NRI Buying a Home in Bengaluru: FEMA Rules, Funding and TDS

A software architect in Dubai spent much of 2026 planning to buy a flat in Bengaluru, the city he grew up in and hopes to retire to. From abroad the rules felt daunting. Could he even buy as an NRI, how would he pay from a foreign salary, could he take a loan, and would his money ever come back out if he sold. The answers turned out to be reassuringly clear, and once he understood them, the purchase was little different from a resident's.

Buying a home in India as a non resident is completely allowed and very common, but it runs on a specific set of rules under FEMA, the foreign exchange law. Get those right and the rest is ordinary property buying. Here is what an NRI needs to know.

The short answer. An NRI or OCI can freely buy residential and commercial property in India, in any number, without RBI permission, but cannot buy agricultural land, a farmhouse or a plantation. You must pay only through your NRE, NRO or FCNR account or by inward remittance, never in cash, and you can take an NRI home loan from an Indian bank for most of the value. The trade off is paperwork, not permission. The rules are generous, but every rupee has to move through banking channels and be documented, because your ability to take money back abroad later depends entirely on that trail.

What can an NRI actually buy?

Residential and commercial property, as much as you like, but not farmland. An NRI or an Overseas Citizen of India can buy any number of residential or commercial properties in India under a general permission, with no need to approach the Reserve Bank at all. What you cannot buy is agricultural land, a plantation, or a farmhouse, and this is a hard line with no exceptions, you cannot buy such land even if you plan to convert it to residential use later.

For most NRI buyers eyeing a Bengaluru flat or a house on a converted site, this is no obstacle at all, since those are residential properties. The restriction only bites if you are tempted by cheap agricultural land on the outskirts, which is off limits to you as a non resident. Stick to residential and commercial, and the door is fully open.

It helps to be clear on who these rules cover. An NRI is an Indian citizen living abroad, while an OCI, an Overseas Citizen of India, is a foreign passport holder of Indian origin with lifelong rights to live and work in India. Both enjoy the same freedom to buy residential and commercial property here, and the same bar on agricultural land. A person of Indian origin who holds neither status is treated more restrictively, so know which category you fall in before you start.

How must an NRI pay for the home?

Through Indian banking channels only, with not a single rupee in cash. Your payment must come from a Non Resident External account, a Non Resident Ordinary account, or a Foreign Currency Non Resident account, or as a direct inward remittance from abroad. An NRE account holds money you have sent from overseas, while an NRO account holds your Indian income such as rent. Cash and travellers cheques are simply not allowed under FEMA.

This is not a suggestion but a legal requirement, and it matters far beyond the purchase itself. The account you pay from, and the record of those transfers, is what later decides how much of your money you can send back abroad if you sell. So route the funds cleanly, keep every remittance advice, and never let anyone persuade you to pay a part in cash. The table below sets out the rules at a glance.

Can an NRI take a home loan?

Yes, and the process is much like a resident's, with a few extras. Most major Indian banks offer NRI home loans, generally financing around seventy five to eighty five percent of the property value, with tenures up to about twenty years. The loan is repaid through your NRE or NRO account or by remittance from abroad, so your foreign income services the loan in rupees. The bank will assess your overseas income, employment and documents, which can take a little longer to verify than for a resident.

Because you are financing the purchase, all the usual borrower rules apply on top of the NRI ones, including the tax benefits on your home loan. Our guide to home loan tax benefits under Section 24(b) and 80C covers the deductions, which an NRI filing tax in India can also use, subject to the regime and residency rules that apply to you.

How do you buy from abroad without flying down?

With a carefully drafted power of attorney given to someone you trust. Since an NRI often cannot be present in India for every step, from signing the agreement to registering the deed, a power of attorney lets a trusted relative or friend act on your behalf. A specific power of attorney, spelling out exactly which powers you are granting for this purchase, is safer than a broad one, because it limits what your representative can do to the transaction at hand.

Treat this document with care, since it hands real authority over your money and property to another person. Have it drafted and attested properly, ideally through the Indian consulate where you live, and keep its scope narrow. Used well, a power of attorney lets you complete a Bengaluru purchase from Dubai or Singapore without a single trip, while keeping you in control of what your representative may sign.

Keep your paperwork ready too, since a purchase from abroad leans heavily on documents. You will typically need your passport and, for an OCI, the OCI card, an Indian PAN for the tax and TDS steps, proof of your overseas address, and recent income and bank statements if you are borrowing. Having these in order before you begin spares your representative in India from chasing you across time zones for one missing paper.

What tax and repatriation rules should you plan for?

Plan for TDS when you buy and for the caps on taking money back when you sell. When you buy from a resident seller and the price is above fifty lakh, you deduct one percent TDS, just as a resident buyer would. If instead you buy from another NRI, the tax you must deduct is higher and falls under a different rule, a point our guide to buying from an NRI seller under Section 195 explains in full.

On the way out, repatriation has limits. If you bought with NRE funds, you can send back the sale proceeds of up to two residential properties, up to your original investment, and through an NRO account the ceiling is one million US dollars per financial year with a chartered accountant's certificate, after capital gains tax is paid. Breaching FEMA is costly, with penalties that can reach several times the transaction, so it pays to follow the rules exactly. A quality address such as Adarsh Lumina is the kind of home an NRI buys to keep and eventually live in.

What should an NRI check before buying?

Follow the NRI rules, then do every ordinary buyer check on top. Run this checklist before you commit.

1. Confirm you are buying residential or commercial property, not agricultural land or a farmhouse.
2. Pay only through your NRE, NRO or FCNR account or an inward remittance, never in cash.
3. Arrange an NRI home loan from an Indian bank if you need one, repaid through those accounts.
4. Give a trusted person a properly attested power of attorney if you cannot attend in person.
5. Deduct the correct TDS, one percent from a resident seller and more from an NRI seller.
6. Keep records of every remittance, since repatriation later depends on this paper trail.
7. Complete the same title, khata and RERA checks any buyer would, on top of the NRI rules.

Do all this and buying a Bengaluru home from abroad is straightforward, not scary. The FEMA rules are generous to NRIs, they simply ask that your money moves cleanly and is documented, so that the home you buy today is one you can fully enjoy, and freely sell, tomorrow.

Frequently asked questions

Can an NRI buy property in India?

Yes. An NRI or OCI can buy residential and commercial property in India, in any number, without special permission from the Reserve Bank. The one hard limit is that you cannot buy agricultural land, a farmhouse or a plantation, even if you intend to convert it later. Those categories are simply off limits.

How must an NRI pay for the property?

Only through banking channels. Every rupee must come from your NRE, NRO or FCNR account, or as a direct inward remittance from abroad, and cash payments are barred under FEMA. Keeping the money within these channels is not optional, it is a legal requirement and the paper trail you will need later.

Can an NRI get a home loan in India?

Yes. Major Indian banks offer NRI home loans, typically funding around 75 to 85 percent of the property value, with the loan repaid through your NRE or NRO account or by remittance. So an NRI buyer can use a loan much like a resident, subject to the bank's checks on income and documents from abroad.

Can an NRI take the sale money back abroad?

Within limits. If you bought with NRE funds, you can repatriate the sale proceeds of up to two residential properties, up to your original investment. Through an NRO account the cap is one million US dollars per financial year, with a chartered accountant's certificate, and capital gains tax must be paid first.

Sources opened for this article include SBNRI on the NRI guide to buying property and Assetly on FEMA rules for NRI property. FEMA and tax rules change, so confirm your position with your bank and a chartered accountant before you buy.

Last updated 2026-09-09. PropNewz Team.