NRI Property Purchase in Bangalore: A Legal Compliance Checklist

An NRI buying property in Bangalore is doing two transactions, not one. The first is the property purchase under Karnataka law — title verification, sale deed, registration, Khata transfer. The second is a foreign-exchange transaction under FEMA and RBI rules — funding the purchase, banking compliance, repatriation eligibility, tax compliance. Most NRI clients we work with are focused on the first and almost unaware of the second. By the time the bank flags an inward remittance issue, or the income tax department raises a query, the deal has already closed.

Below is the compliance map we walk an NRI client through, in the order it actually matters.

1. Who is allowed to buy what

Under FEMA and the Foreign Exchange Management (Non-debt Instruments) Rules, 2019, an NRI or OCI cardholder can freely purchase residential and commercial property in India. The two clear restrictions are:

• Agricultural land, plantation property and farmhouses cannot be purchased — they can only be inherited or received by gift from a resident Indian relative
• Persons who are citizens of certain neighbouring countries (Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, Bhutan, Hong Kong, Macau) need RBI permission even to acquire residential property

On the Bangalore outskirts, what looks like a 'residential plot' may still be agricultural in revenue records if DC conversion has not happened. An NRI buyer who pays for unconverted land has, in effect, paid for agricultural land — which she is not entitled to hold. Verify the conversion order and the corresponding RTC mutation before remitting funds.

2. Funding routes — NRO, NRE, FCNR

The purchase must be funded through one of three routes: inward remittance through normal banking channels, debit to an NRE or FCNR account, or debit to an NRO account. Cash payment to the seller is not permitted under FEMA, and any cheque or wire from a foreign account that is not routed through an NRI bank account creates a documentation gap that surfaces at repatriation.

The funding route also affects repatriation. Funds debited from an NRE or FCNR account when buying give a stronger repatriation profile when selling. Funds debited from an NRO account are subject to tighter limits — currently up to USD 1 million per financial year, including sale proceeds — and require a Form 15CA / 15CB filing.

3. Title verification — same as residents, only stricter

The 30-year chain of title, EC, Khata, tax receipts, sanctioned plan, OC and litigation search are not optional for NRI buyers. The reason to be stricter is simple: an NRI cannot easily run to the Sub-Registrar or the BBMP office to chase a missing document next month. Everything must be confirmed before consideration moves.

4. Registering through Power of Attorney

Most NRI buyers cannot attend the Sub-Registrar in person. Registration is therefore through a GPA executed in favour of a trusted relative or lawyer in India. The GPA must be:

• Executed before the Indian consulate or embassy in the country of residence, or before a foreign notary and then apostilled or legalised under the Hague Apostille Convention
• Adjudicated and stamped in Karnataka under Section 18 of the Indian Stamp Act within three months of receipt in India
• Specific in scope — limited to the property being purchased, with authority to execute the sale deed, register it, pay stamp duty and registration fee, and apply for Khata transfer
• Carrying the principal's photograph and signature attested by the consular officer

5. PAN, TDS and the seller-side withholding

Where the seller is an NRI, the buyer is required to deduct tax at source under Section 195 of the Income Tax Act on the entire sale consideration — not just on capital gains. The applicable rate is in the range of 20 to 30 percent depending on holding period and surcharge. Buyers regularly miss this and the demand surfaces years later with interest. Where the seller is a resident, TDS at 1 percent under Section 194-IA applies on consideration above the threshold.

An NRI buyer must hold a PAN and an Indian bank account before the sale deed is registered. A TAN is required where she becomes the deductor on a future resale to another NRI.

6. Stamp duty and registration in Karnataka

Stamp duty in Karnataka is a function of the property value and the location, with concessions for women buyers in some categories. Registration fee is separate. There is no NRI surcharge — the rates are the same as for resident buyers. Stamp duty is paid online through Khajane II or through stamp papers from authorised vendors. The challan reference must be quoted on the sale deed.

7. Khata, mutation and post-registration filings

Registration completes the transfer in law, but the Khata must be transferred to the NRI buyer's name through BBMP or the panchayat. This requires a formal application with the registered sale deed, the latest tax receipts, identity proofs and an indemnity bond. Where the buyer is not in Bangalore, this is also handled through the GPA holder.

8. Repatriation on future sale

On a future sale of the Bangalore property, the NRI seller can repatriate sale proceeds subject to:

• Property having been acquired in compliance with FEMA
• Repatriation of original cost limited to the equivalent of foreign exchange brought in for the purchase, for properties acquired through NRE / FCNR funding
• Capital gains repatriation through NRO account, subject to the USD 1 million annual limit
• Form 15CA / 15CB filings and bank certification
• TDS by the buyer at the time of sale

9. Common traps

• Sending money from a foreign bank without it touching an Indian banking channel — creates documentation that is unfavourable at repatriation
• Buying a 'farmhouse plot' that is in fact agricultural land — outright prohibited under FEMA for NRIs
• Using a single GPA for multiple unrelated transactions — risks misuse and is harder to revoke cleanly
• Failing to file Form 15CA / 15CB at repatriation — the bank refuses to remit and the matter escalates

If you are an NRI evaluating a Bangalore property — or a family member helping one — send the property documents and the funding plan to us on WhatsApp at +91 63634 69138. We will set out the title position, the FEMA route and the tax exposure in a single written note before you commit.