Can Foreign Nationals, NRIs and OCI Cardholders Purchase Property in India?
A practical guide to buying, inheriting, leasing, gifting, selling and retaining immovable property in India under the Foreign Exchange Management Act, 1999 and the Foreign Exchange Management (Non-debt Instruments) Rules, 2019.
1. Applicable laws and important definitions
The principal legislation is the Foreign Exchange Management Act, 1999 (FEMA). The rules for immovable property are contained in Chapter IX of the Foreign Exchange Management (Non-debt Instruments) Rules, 2019, especially Rules 24 to 29, read with the RBI Master Direction on acquisition or transfer of immovable property. The earlier 2018 property regulations were superseded by the 2019 Rules.
- Section 2(v), FEMA: defines a person resident in India. The test generally includes residence in India for more than 182 days during the preceding financial year, subject to important exceptions concerning employment, business and the intention to stay for an uncertain period. Days alone do not determine status.
- Section 6(5), FEMA: allows a person resident outside India to continue holding, owning, transferring or investing in immovable property acquired while resident in India or inherited from a person resident in India, subject to other applicable laws.
- NRI: an Indian citizen resident outside India for FEMA purposes.
- OCI: a person resident outside India registered as an Overseas Citizen of India Cardholder under Section 7A of the Citizenship Act, 1955. OCI status is not Indian citizenship.
- PIO: Person of Indian Origin, a historical category; the former PIO Card Scheme was merged with the OCI scheme. The operative property rules generally refer to NRI and OCI.
2. Who can purchase immovable property in India?
| Person | Residential or commercial property | Agricultural land, farmhouse or plantation |
|---|---|---|
| Non-Resident Indian (Indian citizen) | Generally permitted under Rule 24, subject to payment and other conditions | Not permitted by the general purchase permission |
| OCI Cardholder resident outside India | Generally permitted under Rule 24 | Not permitted by the general purchase permission |
| Foreign national of non-Indian origin resident outside India | Generally requires RBI permission; no automatic purchase right | Generally restricted; individual permission and other laws may apply |
| Foreign national who qualifies as resident in India under FEMA | May be permitted, subject to nationality restrictions and state or other approvals | Subject to agricultural land and other applicable restrictions |
3. Can an OCI Cardholder purchase and hold property?
Yes. Under Rule 24 of the 2019 Rules, an OCI resident outside India can generally acquire residential or commercial immovable property in India. Payment must ordinarily come through permitted banking channels, including inward remittances or eligible non-resident accounts. Traveller's cheques, foreign currency notes and other unapproved modes are not permitted.
OCIs cannot rely on this general permission to purchase agricultural land, a farmhouse or plantation property. Property acquired lawfully before becoming non-resident, or inherited in accordance with FEMA, must be considered separately under Section 6(5) and the applicable rules.
4. Who is eligible to apply for an OCI Card?
Section 7A of the Citizenship Act, 1955 provides eligibility for specified foreign citizens who were Indian citizens, were eligible to become Indian citizens at commencement of the Constitution, belonged to territories subsequently becoming part of India, or are eligible descendants. Certain minor children and foreign-origin spouses of Indian citizens or OCI Cardholders may also qualify. For the spousal route, the marriage must be registered and have subsisted continuously for at least two years immediately before application, with the prescribed checks.
Citizenship history involving Pakistan, Bangladesh or another notified country may bar eligibility, including specified parental and ancestral connections. Eligibility must be checked against the current law and official OCI Services portal.
5. Can a foreign national of non-Indian origin purchase property?
A foreign national of non-Indian origin who is resident outside India generally cannot buy immovable property in India without RBI permission. Such a person may acquire property through inheritance from a person resident in India, subject to the rules, and may enter into a lease not exceeding five years without prior RBI permission under the general FEMA property framework.
