FEMA Rules for NRI Resort Investment in India (2026)

1. Who can buy under FEMA

NRIs (Non-Resident Indians) — Indian citizens residing outside India.
OCIs (Overseas Citizens of India) — foreign nationals of Indian origin holding OCI cards.
Both categories can acquire residential and commercial immovable property in India without any prior RBI permission under the general permission route.

A branded resort unit purchased under sale-leaseback typically qualifies as a registered immovable property — eligible for NRI / OCI ownership under this general permission.

2. What NRIs cannot buy

FEMA explicitly restricts NRIs and OCIs from acquiring:

Agricultural land. No NRI / OCI can purchase agricultural land in India.

Plantation property. Tea, coffee, rubber, cardamom estates are prohibited.

Farmhouses. Properties classified as farmhouses under state revenue records are not permitted.

Inheritance is treated separately — NRIs can inherit any property, including agricultural, from a person resident in India. The restrictions apply only to direct purchase.

Branded resort properties on land classified as commercial / hospitality / non-agricultural fall outside these restrictions and are freely purchasable.

3. Payment — how the money has to flow

Under FEMA, the purchase consideration must be paid through one of:

Inward remittance through normal banking channels from abroad.

NRE (Non-Resident External) account — rupee account funded from foreign currency.

NRO (Non-Resident Ordinary) account — rupee account holding Indian-source income.

FCNR(B) account — foreign currency deposit.

Cash, traveller's cheques, or third-party remittance are strictly not permitted. Every rupee of the purchase consideration must be traceable to one of the four sources above. The bank that handles the wire transfer or the NRE/NRO account debit becomes the audit trail.

4. TDS during purchase — Section 194-IA

If the property value exceeds ₹50 lakh, the buyer (the NRI) is required to deduct 1% TDS under Section 194-IA on the purchase consideration and deposit it to the seller's PAN through Form 26QB. This applies regardless of whether the seller is resident or non-resident, with adjustments where the seller is also non-resident.

Where the seller (developer) is a non-resident entity, the TDS rate jumps to 20% (LTCG) or higher rates under Section 195 — most branded developers are resident entities, so the 1% / 26QB pathway is standard.

5. TDS on rental income — Section 195

For NRIs receiving rental income (sale-leaseback rent), the developer/operator deducts TDS at 31.2% under Section 195 on gross rent (30% + surcharge + cess; rates as per applicable Finance Act).

NRIs can apply for a Lower TDS Certificate under Section 197 to reduce this to the rate corresponding to actual tax liability after Section 24 deductions — often 5–15%. The certificate is issued by the jurisdictional assessing officer on Form 13. Apply for it before the first rent is paid — retroactive recovery is slower.

DTAA between India and the country of residence may also provide concessional withholding rates if treaty conditions are met.

6. Repatriation — how the money goes back

Rental income can be repatriated freely from the NRO account (after tax) up to USD 1 million per financial year aggregate (across all NRO sources). Form 15CA + 15CB through the bank is required.

Sale proceeds of the property are repatriable subject to the USD 1 million per FY ceiling, provided the original purchase was funded through inward remittance or NRE / FCNR account. Where the purchase was funded from NRO, the ceiling applies but the repatriability remains.

If the property was acquired from rupee-only sources (rare for branded resort SLB), repatriation is restricted to the USD 1 million per FY route.

7. Documents to keep — for life of investment

1. Sale deed (registered) and lease deed (registered).

2. Source-of-funds proof — wire transfer SWIFT, NRE/NRO debit statement, FCNR withdrawal — for the full purchase consideration.

3. TDS certificates (Form 16A from operator) for every rent payment, and Lower TDS certificate from AO.

4. Form 26AS downloaded annually showing all credits / debits against PAN.

These four documents are the audit trail FEMA, the Income Tax Department, and your bank will reference for the entire holding period and at the time of sale or repatriation.

Frequently asked