As an NRI, if you've ever considered investing in India's real estate market, you're not alone—many others share the same curiosity and concerns. Questions about taxation policies, funding options, legal procedures and eligibility requirements often create hesitation. But here's the good news: the Indian real estate market is not only booming; it’s evolving into one of the world’s most promising investment destinations.
This blog aims to simplify the complex processes and provide you with clear, reliable insights to help turn your investment dreams into a confident and informed decision.
In fact, by 2025, the sector is projected to grow into a $650 billion industry, and NRIs are expected to play an important role in driving this growth. With relaxed investment norms, a wide range of property options and an increasing push toward transparency and digital transactions, now is an ideal time to explore opportunities.
Types of properties in NRI’s can invest
NRIs have the freedom to invest across a diverse Indian property – be it residential apartments, commercial spaces, luxury villas, plots or land.
With the Indian real estate market witnessing first-time growth, these investments are not just assets – they're the opportunities of exceptional returns and long-term security.
- Land for future development opportunities
NRI’s can also invest in land, as it is beneficial, the value of land significantly increases, as demand is high but supply is limited. This makes land a high paying asset not only for Indians but NRI’s also. One of the other reasons due to which land becomes a preferable option for NRI’s is land is low maintenance, as compare to residential and commercial properties, as they don’t live in India, to monitor or maintain properties and then land comes to their saviour which makes their investment secure and high paying and low maintenance at the same time. - Commercial land or property and it’s return
Investing in commercial land or property is a smart choice for NRIs because it usually offers higher returns than residential properties. The rent from commercial spaces—like office buildings or retail shops—is generally higher, which means you can start earning good rental income quickly. This income can either help you recover your investment faster or serve as a steady second source of income. With India’s fast-growing economy, the demand for commercial spaces is rising, making this a low-risk and rewarding investment. On average, commercial properties offer a return of 6% to 12%, or even more. Plus, the time it takes to recover your investment (payback period) is usually shorter with commercial land. - Residential Properties and it’s return
Residential properties like apartments, villas and community homes become the popular options in Indian real estate among NRI’s, due to their high rental especially when it is in metropolitan cities like in Mumbai, project’s like Riyasat Bliss and The Riyasat Sankalp and income which reduces the payback period (Investment recovery). NRI investment in Indian real estate now includes urban areas, where housing demand continues to rise.
NRI investment: Legal aspect and eligibility
Foreign Exchange Management Act (FEMA)
Government of India enacted Foreign Exchange Management Act (FEMA) in 1999 to implement rules and regulations for the smooth transaction across international borders.
As NRI is not allowed to open a Resident Saving Account in India, so in that case if an NRI wants to invest in real estate, he/she needs to open an NRO account to conduct a transaction, in that case an NRI required to open NRI account in India.
Some key points to remember
- NRO account is used to collect their income earned in India like rent, selling of property etc. these NRO accounts are Partially Transferable back to investor’s or NRI’s country of residence.
- As per the guideline given by FEMA, NRI’s cannot purchase agricultural land, plantation and farmhouses.
- Two or more than two NRI’s can own property with each other but they are not allowed to do so with any Indian residence.
- NRI’s needs to follow state-specific real estate laws and regulations and it also include registration requirements and stamp duty payments.
RERA Compliance
As per the Know Your Customer (KYC) regulations, an NRI requires to present a copy of their passport and the pages which includes their photo, name, date as well as their address and Permanent Account Number (PAN). For NRI’s their international address is also requires either the permanent address or correspondence address outside of India to invest in Indian real estate.
Financing option available for NRI’s\
Home Loans for NRIs: To Financing Your Indian Property Dreams
Indian banks and other financial institutions offer a wide range of home loan options tailored for NRIs. With competitive interest rates, flexible repayment tenures and supportive lending norms, owning a home in India is now more accessible than ever.
Eligibility for NRI Home Loans
To avail of a home loan in India, NRIs needs to fulfil specific eligibility criteria, which may slightly vary across financial institutions. Generally, applicants must:
· Be employed or self-employed in abroad for at least 1–2 years with a stable source of income.
· Fall within the age limits (23 years to 60 years) specified by the lender.
· Ensure that the property to be purchased is located in the areas approved by the bank.
Since policies can differ from one bank to another, it is advisable for NRIs to consult individual lenders to explore more customized options for loan that suit their financial profile and investment goals.
Types of Home Loans Available for NRIs
1. Home Purchase Loan: NRIs are able to secure loans to buy ready-to-move-in houses, apartments, or villas from approved builders or individual sellers.
2. Plot or Land Loan: For those planning to build their dream home in the future, loans are available for purchasing residential plots for approved layouts.
3. Composite Home Loan: This loan covers both the cost of plot purchase and the following construction. Typically, lenders finance up to 60% of the combined cost.
4. Second Home Loan: Investment in a second property is also permitted, irrespective of whether the first was purchased through a loan. This enables NRIs to diversify their real estate portfolio in India.
Documents Required for NRI Home Loan Application
To ensure a smooth application process, NRIs requires to submit the following documents:
· Proof of Identity: Passport, driving licence, PAN card, green card or Aadhaar card.
· Proof of Address: Aadhaar card, driving licence, voter ID, Indian government-issued ID, electricity or gas bill, or property tax receipt.
· Proof of Birth Date: PAN card, Passport, or Aadhaar card.
· Proof of Signature: Signature verification through passport, PAN card or bank statements.
· Duly Filled Loan Application: The loan application must be correctly filled and signed, accompanied by recent passport-sized photographs of all applicants.
· Processing Fees & Background Checks: Applicable processing fees and verification procedures must be completed.
· Signed Documentation: All original and/or photocopied documents must be personally signed by the applicant(s).
Additional Security: Banks may require additional security such as an equitable mortgage on the property, a guarantor or a life insurance policy (e.g., LIC) as collateral.
Taxation: Implication on NRIs
If the purchased property, bought from a resident than TDS @1% will be deducted, only when if the amount of sale exceeds Rs. 50 lakhs. If purchased property is bought from a non-resident, then TDS will be deducted @20% in the case of LTCG and in the scenario of STCG it will be 20%.
TDS on Property Sale by NRIs: What You Need to Know
When a Non-Resident Indian (NRI) sells property in India, Tax Deducted at Source (TDS) is applicable on the basis of the duration of property ownership and the transaction date. Here's how it works:
· For property sales before July 23, 2024, a 20% TDS is applicable after considering indexation benefits (used to adjust the purchase price for inflation).
· For property sales on or after July 23, 2024, the TDS rate is 12.5% without indexation benefits.
· If the property is sold within 2 years of purchase, it is considered a short-term capital gain, and a higher TDS of 30% will be applied, regardless of the sale date.
With the right knowledge and strategy, NRIs can secure strong returns and connect with India's growth story. 2025 is a great time to explore and invest in Indian real estate.