Buying property in Mumbai is a major decision even more so for NRIs. While Indian real estate continues to be a strong long-term asset and an attractive NRI investment option in India, the legal framework around purchase of property by NRIs in India is very specific. FEMA, RBI, taxation and property laws particular to Maharashtra add up to a different ball game compared to resident Indians.
A lot of NRIs do buy property in Mumbai for self-use, earning rental income or capital appreciation in the long run. But one errant click in the wrong payment mode, a Power of Attorney that is not valid and done properly, or an oversight on TDS later can land you into legal trouble, penalties or your repatriation getting blocked. This guide explains everything NRIs must know step by step to buy property in Mumbai legally, safely, and confidently, whether it’s a residential apartment, a commercial unit, or a resale flat.
Who Is Considered an NRI Under FEMA? (Foreign Exchange Management Act)
Under Indian law, the definition of an NRI primarily comes from the Foreign Exchange Management Act (FEMA) not the Income Tax Act. This distinction is extremely important for NRI real estate transactions.
FEMA Definition vs Income Tax Definition
Under FEMA, a person is considered an NRI if they reside outside India for employment, business, or any purpose indicating an intention to stay abroad for an uncertain period. The Income Tax Act, on the other hand, defines residential status based on the number of days stayed in India during a financial year.
OCI vs PIO vs NRI – Who Can Buy Property in India
NRIs: Fully allowed to buy residential and commercial property in India
OCI (Overseas Citizen of India): Same property rights as NRIs
PIO (Person of Indian Origin): Now merged with OCI status
All three categories can legally invest in Indian real estate, including buying property in Mumbai.
Categories with Restrictions in Maharashtra
While NRIs and OCIs can buy property freely, foreign nationals (non-Indian origin) cannot buy immovable property in India without special RBI approval. Maharashtra follows FEMA strictly, so violations can result in property seizure or monetary penalties.
What Types of Property Can NRIs Buy in Mumbai?
A very common question is: Can NRIs buy property in India?
The answer is yes but only specific types.
Is NRI Buying Property in India Legally Allowed?
Yes. FEMA explicitly permits NRI buying property in India, provided the property type and payment method comply with RBI norms.
Residential & Commercial Property
NRIs are allowed to purchase Residential apartments and villas or Commercial offices, shops, and retail units. These are the most common forms of NRI investment in Indian real estate, especially in cities like Mumbai.
Agricultural Land, Farmhouses & Plantation Land
NRIs cannot buy Agricultural land, Farmhouses and Plantation property. This restriction applies across India, including Maharashtra.
Can an NRI Inherit Restricted Property?
Yes. Even though NRIs cannot purchase agricultural land, they can inherit such property from a resident Indian. However, selling or repatriating proceeds later involves strict RBI compliance.
Buying from an NRI vs Buying from a Resident
When buying property from Resident Indian Standard TDS and payment rules apply. And when buying property from Another NRI Higher TDS (20% + surcharge + cess) is mandatory. This distinction significantly impacts the cost of NRI buying property in India, especially resale transactions in Mumbai.
Mandatory Documentation Checklist for NRIs Buying Property
Documentation is one of the most sensitive parts of buying property in Mumbai as an NRI. Even a small mismatch or missing paper can delay registration, block loan disbursement, or cause FEMA non-compliance. Unlike resident Indians, NRIs must submit both Indian and overseas documents, all of which must be valid at the time of agreement and registration.
Identity & Residency Proof
An NRI must submit a valid Indian passport or OCI card. If the passport has been re-issued recently, banks and sub-registrars may ask for previous passport copies to verify travel history. This is a common requirement in Mumbai registrations.
PAN Card (Mandatory)
A PAN card is legally mandatory for any property transaction in India whether buying, selling, or paying TDS. Without PAN, stamp duty registration will not be allowed, and higher TDS may be deducted automatically.
Overseas Address Proof
NRIs must provide proof of their overseas residence, such as Utility bills, Driving license, and Bank statements. This establishes non-resident status under FEMA.
NRE / NRO Bank Account Proof
Property payments must flow only through NRE, NRO, or FCNR accounts. Proof of these accounts is required during agreement execution, loan processing, and tax reporting.
Power of Attorney (If Not Physically Present)
If the NRI cannot be present in India for registration, a valid Power of Attorney (POA) is compulsory. This document must strictly follow Indian legal procedures, explained below.
Power of Attorney (POA): The Most Critical Legal Element
For most NRIs buying property in Mumbai, Power of Attorney is unavoidable and also the most misused legal instrument.
Why POA Is Needed?
POA allows a trusted person in India to Sign agreement for sale, complete registration, collect possession, coordinate with banks and society. Without POA, physical presence is mandatory at the sub-registrar office.
What Type of POA Is Valid?
