Can NRIs buy property in India using NRE funds? Key rules explained

With increasing global mobility, many non-resident Indians (NRIs) and foreign citizens of Indian origin often look to invest in residential property in India using funds held in their NRE accounts.

However, such transactions are governed by specific provisions under the Foreign Exchange Management Act (FEMA) and related tax laws. It is important to understand the applicable rules, permissible investments, and compliance requirements before proceeding with any property purchase in India.

Today's Q&A explains such details in response to a query by a reader.

So your son and daughter-in-law do not need to obtain any permission for acquiring a residential house property in India. So no formalities are required to be complied with under the FEMA law for acquiring a residential house in India.

In case the purchase price of the property exceeds 50 lakhs, your son and daughter will have to deduct tax at source @ 1% of the respective share in the purchase cost. Since the tax can be paid using the PAN of the seller and buyer, your son and daughter-in-law will have to obtain a PAN number in case they do not have one.

Please note that they are not mandatorily required to file an Income Tax Return (ITR) here in India just because they have a PAN, unless they are otherwise required to file an ITR here in India.