NRI and OCI Property Purchase and Transfer in India: FEMA Rules 2026
Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs) can generally purchase residential and commercial property in India without prior RBI permission. However, the Foreign Exchange Management Act, 1999 (FEMA), the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 and RBI directions regulate eligibility, payment, gifts, inheritance, transfers, loans and repatriation.
Applicable law and important definitions
FEMA section 2(v) defines a person resident in India by reference to residence in the preceding financial year and statutory purpose-of-stay exceptions. Section 2(w) defines a person resident outside India as someone not resident in India under FEMA. FEMA residential status is different from income-tax residential status.
FEMA section 6 regulates capital-account transactions and the holding of assets; section 10 concerns authorised persons such as authorised dealer (AD) banks. Rule 24 of the 2019 Rules addresses NRI/OCI acquisition and transfer; Rule 25 provides limited joint acquisition by a foreign spouse; other rules address inheritance, specified nationals, foreign entities and restrictions.
NRI generally means an Indian citizen resident outside India. OCI means an individual registered as an Overseas Citizen of India Cardholder under section 7A of the Citizenship Act, 1955. The former PIO Card scheme was merged into the OCI scheme; references to PIO in older RBI material should be read in their proper regulatory context.
Who can purchase property in India?
| Buyer | Residential / commercial | Agricultural land / farmhouse / plantation |
|---|---|---|
| Indian citizen resident outside India (NRI) | Generally permitted under Rule 24 | Not permitted under the general purchase permission |
| OCI cardholder resident outside India | Generally permitted under Rule 24 | Not permitted under the general purchase permission |
| Foreign spouse of NRI/OCI | One property jointly with spouse, subject to Rule 25 conditions | Not permitted under that facility |
| Other foreign national resident outside India | Generally prohibited from purchasing, unless a specific exception/permission applies | Generally prohibited |
| Foreign national genuinely resident in India under FEMA | Subject to applicable FEMA restrictions and other approvals | Subject to special restrictions and other laws |
There is generally no numerical cap on residential or commercial properties acquired by an eligible NRI/OCI under the ordinary permission. This does not remove state-law, land-use, registration, tax or other restrictions.
Approved payment methods
Rule 24 requires consideration to be paid from inward remittance through banking channels or funds in eligible non-resident accounts maintained under FEMA. NRE, NRO and FCNR(B) account usage depends on the account and transaction rules. Payment by traveller's cheque, foreign currency notes or other unapproved means is not permitted. Maintain remittance advice, bank statements and proof of source of funds.
Acquisition by gift and inheritance
Gift: An NRI or OCI may acquire residential or commercial property by gift from a resident Indian, NRI or OCI who is a relative under section 2(77) of the Companies Act, 2013, subject to Rule 24. This is narrower than the unrestricted gift description in some older guidance. General gift permission does not extend to agricultural land, farmhouses or plantation property.
Inheritance: NRIs and OCIs may inherit immovable property under the applicable statutory conditions, including from a person resident in India and, in prescribed circumstances, from a non-resident who lawfully acquired it. Inheritance of agricultural land must be distinguished from purchasing or receiving it as a gift. A foreign national who is neither NRI nor OCI must check the specific inheritance rules and any approval requirement before accepting or transferring property.
Sale, gift and mortgage of existing property
An NRI may generally sell eligible residential or commercial property to a person resident in India or to another NRI/OCI, in accordance with Rule 24. An OCI may generally sell such property to a resident Indian or an NRI/OCI as permitted by the applicable rules. Gifts are subject to the specified eligible recipient and relative conditions. Agricultural land, farmhouses and plantation property lawfully held by an NRI/OCI are subject to stricter transfer rules, including the requirement that the recipient be an Indian citizen resident in India in applicable cases.
Mortgage to an authorised dealer or housing finance institution may be permitted subject to RBI directions, loan documentation and lender eligibility. Mortgaging in favour of an overseas lender is not automatically permitted: obtain specific regulatory advice or approval where required.
Property acquired before becoming non-resident
FEMA section 6(5) generally protects the ability of a person resident outside India to hold, own, transfer or invest in property situated in India if it was acquired, held or owned when that person was resident in India or was inherited from a person resident in India. The manner of a later transfer, including agricultural property, and the remittance of proceeds remain governed by applicable FEMA and other laws.
