Buying a House in India as an NRI? Read This First.

Banks like SBI, HDFC, ICICI, and Axis all offer home loans to NRIs. The process looks similar to a resident loan, but the fine print is different. Here's what matters:

Eligibility: You need a valid passport, employment proof from your current country, and an Indian PAN. Most banks require at least 2 years of overseas employment.

Loan amount: Typically 75-80% of property value for NRIs (vs 80-90% for residents). The rest comes from your pocket.

Interest rate: Same as resident rates in most banks. No NRI premium on the interest rate itself.

Repayment: Can be done from your NRE or NRO account. EMI direct debit from NRE is cleanest because it avoids repatriation complications later.

Here's where it gets tricky: the moment you own Indian property, you're exposed to Indian rental income TDS, capital gains TDS on sale, and TDS on the interest component if you rent it out. DTAA can help with some of this, but not all.

Scenario 1. You rent it out: Your tenant (or property manager) must deduct 31.2% TDS on the gross rent and deposit it with the government. DTAA usually doesn't reduce this because most treaties say rental income from immovable property is taxable where the property sits. But you CAN claim deductions in your ITR, municipal taxes, 30% standard deduction, to reduce the effective tax.

Scenario 2. You live in it when visiting: No rental income, no TDS. But you can't claim the home loan interest deduction unless you file an ITR showing the property as self-occupied.

Scenario 3. You sell it: Under Section 195, the buyer must deduct TDS at 12.5% on the full sale value (not just the gain). For properties held less than 24 months, Section 195 applies the rates-in-force (30% + applicable surcharge + 4% cess) for STCG. The default 12.5% on full sale value is brutal for cash flow, on a ₹1 crore sale with a ₹40 lakh gain, the buyer withholds ₹12.5 lakh, but your actual tax on the gain is ₹5 lakh. The ₹7.5 lakh gap sits with the ITD for 9-12 months pending the refund. The fix: apply for a lower TDS certificate (Form 13 under Section 395, formerly Section 197) before the sale closes. The Assessing Officer issues a certificate at the actual-gain rate, dropping deduction from 12.5% on sale price to roughly 5% on sale price.

The golden rule: track everything. Your purchase cost, renovation expenses (with receipts), and all TDS deducted. Note: indexation on property is no longer available for NRIs post-23-July-2024 (Budget 2024). You'll need these records when you eventually sell.

This is where most NRIs get blindsided. You can't just sell your flat and wire the money abroad.

RBI rules: NRIs can repatriate up to $1 million per financial year from NRO accounts (which is where sale proceeds land). For amounts above that, you need RBI approval.

Forms required: Form 15CA (online declaration) + Form 15CB (CA certificate confirming tax compliance). These are mandatory for any outward remittance from NRO.

Tax clearance: You need to show that all taxes on the sale have been paid. TDS by buyer, any additional capital gains tax through ITR.

Pro tip: If you bought the property with NRE funds and can prove it, repatriation of the original purchase amount is unrestricted. It's only the gains and any NRO-funded portion that's subject to the $1M cap.

Banks will ask for a mountain of documents. Keep your purchase agreement, bank statements showing source of funds, and all TDS certificates organized. You'll thank yourself later.