NRI guide · updated June 2026
Under FEMA and the NDI Rules 2019, every rupee an NRI or OCI pays for Indian property must arrive through a specific, documented route: foreign currency converted to INR, credited to an NRE, NRO or FCNR account, then wired to the developer or seller by RTGS or NEFT. No cash, no foreign-currency direct transfer, no traveller's cheques. Which account you use matters enormously — NRE funds are fully and freely repatriable when you eventually sell; NRO funds are capped at USD 1 million per financial year; FCNR deposits hold your money in foreign currency until maturity, then convert on your terms. This guide covers the rules precisely, compares the three account types side by side, walks through exactly how payments move for a plot purchase and a remote construction build, and explains TDS, repatriation, DTAA relief, and the mistakes that cost NRIs real money. This is general information, not legal or tax advice — consult your CA and authorised-dealer bank.
All property payments by NRIs must be in Indian Rupees (INR), through banking channels, from an NRE, NRO or FCNR account. Cash is prohibited. Foreign-currency wires directly to a seller are prohibited. Traveller's cheques are not permitted. This applies to every payment: booking amount, construction instalments, stamp duty, and registration fees.
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:
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.
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 holds foreign earnings converted to INR — fully repatriable, best for property purchase. NRO holds Indian-sourced INR income — repatriation capped at USD 1 million per financial year. FCNR is a foreign-currency term deposit — fully repatriable, useful for parking a lump sum before converting. All three can fund property payments in India.
| Feature | NRE Account | NRO Account | FCNR Deposit |
|---|---|---|---|
| Full form | Non-Resident External | Non-Resident Ordinary | Foreign Currency Non-Resident (Bank) |
| Currency held | INR (converted from foreign currency on deposit) | INR (Indian-sourced income) | Foreign currency (USD, GBP, EUR, SGD, CAD, AUD) |
| Typical source of funds | Salary, savings abroad remitted to India | Rent from Indian property, dividends, pensions, inherited money | Foreign earnings — like NRE but in a term deposit |
| Exchange rate risk | Yes — converted at deposit time | Yes — converted at deposit time | No until maturity; held in your chosen foreign currency |
| Can fund Indian property payment? | Yes | Yes | Yes (via NRE account on maturity) |
| Repatriation of principal | Fully and freely repatriable | Capped — USD 1 million per financial year (subject to Forms 15CA/15CB) | Fully and freely repatriable |
| Repatriation of interest | Fully repatriable | Repatriable within USD 1M/yr cap, after TDS | Fully repatriable |
| Tax on interest in India | Exempt (NRE interest is tax-free in India) | Taxable; TDS deducted by bank | Exempt (FCNR interest is tax-free in India) |
| Joint holding with resident Indian? | Permitted only as second holder (on former or survivor basis) | Yes | Permitted only as second holder |
| Account type | Savings / current / FD | Savings / current / FD | Term deposit only (no cheque book) |
| Best for property purchase? | Yes — preferred | Yes, but repatriation cap applies later | Yes — for lump-sum parking before purchase |
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).
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.
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:
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.
For most NRIs buying a residential plot or flat from foreign earnings: use your NRE account for all payments. This gives the cleanest repatriation path. For construction milestone payments during a remote build: same answer — RTGS from NRE for each milestone. Use NRO only if you are paying from Indian-sourced income (rent, pension) and understand the USD 1M/yr repatriation cap this creates at exit.
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.
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.
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:
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.
The money trail is: Your overseas bank → wire (SWIFT) → your NRE/FCNR account at Indian bank → RTGS or NEFT to developer/seller/authority. Your Indian bank issues a Foreign Inward Remittance Certificate (FIRC) for each inward wire. Keep every FIRC — they are your documentary proof for repatriation when you sell.
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:
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.
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.
For every property payment, maintain a folder (physical or digital) with:
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.
For a turnkey construction project, each milestone payment should be remitted from abroad into your NRE account, then RTGS'd to the builder's RERA project account when the milestone is independently verified. Never pay in advance for unstarted work — milestone-linked payment protects both your cash and your FEMA compliance trail.
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.
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):
For each milestone payment:
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 →
NRE-funded property: sale proceeds repatriable in full for up to 2 residential properties, no annual cap, subject to Forms 15CA/15CB and TDS having been deducted. NRO-funded property: repatriation capped at USD 1 million per financial year, subject to Forms 15CA/15CB. Your bank will not process the outward transfer without these forms. Consult your CA and authorised-dealer bank before initiating repatriation.
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:
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.
These two forms exist to prevent Indian money going abroad without the tax department's knowledge. Their function:
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.
