NRI property in India: what FEMA allows and what it does not
Property is the most emotionally charged investment for NRI families. The ancestral home in Tinsukia. A flat in Mumbai bought before moving abroad. A plot of land the family has held for decades. Each carries memories, obligations, and — too often — regulatory confusion.
Under FEMA, NRIs and OCI holders can purchase residential and commercial property in India. There is no limit on the number of properties, and no prior RBI approval is needed. Payment must come from an NRE, NRO, or FCNR account — not from a foreign bank account directly.
What NRIs cannot purchase: agricultural land, plantation property, or a farmhouse. This restriction applies regardless of how the land is described — if it is classified as agricultural in the revenue records, it is off-limits. Inherited agricultural land is a different matter — NRIs can inherit agricultural property but cannot purchase it.
The sale of property follows specific repatriation rules. If the property was purchased using NRE funds, the repatriation of sale proceeds (up to two residential properties) is permitted — but only the amount originally paid from the NRE account, not the appreciated value. Capital gains from the sale are repatriable from the NRO account, subject to the one-million-dollar annual cap and applicable taxes.
For families at Dhansanchay, property decisions are part of the broader wealth picture. We do not advise on property transactions directly — that requires a lawyer who understands FEMA, RERA, and local property law. But we do help NRI families think about property within their overall asset allocation. A family with seventy percent of their India net worth locked in two flats and no liquid investments has a concentration problem, not a property portfolio. The flat is illiquid, undiversified, and generates rental yield that rarely keeps pace with inflation after maintenance and vacancy costs.
The question is not whether to own property in India. It is whether the property you hold is the right proportion of your total wealth — and whether the rest of the portfolio is liquid enough to fund the goals that property cannot.
If this sounds like your dining-table conversation, you are already halfway to structure. Treat this as a checkpoint on behaviour and systems. Products change; the habit of clarity usually does not.
NRI taxation, FEMA regulations, and DTAA provisions are complex and change frequently. This article reflects our understanding as of April 2026 and is for general education only. It is not tax, legal, or investment advice. Always consult a qualified chartered accountant or cross-border tax advisor for guidance specific to your residency status, country of residence, and financial situation.