Can an NRI or OCI cardholder buy property in India? What the law allows

At 30 June 2025, people born in India were the largest overseas-born group in Australia for the first time on record, the Australian Bureau of Statistics (ABS) estimated: 971,020 people, just ahead of the 970,950 born in England. For those who are still Indian citizens, and for those who have taken Australian citizenship and hold an Overseas Citizen of India (OCI) card, whether they can buy property in India, and whether the answer changes once the Indian passport is handed in, is a practical question. The answer sits in India’s foreign exchange law, which separates farmland from other property and applies that line to Indian citizens abroad and OCI cardholders alike.

Who the rules cover

The governing text is Chapter IX of the Foreign Exchange Management (Non-debt Instruments) Rules 2019, notified by India’s Ministry of Finance on 17 October 2019 under the Foreign Exchange Management Act 1999 (FEMA). The Reserve Bank of India’s (RBI) consolidated copy of the Rules, updated to 2 September 2026, records amendments made in 2025 and 2026 to other parts of the Rules but none to Chapter IX. The RBI restates the rules in a Master Direction on immovable property, last updated on 1 September 2022, and in a FAQ last updated on 6 April 2023.

The rules define a Non-Resident Indian (NRI) as an individual resident outside India who is a citizen of India, and an OCI as an individual resident outside India who is registered as an OCI cardholder under section 7A of the Citizenship Act 1955. Rule 24, on buying, gifts, inheritance and sale, gives NRIs and OCIs the same permissions in the same words. A document published by India’s Ministry of External Affairs states that OCI cardholders “have also been granted all rights in the economic, financial and education fields in parity with NRIs except, the right to acquisition of agricultural or plantation properties”.

Two details are relevant for Australian readers. First, the OCI definition turns on registration. An Australian citizen of Indian origin who has never registered as an OCI cardholder does not fit it, and so falls outside rule 24. The RBI’s FAQ states that “All other acquisitions/ transfers by foreign nationals will require the prior permission of RBI”. Second, “resident” is FEMA’s own test, built on more than 182 days in India in the preceding financial year and on the purpose of a stay abroad, such as employment or business.

What you can buy, and what you cannot

Rule 24(a) lets an NRI or OCI “acquire immovable property in India other than an agricultural land or farm house or plantation property”. A farm, a plantation and a farmhouse are closed, and the RBI’s Master Direction and FAQ repeat the same three exclusions. The FAQ’s table also lists gifts of “residential/ commercial property” by NRIs and OCIs to residents, NRIs and OCIs.

How an NRI must pay to buy property in India

Under the proviso to rule 24(a), the purchase price must come from one of two places: funds received in India through banking channels as an inward remittance from outside India, or funds held in a non-resident account maintained under FEMA. The second proviso says no payment “shall be made either by traveller’s cheque or by foreign currency notes or by any other mode other than those specifically permitted”. Rule 32 adds that every acquisition or transfer must go through banking channels in India and is subject to applicable Indian taxes, duties and levies.

The RBI’s FAQ on non-resident accounts describes three of them: the NRE account, a rupee account credited with inward remittances from abroad; the NRO account, a rupee account that can also take legitimate dues in India; and the FCNR(B) account, a term deposit in a freely convertible foreign currency. Which one pays for the property matters later, at sale.

Buying with a spouse who is neither NRI nor OCI

Rule 25 covers an NRI or OCI married to someone who lives outside India and is neither. The spouse may acquire one immovable property, other than agricultural land, a farmhouse or plantation property, jointly with the NRI or OCI partner. The same payment rules apply, the marriage must have been registered and have subsisted for a continuous period of not less than two years immediately before the purchase, and the spouse must not otherwise be prohibited from acquiring property in India.

Gifts, and who counts as a relative

An NRI or OCI can receive property other than agricultural land, a farmhouse or plantation property as a gift from a person resident in India, an NRI or an OCI, but rule 24(b) requires that the giver “in any case is a relative”. The rules take the meaning of relative from section 2(77) of the Companies Act 2013: members of a Hindu undivided family, husband and wife, and a prescribed list of father, mother, son, son’s wife, daughter, daughter’s husband, brother and sister, in which father, mother, son, brother and sister include step relations.

Rule 24(d) lets an NRI or OCI transfer any immovable property, farmland included, to a person resident in India. Rule 24(e) lets them transfer property other than agricultural land, a farmhouse or plantation property to another NRI or OCI, and the Master Direction adds that where that transfer is a gift, the recipient must be a relative. “Transfer” here includes sale, exchange, mortgage, gift and loan.

Inheritance, including the family farm

Inheritance is the one exception to the farmland bar. Rule 24(c) lets an NRI or OCI acquire “any immovable property in India” by inheritance, which the RBI’s Master Direction describes as inheritance either from a person resident in India or from a person resident outside India who had acquired the property in accordance with the exchange law in force at the time. Under this rule, an Australian OCI cardholder can inherit a parent’s agricultural land.

Selling it is another matter. Because rule 24(e) excludes agricultural land, farmhouses and plantation property from transfers to NRIs and OCIs, the rules allow inherited farmland to be sold or gifted only to a person resident in India. The RBI’s FAQ table lists sales and gifts of agricultural land to residents only, and the Master Direction states that any transfer not covered by it needs the RBI’s prior permission.

Property bought before leaving India is covered separately. Section 6(5) of FEMA says a person resident outside India may hold, own, transfer or invest in immovable property in India that was acquired when they were resident in India, or inherited from a person who was resident in India.

Taking the money out: the two properties rule

Rule 29(2) allows an authorised dealer bank to let an NRI or OCI repatriate the sale proceeds of non-agricultural property if three conditions are met: the property was acquired in accordance with the exchange law in force at the time; the purchase was paid for in foreign exchange received through banking channels, or from funds held in an FCNR or NRE account; and, “in the case of residential property, the repatriation of sale proceeds is restricted to not more than two such properties”.

Proceeds outside those conditions have a second route. Under the RBI’s Master Direction on remittance of assets, NRIs and persons of Indian origin, a group the RBI says includes OCI cardholders, may remit up to US$1 million per financial year, which the RBI counts from April to March, out of NRO account balances, sale proceeds of assets and assets acquired by inheritance. Anything above that figure in a year needs the RBI’s prior approval. Under an RBI notification dated 18 June 2026, money can also be moved from an NRO account to an NRE account within that limit. The immovable property Master Direction states that a person holding property under section 6(5) who now lives outside India can use this facility.

For an Australian with an OCI card, the rules give the same permissions as an Indian citizen living abroad, and rule 24 allows farmland only by inheritance while the cardholder lives outside India. How a purchase was funded is one of the conditions for repatriating the sale proceeds under rule 29, and while rule 24(a) sets no cap on the number of properties bought, rule 29 limits repatriation of residential sale proceeds to two. This article is general information, not legal or tax advice.