Yes, an OCI can buy property in India, with one clear boundary: any residential or commercial property is fair game and there is no cap on how many you own, but agricultural land, plantation property, and farmhouses cannot be purchased directly. The permission sits in Rule 24 of the Foreign Exchange Management (Non-Debt Instrument) Rules, 2019, administered by the Reserve Bank of India. What takes more planning than the permission itself is everything around it: how you pay, how you’re taxed, and how you get the proceeds out of India when you sell.
What You Can Buy and What’s Off Limits
An OCI cardholder can purchase apartments, independent houses, plots for building a home, office space, retail shops, or warehouses. Personal use or investment, one property or twenty — the rules don’t distinguish.
The prohibited categories are agricultural land, plantation property, and farmhouses. Price and intended use don’t change the answer. A proposal that requires acquiring agricultural land would need specific RBI approval in consultation with the central government, and approval is rarely granted.
The recurring question is whether land that was once agricultural but has been converted to residential or commercial use is still restricted. The answer depends on the land’s current revenue classification, not its history. If a state revenue authority has formally reclassified the parcel as residential or commercial, it falls into the permitted category. If the land records still show it as agricultural, it remains off-limits even if nothing has grown there in decades. Check the current classification in the local revenue records before signing anything.
Gifts and Inheritance
Beyond a straight purchase, an OCI can also acquire Indian property by gift or by inheritance, and each route has its own rules.
A gift of residential or commercial property is allowed if the donor is a resident Indian, an NRI, or another OCI, and if the donor qualifies as a “relative” under the Companies Act, 2013 definition. That covers a spouse, parents, children, siblings, a son’s spouse, and a daughter’s spouse.
Inheritance is the broadest route. An OCI can inherit any type of immovable property in India, including agricultural land, plantation property, and farmhouses, from a person resident in India or from someone outside India who acquired the property lawfully under Indian foreign exchange rules. Inheritance is the only lawful way an OCI ends up holding farmland or a farmhouse in India. You can keep what you inherit; selling it and moving the money abroad follows the repatriation rules below.
Buying Jointly With a Foreign-Passport Spouse
If your spouse holds neither OCI nor NRI status, they cannot buy Indian property on their own, but Rule 25 of the NDI Rules lets them jointly acquire one immovable property with you (other than agricultural land, a farmhouse, or a plantation). One property, not more. Any additional properties have to be in the OCI spouse’s name alone.
Payment Channels and Paperwork
All payments must move through authorized banking channels. You cannot hand foreign currency directly to a seller. The accepted routes are:
- Inward remittance wired from abroad through normal banking channels.
- Funds from an NRE (Non-Resident External) or FCNR(B) (Foreign Currency Non-Resident) account with an Indian bank. Balances in these accounts are freely repatriable, which matters when you eventually sell.
- Funds from an NRO (Non-Resident Ordinary) rupee account, which is subject to repatriation limits and tax clearance.
A PAN card is mandatory. You need it to register the sale deed, to handle TDS, and to file Indian tax returns on rental income or capital gains. If you don’t have one yet, apply through the NSDL or UTIITSL portals before you start shopping.
One useful simplification: OCIs buying residential or commercial property under the general permission do not need to file any post-purchase declaration with the RBI. Form IPI, which applies to foreign businesses acquiring Indian property, specifically excludes persons of Indian origin buying under general permission.
Home Loans From Indian Banks
OCIs are eligible for home loans from Indian banks and housing finance companies. NRI/OCI home loan rates typically start around 7% to 10% per annum depending on the lender, the loan amount, and your credit profile.
The RBI caps the loan-to-value ratio by loan size:
- Up to ₹30 lakh: up to 90% of property value.
- ₹30 lakh to ₹75 lakh: up to 80%.
- Above ₹75 lakh: up to 75%.
Tenures for NRI/OCI borrowers run up to 20 years on paper, though many lenders cap them at 11 to 15 years in practice. Repayment must come from your NRE, NRO, or FCNR account. You cannot repay directly in foreign currency. Expect to submit your OCI card, passport, overseas income proof, and Indian bank statements.
Stamp Duty and Registration
Stamp duty and registration fees are set by each state, so what you pay depends on where you buy. Stamp duty ranges from roughly 2% to 10% across states, with most falling in the 5% to 7% band. Registration is typically another 1% on top. Several states offer a discount of 1% to 2% for female buyers.
