NRI Buying Property in Bengaluru: The FEMA Rules, Payment Routes and Repatriation Limits

Every week, somewhere between a video call from Dubai and a site visit deputised to a brother in Bengaluru, an NRI family makes a property decision involving more money than any other decision they will take that year. The questions are always the same: can we buy this, how do we pay for it legally, who signs if we cannot fly down, and what happens when we eventually sell. The rules answering them are neither secret nor complicated, they sit in FEMA and the Reserve Bank of India's regulations, but they are scattered, and the gaps between what NRIs assume and what the law says is where expensive mistakes live. One family's farmhouse dream on Kanakapura Road, for instance, is not legally available to them at all.

The short answer. An NRI or OCI can buy residential and commercial property in India freely, with no RBI permission and no cap on the number of properties, but cannot purchase agricultural land, plantation property or a farmhouse. Payment must come through normal banking channels or from NRE, NRO or FCNR accounts, never in foreign currency notes or traveller cheques. On exit, sale proceeds are repatriable within limits: residential sale proceeds for a maximum of two properties, and otherwise up to 1 million US dollars per financial year through the NRO route. The trade-off: buying is easy, moving money out later is the regulated part, so plan the exit before the entry.

What can an NRI buy, and what is permanently off the table?

The Ministry of External Affairs' official summary of the FEMA position states it directly: a person resident outside India who is a citizen of India can acquire by way of purchase any immovable property in India other than agricultural land, plantation property or a farm house. Flats, villas inside converted residential layouts, commercial offices, shops: all open. Farmland, coffee estates, and the farmhouse plots marketed on Bengaluru's rural fringes: closed to purchase, regardless of how the seller proposes to paper it. The one lawful route into agricultural property is inheritance, and even then the MEA summary notes such inherited land can be transferred only to Indian citizens permanently residing in India. Treat any structure offered to get around this, buying through a cousin, an unregistered agreement, a long lease that smells like a sale, as a risk you are buying, not a loophole you are using.

How must the money move?

FEMA cares as much about the payment route as the asset. Both the MEA summary and Deutsche Bank India's NRI property FAQ describe the same two lawful channels: funds remitted into India through normal banking channels from abroad, or funds held in your non-resident accounts in India, the NRE, NRO and FCNR family. Explicitly prohibited: paying with traveller cheques, foreign currency notes, or any mode outside those channels. This is not a formality. The payment trail you create at purchase becomes the evidence base for repatriation when you sell, because the route money came in by determines how freely it can leave. An NRI who pays partly through a resident relative's account, for convenience, has muddied exactly the trail that the exit rules will one day ask for.

What do the rules look like on one screen?

The questions every NRI buyer asks, answered in one place.

Most of the table is generous. The last row is the one that demands planning, and it is the row buyers read last, usually years too late. A useful exercise before any purchase: write down, in one paragraph, how the money for this property will leave India in ten years, through which account, under which limit, supported by which documents. If you cannot write that paragraph today, the gap in it is the part of the transaction to resolve before you sign, not after.

How do loans, powers of attorney and remote closings work?

Buying remotely also changes negotiation dynamics in ways worth naming. Sellers and brokers price NRI urgency, the two-week visit window in December, the family pressure to finish the matter this trip, and a buyer who reveals that schedule has already paid for it.

Indian lenders run NRI home loan programmes, with repayment expected through the same non-resident account channels the purchase rules use. The practical instrument for buying from abroad is a power of attorney executed in favour of a trusted relative in India, signed before the Indian consulate in your country or apostilled, then adjudicated in India, authorising specifically described acts: signing the agreement, presenting the deed for registration, taking possession. Keep the POA special rather than general, name the property, and revoke it formally when the transaction completes. The verification work, meanwhile, does not change because you are remote: the title chain, the encumbrance certificate we detailed in our EC guide, khata, approvals and RERA status all still need checking, by a professional you engage, not one the seller supplies.

