Table of Contents
Introduction
For most Indians living abroad, property back home isn’t just an investment – it’s a connection. A house where parents still live, land inherited from grandparents, or a flat purchased years ago with the hope of returning someday. Yet, when it comes to managing these assets, many NRIs find themselves lost between legal jargon, bank procedures, and unresponsive middlemen.
In our legal experience, we have come across numerous cases involving vast amounts of legal troubles that involve breach of trust by known people that the foreign national/ NRI trusted at some point for taking care of their properties in their absence. Delving further, it is only natural for foreign nationals to keep a connection with their roots, as in most cases the immediate family is abroad, in their absence local villagers, distant relatives, caretakers make the most reliable connection with their ancestry. Over a passage of time, a trusting relationship is built and as a result certain documents are signed which have led to many legal disputes for foreign nationals. For many, it has caused more emotional pain than financial as the aggrieved party is ultimately forced to engage competent legal assistance to help their cause.
But, the question remains, why is there reliance on local agents, village acquaintances, distant relatives and so on, why are the land records/ paperwork not verified before any transaction? As most of the people while living abroad engage top legal help to manoeuvre through legalities abroad, similarly, it is beyond essential to do the same in India, it is pertinent to engage qualified legal professionals in India, the same as anywhere else in the world.
Over the past decade, I’ve handled countless cases where NRIs struggled not because the law was against them, but because they didn’t know the right process. This guide is written to make sure you don’t end up in that situation – whether you’re looking to buy a property in India or sell one you already own.
1. What the Law Actually Allows You to Do
Let’s start with the basics.
Under the Foreign Exchange Management Act (FEMA) and RBI guidelines, an NRI or OCI can:
- Freely buy residential or commercial property in India.
- Buy as many of these properties as they want.
- Pay for them through NRE/NRO/FCNR accounts or through funds remitted via normal banking channels.
What you cannot buy are agricultural lands, plantation properties, and farmhouses, unless they come to you through inheritance. That’s the one clear restriction the law maintains even today.
You can also sell your property in India, but the buyer must be legally eligible:
- Residential or commercial property can be sold to another NRI, OCI, or resident Indian.
- Agricultural or plantation land can only be sold to a resident Indian.
Sounds simple enough, right? The complexity begins when we talk about taxation, Power of Attorney, and repatriation; the parts NRIs most often get wrong.
2. Buying Property in India as an NRI; The Sensible Way
Buying property from abroad isn’t difficult, but you need to be meticulous. I always tell my clients: treat property purchase as a legal transaction, not just a family decision.
Here’s the sequence you should follow:
(a) Check the title before paying even one rupee
https://nrilegalconsultants.in/title-search-for-property/
Every week, we see cases where an NRI buys property without verifying who actually owns it. Always get a title search done by a local advocate. This includes checking the Encumbrance Certificate, prior sale deeds, and mutation records. A clear title is everything.
(b) Use a Power of Attorney (POA) properly
If you can’t travel to India, issue a registered POA in favour of someone you truly trust ; preferably a professional rather than a relative.
- The POA must be signed before the Indian Consulate or a notary in your country.
- When sent to India, it must be stamped and registered in the local sub-registrar’s office.
- Always keep the POA limited in scope — for example, only for one transaction.
(You can learn more about this in our separate note on Power of Attorney for NRIs.)
(c) Payment and registration
Payments must go through your NRE or NRO account. Never pay in cash.
Once the sale deed is executed, make sure the property is registered in your name (or POA holder’s name on your behalf), and mutation entries are updated.
A few developers still try to take shortcuts on registration or insist on “agreement to sell” without actual registration; Avoid That.
3. Selling Property in India; Step by Step
If you already own property and wish to sell it, here’s what you should know.
(a) Identify an eligible buyer
NRIs can sell residential or commercial property to any Indian citizen, NRI, or OCI. Agricultural or plantation land, however, can only be sold to a resident Indian.
(b) Understand TDS and capital gains
When an NRI sells property, the buyer must deduct TDS (Tax Deducted at Source) on the sale price:
- 20% if the property was held for more than 24 months (long-term capital gains).
- 30% if held for less than 24 months (short-term gains).
