12 Costly Mistakes NRIs Make Buying Property in India — And How to Avoid Them

Why NRIs make these mistakes — and why it's structural, not personal

Before listing the mistakes, it is worth naming the structural conditions that create them — because understanding the why makes the fixes stick.

When you live outside India, the information asymmetry is severe. The person selling you the property knows the market, the legal environment, the builder's history, and the surrounding infrastructure better than you do. You are working off WhatsApp voice notes, PDFs and weekend calls. The emotional pressure is also real: the Indian property market feels urgent, cousins who bought in 2019 tell you they've doubled their money, and the dollar / dirham / pound is strong — so the sticker price feels manageable.

Add to this the genuine complexity of the Indian regulatory framework — FEMA, RERA, TDS for non-residents, state-specific stamp duty, varying PoA authentication requirements by country — and you have a situation where even educated, financially sophisticated NRIs routinely make expensive errors.

The 12 mistakes below are the ones we encounter most often in our advisory conversations. Some are legal violations with financial penalties. Some are procedural oversights that lead to tax pain at exit. Some are simply the result of trusting the wrong people or skipping the right questions.

The 12 mistakes

Mistake 01 Confusing the agent's RERA registration with the project's RERA registration

Under the Real Estate (Regulation and Development) Act, 2016, agents must register with RERA to legally sell or market real estate projects (RERA Section 9). Separately, projects above a threshold size must be registered with RERA before they can be advertised or sold (RERA Section 3). An agent can hold a valid RERA agent registration — for example, Vidastu's UP-RERA number is UPRERAAGT000309/01/2026 — while simultaneously marketing projects that have not been registered with RERA, or projects sold in phases that exceed the registered scope.

Why does project RERA registration matter to you as a buyer?

• Escrow protection: RERA Section 4(2)(l)(D) mandates that at least 70% of the amount collected from buyers for a project must be deposited in a separate escrow account and can only be withdrawn against certified construction progress. Without project RERA registration, this escrow does not exist — your money can be freely mixed with the developer's general funds.
• Disclosure obligations: RERA-registered projects must disclose the approved layout, carpet area, construction timeline, developer history of defaults, and legal status of the land. Unregistered projects have no such obligation.
• Complaint mechanism: If the builder defaults, a RERA-registered project gives you recourse at the RERA tribunal. Unregistered projects send you to civil courts — slower, more expensive, and less certain.
• Delivery commitment: The developer commits to a RERA possession date on the RERA portal. If they miss it, RERA can award interest at the SBI MCLR + 2% rate for every month of delay.

The fix: Before signing anything or paying any amount, go to up-rera.in (for UP projects) or the relevant state's RERA portal and search for the project by name. Verify that the project is listed, that its registration is active (not expired), and that the phase you are buying in is covered by the registration. Also search the developer's name for any complaints or penalties on file. This takes 10 minutes and can save lakhs.

Mistake 02 Relying on a relative without a proper, limited Power of Attorney

The scenario plays out dozens of times a year: an NRI asks a sibling, parent, or cousin in India to "handle" the property purchase. The relative is trusted, the intent is good — but there is no written Power of Attorney, or there is a General PoA that grants far too much authority, or the PoA is not authenticated in a way that makes it legally valid.

The problem with a verbal or informal arrangement is simple: without a properly executed and authenticated PoA, your representative cannot legally sign documents in your name. The builder cannot accept the allotment letter. The sub-registrar cannot register the property. The bank cannot release funds. And if things go wrong — if your relative makes a decision you didn't sanction, or the relationship deteriorates — you have no documented record of what was and wasn't authorised.

The problem with a General Power of Attorney (GPA) is the opposite: it grants too much. A GPA can authorise your representative to sell, mortgage, gift or otherwise dispose of the property — not just to buy it. GPAs granted to the wrong person have resulted in NRIs losing properties entirely. Indian courts have been cautious about enforcing GPAs for property sales following a 2011 Supreme Court ruling (Suraj Lamp & Industries Pvt. Ltd. vs State of Haryana), and many sub-registrars are reluctant to accept GPAs for direct sale transactions.

