Yes, an NRI can buy commercial property in India without RBI approval, on the same free basis as residential property. Office space, retail shops, and commercial buildings are all permitted. What differs from a residential purchase is mainly around usage, tenancy structuring, and how rental income and eventual sale are taxed.
The purchase rules themselves are straightforward
Commercial property sits in the same permitted category as residential property under FEMA Notification 21(R)/2018-RB. No RBI approval is needed, there is no cap on the number of commercial properties an NRI can own, and payment must be made in Indian rupees through normal banking channels, using an NRE, NRO, or FCNR account, exactly as with a residential purchase.
Where commercial purchases involve extra practical steps
Commercial property purchases more commonly involve GST implications, whether on the purchase itself in certain structures, or on rental income once the property is let out. Lease agreements for commercial tenants also tend to be more complex than residential rental agreements, often involving lock-in periods, escalation clauses, and specific use restrictions that should be reviewed carefully before the property is let out.
Repatriation: confirm the rules for your specific structure
The two-property cap on repatriating sale proceeds is a confirmed rule for residential property. Whether the same cap, a different limit, or no limit applies to commercial property sale proceeds is not something to assume either way. NEEDS VERIFICATION: confirm the current RBI repatriation treatment for commercial property specifically before advising a client on exit planning. Get this confirmed directly with your bank’s NRI desk and your advocate before the purchase, not after.
Financing a commercial purchase
Indian banks offer commercial property loans to NRIs, though eligibility criteria and loan-to-value ratios tend to be more conservative than for residential lending, reflecting the higher perceived risk in commercial real estate. Disbursement and repayment must still route through NRE, NRO, or FCNR accounts, the same as any other NRI property payment, and lenders will typically want to see the property’s projected rental income or business use case as part of the loan assessment.
Due diligence specific to commercial property
Beyond the standard title and encumbrance checks that apply to any property purchase, commercial due diligence should confirm the building’s occupancy certificate, fire safety compliance, and, for a purchase within a larger commercial complex, the common area maintenance structure and any restrictions the building’s association places on usage or subletting. A commercial unit that looks straightforward on paper can carry usage restrictions that only become apparent once you try to lease it to a specific type of tenant.
Choosing between direct ownership and a structured entity
Some NRIs purchase commercial property directly in their own name, while others structure the purchase through an Indian entity for tax or liability reasons. NEEDS VERIFICATION: the specific tax and FEMA implications of holding commercial property through an entity versus direct individual ownership should be confirmed with a chartered accountant and advocate for your specific circumstances, since the right structure depends on factors this guide cannot assess generically. This decision is worth making before the purchase, not retrofitted afterward.
Frequently asked questions
Can an NRI buy commercial property without RBI approval?
Yes. Commercial property falls under the same permitted category as residential property under FEMA. No RBI approval is required, and there is no limit on the number of commercial properties an NRI can purchase, provided payment is made through normal banking channels in Indian rupees.
Does GST apply to an NRI’s commercial property purchase?
GST implications depend on the specific transaction structure and whether the property is under construction or completed, and separately on GST treatment of rental income once let out. This should be reviewed with a tax advisor at the time of purchase, since the treatment varies by circumstance.
Is repatriation of commercial property sale proceeds capped like residential?
The two-property cap is a confirmed rule for residential property sale proceeds specifically. The exact repatriation treatment for commercial property should be confirmed directly with your bank’s NRI desk and your advocate before purchase, rather than assuming it mirrors the residential rule either way.
Can an NRI lease out commercial property they own in India?
Yes, there is no restriction on an NRI leasing commercial property they own. Commercial lease agreements tend to be more complex than residential ones, often including lock-in periods and use restrictions, so these should be reviewed carefully before signing rather than using a generic template.
Can an NRI get a loan for commercial property in India?
Yes, Indian banks offer commercial property loans to NRIs, though eligibility and loan-to-value ratios tend to be more conservative than residential lending. Disbursement and repayment must route through NRE, NRO, or FCNR accounts, and lenders typically assess the property’s projected rental income as part of the loan decision.
What extra due diligence applies to commercial property specifically?
Beyond standard title checks, confirm the occupancy certificate, fire safety compliance, and, within a larger complex, the common area maintenance structure and any usage or subletting restrictions imposed by the building’s association. These can materially affect your ability to lease the unit to a specific type of tenant later.
Should an NRI buy commercial property directly or through an entity?
This depends on tax and liability considerations specific to your situation, and should be confirmed with a chartered accountant and advocate before the purchase rather than decided informally. The right structure varies enough by circumstance that a generic recommendation would not be responsible advice.
Does an occupancy certificate matter for a commercial purchase?
Yes, significantly. An occupancy certificate confirms the building has been approved for use following construction, and its absence can complicate financing, insurance, and even the legality of operating a business from the premises. Verify this directly rather than assuming it exists because the building appears complete.
Structure the Purchase With the Exit in Mind
Commercial property can be a genuinely straightforward purchase for an NRI, but the tax and repatriation considerations differ enough from residential property that they deserve attention before the purchase, not after the fact when the exit is being planned.
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VIVS Legal advises NRI clients on commercial property purchase, leasing structures, and FEMA compliant planning.
Get a Free Legal ConsultationVIVS Legal advises NRI clients on commercial property purchase, leasing structures, and FEMA compliant repatriation planning. Read more in our NRI legal services.
Written by Adv. Swanand Pandit, BLS, LL.B, LL.M, Advocate, High Court of Bombay, Director, VIVS Legal. Last updated 15 August 2026.
