FEMA Amendments 2026: Simplified Rules for NRI Property and Investment

The Reserve Bank of India has notified significant amendments to the Foreign Exchange Management Act (FEMA) regulations governing Non-Resident Indian (NRI) investments in India, effective 1 April 2026. Published as Notification No. FEMA.410/2026-RB, the amendments simplify property acquisition, expand permissible investment avenues, and streamline the repatriation process. With over 3.2 crore NRIs and Persons of Indian Origin (PIOs) worldwide, and NRI deposits in Indian banks exceeding $140 billion, these changes have substantial implications for the diaspora's financial engagement with India.

Property Acquisition: Key Changes

Under the existing FEMA framework (Regulation 5 of FEMA 21(R)/2018-RB), NRIs and Overseas Citizens of India (OCI) can acquire residential and commercial property in India but not agricultural land, plantation property, or farmhouse. The amendment retains this restriction but introduces several simplifications. NRIs can now purchase property using funds from any foreign account (not just NRE/NRO accounts), with the payment being routed through the Authorised Dealer (AD) bank's compliance framework. The previous requirement for prior RBI approval for property transactions exceeding Rs 5 crore has been removed, replaced by a post-transaction reporting mechanism to the AD bank within 90 days.

For property sales, the repatriation limit for NRIs has been increased from the equivalent of $1 million per financial year to $2 million, subject to the condition that the property was held for a minimum of 3 years (reduced from 5 years under the old rules). Capital gains tax continues to apply as per the Income Tax Act, and the AD bank will require a certificate from a Chartered Accountant confirming tax compliance before authorising the remittance.

Mutual Fund and Securities Investments

The amendments expand the Portfolio Investment Scheme (PIS) route for NRIs. The aggregate ceiling for NRI investment in equity shares of a listed company has been raised from 10% to 15% of the paid-up capital, bringing it in line with the Foreign Portfolio Investor (FPI) aggregate limit. For mutual funds, NRIs from all jurisdictions (including the US and Canada, which previously faced operational restrictions from many AMCs) can now invest through a standardised digital KYC process, with the RBI directing AMFI and SEBI to ensure that at least 80% of mutual fund schemes are operationally accessible to NRIs by September 2026.

The NRO account repatriation limit, which governs how much income earned in India (rent, dividends, pension) can be sent abroad, has been enhanced from $1 million per financial year to $1.5 million. This addresses a long-standing demand from retired NRIs who earn rental income from properties in India.

Digital Compliance and Reporting

Perhaps the most practical change is the introduction of a digital compliance portal (NRI-FEMA portal) operated by the RBI, which will serve as a single window for NRI FEMA compliance. Currently, NRIs must navigate between their AD bank, the RBI, and the Income Tax department for various approvals and filings. The portal will integrate these requirements, reducing the average compliance time from 45-60 days to an estimated 15-20 days for routine transactions.

What NRIs Should Do Now

NRIs planning to purchase property in India should coordinate with their AD bank to understand the new documentation requirements, which are simpler but still mandatory. Those with existing properties should review whether the enhanced repatriation limits allow them to bring back sale proceeds that were previously stuck. For investment purposes, NRIs in the US and Canada should check with their preferred AMC about operational access, as many fund houses that previously declined NRI applications from FATCA-compliant jurisdictions are now updating their processes. The overall direction of these amendments is toward making India a more accessible and administratively simpler investment destination for its diaspora.