As an NRI or a foreign investor who is intending to invest in the real estate property in Gurugram, you should be knowledgeable of the legal regulations that would govern the investment. This consists of regulations according to foreign exchange management act (FEMA), property rights ownership, repatriation policy and tax implications. Gurugram is among the leading commercial and residential centers in India and thus promising real estate investments are available, however, foreign investments are subject to certain regulatory provisions.
Who Is Allowed to Invest in Real Estate in Gurugram?
As per Indian law:
- Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs) are allowed to invest in both residential and commercial properties in Gurugram.
- Foreign nationals of non-Indian origin are not permitted to buy real estate in India unless they receive prior permission from the Reserve Bank of India (RBI).
- Agricultural land, farmhouses, and plantation property cannot be purchased by NRIs or foreign nationals without RBI approval.
This implies that though NRIs and OCIs can purchase flats, houses and office spaces, it’s not possible to purchase land with agricultural/farming usage.
What Does FEMA Say About Foreign Investment in Real Estate?
Foreign Exchange Management Act (FEMA), 1999 governs foreign investments in India including the real estate. In case you happen to be an NRI or an OCI:
- You do not need RBI approval to purchase residential or commercial property in Gurugram.
- The payment for the purchase must be made in Indian Rupees through:
- Inward remittance from overseas
- Funds held in NRE (Non-Resident External), NRO (Non-Resident Ordinary), or FCNR (Foreign Currency Non-Resident) bank accounts
All the transactions should be done via authorized banking channel. Pavement payments are forbidden.
Can Foreign Investors Repatriate Funds from Indian Property?
Yes, NRIs and OCIs can repatriate the sale proceeds of up to two residential properties in India under FEMA guidelines.
Conditions for Repatriation:
- The property must have been purchased using foreign funds sent via banking channels.
- Funds must be routed through NRE or FCNR accounts.
- Repatriation is capped at USD 1 million per financial year, including all assets and income transfers.
- All applicable taxes must be paid before repatriation.
- If the property was acquired from Indian funds (via NRO account), only the rental income or interest may be repatriated, and even that is subject to RBI limits.
Is Power of Attorney (PoA) Required for NRIs?
Yes, quite a number of NRIs transact in Gurugram real estate using a registered Power of Attorney when they are not actually on the ground in India.
To be legally valid:
- The PoA must be executed abroad and attested by the Indian Embassy or Consulate.
- It should be registered in India for property transactions like purchase, sale, or registration.
PoA is used widely and has to be specific to what is permitted e.g. signing sales agreements, or presenting to the sub-registrar.
What Taxes Apply to NRIs Buying or Selling Property in Gurugram?
1. Rental Income
- Taxable under “Income from House Property”
- Subject to 30% TDS if paid to an NRI
- NRIs can claim:
- 30% standard deduction
- Municipal taxes paid
- Interest on home loan under Section 24
2. Capital Gains Tax
- Short-Term Capital Gains (STCG): If the property is sold within 2 years of purchase, taxed at 30%
- Long-Term Capital Gains (LTCG): If sold after 2 years, taxed at 20% with indexation benefits
3. TDS Obligations
- The buyer must deduct:
- TDS @ 20% on LTCG
- TDS @ 30% on STCG
- The buyer must also file Form 15CA/15CB when remitting funds to the NRI seller.
4. Double Taxation Relief
- India has signed DTAA (Double Taxation Avoidance Agreements) with countries like the US, UK, UAE, Canada, etc.
- NRIs can claim tax credits or exemptions under DTAA to avoid being taxed twice.
Are NRIs Protected Under Indian Real Estate Laws?
Yes. Under the Real Estate (Regulation and Development) Act (RERA), NRIs and OCIs have the same consumer protection rights as resident Indian buyers. In Gurugram, all developers and real estate projects must be registered with Haryana RERA.
This ensures:
- Timely delivery of projects
- Legal transparency in transactions
- Mandatory disclosures from developers
- Legal recourse in case of delays or fraud
Legal Due Diligence Before You Invest
Before making any property purchase in Gurugram, NRIs and foreign investors should:
- Verify the title and ownership of the property
- Confirm the project is RERA-registered
- Review developer credentials
- Ensure that all approvals and clearances are in place
- Consult a qualified property lawyer
Key Legal Points for Foreign Investment in Gurugram Real Estate
| Legal Aspect | Details |
|---|---|
| Eligibility | NRIs and OCIs can invest; foreign nationals need RBI approval |
| Permitted Property Types | Residential & commercial only |
| FEMA Compliance | No RBI approval required if paid via NRE/NRO/FCNR accounts |
| Repatriation Rules | Allowed for 2 residential properties; USD 1 million/year limit |
| Taxation | Income and gains taxable in India; DTAA benefits applicable |
| Power of Attorney | Allowed with consulate attestation and Indian registration |
| RERA Protection | Full rights under Haryana RERA |
Gurugram presents a highly favorable environment for foreign real estate investment, especially for NRIs and OCIs. The city’s commercial appeal, infrastructure development, and stable demand for premium housing make it a strategic long-term investment destination. However, every foreign investor must navigate the legal structure, especially FEMA guidelines, tax obligations, and ownership restrictions, to ensure their investment is secure and compliant.
If you’re planning to invest in Gurugram’s real estate as an NRI or foreign investor, it is advisable to consult with a real estate legal expert and work with RERA-compliant developers. Doing so will help you avoid future disputes and streamline your property acquisition process.