The buyer of the property must deduct TDS from the sale payment. For long-term capital gains (held >24 months): 12.5% TDS effective 23 July 2024, plus surcharge and 4% cess. For short-term (≤24 months): 30% TDS plus surcharge and cess. Sellers can reduce TDS by obtaining a Lower Deduction Certificate (Form 13, Section 197) in advance. DTAA relief is available with a Tax Residency Certificate (TRC) and Form 10F. Consult your CA before transacting.
The Union Budget 2024, presented on 23 July 2024, made significant changes to capital gains taxation on property:
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.
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:
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.
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.
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.
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):
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.
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.
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.
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.
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.
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.
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).
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.
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:
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.
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:
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.
Talk to the Vidastu NRI desk about payment structure →
No. Under FEMA and the NDI Rules 2019, all property payments by NRIs must be in Indian Rupees (INR) through banking channels — via an NRE, NRO or FCNR account. Payments in foreign currency directly to a seller or developer are not permitted. Cash payments are prohibited. This rule applies to every payment in the transaction: booking amount, construction instalments, stamp duty, and registration charges. Consult your CA and authorised-dealer bank to confirm compliance for your specific transaction.
For most NRIs buying from foreign earnings (salary, savings abroad), the NRE account is the better choice because NRE funds are fully and freely repatriable. When you sell the property, proceeds funded from NRE (for up to 2 residential properties) can be sent back abroad without the USD 1M annual cap, subject to Forms 15CA and 15CB. NRO funds are repatriable but capped at USD 1 million per financial year. Use NRO for property payments only if the funds are Indian-sourced (rent, pension) and you understand the repatriation cap. Always consult your CA and authorised-dealer bank before deciding.
An inward remittance is a foreign-currency wire sent from your overseas bank to your NRE account in India. Your overseas bank converts the foreign currency to INR and credits it to your NRE account. A Foreign Inward Remittance Certificate (FIRC) is the document your Indian bank issues to confirm each inward remittance — it states the foreign currency amount, the INR equivalent, and the exchange rate. Keep every FIRC permanently — they are required proof of NRE funding when you later repatriate sale proceeds. Losing FIRCs can trap money in India under the NRO cap even if the purchase was genuinely NRE-funded.
If the property was purchased entirely from NRE (or FCNR-equivalent) funds: repatriation is fully permitted for up to 2 residential properties, no annual cap, subject to Forms 15CA/15CB and TDS deduction. If purchased from NRO funds or without clear NRE documentation: repatriation is capped at USD 1 million per financial year (across all repatriations from NRO). Forms 15CA and 15CB are mandatory in both cases — banks will not process the outward wire without them. Consult your CA and authorised-dealer bank before initiating repatriation.
The buyer of an NRI's property must deduct TDS at source. For long-term capital gains (property held more than 24 months), the TDS rate is 12.5% effective 23 July 2024, plus applicable surcharge and 4% cess — the effective combined rate is approximately 14.95%–17.94% depending on the gain amount. For short-term capital gains (held 24 months or less), TDS is 30% plus surcharge and cess. The seller (NRI) can apply for a Lower Deduction Certificate (Form 13, Section 197) in advance to reduce TDS if actual tax liability will be lower. Always consult a qualified CA before transacting — this is not tax advice.
Form 15CB is a certificate issued by a Chartered Accountant confirming that applicable TDS has been deducted, the remittance is not taxable in India beyond what has been deducted, and the transfer is FEMA-compliant. Form 15CA is an online self-declaration on the income tax portal, filed by the NRI based on the CA's 15CB certificate. Banks require both documents before processing any outward remittance of property sale proceeds. Prepare them at least 2–3 weeks before you plan to remit — rushing this at the bank causes errors and delays. Consult your CA.
No. Under FEMA and the NDI Rules 2019, NRIs and OCIs are explicitly prohibited from purchasing agricultural land, farmhouses, and plantation property in India. This is a category prohibition — no account type or payment route makes it permissible. NRIs and OCIs may purchase residential property and development-authority-allotted residential plots (such as YEIDA scheme plots). If anyone offers a structure to help you "acquire" agricultural land as an NRI, refuse — it is a FEMA violation with serious penalties.
A Double Taxation Avoidance Agreement (DTAA) is a bilateral treaty between India and another country that determines which country has the right to tax a specific type of income — and at what rate. India has DTAA agreements with over 90 countries. For property capital gains, the DTAA may allow the NRI to be taxed only in India (at the domestic LTCG rate) or may cap the Indian withholding rate. To claim DTAA benefits, the NRI must provide a Tax Residency Certificate (TRC) from their country of residence and file Form 10F on the Indian income tax portal. Get the TRC and file Form 10F before the sale. Consult your CA on the specific DTAA provisions for your country.
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