India's scale and growth trajectory place it at the centre of many internationally mobile investors' thinking. A rapidly expanding middle class, urbanisation, a digitised financial infrastructure, and policy reforms across sectors from real estate to capital markets have made India a more accessible investment destination than at any point in its modern history. Yet the regulatory and tax architecture — shaped by FEMA (the Foreign Exchange Management Act), a dual-track personal tax regime, a complex property market, and a succession law system that intersects with personal religious law — demands careful and expert navigation.
This guide is for general information only. Indian tax law and FEMA regulations are subject to frequent amendment; rules applicable to NRIs, PIOs, and foreign nationals differ in material respects. Nothing in this guide constitutes tax or legal advice. Seek qualified professional advice in India and your home country before making decisions. Investments can fall as well as rise, and returns are not guaranteed.
Tax system overview
India operates a progressive personal income tax system, administered by the Central Board of Direct Taxes (CBDT). As of 2026, individuals may choose between two regimes:
Old tax regime: progressive rates with numerous deductions available (Section 80C, 80D, HRA exemption, standard deduction, etc.). Rates range from 5% to 30% on taxable income, plus a surcharge of 10–37% on the basic tax for incomes above INR 50 lakh (approximately USD 60,000). The surcharge brings the effective top marginal rate to approximately 42.74% for incomes above INR 5 crore.
New tax regime (default from FY 2023–24): lower headline rates (up to 30%) but without most deductions. Designed for simplicity; may be advantageous or disadvantageous depending on the individual's circumstances.
For NRIs (Non-Resident Indians), Indian income tax applies only to Indian-source income (income accrued or received in India). Worldwide income is not brought into scope for non-residents. The tax residency threshold is 182 days of presence in India in the relevant financial year (1 April to 31 March), with specific anti-avoidance provisions that deem higher-earning NRIs resident if they have no tax residency elsewhere.
The UK-India Double Taxation Agreement is comprehensive. Key treaty rates include: dividends 15% (or lower domestic rate if applicable); interest 15%; royalties 15%; pensions (including government service pensions) are generally taxable only in the country of residence or source depending on type. The treaty provides meaningful protection against double taxation for UK residents with Indian income.
FEMA and foreign exchange regulations
The Foreign Exchange Management Act (FEMA) governs all foreign exchange transactions involving India. It distinguishes between capital account transactions (investment in/out of India) and current account transactions (income remittances, fees, etc.) and imposes different levels of control on each.
For foreign investors and NRIs, FEMA compliance is a standing obligation. Key practical points:
- Repatriation of funds from India requires documentation evidencing the legal origin: Form 15CA (declaration) and Form 15CB (chartered accountant certificate) are required for most significant outward remittances. Property sale proceeds can generally be repatriated up to USD 1 million per financial year, subject to tax compliance certification.
- Liberalised Remittance Scheme (LRS): Indian residents (not NRIs in this context) can remit up to USD 250,000 per year for permitted purposes including investment abroad, education, and travel.
- FEMA violations can attract serious penalties. All structuring of Indian investments should be reviewed by an India-qualified lawyer or FEMA specialist.
NRI, PIO, and OCI status
The NRI framework is central to understanding how Indian rules apply to internationally mobile Indians:
NRI (Non-Resident Indian): an Indian citizen who has been outside India for 182+ days in the preceding financial year. NRIs have specific investment, banking, and property rights in India.
Person of Indian Origin (PIO): a foreign national who was an Indian citizen or whose parent or grandparent was an Indian citizen. PIO status has largely been superseded by OCI.
Overseas Citizen of India (OCI): a foreign national of Indian origin (or spouse of an OCI/Indian citizen). OCI is a lifetime visa that provides most of the rights of an NRI (except voting, holding public office, and purchasing agricultural land). UK nationals of Indian origin who obtain OCI status can own property, invest, and operate bank accounts in India on the same terms as NRIs. OCI is the most practically relevant status for UK nationals of Indian descent.
