Listen to this article
It is not that complicated for Non-Resident Indians (NRI) to buy or sell immovable property in India and remittance of sale proceeds, but there are certain rules and regulations to be followed during such transactions.
The Reserve Bank of India governs them and they fall under the purview of the Foreign Exchange Management Act (FEMA).
In this article we will cover the rules regarding purchase and sale of property by NRIs and repatriation of sale proceeds respectively under separate headings.
Purchase of Property by NRIs
An NRI or a Person of Indian Origin (PIO) is legally entitled to buy residential and commercial properties in India without prior permission from RBI and there is no restriction on the number of immovable properties they can buy. To comply with RBI guidelines, the payment usually comes from NRE, NRO or FCNR accounts, which also determine whether the funds will be considered repatriable or non-repatriable.
NRIs and PIOs can also legally inherit property from a person resident in India and can hold it.
They cannot buy agricultural land, plantation property or farm house.
However, they can inherit such property from a person resident of India and can hold it.
Sale of Property by NRIs
An NRI can sell their residential or commercial property in India that they have bought or inherited to a person resident in India, NRI or a PIO.
However, in case of selling agricultural land, plantation property or farm house, the property must be sold to a person who is a resident in India.
After the selling comes the repatriation of sale proceeds to the country of residence.
And here you have to follow certain RBI guidelines under FEMA to ensure smooth compliance.
And here you have to follow certain guidelines laid down by RBI under FEMA.
Meaning of Repatriable and Non-Repatriable Transactions
When it comes to property sales in India, NRIs often hear the terms “repatriable” and “non-repatriable” funds.
But what do they really mean?
- Repatriable Transactions:
These are transactions where the sale proceeds can be freely sent (remitted) abroad. Usually, this is possible if the property was purchased using funds from an NRE account or foreign currency inward remittance. Such funds are considered “repatriable” under FEMA and RBI guidelines, meaning NRIs can transfer them back without restrictions (subject to documentation and tax compliance). - Non-Repatriable Transactions:
These refer to cases where the funds cannot be sent abroad freely. For instance, if the property was bought using money from an NRO account or income earned in India, then the sale proceeds are non-repatriable beyond the limit of USD 1 million per financial year. In such cases, funds can still be used within India or partially repatriated after following NRO repatriation rules and obtaining tax clearance certificates.
Understanding this distinction is crucial because it impacts how easily you can send your money abroad after a property sale.
Before starting the process of repatriation of funds from India, it’s wise to check whether your property transaction falls under the repatriable or non-repatriable category.
Repatriation of sale proceeds of the property by NRIs, bought as a resident of India
If you are selling the property bought before moving abroad that is while you were a resident of India, then sale proceeds must be credited to the NRO account.
You are entitled to repatriate up to USD 1 million including all other capital transactions per financial year (April-March), given you have paid all your tax dues.
Repatriation is restricted to sale of two residential properties only.
You can do this repatriation if you held the property for at least 10 years.
If you have kept the property for less than 10 years, you can’t repatriate the money immediately.
You need to keep the money in your NRO account till it completes 10-year period and then you can transfer.
For example, you are selling a property after holding it for 8 years.
Then you need to keep the sale proceeds in NRO account for 2 years.
After this 2-year period you can repatriate.
This process clearly highlights the difference between repatriable and non-repatriable balances, since funds in the NRO account are mostly non-repatriable except for this limited window provided by RBI rules.
Repatriation of sale proceeds of the property by NRIs bought as a Non-resident of India
The sale proceeds of the property purchased after you become an NRI can be remitted outside India only after certain conditions are met:
The property must be purchased in compliance with the foreign exchange laws prevalent at the time of the purchase.
The repatriation cannot exceed the amount of foreign exchange remitted by the NRI to India via normal banking channels for the purchase of the said property.
The remittance cannot exceed the funds paid through Foreign Currency Non Resident (FCNR) Account in buying the property.
The repatriation cannot exceed the amount of loan repayment made using foreign inward remittance or debit to Non Resident External (NRE) or FCNR accounts.
