Buying property in India as a Non Resident Indian is not simply a matter of finding the right project and making a payment. Every step, from the account you use to send money, to the paperwork you sign, to the amount you can eventually bring back to your country of residence, is governed by rules under the Foreign Exchange Management Act and, separately, by RERA at the project level. Misunderstanding either of these can lead to delayed transactions, blocked remittances or, in the worst cases, penalties.
This guide walks through exactly what NRIs are permitted to buy, how payments must be structured, what RERA verification actually involves, and how repatriation works, so that by the time you are ready to commit to a project, the legal groundwork is already clear.
Who Counts as an NRI, OCI or PIO Under FEMA
Before any property rule applies to you, it matters which category you fall under. An NRI is generally an Indian citizen who lives outside India for employment, business or any other purpose. An Overseas Citizen of India is a foreign national who has been registered as an OCI under the Citizenship Act, while a Person of Indian Origin refers to individuals whose parents, grandparents or great grandparents were born in India. Under FEMA, a person becomes what is termed a Person Resident Outside India the moment they leave for employment, business, or with the intention to stay abroad indefinitely, and this determination is based on intent and purpose rather than a simple day count, which is a meaningful difference from how residency is defined under the Income Tax Act.
This distinction matters because your account eligibility changes the moment your status changes. A person who is a resident under FEMA cannot hold NRE or FCNR accounts, so getting this classification right before you start any transaction avoids complications later.
What Property NRIs Can and Cannot Buy
Permitted residential and commercial property
Under FEMA, NRIs and OCIs are permitted to purchase residential and commercial properties in India without needing prior approval from the Reserve Bank of India, and there is no restriction on the number of properties an NRI or OCI can own. This applies whether you are buying an apartment, a villa, an office space or a retail unit.
Why agricultural land, plantation property and farmhouses are restricted
FEMA strictly prohibits NRIs from purchasing agricultural land, plantation land or farmhouses in India, and these categories can only be held if they are inherited or received as a gift, not purchased directly. This restriction exists to preserve local farming interests and keep agricultural land ownership within Indian residents, and it applies regardless of how much an NRI may want to invest in that segment.
How NRIs Are Allowed to Pay for Property
NRE, NRO and FCNR accounts explained
Payments for property must be made through NRE, NRO or FCNR accounts, or through direct inward remittance, and no cash payments are permitted under any circumstances. An NRE account primarily holds foreign earnings that have been remitted to India, is not taxed, and is fully repatriable. An NRO account holds income that originates in India, such as rent or dividends, is taxable, and is only repatriable up to a set annual limit after taxes are cleared. Understanding which account your funds sit in matters enormously later, since it directly determines how easily you can bring that money back out of India.
Why cash payments are never allowed
Every property payment must go through a recognised banking channel under RBI guidelines. Home loans from Indian banks may also be used for property payments, but the underlying rule remains the same, formal, traceable banking channels only, with no exceptions for partial cash components.
RERA Verification: The Step Most NRIs Skip
What RERA registration actually confirms
RERA registration is mandatory for eligible real estate projects, and checking a project's RERA number along with its sanctioned layout, commencement certificate and building approvals gives a buyer real protection against delays, misrepresentation and disputes later. For an NRI who cannot easily visit the site or the local RERA office, this single check often matters more than any other verification step, because it confirms the project is legally recognised before a rupee changes hands.
How to check a project's RERA number before paying anything
Every state maintains its own RERA portal where a project's registration number, promoter details, sanctioned plan and expected completion date are publicly listed. Before making any payment, cross check the RERA number quoted by the builder against the state portal directly, rather than relying only on what appears in a brochure or a sales conversation.
Repatriation Rules NRIs Must Plan For
NRE funded purchases versus NRO funded purchases
Where a property was purchased using funds remitted from an NRE account, the original investment amount can usually be repatriated beyond standard limits, provided there is documentary evidence tracing the funds back to that NRE source. Where the property was purchased using NRO funds, which typically represent income earned within India, repatriation is capped and subject to more documentation.