The fix: Have an Indian property lawyer draft a Special Power of Attorney (SPoA), not a General Power of Attorney. The SPoA should be limited to specific, named tasks: submitting the application for [named project], signing the allotment letter, depositing funds from your NRE/NRO account, completing stamp duty and registration at the sub-registrar's office, and taking possession. That's it. Execute it before a notary in your country, then have it authenticated:

• Hague Convention countries (USA, UK, Canada, most EU countries, Australia, New Zealand): get the notarised PoA apostilled by the competent authority in your country.
• Gulf countries (UAE, Saudi Arabia, Qatar, Oman, Bahrain, Kuwait): get the notarised PoA attested at the Indian Embassy or Consulate in your country.

Courier the original wet-ink PoA to India — a copy or scan is not acceptable at the sub-registrar's office. Allow 3–4 weeks for the full authentication and courier process. See our dedicated guide at Power of Attorney for NRI property purchase in India.

Mistake 03 Skipping title and encumbrance due diligence

RERA registration requires a developer to disclose their title documents — but RERA does not independently verify that title is clean. The developer declares; RERA records the declaration. An encumbrance, a disputed ownership, or a court attachment on the land is not RERA's job to catch. It is yours.

NRIs buying remotely are particularly vulnerable here. The seller shows a title document, the developer's lawyer says it is clear, and the NRI — not physically present, under time pressure, trusting the chain — proceeds without independent verification. Then, years later at possession or resale, a lender's charge, a family member's claim, or a court order surfaces.

The fix: Before signing the sale agreement and before paying any meaningful sum, engage an independent property lawyer — not the developer's in-house counsel — to conduct:

• Encumbrance Certificate (EC): Obtain an EC from the sub-registrar's office covering the past 30 years. The EC records all registered transactions, mortgages, and charges on the property. Any entry indicating a charge or mortgage that has not been discharged is a problem.
• Chain of title search: Verify that the person or entity selling to you actually owns the property, that the chain of ownership is documented and registered, and that there are no disputes or court cases on file.
• Land use verification: Confirm that the land is classified for residential use (not agricultural), that the layout is approved by the competent authority, and that no change-of-land-use proceedings are pending.
• Litigations search: Run a search in the relevant district courts for any pending cases involving the property or the developer/seller.

For a RERA-registered project, also check that the land is not mortgaged to a financial institution without a Tripartite Agreement in place — an agreement between the developer, the lender, and individual buyers that protects your interest even if the developer defaults on their construction loan.

Mistake 04 Paying cash or using informal channels — a direct FEMA violation

The scenario that traps NRIs is usually one of these variants: the seller or agent requests the "white" part (registered price) via banking channels and the remaining amount in cash; or a relative collects cash from the NRI's family in India and hands it to the seller; or the NRI transfers money to a sibling's regular savings account, which the sibling then pays onward in cash. All of these arrangements violate FEMA, regardless of how normalised they may seem in the local market.

The penalties under FEMA Section 13 for a violation can be up to three times the amount involved, with further liability for continuing violations. In serious cases, the Enforcement Directorate can adjudicate and attach assets. The fact that cash transactions are common in Indian real estate does not make them legal — and as an NRI, you face additional scrutiny because cross-border funds are tracked more carefully than domestic transactions.

There is also a practical risk beyond legal liability: cash payments are not documented, which means you have no proof of payment if a dispute arises. And when you eventually sell, you will face capital gains on a cost base that has no documentation to support it — potentially resulting in gains tax on money you effectively already paid.

The fix: All payments — token, booking, construction instalments, registration charges — must flow from your NRE or NRO account via NEFT/RTGS, with a paper trail (bank transfer acknowledgement, builder receipt). Open an NRE account if you have only an NRO. NRE funds are fully repatriable and carry no TDS on the account itself. Keep every payment receipt; you will need them for capital gains computation at the time of sale. Read the full payment framework in our FEMA Guide.

Mistake 05 Ignoring the USD 1 million NRO repatriation cap

Many NRIs who receive rental income or accumulate savings in their NRO account assume they can repatriate the full balance abroad at any time. The cap surprises them when they try to remit a large amount — typically at the time of property sale.