Only a Specific Power of Attorney is legally acceptable. General POA is discouraged and often rejected by banks and registrars. The POA must clearly mention Property details, exact powers granted, and duration of authority.
Apostille & Notarization Rules
If executed abroad, POA must be notarized in the foreign country, apostilled under the Hague Convention, sent to India, and registered at the Mumbai Sub-Registrar Office. Without registration in Maharashtra, POA has no legal validity.
Misuse Risks & Safeguards
Improper POA usage is one of the biggest risks in NRI real estate transactions. Safeguards include Limited scope POA, single-purpose authority, revocation clause and lawyer verification before execution.
FEMA & RBI Compliance Rules NRIs MUST Follow
FEMA compliance is non-negotiable. Violations can lead to penalties up to 3 times the transaction value and even criminal proceedings.
Permitted Modes of Payment
NRIs can pay for property only through NRE account, NRO account or FCNR account. Cash payments are strictly prohibited under FEMA.
Using Foreign vs Indian Income
NRIs can use Overseas income routed via NRE/FCNR or Rental/business income in India via NRO. Direct foreign remittance without proper banking channels is not allowed.
Repatriation Rules (Brief Overview)
Up to USD 1 million per financial year can be repatriated only after applicable taxes are paid and subject to documentation and RBI reporting.
FEMA Section 6(3) Compliance
This section governs acquisition, holding, and transfer of immovable property by NRIs. Non-compliance can invalidate ownership rights making FEMA awareness essential for NRI investment in India real estate.
Home Loan Rules for NRIs (Very Different from Resident Indians)
NRIs can apply for home loans in India, but the rules are far more restrictive compared to resident buyers. Only select banks and NBFCs offer NRI home loans, and each institution applies conservative risk checks, especially for Mumbai real estate due to high ticket sizes.
Eligible Banks & Lending Institutions
Most public sector banks, large private banks, and a few NBFCs provide NRI loans. However, approval depends heavily on Country of residence, Employer profile, and Currency of income. Some countries are classified as high-risk, leading to outright rejection.
Mandatory Co-Applicant Requirement
In many cases, banks insist on a resident Indian co-applicant (close relative). This helps banks manage follow-ups, legal formalities, and recovery risk in case of default.
FOIR Rules for NRIs
NRIs typically have a lower FOIR limit (40–50%) compared to resident Indians. Self-employed NRIs face stricter scrutiny due to income volatility.
Documents Required from Abroad
Banks may request Overseas salary slips or employment contract, Bank statements (6–12 months), Tax returns filed abroad and Work visa / residence permit. All documents must be attested or notarized.
Loan Disbursement Rules
For under-construction projects in Mumbai, disbursement happens strictly as per construction milestones and only for MahaRERA-registered projects.
Title Due Diligence: Legal Checks NRIs Must Never Skip
Title verification is critical in Mumbai due to redevelopment projects, inherited properties, and old land records.
Land Title Chain Verification
A property lawyer must verify the entire ownership chain (usually 30 years). Any break in title can make resale impossible.
MahaRERA Registration
Every new project must be registered under MahaRERA. NRIs should verify Project registration number, Carpet area declared and Completion timelines.
IOD, CC & OC Verification
IOD (Intimation of Disapproval) confirms planning permissions, CC (Commencement Certificate) allows construction and OC (Occupation Certificate) is mandatory for legal possession. Buying without OC can block bank loans and resale.
Encumbrance Certificate
This confirms the property is free from legal dues, mortgages, or court cases.
Society NOC for Resale Flats
For resale properties, society NOC is mandatory to confirm No dues, No disputes and Transfer permission.
Carpet Area Verification
Under MahaRERA, sale must be based on carpet area, not built-up or super built-up.
TDS, GST & Stamp Duty Rules for NRIs
Taxation rules differ depending on the seller type and property status.
Buying from an Indian Resident
1% TDS charged if property value exceeds ₹50 lakh. Buyer must deduct and deposit TDS before registration.
Buying from a Builder
GST only applicable on under-construction properties and No GST on ready-possession flats with OC.
Buying from Another NRI
Higher TDS (20% + surcharge + cess) applies. This often surprises NRI buyers and must be factored into budgeting.
Example: ₹2 Crore Flat in Mumbai
Stamp duty (Mumbai): approx. 5–6%
Registration charges: capped amount
TDS: depends on seller category
Stamp Duty in Mumbai
Mumbai stamp duty is among the highest in India due to location premium. Female buyers may receive limited concessions during government-announced schemes.
Taxation Rules NRIs Must Know Before Purchasing Property
Income Tax Section 24(b)
NRIs can claim interest deduction on home loans, subject to limits.
Section 80C
Principal repayment qualifies for deduction, but only against taxable Indian income.
Wealth Tax
No wealth tax is applicable currently on residential property.
TDS Refund
If excess TDS is deducted, NRIs can claim a refund by filing Indian income tax returns.
