What you can and cannot buy
The rules come from the Foreign Exchange Management Act (FEMA) and the Foreign Exchange Management (Non-debt Instruments) Rules, 2019. The Reserve Bank of India summarises them in its FAQ on purchase of immovable property.
| Property | NRI or OCI can buy? | Notes |
|---|---|---|
| Flat or house | Yes | Any number, no RBI permission |
| Commercial property | Yes | Shops, offices |
| Plot in an approved layout on converted land | Yes | It is non-agricultural property |
| Agricultural land | No | Can be inherited, not bought |
| Plantation property, such as a coffee estate | No | Can be inherited, not bought |
| Farmhouse | No | A building on farm land does not change this |
Two points catch people out in Karnataka:
- The state's own rule changed, FEMA did not. Since the 2020 amendment to the Karnataka Land Reforms Act, residents who are not farmers can buy agricultural land in the state. That does not help an NRI or OCI. FEMA still bars them from buying it. Our guide on who can buy agricultural land in Karnataka covers the state rule.
- Converted means converted on paper. A plot is safe for an NRI to buy when the land has a conversion order for non-agricultural use and the layout is approved. If the RTC (pahani, the land record) still shows agricultural use, treat it as agricultural land. See DC conversion in Karnataka.
Who these rules cover. An NRI here is an Indian citizen resident outside India. An OCI is a foreign citizen holding an Overseas Citizen of India card; OCIs are treated like NRIs for property. A foreign citizen of non-Indian origin living abroad generally cannot buy property in India, beyond a lease of up to five years or an inheritance. Citizens of certain neighbouring countries need prior RBI permission; the RBI FAQ lists them.
Inheritance and gifts. An NRI or OCI can inherit any property, including agricultural land and plantations, from a person who held it lawfully. An NRI or OCI can receive a flat, house or plot as a gift from a relative, but not agricultural land, plantation property or a farmhouse.
How you must pay
- Payment must reach the seller in India through normal banking channels.
- It can come from your NRE (non-resident external), FCNR(B) (foreign currency non-resident) or NRO (non-resident ordinary) account in India, or as money sent from abroad.
- You cannot pay in traveller's cheques or foreign currency notes.
- You can take a home loan from a bank or housing finance company in India, repaid from your NRE, NRO or FCNR account, or from rent. Lending terms differ by lender; see our guide on home loans for a plot.
Which account you pay from matters later. Money paid in foreign exchange, or from an NRE or FCNR account, keeps a route back abroad when you sell. Keep every bank advice and remittance record.
Step by step
- Get a PAN if you do not have one. You will need it for the purchase, the loan and any tax later.
- Open or confirm your NRE and NRO accounts with a bank in India.
- Shortlist the property, and confirm it is not agricultural land, plantation property or a farmhouse.
- Check the papers. RTC and mutation, title chain, encumbrance certificate, conversion, layout approval and release order, e-khata or e-swathu record, and K-RERA registration where it applies. The full list is in every paper to check before you pay.
- Sign an agreement with clear terms on price, dates, and refund if a paper fails.
- Arrange a power of attorney if you will not be in Karnataka for registration (see below).
- Pay through your bank, and keep the bank's record of each payment.
- Register the sale deed at the sub-registrar office, in person or through your attorney. Stamp duty and registration fees are the same as for a resident; see stamp duty and registration in Karnataka.
- Transfer the khata into your name with the local body, and keep property tax paid.
For identification at registration, ask the sub-registrar office in advance which documents it accepts from a non-resident without an Aadhaar number. Practice can differ between offices.
Power of attorney from abroad
Most NRIs complete the purchase through a trusted person in India who holds a power of attorney (POA).
- Make it specific. Name the property, the survey or site number, and exactly what the attorney may do: sign the agreement, pay, sign and present the sale deed, apply for khata. A broad general POA invites misuse.
- Sign it properly abroad. Sign before an Indian embassy or consulate, or before a local notary with an apostille where the country allows it. Ask the consulate which route it accepts.
- Get it stamped in Karnataka on time. A POA signed outside India has to be stamped in Karnataka within three months of reaching India. Late stamping attracts a penalty.
- Duty depends on who holds it. A POA in favour of a close family member carries a lower duty than one in favour of others, especially if it lets the attorney sell. Confirm the current duty at the sub-registrar office.
When the seller is an NRI
If you buy from a seller who is a non-resident, you, the buyer, must deduct tax at source (TDS) from the price and pay it to the government. This is stricter than buying from a resident:
- There is no minimum price below which TDS is excused.
- TDS is worked out on the seller's capital gain at the rates for non-residents. For property held more than two years, the long-term gains rate is 12.5% plus surcharge and cess; for a shorter hold, the seller's slab rates apply.
- The seller can apply to the Income Tax Department for a certificate allowing a lower or nil deduction. If they have one, deduct at the rate it states.
- The buyer has needed a TAN (tax deduction account number) to deposit this tax. A 2026 amendment was reported to let resident individual and HUF buyers deposit it with their PAN from 1 October 2026. Confirm the current rule and the return you must file with your chartered accountant before the registration date.
- The sub-registrar may ask for proof that TDS was deposited.
Get this wrong and the unpaid tax, interest and penalty fall on you, not the seller. The Income Tax Department publishes the current forms.
Selling later and taking money abroad
- Two homes, then limits. Sale proceeds of residential property can be sent abroad for up to two such properties, if you bought them lawfully and paid in foreign exchange or from an NRE or FCNR account.
- NRO route. Beyond that, an NRI can remit up to USD 1 million per financial year from the NRO account, which can include property sale proceeds, after tax.
- Paperwork. The bank will ask for proof of tax paid, usually through a chartered accountant's certificate and the remittance forms the tax rules require.
Plan this at purchase. Paying from the right account is easier than fixing it at sale.
How we help
We check the property and papers for NRI buyers, coordinate with your lawyer and attorney in Karnataka, and keep you informed without you having to fly in for every step. Start with our advisory service, or tell us what you want to buy. For tax and FEMA questions specific to you, we work alongside your chartered accountant.
