Can an NRI buy commercial property in India?

Can NRI buy commercial property in India under FEMA?

Yes. The Foreign Exchange Management (Non-debt Instruments) Rules, 2019 allow NRIs and OCIs to acquire any immovable property in India other than agricultural land, plantation property and farmhouses. Payment must come through banking channels or NRE, FCNR or NRO accounts.

Can an NRI get a commercial property loan?

Some banks and finance companies lend to NRIs for commercial premises, usually on stricter terms than home loans. Lenders look at overseas income, the property's rental potential and title. Ask the lender for its current policy before signing.

Due diligence for shops and offices

• Title search over the full chain.
• Approved commercial use and occupancy certificate.
• Fire and other safety approvals for the building.
• Society or association rules on use and signage.
• Existing tenancies and their terms.

Leasing commercial property to tenants

A commercial lease should fix rent, escalation, security deposit, lock-in, fit-out, maintenance, GST where applicable, and the exit process. Our commercial lease with title search covers both sides. Rent goes to your NRO account with tax deducted by the tenant.

Repatriation of commercial property sale proceeds

Proceeds go to your NRO account and can be remitted within the annual limit of USD 1 million, with the required forms and a chartered accountant's certificate. The special rule allowing repatriation of the foreign exchange paid applies only to residential property, up to two.

GST and stamp duty on a commercial purchase

GST applies to commercial units bought from a developer before completion; a completed unit with an occupancy certificate is generally outside GST. Stamp duty and registration charges are set by the state and are the same for NRIs as for residents. Budget for both before agreeing the price.

Under-construction commercial projects

Check that the project is registered under RERA, that the commercial use is approved, and that the payment plan follows construction stages in a registered agreement. Commercial projects often carry maintenance and common area charges that are higher than residential ones; read those clauses carefully.

Selling commercial property as an NRI

The buyer deducts tax at source at the non-resident rate, so consider a lower deduction certificate before the sale. If a tenant is in occupation, the sale should deal with the lease: whether the buyer takes over the tenancy, and how the security deposit is transferred.

What to do next

Start with a title search and a review of approvals. See can NRI buy property in India for the general rules.