Under FEMA's Liberalised Remittance Scheme provisions applicable to NRIs, NRO account repatriation is capped at USD 1 million per financial year (April–March). This is a calendar ceiling — if your sale proceeds are, say, Rs 2.5 crore (roughly USD 300,000 at current rates), you may be able to repatriate it in one year. But if the proceeds are larger, you may need to spread repatriation across multiple financial years.

The repatriation also requires Form 15CA (a self-declaration filed on the income tax portal) and Form 15CB (a certificate from a Chartered Accountant confirming TDS has been deducted or is not applicable). Your bank will ask for both before processing the outward remittance.

The NRE account route is different: funds credited to an NRE account from foreign earnings are freely repatriable without the USD 1M cap. However, Indian-sourced income — rent, sale proceeds — must first pass through NRO. Up to two residential properties can be repatriated through the NRE route, subject to documentation requirements and the condition that the property was purchased from NRE funds originally.

The fix: Before buying, think through your exit strategy: where will you receive the eventual sale proceeds, and how will you repatriate them? If the expected sale value will exceed USD 1 million, plan for multi-year repatriation or structure the purchase partially from NRE funds. Discuss this with your CA and your authorised-dealer bank before you buy, not at the point of selling. Our FEMA Guide covers the full repatriation framework.

Mistake 06 Not obtaining Form 13 — and losing a large chunk of the sale price to TDS

When an NRI sells property in India, the buyer is required to deduct TDS (Tax Deducted at Source) before making payment. The TDS rate for long-term capital gains (property held more than 24 months) is 12.5% effective 23 July 2024 (down from 20% without indexation benefit, per Finance Act 2024), plus applicable surcharge and 4% health and education cess. For short-term gains (held 24 months or less), TDS is 30%.

The critical problem: by default, TDS is deducted on the full sale consideration, not on the taxable gain. The actual tax you owe may be a small fraction of the TDS deducted — because your cost basis, improvement costs, and the long holding period reduce your taxable gain significantly. But the buyer legally must deduct TDS on the full consideration unless you hold a Lower/Nil Deduction Certificate.

That certificate is obtained by filing an application with the Income Tax Department under Section 197, using Form 13. The application asks you to declare your cost of acquisition, indexed cost, improvements, deductions, and compute the actual tax liability. The IT Department then issues a certificate directing the buyer to deduct TDS only at the rate specified in the certificate — which could be much lower than the standard rate, or even nil.

The fix: Engage a CA in India well before the sale — ideally 3–4 months ahead of the expected transaction. The CA will compute your actual tax liability, file the Form 13 application, and obtain the Lower Deduction Certificate in time for the buyer to use it. DTAA (Double Taxation Avoidance Agreement) relief may also be available if you are resident in a country that has a DTAA with India (most countries do) — your CA will advise on furnishing a Tax Residency Certificate (TRC) and Form 10F to claim Treaty benefits. Do not wait until the sale agreement is signed; by then, it may be too late to process Form 13 in time.

Mistake 07 Assuming "NRIs can buy" applies to all property — agricultural land is barred

This mistake is common enough to be dangerous. An NRI hears that NRIs can buy property in India — which is true, within limits — and then proceeds to consider purchasing farmland, agricultural plots, a farmhouse outside a city, or a "plantation" property in a hill station. All of these are specifically prohibited under FEMA.

Under the Foreign Exchange Management (Non-Debt Instruments) Rules 2019, Rule 21, NRIs and OCIs cannot acquire:

• Agricultural land (land recorded as agricultural in revenue records, regardless of what it is currently being used for)
• Plantation property (tea gardens, coffee estates, rubber plantations, etc.)
• Farm houses (as defined — a residential structure on agricultural land outside a municipal area)

What is permitted: residential property (flats, villas, plots in residential layouts), commercial property (shops, offices), and development-authority-allotted residential plots such as YEIDA scheme plots. There is no prior RBI approval required for these permitted categories — payment simply must be via NRE/NRO/FCNR through banking channels.

The "farmhouse" label that appears in Indian real estate marketing is often used loosely for large villa plots outside the main city. If the underlying land is classified as agricultural in the revenue records, it is prohibited — regardless of what marketing material calls it. Some developers sell such plots to NRIs in violation of FEMA, leaving the buyer exposed to penalties and potential voiding of the transaction.