Repatriation Rules: How NRIs Can Take Money Back Abroad
Repatriation is a major reason NRIs invest in Indian real estate.
NRE vs NRO Accounts
NRE is Fully repatriable while NRO is Subject to limits and documentation.
USD 1 Million Rule
NRIs can repatriate up to USD 1 million per financial year from sale proceeds, after tax clearance.
Required Documents
Form 15CA & 15CB, Sale deed, and Proof of tax payment.
Buying Property in Mumbai Through Joint Ownership – Legal Risks
NRIs are legally allowed to buy property in Mumbai jointly with resident Indians, but joint ownership introduces additional legal and tax complexities. The most common structure is NRI + close relative (spouse, parent, or sibling). Banks often prefer this structure for home loans, but buyers must understand the long-term implications.
When an NRI co-owns property with a resident, ownership percentage matters. Taxation on rental income, capital gains, and repatriation is calculated based on ownership share, not contribution amount. This often creates confusion later, especially during sale.
To avoid disputes, joint ownership agreements should clearly define Ownership ratio, Exit rights, Sale consent terms, and Inheritance planning.
Special Rules for NRIs Buying Resale Flats in Mumbai
Buying a resale flat in Mumbai requires more checks than a new project, especially for NRIs who may not be physically present.
Society transfers rules vary by society but typically require Transfer fee payment, No-dues certificate and Share certificate endorsement.
For older buildings, additional verification is essential. Buyers should check Structural audit reports, Pending redevelopment plans, Sinking fund and maintenance dues.
Many old Mumbai societies lack conveyance deeds, which creates ownership risk. Without conveyance, land ownership does not legally transfer to the society, affecting resale and redevelopment rights.
NRIs should always appoint a local lawyer to verify these aspects before committing to a resale purchase.
Common Legal Mistakes NRIs Make (And How to Avoid Them)
One of the most serious mistakes NRIs make is buying property without a full title check, relying only on builder reputation or broker assurances. In Mumbai, even reputed projects can have land-related litigation.
Another major violation is using cash components in property transactions. Cash payments are illegal under FEMA and the Income Tax Act and can result in severe penalties.
Using an invalid or general Power of Attorney is another common issue. Only a properly drafted, apostilled, and registered specific POA is legally accepted in Maharashtra.
NRIs also fail to calculate high TDS liability at the time of selling property, which can significantly reduce net proceeds if not planned in advance.
Avoiding these mistakes requires legal advice, FEMA compliance, and disciplined documentation.
Step-by-Step Legal Process for NRIs Buying Property in Mumbai
- Confirm eligibility under FEMA (NRI/OCI status)
- Shortlist property and verify MahaRERA registration
- Conduct legal and technical due diligence
- Execute POA abroad (if not present in India)
- Open NRE/NRO accounts and plan payment flow
- Execute Agreement for Sale
- Pay stamp duty and registration charges
- Register the agreement at Mumbai Sub-Registrar
- Ensure TDS, GST, and FEMA reporting compliance
- Plan repatriation documentation for future sale
Following this sequence ensures legal ownership and financial safety.
Conclusion – How NRIs Can Buy Property in Mumbai Legally & Safely
Property purchase in Mumbai for NRI is absolutely legal, but it’s regulated to a very fine degree. Compliance with FEMA, proper documentation, and professional diligence are not optional.
Mumbai’s real estate sector has long-term value to offer -provided you structure your purchase right. Knowing the payment, taxation, home loans and repatriation guidelines exclusively applicable to NRIs not only safeguards capital but also ensures mental peace.
Those NRIs who plan well ahead, don’t take a short cut and get expert legal assistance will have nothing to worry about investing in Mumbai real estate without future disputes or penalties.
FAQs
Is it legal for an NRI to buy a residence in Mumbai?
Yes. Under FEMA, NRIs can easily purchase residential and commercial property in Mumbai.
Which documents are required for an NRI to purchase property in Mumbai, India?
Passport/OCI card, PAN card, overseas address proof (while in country of residence), NRE/NRO account details and a valid POA if applicable.
Can an NRI get a home loan in India?
Yes, but lending rules are tighter and depend on your source of income, country of residence and the availability of a co-applicant.
What are the taxes for NRIs to pay when they buy property in Mumbai?
Stamp duty, registration charges, TDS (if seller is applicable) and GST on under-construction properties.
Are there any limitations on payment modes for property payments by NRIs?
Yes. Payments must be made only through NRE, NRO, or FCNR accounts. Cash payments are prohibited.
Can an NRI repatriate money after selling of his property in India?
Yes. You can repatriate the sale proceeds up to USD 1 million in an FY, provided you have complied with tax regulations.
Are there any special advantages for NRIs investing in property in Mumbai?
There are no special deals, but NRIs enjoy long-term capital growth and rental demand in Mumbai.
