NRIs can buy almost any residential or commercial property in India without asking the RBI first, but agricultural land, plantation property and farmhouses are off limits to purchase entirely. Sell that property later and the tax office does not wait to see if you made a profit: TDS lands on the full sale price unless a lower-deduction certificate is arranged in advance.
The NRI property rules India 2026 starts with the FEMA basics that rarely change: buying a flat, house or office in India needs no prior Reserve Bank of India approval, no cap on how many properties an NRI holds, and no distinction between an NRI and an Overseas Citizen of India for this purpose. What does need attention is everything that happens on either side of that purchase, and several of those mechanics have genuinely changed for 2026.
Agricultural land, plantation property and farmhouses sit outside what an NRI is allowed to buy under the RBI’s own Master Direction, full stop. The only way an NRI comes to own any of these is by inheriting it or receiving it as a gift from a resident relative, and land held from before becoming an NRI can simply be kept. An NRI who inherits agricultural land can hold it indefinitely, lease it out to a local cultivator, or manage it through a power of attorney, but if they choose to sell it, the buyer must be a resident Indian citizen. Another NRI or OCI cannot legally buy it from them.
What is Form 128, and why does an NRI selling property need it before the buyer pays?
When an NRI sells property in India, the buyer is required to deduct TDS on the entire sale price, not just the profit, at roughly 14.95 percent for a long-term holding once surcharge and cess are added. On a property sold for 2 crore rupees with only 10 lakh rupees of actual gain, that means over 29 lakh rupees gets withheld against a tax bill that should be a fraction of that.Form 128, the renumbered successor to the old Form 13 application under the Income-tax Act, 2025, lets the seller apply to the assessing officer in advance for a certificate authorising a lower or nil TDS rate based on the real capital gain, so the buyer deducts a realistic amount instead of the seller’s money sitting with the tax department for a year waiting on a refund.
The deduction itself runs through the same non-resident TDS provision that governs NRO interest, renumbered from the old Section 195 to Section 393 under the Income-tax Act, 2025. Long-term capital gains, for property held more than twenty-four months, are taxed at 12.5 percent plus surcharge and cess, with no indexation benefit added back. Short-term gains on property held less than two years are taxed at the seller’s normal income slab rate instead. Both figures apply whether or not a Form 128 certificate is in place; the certificate changes how much gets withheld up front, not what is ultimately owed.
Getting the sale proceeds out of India runs into the same form renumbering that has reshaped NRO account remittances more broadly this year. What used to be Form 15CA and Form 15CB are now Form 145 and Form 146, filed through India’s e-filing portal with a chartered accountant’s certification, before an authorised dealer bank will process the outward transfer.
Repatriation from an NRO account, which is where property sale proceeds typically land, is capped at 1 million US dollars per financial year, a limit that resets every 1 April regardless of how the money got into the account. With complete documentation, banks generally process the transfer within two to four weeks; missing paperwork can stretch that to two or three months.
A separate friction point is due to disappear from 1 October 2026: resident buyers currently need their own Tax Deduction and Collection Account Number, a TAN, purely to deduct and deposit TDS on a single property purchase from an NRI seller, a registration step that has delayed some sales by a week or two on its own. From that date, buyers will instead be able to use their existing PAN through a prescribed PAN-based challan-cum-statement, the same simplification already used for resident-to-resident property deals under Section 194-IA.
No CBDT notification confirming this change has been located directly; it rests on two independent, named, dated 2026 sources describing the same 1 October effective date and mechanism, flagged here rather than treated as officially gazetted. For NRI sellers, a buyer who no longer has to register for a TAN first is one less reason for a settlement date to slip.
None of this changes what an NRI can and cannot buy in the first place, which is still governed by the same FEMA framework as before. What has changed is what happens at the point of sale and the point of repatriation, and a seller who assumes the old Form 13 and Form 15CA process still applies is filing under a form number the tax department no longer recognises for this financial year onward. Further coverage of NRI finance and property questions is available in the Business section.
NRI property rules India 2026: what sellers need to check first
Can an NRI buy agricultural land in India in 2026?
No. Agricultural land, plantation property and farmhouses cannot be purchased by an NRI under FEMA. The only routes to ownership are inheritance, a gift from a resident relative, or land already held before becoming an NRI.
How much TDS gets deducted when an NRI sells property in India?
Without a lower-deduction certificate, TDS is calculated on the full sale price, at roughly 14.95 percent for long-term holdings once surcharge and cess are added, regardless of the actual profit made.
What replaced Form 13 for NRIs seeking a lower TDS rate on a property sale?
Form 128, under the Income-tax Act, 2025, now serves the same purpose as the old Form 13: an advance application to the assessing officer for a certificate authorising a reduced or nil TDS deduction based on the real capital gain.
Is there a limit on how much an NRI can repatriate from a property sale?
Yes. Repatriation from an NRO account, where sale proceeds are usually credited, is capped at 1 million US dollars per financial year, filed using the new Form 145 and Form 146 in place of the old Form 15CA and Form 15CB.
