India, Nov. 9 -- Rajesh Desai, an NRI, purchased an apartment in Bengaluru for Rs.1.5 crore. He complied with Foreign Exchange Management Act (FEMA) rules by making payments through his Non-Resident External (NRE) account. Since the transaction involved a resident seller and exceeded Rs.50 lakh, 1% Tax Deducted at Source (TDS) was deducted. RBI approval was not required, as NRIs are allowed to freely buy residential property in India. Desai also completed the property registration and paid the applicable stamp duty.

When an NRI invests in Indian real estate, their tax obligations are largely similar to those of resident buyers, but with additional layers of compliance under the Income Tax Act and FEMA. "The primary liabilities include st...