Indian property for UAE NRIs: buying, selling, renting, and repatriating proceeds

Indian property is one of the most common assets UAE NRIs hold — inherited family property, apartments bought before moving, or new purchases made from UAE earnings. Each stage of the property lifecycle — buying, renting, selling, repatriating — has distinct FEMA permissions, tax obligations, and practical mechanics.

This guide covers the complete picture for UAE-based Indian nationals.

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Buying Indian property as a UAE NRI

What you can buy

Under FEMA (Foreign Exchange Management Act), NRIs can purchase:

• Residential property (apartments, houses, plots for residential construction)
• Commercial property (offices, shops)

NRIs cannot purchase without specific RBI approval:

• Agricultural land
• Plantation property
• Farmhouses

There is no limit on the number of properties an NRI can buy, and no RBI approval is needed for residential or commercial purchases.

How to fund the purchase

Indian property purchases by NRIs can be funded through:

1. NRE account funds Transfer AED from your UAE salary to your NRE account in India, then use those funds for the purchase. NRE-funded property is considered as purchased with foreign funds — the principal (original investment) can later be repatriated from the NRE account without the $1M NRO limit restriction.

2. NRO account funds India-sourced income (rental income, dividends, pension) accumulated in NRO can fund property purchases, subject to the USD 1M repatriation limit for the original investment.

3. Home loan in India NRIs can take home loans from Indian banks (HDFC, SBI, ICICI, etc.) for Indian property. Loan repayment must come from NRE/NRO account funds or from India-sourced income. Banks typically lend up to 80% of property value to NRIs with slightly stricter documentation requirements than resident buyers.

4. Inward remittance directly You can wire AED to the seller's account via a direct international transfer — the proceeds must be received through an authorized bank channel. This route requires documentation but bypasses the NRE account step.

Documentation for NRI property purchase

• PAN card (mandatory for all property transactions above ₹50L)
• Passport and UAE visa/Emirates ID (as proof of NRI status)
• NRE/NRO account details for funding
• OCI card if applicable (not mandatory but simplifies some processes)

Power of Attorney for UAE NRIs

If you cannot be present in India for the registration and signing, you can execute a Power of Attorney (PoA) authorizing a trusted person (family member, legal representative) to act on your behalf.

Types of PoA for property:

• General PoA — broad authority for multiple transactions; not recommended for property
• Specific PoA — limited to the specific property transaction; preferred

Execution process from UAE:

1. Draft the PoA (have a lawyer draft it in India and send the draft to you)
2. Sign before a Notary Public in the UAE
3. Get the document attested by the UAE Ministry of Foreign Affairs (MoFA)
4. Get the document attested by the Indian Embassy or Consulate in Abu Dhabi or Dubai
5. Send the original attested PoA to India
6. Your representative gets the PoA adjudicated at the local Sub-Registrar's office before using it

The full attestation process takes 1–2 weeks and costs approximately AED 200–500 depending on notary and embassy fees.

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Renting out Indian property as a UAE NRI

Tax on rental income

Rental income from Indian property is India-sourced income — taxable in India for both residents and NRIs. The UAE has no tax on this income.

How rental income is taxed:

Annual rental income is added to your Indian income and taxed at your slab rate, after a 30% standard deduction for maintenance and repairs (Section 24(a)) and deduction of municipal taxes paid.

For most NRIs with only rental income in India, the effective tax rate is:

• Income up to ₹3L (new regime): 0%
• ₹3L–₹7L: 5%
• ₹7L–₹10L: 10%
• ₹10L–₹12L: 15%
• ₹12L–₹15L: 20%
• Above ₹15L: 30%

After 30% standard deduction, ₹6L annual rent becomes ₹4.2L taxable — taxed at 5% = ₹6,000 total Indian tax. But TDS (see below) may be deducted at much higher rates.

TDS on NRI rental income

If your tenant knows you are an NRI and the annual rent exceeds ₹2.4L, the tenant is required to deduct TDS at 30% under Section 195.

Practical issue: Many tenants are unaware of this obligation, or landlords do not disclose NRI status. If TDS is not deducted and the property is later examined, the liability falls on the tenant (penalties for non-deduction) — but it can complicate matters. For significant rental properties, be transparent with tenants about TDS obligations and file ITR to claim refunds of excess TDS.

NRO account for rental income

Rental income must be credited to your NRO account (it is India-sourced income and cannot go directly to NRE). The NRO account then bears the 30% TDS on interest earned on those funds — a double tax layer for income that was already taxed at the rental income level.

Property management for UAE-based NRIs

UAE-based NRIs managing Indian property remotely commonly use:

• Professional property management firms in major Indian cities (1–2% of annual rent as management fee)
• Family members with a specific PoA for rental agreements and maintenance
• Co-working legal firms for lease drafting and renewals

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Selling Indian property as a UAE NRI

Capital gains tax

Capital gains on Indian property are taxable in India regardless of NRI status.

Holding period determination:

• LTCG: Property held more than 24 months from date of purchase
• STCG: Property held 24 months or less

Tax rates:

Gain type	Tax rate	Notes
LTCG	12.5%	No indexation benefit post-Budget 2024 (July 2024 amendment); flat 12.5% on absolute gain
STCG	Slab rate	Added to total income and taxed at applicable slab (up to 30%)

Note on indexation: Prior to the Union Budget 2024, LTCG on property was taxed at 20% with indexation benefit (adjusting cost basis for inflation using the Cost Inflation Index). The 2024 budget changed this to 12.5% flat without indexation. For properties held since before 2001, a special rule allows using 2001 fair market value as cost basis.