One unglamorous warning about the remote-buying setup: the power of attorney is where NRI purchases go wrong most often, in both directions. A POA that is too broad lets a relative do more than you intended, and family money disputes that begin with a general POA over property are common enough that consulates warn about them. A POA that is defective, unattested, not adjudicated, vague about the property, gets rejected at the Sub Registrar Office on registration day, with you asleep in another time zone and the seller's patience expiring. Have the document drafted by your Indian lawyer, executed exactly as the destination state requires, and tested with the jurisdictional SRO's requirements before the registration slot is booked.

What does tax look like at purchase, and why does it surprise buyers?

An NRI buying from a resident seller above the 50 lakh rupee threshold carries the same TDS duty as any buyer: deduct 1 percent and file Form 26QB, exactly as we covered in our TDS guide. The reverse situation deserves more fear than it gets: anyone buying from an NRI seller must deduct under a different section at substantially higher effective rates, with a TAN requirement. NRIs holding Indian property should expect their eventual buyers to deduct accordingly, and price the cash flow effect. Rental income on the Bengaluru flat is taxable in India, returns may need filing, and the country where you reside may tax the same income subject to treaty relief, which is why a chartered accountant familiar with both jurisdictions is part of the true cost of remote ownership.

What happens when you eventually sell?

This is the regulated end of the pipeline. Deutsche Bank's FAQ sets out the architecture: where the property was bought from foreign funds through lawful channels, sale proceeds can be repatriated, but for residential property the repatriation facility is restricted to two such properties. Proceeds connected to NRO funds are credited to the NRO account, from which transfers abroad run within the limit of 1 million US dollars per financial year, the same ceiling the RBI's remittance of assets FAQ confirms for assets acquired by inheritance. Practical consequences: keep every inward remittance record and bank statement from the day you buy, because repatriation paperwork reconstructs the purchase funding years later; sequence multi-property exits across financial years where the ceiling binds; and take professional advice before the sale agreement is signed, not after the money is stuck in an NRO account awaiting paperwork you could have prepared at purchase.

How should an NRI buyer run the purchase, end to end?

1. Confirm the asset class is permitted: residential or commercial yes, anything agricultural in substance, no, whatever the brochure calls it.
2. Route every rupee through banking channels or your NRE, NRO or FCNR accounts, and keep the remittance trail organised from day one.
3. Execute a special, property-specific power of attorney through the consulate or apostille route if you cannot attend registration yourself.
4. Run full due diligence remotely: title chain, encumbrance certificate, khata, approvals and RERA status, through professionals you appoint.
5. Comply with buyer-side TDS at purchase, and budget for the heavier deduction your own buyer will make when you eventually sell as an NRI.
6. Plan the exit at entry: which account receives sale proceeds, how the two-property and USD 1 million ceilings apply, and across which financial years.
7. File the Indian tax returns your rental income or sale requires, with an accountant who understands both your jurisdictions.

Can an NRI buy agricultural land or a farmhouse in India?

No. FEMA prohibits NRIs and OCIs from purchasing agricultural land, plantation property or farmhouses. The only lawful acquisition route is inheritance, and inherited agricultural land can be transferred onward only to Indian citizens permanently residing in India. Treat workaround structures as risks, not loopholes.

Is there a limit on how many flats an NRI can buy?

No. There is no restriction on the number of residential or commercial properties an NRI or OCI can acquire. The binding constraint arrives at exit: repatriation of residential sale proceeds is restricted to two properties, with other transfers running through the NRO route's annual ceiling.

How can an NRI legally pay for property in India?

Through funds remitted via normal banking channels from abroad, or from NRE, NRO or FCNR accounts maintained in India. Payment by traveller cheque or foreign currency notes is expressly prohibited, and the payment trail you create at purchase becomes the evidence for repatriating proceeds when you sell.

How much money can an NRI take out after selling property?

Sale proceeds of residential property are repatriable for a maximum of two such properties, where the purchase was funded through lawful foreign channels. Proceeds routed through an NRO account can be transferred abroad up to 1 million US dollars per financial year, so multi-property exits need sequencing across years.

Last updated 2026-06-12. PropNewz Team.