NRIs buying a flat in India: what FEMA allows, how to pay, and what you can't buy

Rules and rates as of 14 October 2026.

A non-resident Indian who wants a flat back home usually asks three things. Am I allowed to buy? Which of my accounts can I pay from? And is there anything I simply cannot buy? The answers sit in two official documents: the Foreign Exchange Management (Non-debt Instruments) Rules, 2019, and the Reserve Bank of India's Master Direction on acquiring and transferring immovable property. This explainer goes through both, and what they mean for an Overseas Citizen of India (OCI) cardholder too.

Who counts as an NRI or an OCI

The Non-debt Instruments Rules (notification S.O. 3732(E) of 17 October 2019; the RBI's copy says it is updated up to 2 September 2026) define both terms in rule 2. An NRI is an individual resident outside India who is a citizen of India. An OCI is an individual resident outside India who is registered as an OCI cardholder under section 7A of the Citizenship Act, 1955.

For buying property, the rules treat the two groups the same way. Rule 24 is written for "an NRI or an OCI", with no separate conditions for either.

What you can buy, and what you can't

Rule 24(a) lets an NRI or OCI acquire immovable property in India "other than an agricultural land or farm house or plantation property". So a flat, a house, a residential plot or an office is open to you. Agricultural land, a farmhouse or a plantation is not, if you are buying it.

No prior RBI approval is needed for the permitted kinds of property. The RBI said so directly in a press release of 29 December 2021 (No. 2021-2022/1439), issued after it received queries following a Supreme Court judgment of 26 February 2021 in Civil Appeal 9546 of 2010 (Asha John Divianathan v. Vikram Malhotra). The RBI noted that the judgment related to the old Foreign Exchange Regulation Act, 1973, which has been repealed. It clarified that NRIs and OCIs are governed by FEMA, 1999, and need no prior RBI approval to acquire or transfer immovable property other than agricultural land, farm houses and plantation property, subject to the conditions in Chapter IX of the 2019 Rules. (We read the court's order sheet and the RBI's clarification, not the full judgment, so we do not summarise its reasoning here.)

Two other routes work differently from buying:

• Gift. Under rule 24(b), you may receive property by gift from a resident, an NRI or an OCI who is a "relative" as defined in section 2(77) of the Companies Act, 2013. The same exclusion applies: no agricultural land, farmhouse or plantation by gift.
• Inheritance. Rule 24(c) lets you inherit from a resident, or from a non-resident who acquired the property lawfully. This clause carries no agricultural-land exclusion, so inheriting farmland is not barred by these rules.

When you later sell, rule 24(d) lets you transfer any property to a resident in India. A sale to another NRI or OCI under rule 24(e) excludes agricultural land, farmhouses and plantations.

Who can buy what: a quick comparison

Situation	NRI	OCI cardholder	Foreign spouse of an NRI/OCI (not NRI/OCI)
Buy a flat, house or commercial property	Yes, any number	Yes, any number	One property, jointly with the NRI/OCI spouse (rule 25)
Buy agricultural land, farmhouse or plantation	No	No	No
Receive property as a gift from a relative	Yes, except agricultural land, farmhouse, plantation	Same as NRI	Not covered by rule 25
Inherit property	Yes, including agricultural land	Same as NRI	Not covered by rule 25
Prior RBI approval for a permitted purchase	Not needed	Not needed	Not needed if rule 25 conditions are met

The foreign-spouse route has extra conditions in rule 25: the marriage must be registered and must have lasted at least two continuous years immediately before the purchase. Rule 31 separately requires prior RBI permission for citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, Bhutan, Hong Kong, Macau and North Korea, other than for a lease of up to five years. That restriction does not apply to an OCI, and paragraph 9 of the RBI's Master Direction says the same.

How you are allowed to pay

Rule 24(a) allows payment only from an inward remittance through banking channels, or from funds in a non-resident account. Paragraph 3.3 of the Master Direction names the accounts: you may pay by debit to your NRE, FCNR(B) or NRO account. Two modes are ruled out: traveller's cheques and foreign currency notes. So is any mode the rules do not mention. In practice, carrying dollars in cash to pay a builder is not allowed.

The account you pay from matters later, when you sell. Under paragraph 8.2 of the Master Direction, a bank may let you send the sale proceeds abroad if the property was bought lawfully and paid for in foreign exchange through banking channels or from an NRE or FCNR(B) account. Home-loan EMIs paid from abroad or from those accounts count as foreign exchange. For residential property, this route covers no more than two properties. The paragraph does not mention NRO money. Funds in an NRO account have a separate route: the RBI's Master Direction on Remittance of Assets (updated 29 June 2026) lets a bank remit up to USD one million per financial year from NRO balances, with documents and an undertaking, all instalments through the same bank.

Worked example: a ₹1 crore flat paid from two accounts

Illustrative figures. An NRI buys a new flat from a resident developer for ₹1,00,00,000. The stamp duty value is ₹95,00,000. She pays ₹60,00,000 from her NRE account and ₹40,00,000 from her NRO account. State stamp duty and registration are extra and not included here.

Tax deducted by the buyer. Under the Income-tax Act, 2025, section 393(1), table serial 3(i), a payer buying immovable property (other than agricultural land) from a resident deducts 1% of the consideration or the stamp duty value, whichever is higher, where the amount is ₹50 lakh or more. The payer column says "person" with no residence condition, so on the text it reaches an NRI buyer too.

TDS = 1% × higher of (₹1,00,00,000, ₹95,00,000) = 1% × ₹1,00,00,000 = ₹1,00,000.

If the TDS is paid from the NRO side, the developer receives ₹60,00,000 from NRE + (₹40,00,000 − ₹1,00,000) = ₹60,00,000 + ₹39,00,000 = ₹99,00,000, and ₹1,00,000 goes to the government.

What it means at resale. The ₹60 lakh paid from NRE is the kind of payment paragraph 8.2 recognises. The ₹40 lakh from NRO is not named there; money from an NRO account would move abroad under the USD one million yearly facility instead. Ask your bank, before you pay, how it will treat a flat funded from both accounts. (If the seller is an NRI rather than a resident, the deduction is very different; see our separate explainer on TDS when the seller is an NRI.)

What this does not cover

Home loans for NRIs, state stamp duty, and the tax on rent or on a later sale each have their own rules. A lawyer can check title and the state's land laws; a chartered accountant can confirm the TDS mechanics and forms for your case.