Can a resident Indian buy property abroad? Yes and FEMA permits it. The route is the Liberalised Remittance Scheme (LRS), which allows resident individuals to remit up to USD 2,50,000 per financial year for permissible purposes, including the purchase of overseas immovable property. Whether you are a salaried professional looking to invest in a flat abroad, an HNI adding to an offshore portfolio, or a business owner curious about what the rules allow, the framework is the same. What trips people up is not the permission to buy — it is the tax and disclosure obligations that continue for as long as you hold the property.
Quick answer
A resident Indian can buy property abroad by remitting up to USD 2,50,000 per year under LRS through an authorised bank. Whether you are salaried, self-employed, or an HNI, the limit and the route are identical — the key difference is only in scale.
Before acting, check:
- Your total LRS remittances this financial year across all purposes (education, travel, investment) do not exceed USD 2,50,000.
- You are using your own funds — LRS remittances cannot be made using borrowed money.
- The destination country is not under a UN or Government of India financial sanction.
What FEMA allows for resident buying property abroad
Under the Foreign Exchange Management Act 1999 (FEMA) and the RBI’s Master Direction on LRS, resident individuals — including minor children through a parent or guardian — can freely remit up to USD 2,50,000 per person per financial year for a range of purposes. Purchase of immovable property outside India is explicitly permitted.
A “resident individual” under FEMA is broadly a person who has been in India for more than 182 days in the preceding financial year. Note that this FEMA residency test differs from the Income Tax Act’s residential status test (which uses a 120-day threshold for certain categories of high-earning individuals). If you have any uncertainty about your status under either Act — for example, if you have split time between India and abroad — confirm your status before remitting.
The USD 2,50,000 limit is per individual per financial year and covers all LRS purposes combined: property, education fees, travel, overseas equity investments, everything. A family of four can pool their individual limits — 4 × USD 2,50,000 = USD 10,00,000 in a year — and each member can remit their share to fund a joint purchase.
How the LRS route works
Remittance under LRS must go through an authorised dealer bank — typically your existing bank. The bank is responsible for deducting Tax Collected at Source (TCS) on LRS remittances at the time of transfer.
For remittances towards overseas property (a capital-account use), TCS is 20% on the amount above ₹10 lakh in a financial year. This threshold rose from ₹7 lakh to ₹10 lakh with effect from 1 April 2025, so for FY 2025-26 onward the ₹10 lakh figure applies. TCS is not a final tax — it is credited against your total income tax liability when you file your ITR, and any excess is refunded. What it does mean is that you need more cash available upfront and have to wait for the credit when your return is processed.
Example: You remit ₹60 lakh (approximately USD 72,000) to purchase a flat abroad. TCS at 20% applies on ₹50 lakh — the amount above the ₹10 lakh threshold — which works out to ₹10 lakh. The bank collects this before transferring your funds, so you need ₹70 lakh in your account to remit ₹60 lakh. The ₹10 lakh shows up as TCS in your Form 26AS and is set off against your income tax payable for that year.
One forward-looking note: from 1 April 2026, TCS rates were cut to 2% for education, medical, and overseas tour-package remittances. Property and other investment remittances are unaffected — they continue at 20% above the ₹10 lakh threshold — so the figures above stand for an overseas property purchase.
Depending on the nature and taxability of the remittance, your authorised dealer bank may also require Form 15CA, and Form 15CB from a Chartered Accountant. The forms apply to remittances that are chargeable to tax; for a straightforward own-funds property purchase the bank will tell you what it needs, so confirm the documentation with your authorised dealer before initiating the transfer.
Tax on income and gains from your foreign property
Holding property abroad does not end your Indian tax obligations. Two events create liability.
Rental income: If you rent out the foreign property, that income is taxable in India as “Income from House Property.” You can claim a standard deduction of 30% on the net annual value. If tax is withheld in the foreign country on the rent, you can claim Foreign Tax Credit (FTC) in India by filing Form 67 before your ITR filing due date.
Capital gains on sale: When you sell the property, the gain is taxable in India. For property held more than 24 months, it qualifies as Long-Term Capital Gain (LTCG), taxed at 12.5% without indexation (effective July 23, 2024 per the Union Budget 2024-25). Short-term gains — on property held 24 months or less — are taxed at your applicable income slab rate. FTC is available here too for any capital gains tax paid in the foreign country.
Under the Income Tax Act 1961, Section 90 and Form 67 govern FTC for taxes paid in DTAA countries. Under the Income Tax Act 2025, the FTC mechanism is preserved; the exact provision numbers should be verified against the current text of the Act, as sections have been renumbered. For properties in countries without a DTAA with India, FTC is not available and the risk of double taxation must be factored into the investment decision.
Resident buying property abroad: your disclosure obligations
This is where the stakes are highest. Every resident Indian who holds a foreign asset — including immovable property — must declare it in Schedule FA of their ITR each year, regardless of whether the property generates any income. Schedule FA is not optional and is not waived even if the property was purchased legitimately through LRS.
Under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act 2015, failing to disclose a foreign asset attracts tax at 60% of the asset’s value plus a penalty of 90% of that tax — effectively 114% of the undisclosed value. This is separate from, and in addition to, any income tax owed. There is no minimum threshold: a single undisclosed foreign property, however small, triggers the provision.
