Factors NRIs Should Keep in Mind before Purchasing Property in India

According to a survey, Indian real estate had seen an investment of 5 billion dollars in 2014, and by 2018, it rose to 10.2 billion dollars. Due to the rise in popularity of Indian real estate, more and more Non Residential Indians (NRIs) are starting to invest in it. The real estate regulation and development act of 2016 has made it easier for NRIs to buy residential and commercial property in Pune by increasing the transparency in the sector. NRIs are those Indians who went abroad for education and employment, and upon returning to their country they often invest in fixed deposit, properties, and jewellery to convert the dollars into rupees.
In fact, 63% of NRIs said that they prefer to invest in real estate over anything else in India. However, there are a few things NRIs get confused about while investing in real estate.

Who can purchase properties in Pune?

Any NRI holding an Indian passport can buy real estate in Pune, and in case they have a foreign passport, they need to produce their Overseas Citizen of India (OCI) card. Any foreigner who is married to an Indian citizen can jointly own stationary properties in India with their spouse. But if any citizen belonging from the countries of China, Pakistan, Bangladesh, Hong Kong, Macau, Iran, Bhutan, Nepal, Afghanistan, Sri Lanka, or Democratic People’s Republic of Korea wants to buy property in India, they need to seek permission form the Reserve Bank of India.

Investment areas

Before buying residential or commercial property in Pune, NRIs should ask themselves if they are buying it with the intention of using it, or is just an investment for the future? There are plenty of options for end use, as the residential real estate market in Pune has slowed down. The price of houses in the major areas have remained almost unchanged since the past few years. Due to the market being transparent, and investment rules being relaxed, NRIs are attracted to the residential sector.
The commercial property in Pune is a better investment option, since it offers more profits than the residential sector. NRIs get good rental yield from such properties and this has increased the demand for spaces in IT parks, state of the art offices and logistics centres. A decent commercial property can result in a rental yield of about 6-10%, while that of a residential property is only 1.5-3.5%, in comparison.

Legal factors

Every NRI must educate themselves about the Foreign Exchange Act of 1999, also known as FEMA. It declares that Non Residential Indians are Indians by birth. However, some legal factors do come into the play while buying properties in India. The updated Know Your Customer rules require every NRI to submit a photocopy of the passport containing the individual’s address, photo, and date of birth.
Along with the passport, a photocopy of the PAN card must be submitted as well. The NRI also needs to submit a document which displays their overseas address, whether it is a permanent address or just for mailing purposes. NRIs need not seek permission from the Reserve Bank of India before opening an account with a legitimate dealer having the permission to do business with foreign exchange.
The title documents submitted by an NRI needs to have a title certificate, along with a No Dues Certificate. The buyer also needs to acquire the Land and Revenue records for the property he is about to buy, along with the previous title deeds. NRIs do not need to ask RBI for permission for maintaining an NRO account. This account can be used for making foreign transactions.


While buying property in India, NRIs need to hold back the Tax Deducted at Source (TDS) from the amount of money he will pay to the seller. If the value of the property is above 50 lakh rupees, NRIs will have to deduct TDS by 1%. If an NRI is selling a property, then the buyer will deduct TDS from the price of the property, and then the NRI can send the money to their overseas account or NRE account.
For income received via rent, taxation rules are the same for residential Indians and NRIs. The tax deductions that can be availed by resident Indians are available to NRIs as well. The maximum taxation rate is 30% and surcharge will be provided depending upon the net income of the individual.
Any long-term monetary gains from the sale of a property is subject to taxes, at the rate of 20% plus surcharge. For short-term the tax rate is 30% plus suitable surcharge. Any investment in real estate held for more than 2 years, is considered a long-term investment.


As an NRI, you might want to take loans for your purchase, and this shouldn’t be a problem if you have the adequate paperwork. You should get all the necessary paperwork verified by a trusted lawyer before submitting them. If you are buying a jointly-held property, you should clear the title, and if the mortgage for the property was pending, you should get a release from the bank, and ask the seller to provide you with a no-dues certificate. As per RBI rules, you can ask a bank to finance up to 80% of the property value. The remaining amount must come from your own pocket.

Power of attorney

If an NRI is purchasing a property in India that is still under construction, they need to provide another individual with a power of attorney. A lawyer can be consulted for this purpose, to reduce hassle.
The Pune Real Estate market is lucrative and is seeing investments coming in from NRIs who wish to be part of this market. The number of NRIs buying residential and commercial property in Pune is expected to grow in the coming years. Brickfolio, is a leading real estate consultant in Pune. We will be happy to assist you in buying residential or commercial property in Pune.

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