NRI’s Need to Keep This in Mind Before Buying a Home in India

Buying property in India as an NRI has become more transparent in the last few years — Dharani in Telangana, RERA compliance across most states, and cleaner bank channels for repatriation — but the rules still have enough edges that a single mistake on documentation or tax planning can cost you years. This is the practical framework we walk our NRI buyers through before they sign anything.

Nature of the Property: What NRIs Can and Cannot Buy

Under FEMA, an NRI or OCI can freely buy residential and commercial property in India. The restriction is narrow but important — agricultural land, plantation property and farmhouses are not permitted unless they are inherited. For almost every urban residential purchase (apartments, villas, plots in gated communities, commercial office floors), the FEMA permission is automatic and no RBI approval is required.

Pay attention to the property classification in the sale deed. If the land has an agricultural tag that has not been formally converted, even a fully built apartment sitting on it can create title complications down the line. Ask for the land conversion certificate, layout approval (HMDA or GHMC in Hyderabad) and occupancy certificate in writing before you pay beyond a nominal booking amount.

Funding and bank channels

All payments must flow through normal banking channels — NRE, NRO or FCNR accounts, or direct inward remittance. Cash and traveller’s cheques are not allowed. Most NRI buyers use their NRE account for the down payment because those funds are freely repatriable, and run the loan EMI through the same account. Keep clean, itemised records — they matter when you eventually sell and want to repatriate.

Taxes: TDS, Capital Gains and the Numbers That Matter

Tax treatment is where NRI property purchases most often go wrong. Three items to understand upfront:

TDS on purchase. If an NRI is buying from a resident seller, the buyer deducts 1 percent TDS at the time of payment (for properties above ₹50 lakh). If the seller is also an NRI, the rate jumps sharply — 20 percent (plus surcharge and cess) on long-term capital gains, 30 percent on short-term. The buyer is responsible for deducting and depositing this with a TAN. Miss this and you are personally liable.

Capital gains on sale. Long-term (holding period over 24 months) is taxed at 20 percent with indexation benefit. Short-term is taxed at slab rates. NRIs can claim reinvestment exemptions under Section 54 and 54EC in the same way residents can.

Stamp duty and registration. In Telangana this currently runs around 7.5 percent including registration. Budget this separately from the headline property price because it is paid in cash, not from home loan funds.

Impact of RERA and GST on NRI Real Estate

RERA has been the biggest governance upgrade for NRI buyers. Every project sold off-plan must be registered with the state RERA, carry a unique registration number, disclose its project timeline, funding status and developer track record, and maintain 70 percent of buyer deposits in a separate escrow. For an NRI buying remotely, this is the single most reliable filter before you commit capital. Check the state RERA portal, read the project’s disclosure document carefully, and do not sign if the project is not registered.

GST applies only to under-construction property (currently 5 percent for non-affordable housing, 1 percent for affordable). Ready-to-move property with a completion certificate carries no GST. This can be a 5 percent swing in your total outlay, so factor it in when comparing under-construction and ready-to-move options.

Power of Attorney (PoA) — Get This Right

Most NRI buyers execute a Power of Attorney so a trusted family member in India can sign on their behalf at registration. The mistakes happen in the details. The PoA must be executed on non-judicial stamp paper, notarised and attested by the Indian Consulate or Embassy in your country of residence, and then adjudicated at the relevant Sub-Registrar’s office in India within three months of arriving. Specify the exact scope — buying a specific property, signing the sale deed, taking possession — and avoid open-ended general PoAs.

Name a PoA holder you genuinely trust and would trust with a six or seven figure transaction. Ideally a parent, sibling or long-standing family advocate, not a casual acquaintance. Revoke the PoA formally once the transaction is completed; do not leave it dangling.

Buying in Hyderabad Specifically

Hyderabad has become one of the most NRI-friendly Indian property markets. Dharani, the state’s integrated land records portal, gives you clean title verification that is hard to match elsewhere. Gachibowli, Financial District, Kokapet and the HITEC City belt attract disproportionate NRI interest because of the IT corridor, good schools and direct airport connectivity.

For luxury buyers, the Single Floor Single Apartment format at The Pearl by Auro Realty has become a reference point in the NRI segment. For a broader view on why Hyderabad is currently outperforming, our Hyderabad RE growth breakdown and South India market overview are companion reads. For the Gachibowli corridor specifically, we have a full guide.

Frequently Asked Questions