Under the Income Tax Act 2025, the obligation to disclose foreign assets in the annual return is carried forward. The exact provision numbers in the 2025 Act should be confirmed against its current text, but the substance is unchanged from the 1961 Act: disclose every year, or face severe consequences.
What to do before and after you remit
The flowchart below walks you through the key decision before committing to an overseas purchase.
After completing the purchase, report the property in Schedule FA of your ITR in the year of purchase and every year thereafter. Collect and keep in India all proof of the transaction — purchase deed, payment receipts, overseas registration documents. If you receive rental income, include it under “Income from House Property.” When you eventually sell, file Form 67 before your ITR due date to claim FTC for any foreign capital gains tax paid.
When you should not do this
You are using borrowed funds. LRS explicitly prohibits remittances funded by overseas borrowing or by liquidating assets purchased using borrowed money. Funds must genuinely be your own. Your bank will typically require a source-of-funds declaration.
Your LRS for the year is already near the limit. The USD 2,50,000 cap combines all LRS purposes. If you have already sent ₹15 lakh for education fees, that reduces your available property investment headroom. Exceeding the limit without RBI approval is a FEMA violation.
You want to buy through a company. LRS applies only to individuals. If you intend to hold the property through an Indian company, LLP, or trust, a separate and more complex FEMA route (Overseas Direct Investment) applies, and RBI approval is typically required. Do not use your personal LRS limit for a company acquisition.
The destination country is under sanctions. The list of restricted jurisdictions changes. Verify before remitting that both the destination country and the property seller are not subject to UN Security Council sanctions or notifications under Indian law.
You are not ready to disclose every year. If declaring the foreign property in Schedule FA would surface other undisclosed foreign income or assets, the right step is to address the underlying disclosure issue first — not compound it with a new acquisition under LRS.
Documents checklist
📋 Before remitting, keep these ready:
- PAN card and ITR filings for the past two years (required by bank for large LRS)
- Form A2 — LRS declaration submitted to the authorised dealer bank
- Form 15CA (Part C) and Form 15CB from a CA — required for remittances above ₹5 lakh
- Purchase agreement and title deed of the overseas property
- Bank statements showing own-fund source (source-of-funds declaration)
- TCS certificate from the bank for the remittance year
- Foreign tax payment receipts (for FTC claims on rental income or capital gains)
- Form 67 — filed before ITR due date in any year you claim FTC
Final takeaway
Resident Indians can buy property abroad, and the LRS framework makes it accessible — not just to HNIs but to salaried professionals and business owners within the USD 2,50,000 annual cap. The purchase itself is straightforward. What demands ongoing attention is the compliance tail: annual Schedule FA disclosure, tax on any rental income or future gains, and TCS credit management. Done correctly, this is manageable. Ignored, the consequences under the Black Money Act are disproportionate to the oversight.
Overseas property purchase queries, or need help with LRS remittance documentation, Schedule FA disclosure, or FTC claims on foreign rental income? eTaxMate can review your situation and handle the compliance end-to-end.
This blog post is for general information only and does not constitute professional advice. Tax laws are subject to change and their application depends on individual facts and circumstances. Readers should consult a qualified professional before taking any action based on this content. eTaxMate accepts no liability for any action taken based on the information in this post.
Frequently Asked Questions
1. Can a salaried person in India buy a flat abroad?
Yes. Any resident individual — salaried, self-employed, or HNI — can remit up to USD 2,50,000 per financial year under the Liberalised Remittance Scheme to purchase immovable property outside India. Family members can each remit their individual limits for a joint purchase. The only restriction is that funds must come from your own savings, not borrowed money.
2. Is there a tax when you send money abroad to buy property?
There is TCS — Tax Collected at Source. For property and other investment remittances under LRS, TCS is 20% on the amount above ₹10 lakh in a financial year (the threshold rose from ₹7 lakh on 1 April 2025). Your bank collects it at transfer. TCS is not an extra cost — it is credited against your income tax when you file your ITR, and any excess is refunded. It does, though, require more cash upfront.
3. Do I have to declare foreign property in my ITR every year?
Yes, without exception. Resident Indians must disclose all foreign assets, including property, in Schedule FA of their ITR every year — even if the property generates no income. Non-disclosure triggers the Black Money Act: tax at 60% of the asset’s value plus a 90% penalty, totalling roughly 114% of the undisclosed value.
4. What tax applies when I sell property abroad as an Indian resident?
The gain is taxable in India. Property held for more than 24 months qualifies as LTCG, taxed at 12.5% without indexation (from July 23, 2024). Short-term gains are taxed at your income slab rate. If you paid capital gains tax in the foreign country, you can claim Foreign Tax Credit by filing Form 67 in India before your ITR due date.
5. Can I use a personal loan to fund my LRS remittance for overseas property?
No. LRS remittances must come from your own funds. Using a personal loan, home loan, or any other borrowed money to fund an LRS transfer is not permitted under FEMA. Your authorised dealer bank will require a source-of-funds declaration confirming the money is your own.
6. What happens if my LRS remittance exceeds USD 2,50,000 in a year?
Exceeding the LRS limit without prior RBI approval constitutes a FEMA violation. If you need to remit more than USD 2,50,000 — for example, for a high-value property — you must seek specific RBI approval before making the transfer. Pooling the limits of multiple family members for a joint purchase is an alternative within the rules.