You can, however, apply to the Income Tax Department for a lower TDS certificate, which saves a lot of unnecessary money being blocked.
(c) Tax exemptions
https://nrilegalconsultants.in/taxation-on-the-sale-of-immovable-property-for-nris/
You can reinvest the gains in another property or government bonds to save tax:
- Section 54 – reinvest in one residential property.
- Section 54EC – invest up to ₹50 lakhs in NHAI/REC bonds.
- Section 54F – reinvest full sale proceeds if the sold property wasn’t residential.
These are legitimate, time-tested routes most NRIs don’t use; simply because no one tells them.
(d) Repatriation of sale proceeds
After paying tax, you can send the sale amount abroad. The RBI allows NRIs to repatriate up to USD 1 million per financial year from their NRO account, provided:
- The property was acquired legally.
- All taxes have been paid.
- Form 15CA/15CB (issued by a Chartered Accountant) has been filed.
Keep all remittance proofs and sale documents safely; they’re your legal trail if RBI ever questions the transfer.
4. The Hidden Traps Most NRIs Fall Into
Even the most educated NRIs can get trapped by minor errors. A few of the most common ones are:
- Signing unregistered Power of Attorney.
It has no value in India. Courts reject it outright. - Buying through “trusted relatives.”
Countless disputes arise when a brother, cousin, or uncle holds property “on behalf” of an NRI. Unless it’s legally registered, it’s not yours. - Accepting payments in cash.
The Income Tax Department can treat it as unaccounted income. - Not updating mutation or title after inheritance.
If your parent owned the property, and you haven’t updated the land records, your ownership doesn’t legally exist yet. - Ignoring tenancy laws.
Letting someone stay “temporarily” without a written lease can make it nearly impossible to evict them later.
I’ve seen people spend more in litigation than the property’s worth simply because these basics were ignored.
5. A Simple Checklist for NRIs
Whenever you’re buying or selling, these documents are essential:
- Passport and PAN card
- OCI card (if applicable)
- Title documents (sale deed, partition deed, will, etc.)
- Encumbrance certificate
- Latest property tax and utility bills
- POA copy (if used)
- Bank remittance proofs
- Form 15CA and 15CB for repatriation
Keep everything scanned and stored digitally.
FAQs
Q: Can I buy a property jointly with my sibling who’s a resident Indian?
Yes, but ensure your payment comes from your NRE/NRO account and theirs from a resident account.
Q: Can I sell my inherited land while living abroad?
Yes, inheritance is exempt under FEMA. You can sell it, but only to a resident Indian if it’s agricultural land.
Q: Do I need to be physically present at the registrar’s office?
No. A valid, attested POA holder can represent you.
Q: Can I repatriate the full sale amount abroad?
Yes, within the USD 1 million per financial year limit (after paying tax and filing 15CA/CB).
Q: Should I hire a lawyer in India or manage through relatives?
Always hire a lawyer. Even the best relatives can unintentionally make legal mistakes.
7. A Word of Advice from Experience
If there’s one thing years of property work have taught me, it’s this: NRIs lose money not because of the law, but because of assumptions.
Assuming someone else will “handle it.”
Assuming an unregistered POA is fine.
Assuming the buyer will deduct the right tax.
The law isn’t your enemy but ignorance is. If you invest a little time in understanding the process, you can buy or sell property in India smoothly, without stress or future complications.
When handled properly, property transactions for NRIs are completely legal, transparent, and safe. It’s just about following the right order: verify → document → register → repatriate.
Conclusion
Investment in India by NRIs can itself be a daunting task given the complexities of the Indian financial/legal system but an investment done with due diligence can bear the desired results thus navigating the complexities of the financial/legal system.For NRIs, India’s property laws aren’t hostile; they’re simply procedural. And once you know the right sequence, the process becomes straightforward. Whether you’re buying a flat in Gurgaon, selling ancestral land in Punjab, or repatriating funds from a house sale in Ludhiana, everything can be done legally and securely from anywhere in the world. If you’re unsure where to begin, start by getting your documents in order and verifying ownership. From there, a professional can take care of the rest; from registration to repatriation ; while you stay focused on your life abroad.
Author Bio:
Advocate Nirjog Singh Mann, Advocate On Record (AOR), Punjab And Haryana High Court.