Cost basis for NRI property:

• Original purchase price (in INR)
• Plus: cost of improvement (construction, renovation)
• Plus: brokerage/legal fees at purchase
• Less: brokerage/legal fees at sale (allowed as deduction)

TDS on NRI property sale: the buyer's obligation

When an NRI sells Indian property, the buyer is legally required to deduct TDS before paying the seller under Section 195:

Gain type	TDS rate (including surcharge and cess)
LTCG	20.8% (20% + 4% cess) or higher with surcharge
STCG	31.2% (30% + 4% cess) or higher with surcharge

The key problem: TDS is deducted on the gross sale price, not the capital gain. If you sell a property for ₹1 Cr with a cost basis of ₹80L (gain of ₹20L), the buyer deducts TDS on ₹1 Cr — approximately ₹20.8L — even though your actual tax liability is ₹20L × 12.5% = ₹2.5L.

You have overpaid by ₹18.3L in TDS. You file an ITR to claim the refund — but the refund process can take 6–18 months.

Lower deduction certificate: Section 197

To avoid the over-TDS problem, NRIs can apply to the Income Tax Department for a Certificate under Section 197 (lower or nil TDS deduction certificate) before the sale.

Process:

1. File Form 13 online at the Income Tax Portal (requires PAN login)
2. Provide details of the property, expected sale price, cost basis, and estimated gain
3. The Assessing Officer issues a certificate specifying the applicable TDS rate (typically the actual tax rate on the estimated gain, not 20–30% on gross sale proceeds)
4. Provide this certificate to the buyer — the buyer deducts TDS at the certified lower rate

Timing: Apply at least 4–8 weeks before the expected sale date. Processing typically takes 2–4 weeks.

This is almost always worth doing for NRI property sales — the cash flow advantage (getting the full TDS difference upfront rather than waiting for refund) is significant.

Repatriation of sale proceeds

Step 1: Sale proceeds credited to NRO account (buyer pays to NRO after TDS)

Step 2: Obtain CA certificate (Form 15CA/15CB)

• The CA certifies that all taxes have been paid or provided for
• Form 15CA is the taxpayer's undertaking; Form 15CB is the CA's certificate
• Required for repatriation above USD 5,000 equivalent

Step 3: Submit CA certificate to your Indian bank

Step 4: Bank remits funds to your UAE account

Limit: Up to USD 1 million per financial year from NRO account. If your property sale proceeds exceed this (for example, a ₹5 Cr sale = approximately $600,000 — within the $1M limit), you can repatriate in one year. For very large properties, you may need to spread repatriation over 2 financial years.

NRE-funded property exception: If the property was originally purchased using NRE account funds or foreign remittances, the original principal amount can be repatriated from the NRE account without the $1M NRO limit constraint. This requires documentation of the original funding source.

Capital gains exemption: reinvestment options

NRIs can claim LTCG exemption on property sales by reinvesting in specified instruments within the required timeframe:

Section 54: Reinvest LTCG from one residential property into another residential property in India (within 2 years of sale or 3 years if constructing). Exemption is limited to the amount invested or the LTCG, whichever is lower.

Section 54EC: Invest LTCG (up to ₹50L per financial year) in capital gains bonds — NHAI or REC bonds, with a 5-year lock-in. Must invest within 6 months of sale.

Section 54F: If selling a non-residential asset (land, commercial property) and investing the full net consideration (not just the gain) in a residential property, the LTCG is exempt proportionately.

For UAE NRIs who want to exit Indian property entirely without reinvestment — these exemptions are not relevant, and the full LTCG at 12.5% applies.

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Inherited property: UAE NRI considerations

If you inherit Indian property from a parent or relative, the inheritance itself is not taxable (no estate or inheritance tax in India). The cost basis for future capital gains purposes is:

• The original purchase price paid by the previous owner (not the market value at time of inheritance)
• Or, if the property was purchased before April 1, 2001, the market value as of April 1, 2001 (you can use a registered valuer's certificate)

The holding period for LTCG also includes the previous owner's holding period — so a property held by a parent for 20 years and inherited by a UAE NRI qualifies for LTCG treatment immediately.

For inherited property with multiple heirs (common in Indian joint families), all heirs must agree to sell and all must file separate ITRs reporting their share of the capital gain.

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Practical property checklist for UAE NRIs

Before buying:

• Confirm NRI status under FEMA (182+ days outside India in prior year)
• Open NRE account for property funding (to preserve repatriation rights)
• Get PAN card if not already held
• Execute specific PoA if unable to be present for registration
• Get property title search done by a local lawyer

While renting:

• Open NRO account for rental income credits
• Brief tenants on TDS obligation (Section 195, 30% for NRI landlord)
• File ITR-2 annually to report rental income and claim TDS refund
• Keep maintenance records for 30% standard deduction

Before selling:

• Apply for Section 197 lower deduction certificate (4–8 weeks ahead)
• Calculate capital gains and estimated tax liability
• Decide on reinvestment exemption (Section 54 or 54EC) if applicable
• Arrange CA for Form 15CB/15CA for repatriation
• Confirm buyer's TDS obligation and rate to avoid disputes

After sale:

• File ITR-2 in the year of sale to report LTCG and claim TDS refund
• Initiate NRO repatriation with Form 15CA/15CB (up to $1M/year)
• For NRE-funded properties, document the NRE funding source for higher repatriation

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Related reading

• NRE and NRO accounts for UAE NRIs: complete guide
• India-UAE DTAA: how the double tax treaty works
• Indian ITR filing for UAE NRIs: when and how to file
• Repatriating money from Indian property to UAE
• UAE NRI returning to India: the complete financial transition guide