 million per financial year after tax payment.
TDS on NRI Property Transactions
TDS (Tax Deducted at Source) rules differ significantly when an NRI is a party to the transaction — whether as buyer or seller.
When You Buy from an NRI Seller
As the buyer, you are legally responsible for deducting TDS from the sale amount before payment. This applies even if the seller is an NRI — the burden is the buyer's, not the seller's.
| Holding Period | Gain Type | Base TDS Rate |
|---|---|---|
| Less than 24 months | Short-term Capital Gain | 30% (+ surcharge + cess) |
| 24 months or more | Long-term Capital Gain | 20% (+ surcharge + cess) |
Lower TDS Certificate
NRI sellers can apply to the Income Tax Department (Form 13) for a lower TDS certificate if their actual taxable gain is less than 20% of the sale consideration. This is common where the seller has significant cost of acquisition or improvement. Buyers should request this certificate from the seller before closing.
When You (NRI) Sell Your Property
When you sell as an NRI, the buyer deducts TDS at the rates above. Your actual tax liability may be lower — you can claim indexation benefits on long-term capital gains. File your Indian income tax return to claim a refund of excess TDS.
Section 54 exemption: Long-term capital gains from property sale are exempt if reinvested in another residential property within 1 year before or 2 years after the sale (or in construction within 3 years). This applies to NRIs as well.
NRI Home Loans — What You Need to Know
Most major Indian banks and NBFCs extend home loans to NRIs. The documentation requirements are more intensive than for resident Indians, but the process is well-established.
Required Documents
- ✓Valid Indian passport (NRI status) or OCI card
- ✓Work permit / employment visa / residence permit of country of residence
- ✓Last 6 months bank statements (Indian NRE/NRO accounts)
- ✓Last 6 months overseas bank statements
- ✓Salary slips / contract / employment letter (last 3 months)
- ✓Last 2 years Income Tax Returns (both countries if double taxation applicable)
- ✓Property documents (sale agreement, builder NOC)
For resale properties, also verify the Khata status before committing — a B-Khata property can block your home loan. Our guide on BDA vs BBMP Khata explains what to check.
Power of Attorney for NRI Buyers
Most NRIs cannot be physically present in India for the full purchase process — site visits, documentation, registration. A properly structured Power of Attorney (POA) allows a trusted person in India to act on your behalf.
Use a Specific (not General) POA
A Specific POA limits authority to a specific property and transaction. A General POA grants broad authority and creates higher fraud risk. Always use Specific POA for property transactions.
Apostille the POA correctly
The POA must be executed in front of a Notary Public in your country of residence, then apostilled (or attested by the Indian Embassy/Consulate if your country is not a Hague Convention signatory).
Register the POA in India
For the POA to be valid for property registration, it must be presented to the Sub-Registrar's office in India. Your POA holder should register it within 3 months of attestation.
POA expires on death
A POA becomes void on the death of the principal (you) or the attorney. Plan succession documents accordingly.
Best Micro-Markets for NRI Investment in Bangalore
NRIs have distinct investment priorities compared to resident buyers: rental income reliability, resale liquidity, and Grade A builder execution matter more than commute optimization. These micro-markets consistently perform well on all three criteria.
Whitefield / Hoodi / Kadugodi
Metro-connected IT corridor with institutional tenant demand. Grade A builder supply is plentiful. Rental income is consistent and reliable — ideal for NRIs who want predictable yield without active management.
Sarjapur Road (Bellandur to Carmelaram)
Best appreciation story in East Bangalore. High corporate tenant demand from Amazon/Target/Wipro campuses ensures low vacancy. Strong resale liquidity with multiple Grade A projects.
Hebbal / Manyata Tech Park
Premium segment with strong NRI community. Airport proximity (30 min) reduces friction during visits. Corporate lease demand from MNCs at Manyata ensures premium tenant quality.
Budigere / Kadugodi (emerging)
Highest yield option at sub-₹80L entry. For NRIs in Tier 2 income brackets or first-time investors, Budigere offers a low-capital entry into the Whitefield ecosystem.
Frequently Asked Questions
Can NRIs buy residential property in Bangalore?
Yes. NRIs and OCIs can freely purchase residential and commercial properties in India under FEMA. No RBI approval is required. The only restriction is on agricultural land, farmhouses, and plantation properties.
Can NRIs get a home loan in India for a Bangalore property?
Yes. All major Indian banks (SBI, HDFC, ICICI, Axis, Bank of Baroda) offer home loans to NRIs for Indian properties. Rates are typically 25-50 bps higher than resident Indian rates. EMIs must be repaid from NRE/NRO accounts or via inward remittance.
How is rental income taxed for NRIs?
Rental income earned in India is taxable in India for NRIs. A standard 30% deduction on rent is allowed for repairs and maintenance, plus interest on home loan. The net income is added to your India-sourced income and taxed at applicable slab rates. TDS at 31.2% (30% + cess) is typically deducted by the tenant from rent payments to NRIs.
How many properties can an NRI own in India?
There is no limit on the number of residential properties an NRI can own in India. You can own as many as your financial capacity allows. Each property can generate rental income, and gains from up to 2 properties can be reinvested to claim capital gains exemption under Section 54.
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