The remittance cannot exceed the amount paid through NRE account at the time of purchase.
In all cases, the amount of sale proceeds must be credited to NRO account and only then up to USD 1 million per financial year can be repatriated.
Such repatriation is allowed for only two properties.
Waiting for 10 years to complete for repatriation’ doesn’t apply for properties bought by NRIs from their foreign money.
This is why NRE account repatriation rules in India are considered more flexible compared to NRO accounts
‘Waiting for 10 years to complete for repatriation’ doesn’t apply for properties bought buy NRIs from their foreign money.
Repatriation of sale proceeds of inherited property by NRIs
NRIs or PIOs are allowed to repatriate the sale proceeds of immovable property inherited from a person resident in India given they produce documentary evidence in support of their inheritance and necessary tax clearance certificates from the Income-Tax authority.
The amount should not exceed USD 1 million per financial year.
This comes under RBI guidelines for remittance of sale proceeds of inherited property and is one of the most common queries related to repatriation from India.
Taxation on sale of property by NRIs
If NRIs sell the property after three years from date of purchase, they will incur long term capital gains of 20%.
The gains are calculated as difference between indexed cost of purchase and sale value.
Indexed cost of purchase is the cost of purchase adjusted to inflation.
In case of inherited property, the date and cost of purchase for the purpose of calculating the period of holding and cost of purchase is taken to be the date and cost to original owner.
As per laws, NRIs are subject to a TDS of 20%.
If they sell the property within three years from the date of purchase, they are liable for short term capital gains of a TDS of 30% irrespective of tax slab.
Short term capital gains are calculated as difference between the sale value and cost of purchase.
No indexation benefit is applicable on short term capital gains.
Here, tax repatriation rules come into play because only after paying applicable capital gains tax can the sale proceeds be transferred abroad under RBI’s limits.
Tax Exemption on sale of Property by NRIs
Definitely, NRIs are eligible for tax exemption in certain instance.
If they sell their property after three years of purchase and reinvest the sale proceeds into another residential property within two years of sale, gains will be exempt to the extent of the cost of new property.
Another instance of exemption is investment in capital gain bonds.
If NRIs sell their property after three years of purchase and reinvest the proceeds in bonds of National Highways Authority of India and Rural Electrification Corp. of India within six months of sale, they will be exempt from paying capital gains tax.
The bonds are going to be locked in for a period of three years.
NRIs should also note that while these exemptions reduce their tax liability, the repatriation of sale proceeds of immovable property by NRIs will still require tax clearance certificates under RBI and FEMA rules.
The above mentioned facts are to illustrate the due procedure involved with purchase and sale of property by NRIs and repatriation of sale proceeds.
Since taxation and repatriation of funds from India can get complex, especially when dealing with NRO repatriation limits and tax repatriation rules, consulting a professional ensures compliance and avoids penalties.
It is advisable to consult a professional to look into finer details of such transactions.
Buying a property could be your dream. To achieve all your financial dreams an easy way out is to create a workable financial plan.
If you are looking out to create a financial plan for yourself, then you may want to check our financial planning process.
A complete financial plan not only covers property transactions but also guides you on effective investment planning, holistic financial planning, and strategies to handle cross-border remittances like repatriation from India.
If you want to check our own distinctive complete and comprehensive financial planning process will be suitable to you or not, then you may register for
If you have any comments or questions, write them in the comment box below.
Or are you interested in creating a Comprehensive Financial Plan for your financial goals?
Skip the queue by registering for your 30 Minute FREE Financial Plan Consultation. Click the ‘Book Now’ button below.
Thanks for the above useful information.
Could you also please tell me that if the NRI bought the property in joint names with hi wife who is a resident and held jointly. He now wants to sell the property but his status is continued to be Non Resident and the wife’s status continued to be Resident all along. Still the TDS of 20% is applicable?
Dear Ajit Kumar,
Only to the extent of your(NRI) co-ownership, 20% TDS is applicable. As your wife is a resident, for her co-ownership 20% TDS is not applicable.
You have noted some νery іnteresting pоints!
Thank you for the post.
Thankyou.