Foreign nationals, foreign companies and diplomatic missions
Foreign nationals of non-Indian origin resident outside India do not enjoy the NRI/OCI general purchase permission. A lease of up to five years may be available under the relevant rules, subject to its terms and other laws. A person claiming FEMA residence in India must substantiate the statutory residence and purpose conditions; a tourist visa alone does not establish such status.
Special prior-approval rules apply to citizens and certain entities of specified countries; check the current list and exemptions under the Non-debt Instruments Rules before proceeding. Foreign companies with properly established branches or other permitted places of business may acquire property necessary for their authorised activities subject to the relevant rule and reporting obligations; liaison offices are treated differently. Diplomatic missions and personnel have separate conditions, including applicable Ministry of External Affairs clearance and banking-channel payments.
Housing loans, repayments and refunds
Eligible NRIs/OCIs may seek rupee housing loans from authorised banks or housing finance institutions subject to lender and RBI requirements. Permitted repayment sources may include inward remittance, eligible NRE/NRO/FCNR(B) accounts and rental income, depending on the facility. Loan arrangements against non-resident deposits, employer loans and payments by relatives are governed by separate directions; older fixed limits and obsolete Companies Act references should not be assumed current.
On cancellation or non-allotment of a property, refund of booking money and eligible interest must follow the original source-of-funds, account-credit and tax rules. Retain the builder's cancellation statement and proof of original remittance.
Repatriation of sale proceeds
Repatriation means transferring eligible funds from India abroad through an authorised dealer under FEMA. The remittance route depends on how the property was originally acquired and funded.
- Foreign-exchange-funded acquisition: Sale proceeds of eligible property purchased from inward remittances or eligible NRE/FCNR(B) funds may be repatriated under the prescribed conditions and limits linked to the original funding. Repatriation under this route for residential properties is generally limited to two such properties.
- Rupee-funded, inherited or gifted property: Eligible sale proceeds may generally be credited to an NRO account and remitted under the remittance-of-assets framework, ordinarily up to USD 1 million per financial year, subject to documentary evidence, bank scrutiny and taxes.
- Amount above the permitted limit or other cases: RBI approval may be necessary. Capital gains and tax liabilities must be dealt with independently of the foreign-exchange remittance permission.
Consult the RBI website and the Master Direction on Remittance of Assets. Banks may request sale deeds, acquisition documents, proof of funding, tax evidence and prescribed declarations.
Rental income and taxation
NRIs and OCIs may generally rent out property lawfully held in India. Rent is subject to Indian income-tax rules and any applicable tax withholding. Current income may be remitted through authorised banking channels after applicable tax and documentation requirements. A property sale may also create capital gains tax and withholding obligations; the buyer should check the current provisions for payments to non-residents before each payment.
Practical checklist before buying or selling
- Confirm Indian citizenship/OCI status and FEMA residence of all owners and purchasers.
- Verify title, encumbrances, mutation, land use, approvals, RERA applicability and local transfer restrictions.
- Check whether the property is classified as agricultural land, plantation property or farmhouse.
- Use permitted banking channels and preserve complete payment records.
- Review any gift relationship, succession documents, power of attorney and mortgage restrictions.
- Arrange stamp duty, registration, withholding-tax compliance and a documented repatriation route.
Frequently asked questions
Can an OCI buy agricultural land in India?
Not under the general purchase permission. Lawful inheritance and holding of previously acquired property involve separate rules.
Can an NRI purchase multiple flats?
Generally yes; the NRI/OCI purchase permission does not prescribe a numerical limit for eligible residential or commercial properties.
Can an NRI gift a house to an OCI relative?
Potentially, subject to Rule 24, the permitted recipient categories, the applicable relationship requirements and other laws.
Is the USD 1 million limit the maximum sale price?
No. It concerns a particular remittance facility for eligible NRO balances and assets; it is not a cap on property sale consideration.
Official legal references
- Reserve Bank of India - FEMA guidance and notifications
- RBI Master Direction - Acquisition or Transfer of Immovable Property
- RBI Master Direction - Remittance of Assets
- India Code - FEMA 1999 and Companies Act 2013
- Income Tax Department - tax filing and withholding information
This is a general legal information article, not transaction-specific advice. Verify the applicable amendments, state laws and bank documentation requirements before execution.
Related legal reading
Additional legal reference pages retained from the original article: