How NRIs send money to buy property in India — NRE, NRO, FCNR & FEMA (2026)

What does FEMA actually require — the one rule that governs everything?

The legal foundation

The Foreign Exchange Management Act 1999 (FEMA) and the Foreign Exchange Management (Non-Debt Instruments) Rules 2019 (NDI Rules) govern how NRIs and OCIs can buy property in India. The core rule is in Schedule III of the NDI Rules: an NRI or OCI may acquire residential or commercial immovable property in India — but payment must be made only in Indian Rupees through normal banking channels.

There are three prohibited property categories regardless of payment method or account type:

• Agricultural land (including fields, farms under cultivation)
• Farmhouses (property classified as farmhouse under state revenue law)
• Plantation property (tea gardens, coffee estates, rubber plantations etc.)

Everything else — residential flats, independent houses, villa plots, development-authority residential plots (such as YEIDA scheme plots), commercial property — is permitted without prior RBI approval, provided the payment route is correct. The prohibition is on category of land, not on how much you spend.

Why the payment route is not optional

Some NRIs treat the NRE/NRO payment requirement as a bureaucratic formality. It is not. The payment trail through your NRE/NRO account creates the documented proof that FEMA compliance was met — and that proof is what unlocks repatriation when you eventually sell. If you paid outside banking channels (or in cash, or from a relative’s account without documentation), you may find it legally impossible to repatriate sale proceeds abroad — the money will be stuck in India. Tax authorities and banks require a clear chain: inward remittance → NRE/NRO credit → outward RTGS to seller/developer.

Consult your CA and authorised-dealer bank to confirm how the rules apply to your specific country of residence, account type, and transaction structure.

NRE vs NRO vs FCNR — what each account is and how repatriation works

Side-by-side comparison

NRE in detail — why it is usually preferred for property

The NRE account is the workhorse for most NRI property buyers. You remit money from your overseas account to your NRE account — your overseas bank converts the foreign currency and credits INR into your NRE account. You then use that INR balance to pay your developer or seller via NEFT or RTGS.

The critical advantage: NRE funds are freely and fully repatriable. When you sell the property years later, sale proceeds funded from NRE (up to 2 residential properties) can be sent back abroad in full, with the only requirement being Forms 15CA and 15CB and proof that TDS was deducted. There is no annual cap. This makes NRE the cleanest route for NRI property investment if you intend to eventually bring the money back.

Interest earned in an NRE account is tax-free in India (though it may be taxable in your country of residence — check your local tax rules).

NRO in detail — when you use Indian income to pay

The NRO account is designed for Indian-sourced income: rent from an Indian property you already own, dividends from Indian mutual funds, pension payments, income from business in India, or inheritance. If you have been renting out an Indian property and have accumulated rent in a bank account, that money is in an NRO account (or should be).

You can use NRO funds to pay for a new property purchase — FEMA does not prohibit it. But the repatriation consequences are significant: NRO-funded property proceeds, when you sell, can only be repatriated up to USD 1 million per financial year (approximately Rs 8–8.5 crore, depending on the exchange rate). On large transactions, this cap can mean you need multiple years to bring the money back. Forms 15CA and 15CB are required, and a CA must certify that taxes have been paid.

If your NRO account has accumulated substantial rental income and you are considering using it for a property down payment, discuss the repatriation implications with your CA before committing. Consult your CA and authorised-dealer bank.

FCNR in detail — parking foreign currency before a large purchase

An FCNR account is a term deposit — you lock your foreign currency (say, USD or AED) in an Indian bank for a fixed term (minimum 1 year, maximum 5 years). The deposit is held in your chosen currency, so there is no exchange-rate risk while it is on deposit. At maturity, the proceeds are credited to your NRE account in INR at the prevailing rate, and you use that to pay for the property.

FCNR is useful in two scenarios:

• You are expecting a large payment abroad (sale of overseas property, end-of-service gratuity, business exit) and want to park it in India immediately while waiting for the right property opportunity — without locking in a bad exchange rate today.
• You want an Indian fixed-deposit return on foreign currency (FCNR rates from Indian banks have historically been attractive relative to overseas deposit rates in certain currencies) while keeping the money accessible for a property payment on maturity.

FCNR interest is tax-free in India for the FCNR holder, and the principal and interest are fully repatriable — treated on par with NRE for repatriation purposes.

Which account should you use — for a plot purchase vs construction payments?

For a plot purchase (development-authority or builder plot)

When buying a YEIDA residential plot or a developer-allotted villa plot, the payment typically flows in stages: registration deposit (10%), allotment / on-demand (next 20–30%), and balance in instalments or lump sum. All of these should come from your NRE account — or NRE via FCNR maturity proceeds.

• Booking / registration amount: RTGS/NEFT from NRE to the developer/authority’s designated bank account. Retain the bank’s payment confirmation and the FIRC (Foreign Inward Remittance Certificate) for every wire you sent to your NRE account.
• Demand / allotment payments: Same — NRE RTGS. Keep the developer’s receipt and your bank transfer confirmation.
• Stamp duty and registration: Also payable in INR through banking channels. Your NRE account can pay these directly.

NRIs and OCIs cannot buy agricultural land, farmhouses or plantation property regardless of which account they use — this is a category prohibition, not a payment prohibition. YEIDA residential scheme plots fall in the permitted category. See our YEIDA plot scheme guide for the scheme-specific process.

For construction payments during a remote build

If you are building on a plot you own — or in a builder project where payments are linked to construction milestones — each instalment must be paid in INR through banking channels. The mechanics are identical to plot payments: wire foreign currency to your NRE account, then RTGS/NEFT each instalment to the builder’s project account when the milestone is certified.

The advantage of milestone-linked payments from an NRE account is that:

• Each payment has a clear bank trail and a corresponding FIRC from the original inward remittance.
• In RERA-registered projects, the builder must hold at least 70% of the funds in a RERA escrow account, released against verified construction progress — this protects you from a builder using early payments for other projects.
• The aggregate of documented payments becomes your cost of acquisition for capital gains calculation at the time of eventual sale. Sloppy payment records → incorrect cost basis → higher tax exposure.

For Vidastu’s in-house construction projects, payments are structured against certified milestones: slab completion, brick work, plaster, waterproofing, finishing. Each milestone is documented with photos and video before the payment request is made — see the plot + build process.

How funds actually move — inward remittance, RTGS, NEFT and the documents you must keep

Step 1 — The inward remittance (foreign currency → INR)

You initiate a wire transfer from your overseas bank (ADCB in UAE, HSBC in the UK, Bank of America in the USA, etc.) to your NRE account at your Indian bank (SBI, HDFC, ICICI, Axis, etc.). You specify:

• The Indian bank’s SWIFT code and your NRE account number as the beneficiary
• The purpose code (typically P0006 — purchase of immovable property) in the remittance instructions

Your overseas bank converts your foreign currency to INR at the day’s exchange rate and sends the SWIFT wire. Transit time is typically 1–3 business days. Your Indian bank credits the INR equivalent to your NRE account and issues a Foreign Inward Remittance Certificate (FIRC) — also called a Money Transfer Service Certificate in some bank formats.

Keep every FIRC. Scan and store them digitally. When you sell the property years later, your CA and the bank will require FIRCs to prove that the purchase money came from abroad (NRE route), which is a prerequisite for full repatriation of sale proceeds.

Step 2 — RTGS or NEFT to the developer / authority

From your NRE account, you initiate a RTGS (Real Time Gross Settlement — for amounts above Rs 2 lakh) or NEFT (National Electronic Funds Transfer — for any amount, settled in batches) to the developer’s or authority’s designated project account. For YEIDA schemes, this means the specific bank account listed in the scheme brochure; for builder projects, the RERA-registered project account.

The transaction creates a bank confirmation receipt — save this alongside the developer’s payment acknowledgement / receipt. Together, these form the payment record for that instalment.

Step 3 — Collecting and organising the paper trail

For every property payment, maintain a folder (physical or digital) with:

• Overseas bank remittance confirmation (showing the foreign currency amount and exchange rate)
• FIRC from your Indian bank (confirming NRE credit)
• RTGS/NEFT transfer receipt from your Indian bank (confirming payment to developer)
• Developer’s official payment receipt (on their letterhead, with RERA project number if applicable)
• For stamp duty and registration: the challan receipt from the sub-registrar

This documentation is the backbone of your eventual capital-gains calculation and your repatriation claim. Property transactions in India can take 10–20 years from purchase to sale — do not assume you will remember the details. File everything at the time of each payment.

Milestone payments for a remote build — how to fund construction from abroad

Why milestone-linked payment matters for NRIs specifically

Most NRI buyers cannot physically inspect construction progress. This creates a temptation (sometimes pressure from builders) to pay large advance amounts. Milestone-linked payments solve two problems simultaneously: they protect you from a builder using your advance for other projects (the RERA escrow rule prevents this for registered projects), and they keep each payment tied to a documented construction event — which becomes part of your cost-of-acquisition record.

Typical milestone structure for a turnkey home build

Vidastu’s milestone payment structure for a 10–16 month turnkey build runs approximately as follows (percentages of total construction cost are illustrative; your specific contract will define them):

1. Agreement / mobilisation — 10%. Paid when the construction agreement is signed and YEIDA building plan sanction is received. This unlocks the site setup, foundation excavation and material procurement. Remit from NRE the day the agreement is countersigned.
2. Foundation and plinth — 15%. Paid after foundation excavation, PCC, RCC footing and plinth beam are complete. Vidastu shares a video walkthrough of the completed plinth level before raising the payment request.
3. Ground floor slab — 15%. Paid after ground floor brick/block walls and RCC slab are cast and cured. Video walkthrough shared. You approve before paying.
4. First floor slab / roof slab — 20%. Paid after first floor columns, walls and slab (or roof slab for a single-storey) are completed. This is typically the structural completion milestone.
5. Brick work, plaster, waterproofing — 15%. Paid after internal and external plaster and roof waterproofing are certified complete. Video confirms plaster quality and waterproofing membrane.
6. Flooring, tiling, doors, windows — 15%. Paid after major finishes — floor tiles, door frames and shutters, window frames — are installed. Photographs of each room shared.
7. Fit-out and handover — 10%. Final payment on physical handover — electrical, plumbing, painting, sanitary fittings complete, keys handed to you or your PoA holder.

For each milestone payment:

• Vidastu sends a formal payment request with the milestone completion certificate and video evidence.
• You remit the required amount from abroad to your NRE account (2–3 days transit).
• Once credited, you RTGS the milestone amount to Vidastu’s RERA project account.
• Vidastu acknowledges receipt and issues an official payment receipt on company letterhead.

Total build timeline for a standard 3BHK independent house on a 200 sq m YEIDA plot: 10–16 months from plan sanction to handover, depending on floor count and finish specification. See the full plot + build process →

Repatriation when you sell — NRE rules, NRO caps, and Forms 15CA/15CB

The repatriation framework for NRE-funded property

If you purchased the property entirely from funds remitted through your NRE account (or FCNR, which is treated on par with NRE), you are entitled to repatriate the net sale proceeds — after TDS — with the following conditions:

• Limit on number of properties: The freely repatriable cap applies to the proceeds of up to 2 residential properties over your lifetime. If you sell a third, fourth, or fifth residential property, the additional sale proceeds are subject to the USD 1M/yr NRO cap for repatriation — they flow through NRO.
• Amount repatriable: Up to the original amount invested (cost of purchase + documented improvements). Capital gains over and above your original investment also repatriate, but TDS must be deducted first.
• Forms 15CA and 15CB are mandatory: No bank will wire money abroad without Form 15CA (online declaration by remitter) and Form 15CB (CA’s certificate). Get these prepared before you approach the bank for repatriation — doing it in a rush at the bank counter creates errors.
• FIRCs as evidence: Your bank will ask for the FIRCs from the original purchase to confirm that the property was bought with NRE funds. If you cannot produce the FIRCs, the bank may treat the proceeds as NRO (with the 1M cap). This is why keeping every FIRC matters.

The repatriation framework for NRO-funded property

If any part of the purchase was funded from NRO (or if you cannot prove NRE funding through FIRCs), repatriation is governed by the NRO repatriation limit: USD 1 million per financial year (April 1 to March 31). This limit is per NRI, across all assets — not per property. If you are also repatriating rental income, fixed deposits or other NRO proceeds in the same year, all of those count against the USD 1M limit.

For large transactions (a Rs 2 crore+ property sale), the USD 1M limit means you may need to spread repatriation over two financial years. Plan this with your CA well before the sale closes — you cannot retroactively time the sale date.

Forms 15CA and 15CB — what they are and when to get them

These two forms exist to prevent Indian money going abroad without the tax department’s knowledge. Their function:

• Form 15CB: Issued by a Chartered Accountant. The CA verifies: the nature of the payment (property sale proceeds), the applicable TDS rate, whether a DTAA applies, that taxes have been paid or TDS deducted, and that the remittance is FEMA-compliant. The CA signs this and provides their registration details.
• Form 15CA: An online self-declaration filed on the income tax portal (incometax.gov.in) by the NRI (or their authorised representative), based on the CA’s 15CB. There are four parts to Form 15CA; for property sale proceeds the relevant part depends on whether the amount exceeds Rs 5 lakh. For most property transactions, Part C (for taxable remittances above Rs 5 lakh) applies and requires a 15CB certificate first.

Your bank will require the 15CA acknowledgement number and a copy of 15CB before processing the outward wire. Get these documents ready at least 2–3 weeks before you plan to initiate repatriation — finding a CA and getting the numbers at short notice is stressful and often delays the transfer.

TDS when an NRI sells property in India — LTCG, STCG, Form 13, and DTAA

What changed on 23 July 2024 — the indexation removal

The Union Budget 2024, presented on 23 July 2024, made significant changes to capital gains taxation on property:

• The long-term capital gains tax rate on property was reduced from 20% to 12.5% for transfers on or after 23 July 2024.
• However, indexation benefit was simultaneously removed for property acquired on or after 23 July 2001 (with transitional relief for property held before that date).
• For properties acquired before 23 July 2024: there is a grandfathering option — taxpayers can choose between the old 20%-with-indexation regime and the new 12.5%-without-indexation regime for properties acquired before the budget date, whichever is more beneficial.

For most NRI property buyers (who tend to hold for 10+ years), the removal of indexation can mean a higher actual taxable gain under the new regime, even at the lower 12.5% rate. Your CA should model both options for your specific purchase price, year of acquisition, and expected sale price.

LTCG — long-term capital gains (held more than 24 months)

If you have held the property for more than 24 months from the date of purchase (date of registry / allotment letter), any gain above your cost of acquisition is a long-term capital gain. TDS applies at:

• Base rate: 12.5% on LTCG (effective 23 July 2024)
• Surcharge: 15% on income tax for taxable income between Rs 1 crore and Rs 2 crore; 25% for Rs 2–5 crore; 37% for above Rs 5 crore (these rates are on the base tax, not the gain)
• Health and Education Cess: 4% on (income tax + surcharge)
• Effective maximum rate: Approximately 14.95% for gains in the Rs 1–2 crore range; up to approximately 17.94% for very large gains (with 37% surcharge) — before DTAA

The buyer (purchaser of your property) is responsible for deducting this TDS from the payment and depositing it with the government using Form 26QB. They must also issue you a TDS certificate (Form 16B). If the buyer fails to deduct TDS, the buyer — not you — is liable for the shortfall, but you should ensure it is done correctly as it affects your repatriation filing.

STCG — short-term capital gains (held 24 months or less)

If you sell within 24 months of acquisition, the entire gain is taxed as short-term capital gain at your marginal income tax rate — effectively 30% plus applicable surcharge and cess for most NRIs, since their Indian income typically falls in the top bracket. TDS is deducted at this rate by the buyer. For large transactions, the total tax outgo can be very substantial — on a Rs 50 lakh STCG, the tax after surcharge and cess can exceed Rs 16–17 lakh. Avoid short-term property sales unless the commercial case is compelling.

Form 13 — how to get a Lower / Nil Deduction Certificate

Under Section 197 of the Income Tax Act, you can apply to the income tax officer before the sale for a Lower or Nil Deduction Certificate (Form 13). If your actual tax liability will be lower than the headline TDS rate (for example, because you have carry-forward losses, or because DTAA reduces your tax, or because your actual gain after all deductions is small), Form 13 authorises the buyer to deduct TDS at a lower rate.

Form 13 is applied for through the income tax portal. Processing takes 2–4 weeks. If you are planning a sale, apply for Form 13 at least 4–6 weeks before the expected payment date. Your CA should file the application and handle the correspondence. Without Form 13, TDS is deducted at the full statutory rate on the gross sale consideration — which can lock up a large sum that you then have to recover through a refund filed with the income tax department (a process that takes months to years). Consult your CA well in advance of the sale.

DTAA — Double Taxation Avoidance Agreement relief

India has signed DTAA treaties with over 90 countries, including UAE, UK, USA, Canada, Singapore, Australia, Germany, and most Gulf countries. A DTAA may reduce your Indian tax liability on capital gains from property sale — in some cases to zero, in others to a treaty rate lower than the domestic rate. The treaty position varies by country and by the type of income.

To claim DTAA relief, you must provide the buyer (for TDS purposes) and later the tax department (in your return):

• Tax Residency Certificate (TRC): Issued by the tax authority of your country of residence (e.g., UAE’s Federal Tax Authority issues a TRC for UAE residents). This certifies that you are a tax resident of that country for the relevant year.
• Form 10F: A self-declaration filed on the Indian income tax portal, providing details of your tax residency (PAN, TRC details, period of residency). This is a mandatory supplement to the TRC for claiming DTAA benefits in India.

Get your TRC and File Form 10F well before the sale. Without these, the buyer cannot apply a lower DTAA TDS rate — they must deduct at the full domestic rate. Recovering the excess through a refund is possible but slow. Consult your CA on the applicable DTAA provisions for your country of residence.

Common mistakes NRIs make when sending money for Indian property

Mistake 1 — Paying from a resident family member’s account

An NRI gets a relative in India to pay a booking amount or instalment “temporarily” with the plan to reimburse them later. This breaks the FEMA payment chain — the payment did not come from an NRE/NRO account, and there is no FIRC proving foreign-origin funds. When you later try to repatriate sale proceeds, the bank has no documentation confirming that the property was bought with NRE funds. The entire sale proceeds may be trapped in NRO, subject to the USD 1M cap, even if you remit the money from abroad to your relative immediately after. Keep every payment directly in your name, from your account.

Mistake 2 — Not maintaining FIRCs

FIRCs are issued at the time of each inward remittance and are often not thought about again for years. Then, at the time of sale, the bank or CA asks for FIRCs from the original purchase — and the seller cannot produce them. Some banks will issue duplicate FIRCs for older transactions, but it is not guaranteed and the process takes months. Scan and store every FIRC in at least two places (cloud and local) the week you receive it.

Mistake 3 — Paying stamp duty in cash at the sub-registrar’s office

Stamp duty and registration charges must also be paid through banking channels for full FEMA compliance. In many cases, people pay a small cash component to a stamp vendor or local agent handling the registration. Even a small cash payment at registry can complicate the compliance picture. Insist on paying stamp duty via e-stamp or banker’s cheque drawn on your NRE/NRO account.

Mistake 4 — Using the wrong purpose code in the remittance wire

When sending a SWIFT wire to your NRE account, the overseas bank asks for a purpose code. The correct code for property purchase remittances is P0006 (purchase of immovable property). If you leave this blank or use a generic code (P1301 — personal transfer), the FIRC issued by your Indian bank will not clearly state the property-purchase purpose. At repatriation time, this creates questions that your CA must answer. Always specify P0006 explicitly in your wire instructions.

Mistake 5 — Not applying for Form 13 before the sale

Many NRIs discover Form 13 only after the sale has closed and TDS has been deducted at the full 12.5% (or 30% STCG) rate. Recovering excess TDS through an income tax refund can take 6–24 months in practice. If your actual tax liability is lower — due to deductible costs, DTAA, or carry-forward losses — apply for Form 13 at least 4–6 weeks before the sale. The fee for your CA to file Form 13 is a fraction of what you save in TDS reduction.

Mistake 6 — Not knowing whether a PoA holder’s payments are compliant

NRIs who use a PoA holder in India sometimes let the PoA holder pay instalments from the PoA holder’s own account “for convenience.” This is a FEMA violation — payments must come from the NRI’s own NRE/NRO account. The PoA holder can sign documents, submit forms, and attend the sub-registrar’s office, but the payment must originate from the NRI’s account. If the PoA holder needs to make a payment, the NRI must first transfer funds to their own NRE account and then the PoA holder instructs the bank to debit that NRE account (via a signed letter of authority).

Mistake 7 — Mixing NRE and NRO funds without records

Some NRIs pay some instalments from NRE and others from NRO without keeping records of which payment came from which account. At the time of sale, if you cannot prove which proportion was NRE-funded, the bank may conservatively treat all proceeds as NRO, applying the USD 1M cap to the entire amount. If you do use both accounts for different payments, keep a detailed log — date, amount, account type, FIRC reference — for every payment. Have your CA prepare a schedule of NRE vs NRO contributions as part of your property file.

Mistake 8 — Not getting PoA authenticated correctly for the buyer’s country

A PoA executed in India is fine. A PoA executed abroad must be authenticated for use in India. The rule depends on your country of residence:

• Hague-convention countries (USA, UK, Canada, most of EU, Australia, New Zealand, Singapore): the PoA must be notarised by a local notary and then apostilled by the designated Hague authority in that country. No further attestation needed in India.
• Non-Hague-convention countries (UAE, Saudi Arabia, Qatar, Oman, Bahrain, Kuwait, and most Gulf states): the PoA must be notarised by a local notary and then attested by the Indian Embassy or Consulate in that country. Apostille is not valid — consular attestation is required.

A PoA with the wrong authentication (apostille in a Gulf country, or consular attestation when apostille is needed) will be rejected by the sub-registrar and the developer. Redo the PoA correctly — do not try to work around it.

How Vidastu coordinates with your bank — what we handle vs what you do

Vidastu is a Greater Noida-based real estate developer and UP-RERA registered agent (UPRERAAGT000309/01/2026), operating since 2012. Founder Vidit Kaushik (BITS Pilani civil engineer) and co-founder Ravi Shankar Sharma (30+ years construction experience) lead the NRI advisory and construction teams. The firm holds a 4.8-star rating across 54 Google reviews.

For NRI clients, the money and documentation process is the part that causes the most anxiety — particularly for first-time buyers who have never remitted to India for a property purchase. Here is specifically what Vidastu handles versus what you must do yourself:

What Vidastu handles

• Payment schedule design: We structure milestone payments to match your cash flow and the construction timeline, with payment requests only when milestones are certified and evidenced.
• RERA-compliant project accounts: All construction payments go into Vidastu’s RERA-registered project escrow accounts, not a personal account. We provide the account details in writing with the RERA project number — you can verify independently on the UP-RERA portal.
• Milestone documentation: Before each payment request, we share photos, video, and a milestone completion certificate signed by the site engineer. You approve before paying.
• Payment receipts: Official company receipts on letterhead for every payment, issued within 24 hours of payment clearance.
• PoA guidance: We advise on the correct PoA language for your country, what authentication is required, and which acts to include — so your PoA is valid for registry, plan sanction and possession. We do not draft the PoA itself (that is your lawyer’s job) but we ensure the scope is right.
• YEIDA scheme coordination: For YEIDA plot buyers, we monitor scheme openings, help with application preparation, track draw results, and coordinate the allotment and possession process with YEIDA on your behalf.

What you must do yourself (with your CA and bank)

• Open and maintain your NRE/NRO account — Vidastu cannot open bank accounts on your behalf.
• Initiate all inward remittances from your overseas bank — only you (or your PoA holder acting on your explicit written instruction to your Indian bank) can do this.
• Collect and store FIRCs — your bank issues these; Vidastu does not have access to your bank records.
• Apply for Form 13 before any sale — this is your CA’s function, initiated by you.
• File Forms 15CA/15CB at the time of repatriation — your CA handles these; your bank executes the outward wire.
• File your Indian income tax return for the year of sale — mandatory if you have Indian capital gains income.

We recommend NRI buyers engage a FEMA-experienced CA before the first payment, not after. A one-hour call with a qualified CA to structure the payment and documentation correctly saves enormous headaches at the other end of the transaction. We can refer you to accountants familiar with NRI property transactions in the NCR — ask us when you get in touch.

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