OCIs pay the same rates as resident Indian buyers. There is no separate surcharge. On a ₹1 crore property, stamp duty and registration together can easily run ₹6 to ₹8 lakh depending on the state, so budget for this early.
Indian Tax on Rental Income and Sale
Rental Income
Rental income from Indian property is taxable in India. Your tenant or property manager must deduct TDS before paying you, and you file an Indian income tax return to reconcile the amount and claim any refund. Interest paid on a home loan is deductible against rental income under Section 24(b), with no upper limit for a rented-out property. The applicable form for a non-resident earning rental income is ITR-2, or ITR-3 if you also have business income.
Capital Gains When You Sell
Profit on the sale of Indian property is taxed as capital gains. Holding for 24 months or less is short-term, taxed at your applicable slab rates. Holding for more than 24 months is long-term, taxed at a preferential rate. Recent budgets have adjusted the long-term rate and the availability of indexation (an inflation adjustment to your purchase price), so confirm the current position with a tax advisor before you sell.
The buyer must deduct TDS under Section 195 of the Income Tax Act when purchasing from a non-resident seller. The rate tracks the applicable capital gains rate rather than the flat 1% that applies to purchases from resident sellers, and it is calculated on the gross sale price, not the actual gain. That often results in over-withholding, which you recover by filing a return.
Two exemptions are commonly used to reduce or eliminate capital gains tax: reinvestment in another residential property under Section 54, and investment in specified capital gains bonds under Section 54EC. Both carry holding-period requirements, investment deadlines, and monetary caps that should be mapped out before the sale closes.
US Tax and FBAR/FATCA for US-Based OCIs
If you are a US citizen or resident, the US taxes your worldwide income, so Indian rental income and capital gains show up on your US return as well. The US-India tax treaty prevents double taxation by letting you claim a foreign tax credit for income taxes paid to India.
The property itself is not reportable on an FBAR (FinCEN Form 114), and it is not a “specified foreign financial asset” for Form 8938. Your Indian bank accounts are. If the aggregate value of all your foreign financial accounts exceeds $10,000 at any point in the year, you must file an FBAR. Form 8938 has higher thresholds that vary by filing status and whether you live in the US or abroad, starting at $50,000 for single US-resident filers on the last day of the year. Filing your 1040 does not cover your FBAR obligation, and the penalties for missing either form are steep.
Getting the Money Out After You Sell
Repatriation is where most OCIs run into friction. The rules depend on how you funded the purchase and what type of property you sold.
If you bought the property with funds remitted from abroad or from an NRE or FCNR(B) account, you can repatriate up to the amount of foreign exchange you originally brought in. Anything above that goes into your NRO account and follows the NRO rules. Repatriation of residential sale proceeds under the general permission is capped at two properties.
If you bought the property with rupee funds from an NRO account or other rupee sources, sale proceeds can only be repatriated after a minimum holding period, generally 10 years. This lock-in catches people off guard.
Sale proceeds from inherited property, including the agricultural land, farmhouses, and plantations you could not have purchased directly, can be repatriated up to USD 1 million per financial year through your NRO account after taxes are paid. Anything above that in a single year needs specific RBI approval through your authorized dealer bank.
All remittances from an NRO account are subject to a combined USD 1 million cap per financial year, covering sale proceeds, rental income, inheritance, and any other funds. The remittance requires tax clearance: Form 15CA is a self-declaration filed online on the Income Tax Department portal, and if the remittance exceeds ₹5 lakh in a financial year, you also need a Chartered Accountant’s certificate in Form 15CB confirming that taxes have been properly paid or deducted.
Managing the Transaction From Abroad
Most OCIs handle Indian property transactions through a Power of Attorney granted to someone they trust in India. The POA lets your representative sign sale deeds, collect rent, pay property taxes, and operate bank accounts on your behalf.
For OCIs based in the US, the Indian Embassy in Washington DC confirms that OCI cardholders do not need to apostille their POA. The process mirrors what Indian citizens follow: sign in the presence of two witnesses who are not immediate family members, get it notarized, and submit it to the Indian consulate for attestation. Once attested, it can be used in India for property transactions.
Use a specific POA rather than a general one. Limit the agent’s powers to defined transactions, name the specific property, and set an expiration date. Disputes over POA misuse are among the most common property litigation issues involving non-resident Indians, so have an Indian lawyer draft or review the document before you sign.