NRI Property Rules: 5 Facts That Save You Lakhs

NRIs buying or selling property in India must follow RBI and FEMA rules. Get it wrong and you face heavy TDS deductions, blocked repatriation, or penalties. Here's what you must know before signing any deal.

Here's what happened: Under FEMA rules, NRIs can freely buy residential and commercial property in India, but agricultural land, farmhouses, and plantation property are strictly off-limits without RBI approval.. When an NRI sells property, the buyer must deduct TDS at 20% on long-term capital gains or 30% on short-term gains — much higher than the 1% applicable when a resident Indian sells.. NRIs can repatriate sale proceeds abroad, but only up to USD 1 million per financial year, and only through NRO or NRE accounts after paying applicable taxes and filing Form 15CA/15CB..

What you should do: Verify the seller's residential status before buying from an NRI — you, the buyer, are legally responsible for deducting the correct TDS or face penalty.. Apply for a lower TDS certificate (Form 13) from the Income Tax department before the sale closes — this can significantly reduce the upfront deduction on actual gains.. Route all NRI property transactions through an NRE or NRO account only, and get a chartered accountant to file Form 15CA/15CB before any repatriation to avoid FEMA violations..

NRIs can claim TDS refund after filing an Indian ITR if actual capital gains tax is lower than the TDS already deducted — many miss this and leave lakhs unclaimed every year.