NRI Property Purchase & FEMA Compliance

NRIs and OCIs may purchase residential and commercial immovable property in India without prior approval from the Reserve Bank of India, under the general permission available to them under the Foreign Exchange Management Act, 1999 and the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019. This general permission does not extend to agricultural land, plantation property, or a farmhouse — acquisition of these categories by an NRI/OCI requires specific prior RBI approval, and is restricted in practice.

Payment for the property must be made through banking channels only — by remittance from abroad through normal banking channels, or from funds held in the buyer's NRE, NRO, or FCNR(B) account. Payment by traveller's cheque, foreign currency notes, or any other mode outside these prescribed channels is a contravention of FEMA and cannot be used to fund the purchase.

On sale of the property, repatriation of the sale proceeds outside India is governed by the Foreign Exchange Management (Remittance of Assets) Regulations, 2016. Under Regulation 4(2), an NRI/OCI may repatriate up to USD 1,000,000 per financial year from the balance in an NRO account (which would include property sale proceeds credited there), subject to payment of applicable taxes and production of a chartered accountant's certificate in Form 15CB along with Form 15CA. Repatriation of the original investment amount (where the property was purchased with foreign inward remittance or NRE/FCNR funds) is permitted for a maximum of two residential properties, subject to conditions.

Our engagement covers pre-purchase FEMA eligibility review, structuring the payment through compliant banking channels, and post-sale repatriation certification within the USD 1,000,000 annual cap.

NRI property FEMA advisory covers the purchase, the holding and the sale of property in India by non-residents under the Foreign Exchange Management Act 1999 — the acquisition of the immovable property by the NRIs and the OCIs under the Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations 2018, the remittance of the purchase consideration through the banking channels, the repatriation of the sale proceeds within the limits, and the compliance with the RBI's framework. The property transaction is one of the most regulated money movements in the NRI's life.

The property is where the NRI's Indian money is most often held, and the transaction carries the FEMA rules at every step — the acquisition rights under the 2018 Regulations, the payment through the proper channels, the repatriation of the sale proceeds within the prescribed limits, and the reporting. The property that was bought through the wrong channel or sold with the wrong repatriation is the transaction the RBI questions.

The cost of a non-compliant property transaction is the blocked money and the regulatory action: the sale proceeds that cannot be repatriated, the purchase that the bank refuses to process, the violation that the FEMA enforcement pursues. The property transaction is a compliance event, not just a purchase.

This service is for NRIs buying, holding and selling property in India. We review the acquisition rights under the 2018 Regulations, structure the purchase and the remittances through the compliant channels, manage the holding and the rental positions under the FEMA and the tax framework, handle the sale and the repatriation of the proceeds within the limits, and keep the property compliance current.