The USD one million per year limit and Form 15CA, 15CB
Repatriation from an NRO account is generally allowed up to USD one million per financial year, after all applicable taxes have been paid and after Form 15CA and Form 15CB have been filed. Form 15CA is an online declaration the NRI files with the Income Tax Department before the remittance takes place, while Form 15CB is a certificate from a chartered accountant confirming that taxes have been correctly paid and that the remittance complies with FEMA. Banks will not process an international transfer without both forms in place, so building this into your timeline early avoids last minute delays.
Common FEMA Mistakes NRIs Make and How to Avoid Them
|
Common Mistake |
Why It Happens |
How to Avoid It |
|
Making or accepting part payment in cash |
Assuming a small cash component is harmless or convenient |
Insist on payments only through NRE, NRO, FCNR or verified inward remittance channels |
|
Continuing to operate a resident savings account after becoming an NRI |
Not updating account status after moving abroad |
Convert to an NRE or NRO account as soon as NRI status begins |
|
Skipping RERA verification because the builder seems reputable |
Assuming reputation alone guarantees compliance |
Check the RERA number directly on the official state portal before paying anything |
|
Attempting to repatriate sale proceeds without Form 15CA or 15CB |
Underestimating documentation needed for outward remittance |
Engage a chartered accountant early and file both forms before initiating transfer |
|
Trying to purchase agricultural land or a farmhouse directly |
Not realising this category is restricted for NRIs |
Confirm property type and permissible use before shortlisting any project |
How Compliance Ties Into a Safer Buying Process
Legal compliance is not a separate concern from getting a good deal. A project that is properly RERA registered, combined with a payment process that follows FEMA rules from day one, removes most of the risk that comes with buying property in an unfamiliar city without being able to inspect every detail personally. This is also why a structured buying approach that verifies projects on your behalf, such as the group buying model used by Realaasti, is particularly useful for NRIs, since project verification and RERA checks are handled before you ever commit to a purchase.
Frequently Asked Questions
Who is considered an NRI under FEMA rules?
An NRI is generally an Indian citizen residing outside India for employment, business, education or any other purpose, with status determined by intent and purpose rather than a simple day count under FEMA.
Can NRIs buy agricultural land or farmhouses in India?
No. NRIs cannot directly purchase agricultural land, plantation property or farmhouses, though these can be held if received through inheritance or as a gift.
Do NRIs need RBI approval to buy residential property?
No. NRIs and OCIs can purchase residential and commercial property in India without prior RBI approval, and there is no cap on the number of properties they can own.
What is the difference between an NRE and NRO account for property payments?
An NRE account holds foreign earnings and is fully repatriable, while an NRO account holds India sourced income and is repatriable only up to a set annual limit after taxes are paid.
Can NRIs pay for property in cash?
No. All property payments must go through recognised banking channels such as NRE, NRO, FCNR accounts or direct inward remittance, with no cash payments permitted.
How much money can an NRI repatriate after selling property in India?
Generally up to USD one million per financial year from an NRO account, after taxes are paid and Form 15CA and Form 15CB have been filed.
What are Form 15CA and Form 15CB, and why are they needed?
Form 15CA is a declaration filed by the NRI before remittance, and Form 15CB is a chartered accountant's certificate confirming tax compliance. Both are required before a bank will process an international transfer of sale proceeds.
How can an NRI check if a project is RERA registered?
By checking the project's RERA number directly on the relevant state's official RERA portal, rather than relying solely on what a builder's brochure or sales team states.
What happens if an NRI violates FEMA rules unknowingly?
Violations can attract penalties, and in serious cases a compounding process is available to regularise the contravention, but this involves additional cost and paperwork, so prevention is far simpler than correction.
Can NRIs inherit agricultural land even if they cannot purchase it directly?
Yes. NRIs can inherit agricultural land, plantation property or farmhouses, though resale of such inherited property is restricted, typically only to a resident Indian citizen.
Conclusion
FEMA and RERA compliance are not obstacles standing between an NRI and a good property investment, they are the framework that makes a safe investment possible in the first place. Getting your account structure right, verifying RERA status before you pay, and understanding repatriation limits in advance means fewer surprises later and a much smoother path from decision to ownership.
If you are an NRI planning to invest in Vizag and want the compliance and verification work handled for you, talk to a Realaasti property advisor or explore our NRI Corner for more resources built specifically for overseas buyers.
