NRI property investment in India: rules, tax and exit

What can NRIs invest in?

• Completed residential and commercial property.
• Under-construction projects registered under RERA.
• Units of listed real estate investment trusts, under the applicable investment rules.

Agricultural land, plantations and farmhouses are not permitted.

NRI property investment rules for under-construction projects

Check RERA registration, the builder's title and approvals, and that payments follow the registered agreement. Under Section 13 of RERA, the builder cannot take more than 10% of the price before a registered agreement. See documents to check before buying a flat under construction.

How is rental income taxed?

Rent from Indian property is taxable in India. The tenant must deduct tax on rent paid to a non-resident landlord. Rent goes to the NRO account.

Exit: sale and repatriation

The buyer deducts tax at source on the sale. Proceeds from property bought with NRE or FCNR funds can be repatriated up to the amount paid in foreign exchange for up to two residential properties; others go through the NRO account within the annual limit. See TDS on sale by NRI.

Risks an NRI investor should check

• Title defects that surface when you try to sell.
• Project delays; RERA gives remedies, but they take time.
• Occupants or tenants who will not leave.
• Tax and repatriation rules changing between purchase and sale.

Whose name should the property be in?

Individually, or jointly with a spouse or a resident relative. Joint ownership affects how rent and gains are taxed and who can sell. See buying jointly with a resident Indian.

Real estate investment for NRIs: legal checks first

Before investing, get a title search and read the agreement. Our role is legal: documents, title and disputes, not choosing investments. See NRI property services.