Buying or Selling Bengaluru Property as an NRI, The FEMA and Repatriation Rules You Must Get Right

As Bengaluru's prices climb and the city draws growing interest from the diaspora, more non-resident Indians are buying into a market governed by rules that do not apply to resident buyers. NRIs can own homes here, but FEMA, TDS and repatriation provisions shape what they can buy, how they must pay, and how much of the proceeds they can take home. Getting these right is what protects the net outcome.

The short answer. NRIs can buy residential and commercial property in Bengaluru but not agricultural land or farmhouses, must route funds through NRE, NRO or FCNR accounts, and on sale face TDS under Section 195 at rates well above the resident 1 percent. NRIs can repatriate up to USD 1 million per financial year from an NRO account, subject to TDS and Form 15CA and Form 15CB filing, while NRE and FCNR balances are fully repatriable. The honest trade-off: high TDS and the NRO cap reduce net proceeds, so timing and paperwork matter.

What property can an NRI buy in Bengaluru?

Under FEMA and RBI rules, NRIs can freely buy residential and commercial property in India, including in Bengaluru, but they cannot purchase agricultural land, plantation property or farmhouses. The restriction is defined by the type of property, not the city, so a buyer must confirm the land classification before committing, since an attractive plot that turns out to be agricultural is off-limits. This is the first and most fundamental check for any NRI purchase, because it determines whether the transaction is permissible at all.

How must purchase funds be routed?

NRI purchases must be funded through proper banking channels, using an NRE, NRO or FCNR account, rather than cash or informal routes. The account used matters beyond the purchase itself, because it affects repatriation later: funds brought in through an NRE account are treated differently from NRO funds when you eventually want to take proceeds out of the country. A buyer should therefore plan the funding route at the outset with the eventual sale and repatriation in mind, rather than treating it as a mere banking detail.

What TDS applies when an NRI sells?

When an NRI sells a property, the buyer is required to deduct TDS under Section 195, at rates substantially higher than the 1 percent that applies when a resident sells, with the applicable rate depending on the holding period and whether the gain is long or short term, plus surcharge and cess. This materially affects the seller's cash flow at the point of sale. An NRI seller should plan for this deduction in advance and, where eligible, consider applying for a lower-deduction certificate to ease the impact.

How much can be repatriated and how?

NRIs can repatriate up to USD 1 million per financial year, running 1 April to 31 March, from an NRO account, a cap that is per person and pools all outward remittances in that year, and which requires the filing of Form 15CA and Form 15CB. Balances held in NRE and FCNR accounts, by contrast, are fully repatriable without that limit. For a seller, this means the route the money sits in determines how readily it can be sent abroad, so the repatriation plan should be mapped well before the sale, not after.

What documents (PAN, power of attorney) are needed?

An NRI transaction generally requires a PAN for tax purposes, and where the buyer or seller cannot be present in person, a properly executed and registered power of attorney granted to a trusted representative in India. Getting the PoA right, with the correct scope and proper registration, is important because a defective PoA can derail a registration or sale. A buyer or seller managing the transaction from abroad should arrange these documents in advance, since organising them remotely at the last minute is a common source of delay.

How are capital gains taxed for NRIs?

Capital gains for an NRI seller are taxed according to whether the gain is long or short term, determined by the holding period, with long-term gains and short-term gains treated under their respective rules. This interacts directly with the Section 195 TDS deducted at sale, which is intended to cover the tax on the gain. Because the precise rates, surcharge and any available exemptions depend on the specifics and change over time, an NRI should confirm the current treatment on the Income Tax Department's guidance and plan accordingly.

What to verify before an NRI transaction?

Confirm NRI status and obtain a PAN, use NRE or NRO accounts correctly, and verify that the property is not agricultural land. Arrange a registered power of attorney if you are transacting remotely, plan for Section 195 TDS on any sale, and prepare to file Form 15CA and Form 15CB for repatriation. Confirm the project's RERA registration and a clean title. Verifying the current rules on RBI and Income Tax Department sources protects the net proceeds that the rules can otherwise erode.

A 7-point checklist for an NRI Bengaluru transaction

1. Confirm NRI status and obtain a PAN.
2. Use NRE or NRO accounts correctly for funding.
3. Verify the property is not agricultural land or a farmhouse.
4. Arrange a registered power of attorney if transacting remotely.
5. Plan for Section 195 TDS on any sale.
6. Prepare Form 15CA and Form 15CB for repatriation.
7. Confirm the project's RERA registration and a clean title.

Frequently asked questions

What property can an NRI buy in Bengaluru?

NRIs can buy residential and commercial property in India, including Bengaluru, but not agricultural land, plantation property or farmhouses. This is set by FEMA and RBI rules. The restriction is on the type of property, so a buyer should confirm the land classification before proceeding with any purchase.

How must purchase funds be routed?

Funds must be routed through proper banking channels, using an NRE, NRO or FCNR account, rather than cash or informal transfers. The choice of account matters later for repatriation, since money brought in through NRE is treated differently from NRO funds, so plan the funding route with the eventual sale in mind.

What TDS applies when an NRI sells?

When an NRI sells, the buyer must deduct TDS under Section 195 at rates well above the 1 percent that applies to resident sellers, with the rate depending on the holding period and gain. This significantly affects the seller's cash flow, so an NRI seller should plan for it and consider seeking a lower-deduction certificate where eligible.

How much can be repatriated and how?

NRIs can repatriate up to USD 1 million per financial year from an NRO account, subject to TDS and the filing of Form 15CA and Form 15CB, while NRE and FCNR balances are fully repatriable without that limit. The NRO cap is per person and pools all outward remittances in the year.

Last updated 2 June 2026. PropNewz Team.