The fix: Ask for the land's Khasra/Khatauni records (land revenue records in UP and other northern states) and confirm the land-use classification. If it shows "agriculture," it is prohibited. For any property described as a farmhouse, villa on the outskirts, or agricultural land converted for residential use, involve a FEMA lawyer — not just a property lawyer — to confirm that the conversion is complete, valid, and that the resulting classification makes it a permitted property for NRI purchase.

Mistake 08 Trusting glossy brochures over construction-stage reality

NRIs are the perfect target for aspirational marketing because they often cannot visit the site. The developer's brochure shows rendered images of a gleaming township with a clubhouse, a pool, manicured streets, and a view of the airport. The NRI buys on that vision. They then wait years for possession, and when the keys are finally handed over, they find a construction-quality shortfall, a 40% smaller clubhouse, the pool still under build, and streets that are still dirt.

This is not always malicious — sometimes developers genuinely overestimate what they can deliver. But when you buy before the project is complete, you are buying a promise, and promises have risk. The brochure is not a contract.

What the brochure promises and what your sale agreement actually commits the developer to are often very different things. Amenities listed in brochures are frequently non-binding unless explicitly included in the schedule of the sale agreement with delivery timelines.

The fix: Several layers of protection exist:

• Check the RERA project page: The RERA registration requires the developer to list all committed amenities, carpet area, floor plan, and delivery date. If an amenity is in the brochure but not on the RERA portal, it is not committed.
• Ask for a site visit — or a live video tour: If you cannot visit, ask for a live (not pre-recorded) video walkthrough of the current construction stage. Ask the agent to walk the boundary, show you adjacent construction, and explain what is and isn't built. Vidastu provides weekly video updates on WhatsApp for all ongoing projects; this standard should apply before you buy, not just after.
• Read the sale agreement, not the brochure: The sale agreement is the contract. Have a lawyer review it. Specifically check the possession date, penalty clauses for developer delay, what happens to your money if the project is cancelled, and the definition of carpet area vs super built-up area.
• Check builder track record: Search the developer's name on the RERA portal for any complaints, orders, or penalty records. Search Google for buyer forums. This takes an hour and can save years of litigation.

Mistake 09 Paying in large lump sums instead of construction-linked milestone payments

Demand plans in Indian real estate come in two broad types: construction-linked plans (CLP), where you pay as specific construction milestones are completed and verified; and down-payment or lump-sum plans, where you pay most of the price upfront in exchange for a discount. Many NRIs, attracted by the lower price under the lump-sum scheme, pay large sums early — and then lose leverage if the construction stalls.

The risk is not hypothetical. Indian real estate has seen multiple cases — most famously in the NCR — where developers collected nearly full payment from buyers, stalled construction when funds ran dry, and left buyers with years of waiting and legal battle. Under RERA, the escrow mechanism mitigates this for registered projects: at least 70% of collected funds must sit in escrow, released only against certified construction milestones (RERA Section 4(2)(l)(D)). But even under RERA, the remaining 30% is unprotected, and the escrow mechanism's practical enforcement varies by project and authority.

Paying in full upfront — before possession — also means you have no financial leverage if quality falls short. Once your money is with the builder, your only recourse is legal. If your payments are milestone-linked, you can pause payment when a milestone is missed or quality is disputed.

The fix: Always prefer a construction-linked payment plan, even if it costs slightly more than the "discount" on a down-payment scheme. Map each payment to a verifiable milestone: foundation pour, slab at each floor, brick work, plastering, finishing, possession. Ask your developer for photographic / video evidence of milestone completion before releasing each payment from your NRE/NRO account. For Vidastu's plot-and-build projects, milestone payments and weekly video documentation are standard — see how that works.