Foreign nationals of non-Indian origin who become persons resident in India under Section 2(v) of FEMA may acquire immovable property, subject to the rules, their nationality, state land laws and other approvals. A tourist visa or physical presence alone is not sufficient to establish FEMA residence.
6. Nationals of specified countries
Special prior RBI permission restrictions apply to citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, Bhutan, Hong Kong, Macau and the Democratic People's Republic of Korea, irrespective of residential status, for acquisition or transfer other than leases not exceeding five years. The applicable OCI exception and limited long-term-visa provisions should be assessed where relevant. Check the current RBI directions before entering into a transaction.
7. Can a foreign national take property on lease?
Yes. A lease of immovable property in India for a period not exceeding five years is generally outside the restrictions imposed by the FEMA non-debt instrument property rules. Stamp duty, registration, state tenancy law, visa conditions and other applicable requirements still apply. A longer lease requires separate legal examination.
8. Property purchased while resident in India
Under Section 6(5) of FEMA, a person who lawfully acquired immovable property while resident in India may continue to hold it after becoming resident outside India. This may include agricultural land or a farmhouse acquired lawfully while resident, even though a fresh purchase by an NRI or OCI is generally restricted. Subsequent transfer must comply with the current FEMA rules, state agricultural land laws and other applicable requirements. Prior RBI approval is not universally required for every transfer by an OCI.
9. Gift, inheritance and sale of property
Rule 24 permits an NRI or OCI to receive non-agricultural property by gift from a person resident in India, NRI or OCI who qualifies as a relative under Section 2(77) of the Companies Act, 2013. Inheritance is governed by separate conditions, including whether the previous owner acquired the property lawfully.
An NRI or OCI may generally transfer immovable property to a person resident in India; transfer to another NRI or OCI is generally limited to property other than agricultural land, farmhouses or plantation property. Special rules may apply to other foreign nationals, and inherited property. Title, succession, registration, stamp duty and tax law must also be satisfied.
10. Can an OCI rent out property in India?
Yes. An OCI may generally let out lawfully owned residential or commercial property in India. Rental income may attract Indian income tax, tax withholding and foreign exchange reporting or repatriation requirements. The permitted use of the property must comply with municipal and state laws.
11. Joint purchase by the foreign spouse of an NRI or OCI
Rule 25 of the 2019 Rules allows an eligible foreign spouse who is resident outside India to acquire one immovable property jointly with an NRI or OCI spouse, other than agricultural land, a farmhouse or plantation property, subject to conditions. The marriage must have been registered and subsisted for at least two years immediately before acquisition, the spouse must not otherwise be prohibited, and the prescribed payment conditions apply.
12. Payment, repatriation and practical precautions
- Confirm the purchaser's citizenship, OCI status and FEMA residential status before executing the agreement.
- Check title, encumbrances, land-use classification, approvals, mutation and registration requirements.
- Use permitted banking channels and preserve remittance records and source-of-funds documents.
- Check the seller's tax residence and applicable tax deduction requirements, particularly when buying from an NRI.
- For repatriation of sale proceeds, check the applicable RBI conditions, authorised dealer documentation, tax clearance or certification requirements and the limit relating to residential properties.
- Verify whether state laws restrict ownership or transfer of agricultural or other protected land.
For further guidance, see purchase and transfer of property by NRIs and OCI Cardholders and the meaning of NRI, PIO and OCI.
Frequently asked questions
Can an OCI buy an apartment in India without RBI permission?
Generally yes, if the purchase satisfies Rule 24 and other applicable requirements.
Can an OCI buy agricultural land in India?
Not under the general purchase permission. Inheritance or property lawfully held from an earlier period is a separate legal question.
Can a foreigner buy property on a tourist visa?
A tourist visa does not itself confer the FEMA residential status needed for an ordinary purchase. RBI permission and other laws may be relevant.
Can an OCI sell property to an Indian resident?
Generally yes, subject to the applicable FEMA rules, title, land-use restrictions and tax obligations.