Mistake 10 Buying on "guaranteed appreciation" or "assured returns" promises

Let us be direct: no one can guarantee property appreciation. Property values depend on market supply, demand, interest rates, infrastructure delivery, local economic conditions, national policy, and factors entirely outside any developer's control. Developers or agents who make guaranteed appreciation or assured return promises in writing are either:

• Offering an arrangement that is economically unsustainable and will eventually fail, or
• Inflating the booking price to fund the "return" from the buyer's own money, or
• Making a verbal promise with no legal backing, which they will deny when the time comes

RERA specifically prohibits misleading advertisements (Section 11(2)) and requires that all commitments to buyers be made in writing in the sale agreement. If the "guaranteed return" is not in the RERA-registered sale agreement, it is not a guarantee — it is a sales tactic.

The broader point about appreciation: Indian real estate has had strong cycles. Parts of the NCR — Noida, Greater Noida — genuinely appreciated significantly between 2020 and 2025. But those were specific circumstances: interest rate conditions, post-Covid pent-up demand, genuine infrastructure delivery. Past cycles are not a template for future performance. Anyone citing past appreciation as a reason to expect future appreciation is making a claim they cannot substantiate.

The fix: Evaluate a property on its fundamentals — location, builder track record, RERA compliance, construction quality, your own financial capacity, and your genuine holding horizon — not on return promises. If a developer or agent is leading with an appreciation guarantee, walk away or at minimum demand it be written into the RERA-registered sale agreement. It won't be, and that will tell you what you need to know.

Mistake 11 Not budgeting all-in costs — stamp duty, GST, registration, and the rest

NRIs often compare quoted prices across properties as if the quoted price is the cost. It is not. In Indian real estate, the gap between the quoted base price and the total all-in cost can be 20–30% or more, depending on the property type and state.

Here is what the "base price" of an under-construction apartment in UP typically does not include:

• Stamp duty: 5% of the transaction value (women buyers) or 6% (men) in Uttar Pradesh, paid to the state government at registration.
• Registration charges: Approximately 1% of the transaction value, paid at the sub-registrar's office.
• GST: 5% on under-construction residential property (no GST on completed/registered property or resale). This is in addition to stamp duty, not instead of it.
• Preferential Location Charges (PLC): Additional amounts charged for floor, direction, park-facing, or corner units — can add 5–10% to the base price.
• Car parking: Often priced separately; can be Rs 3–10 lakh per space depending on the project.
• Club membership and infrastructure charges: Developers charge these separately; can add Rs 2–5 lakh per unit.
• Maintenance deposit: Upfront corpus for society maintenance; can be Rs 1–5 lakh.
• Interior fit-out: In many projects, the handover is in a "bare shell" condition — walls white, flooring not done. Full fit-out can add Rs 20–60 lakh depending on specification.
• Agent brokerage: Typically 1–2% of the transaction value if you are buying through a broker.

For a plot and self-construction (like a YEIDA plot with a Vidastu-built home), add: YEIDA development charges, building plan approval fees, construction cost per sq ft, boundary wall, driveway, bore well or water connection, and the future freehold conversion premium.

The fix: Ask for a written cost sheet that itemises every charge before signing anything. Then run it past your CA to verify that GST has been correctly applied (some developers undercharge GST in the booking stage and collect it later — this is your liability, not the developer's). Use our NRI Value Projector to model total cost and compare it against your available capital in your currency.

Mistake 12 Skipping an independent CA — and getting the tax structure wrong from the start

The CA conversation feels like something that can wait until tax time. It cannot. Multiple tax and structuring decisions need to be made before you buy, and getting them wrong at the start creates costs that compound over the holding period and explode at the exit.

Here are the specific decisions an independent CA should advise on before you buy:

• NRE vs NRO funding: Where your purchase funds come from affects whether proceeds are freely repatriable or capped at USD 1M/yr. This decision is made at the time of purchase, not at the time of sale.
• Joint purchase structure: Buying jointly with a spouse or parent affects capital gains computation at exit, TDS implications, and inheritance. A CA can advise the optimal structure for your situation.
• Tax on rental income: If you plan to rent the property, rental income received in India is taxable in India and reportable in your country of residence (with DTAA credit). A CA sets up the correct compliance structure from the start.
• TDS on purchase of resale property: If you are buying from an NRI seller, you are required to deduct TDS from the payment (typically 20–23% of sale value for LTCG on NRI seller, unless they hold a Form 13 certificate). Not deducting TDS correctly when buying from an NRI makes you the defaulter under TDS law.
• DTAA planning: If your country has a Double Taxation Avoidance Agreement with India (most countries do), you may be able to reduce or eliminate the Indian tax on rental income or capital gains — but the Treaty benefits require specific documentation (TRC, Form 10F) submitted at the right time.
• Capital gains holding period: 24 months is the threshold for long-term vs short-term capital gains on immovable property. Your CA should advise on the implications of selling before vs after the 24-month mark, especially given that short-term gains are taxed at 30% while LTCG is at 12.5% post-July 2024.

The fix: Engage an Indian CA — not a general accountant, but one specifically experienced in NRI property tax — before you sign the sale agreement. The CA's fee for this consultation is a rounding error compared to the tax savings from a correctly structured transaction. Ask your CA to give you a one-page memo covering: which account to fund from, what TDS obligations you have as buyer, what the approximate capital gains tax will be at a notional exit price, and what DTAA benefits you can claim. Vidastu connects NRI clients with CA networks in India who specialise in NRI property transactions — mention this when you reach out.

How Vidastu's model removes most of these risks

Vidastu is a Greater Noida-based developer and UP-RERA registered agent (UPRERAAGT000309/01/2026), operating since 2012. We hold a 4.8-star average across 54 Google reviews. Everything we do with NRI clients is designed around the specific vulnerabilities this guide describes — not because we invented these practices, but because we have seen what happens when they are absent.

Here, concretely, is how each category of mistake is addressed when you work with us:

• RERA confusion (Mistake 1): We only market RERA-registered projects. Every project listing includes the project RERA number and a direct link to the up-rera.in page. Our own agent registration number is public and verifiable.
• PoA without a plan (Mistake 2): We work only with properly authenticated Special PoAs, not General PoAs. We guide NRI clients on the specific PoA language and authentication steps for their country of residence.
• Title due diligence (Mistake 3): We present encumbrance certificates, land-use records, and RERA disclosure documents upfront. We encourage buyers to appoint an independent lawyer — we do not discourage independent legal review.
• Cash / FEMA (Mistake 4): All payments to Vidastu are via banking channels from NRE/NRO accounts, with formal receipts. We do not accept cash or informal transfers, and we do not participate in any split-payment arrangements.
• Repatriation planning (Mistake 5): We walk NRI clients through the NRE vs NRO implications before purchase and connect them with CAs who can structure the transaction correctly.
• Form 13 / TDS (Mistake 6): We remind clients to engage their CA and apply for Form 13 well before any sale. We do not handle tax advice ourselves, but we flag the requirement proactively.
• Agricultural land (Mistake 7): All properties we market are in clearly permitted categories — residential apartments and YEIDA development-authority residential plots. We do not market farmhouses or agricultural land to NRIs.
• Brochure vs reality (Mistake 8): We provide weekly video updates on WhatsApp for every ongoing project — live walkthroughs of the construction stage, not pre-recorded promotional content. NRI clients see every slab pour, every course of brickwork, every finishing stage. Before purchase, we provide live site walkthroughs on request.
• Milestone payments (Mistake 9): Vidastu's construction contracts are milestone-linked. You pay against verified stage completion — foundation, structure, brick, plaster, finishes, handover. You are not asked to fund the next stage before the current stage is documented and complete.
• No guaranteed returns (Mistake 10): We do not make appreciation guarantees. Our investment case page presents historical data with the explicit caveat that past performance does not predict future returns. We will not quote a guaranteed return even if you ask for one.
• All-in cost transparency (Mistake 11): Every NRI inquiry is answered with a detailed cost sheet: base price, PLC (if any), parking, development charges, GST, stamp duty estimate, registration charges — itemised, in writing, before you commit. No surprises at registration.
• CA referral (Mistake 12): We have a standing referral network of CAs experienced in NRI property tax who can advise on the full tax structure before purchase. We strongly encourage — and facilitate — this conversation happening before, not after, the sale agreement is signed.

Our NRI desk is reachable via WhatsApp at +91 95404 45300 and email at [email protected]. The first conversation is free of obligation — we will tell you honestly if what you are looking for is something we can help with, and if not, what kind of advisor you actually need.