UK nationals with no Indian origin are classified as foreign nationals and face more restricted property and investment rights than NRIs/OCIs.
Property ownership for foreigners
NRIs and OCIs may purchase residential and commercial property in India without restriction. The principal restriction is that neither NRIs nor OCIs may purchase agricultural land, plantation property, or farmhouses — a prohibition enforced under FEMA.
Foreign nationals (non-NRI/OCI) may generally only acquire immovable property in India through inheritance or gift from a resident Indian (subject to RBI approval in most direct purchase cases).
India's real estate market has experienced significant price appreciation in major tier-1 cities over the past five years. Key markets for NRI investors include:
- Mumbai: South Mumbai, Bandra (W), Worli, and BKC (Bandra Kurla Complex) for commercial. Premium residential prices are among India's highest.
- Delhi NCR: Gurgaon (particularly Golf Course Road and Cyber Hub corridors), Noida, and Greater Noida. Strong rental demand from corporate occupiers.
- Bengaluru: Whitefield, Koramangala, Sarjapur Road — driven by the technology sector. Bengaluru offers some of the strongest rental yields in India's major cities.
- Hyderabad: HITEC City and Gachibowli, with more competitive entry prices than Mumbai or Delhi.
RERA (Real Estate Regulation and Development Act) has significantly improved buyer protection by requiring developer registration, escrow of buyer funds, and mandatory project completion timelines. Developer risk has not been eliminated, but the regulatory environment is materially better than pre-RERA.
TDS on property purchase from NRI sellers: A buyer purchasing property from an NRI seller is required to deduct Tax Deducted at Source (TDS) on the sale consideration. For long-term capital gains (property held over 24 months), the rate is 12.5% without indexation following the change effective 23 July 2024 (down from the previous 20% with indexation), plus applicable surcharge and 4% cess. Short-term gains are deducted at the seller's slab rate. This is a significant liquidity consideration for NRI sellers, since TDS is calculated on the gross sale value unless a lower-deduction certificate is obtained. An NRI seller can apply to the income tax assessing officer under Section 197 for a reduced TDS certificate if the actual taxable gain is lower than the TDS base.
Pension and retirement planning
India does not have a social security totalization agreement with the United Kingdom in the conventional sense. UK nationals working in India for an Indian employer may be required to contribute to the Employees' Provident Fund (EPF) — a mandatory defined contribution scheme with both employer and employee contributions. EPF balances can be withdrawn (subject to conditions) on departure from India, or transferred to a later Indian employer.
India's National Pension System (NPS) is available to NRIs as well as residents and offers defined contribution retirement savings with equity and fixed income fund options. NRI contributions to NPS are permitted; repatriation of NPS benefits is subject to FEMA provisions.
India's Public Provident Fund (PPF) is not available to NRIs for new accounts; NRIs who held PPF accounts prior to becoming non-resident may continue to hold and contribute until maturity but cannot open new accounts.
For UK-based retirement planning, existing SIPP and ISA arrangements remain the primary vehicles. QROPS arrangements in India are not relevant (India is not an established QROPS jurisdiction).
Estate planning
Estate planning for Indian assets involves the intersection of Indian succession law, FEMA, and any applicable personal religious law.
India does not have a comprehensive unified succession law. The applicable law depends on the religion of the deceased:
- Hindus, Buddhists, Sikhs, and Jains: governed by the Hindu Succession Act 1956 (as amended 2005), which imposes certain forced heirship rights (particularly for daughters in coparcenary property).
- Muslims: Islamic inheritance law applies.
- Christians, Parsis, and others: governed by the Indian Succession Act 1925.
Foreign nationals and NRIs subject to their home country's succession law may find that their home-country will conflicts with Indian succession provisions. An international will may be recognised in India, but conflicts between succession regimes require legal advice in both jurisdictions.
Obtaining probate in India is through the civil courts and can be protracted. A Succession Certificate (issued by a civil court) is required for movable assets where there is no will. Practically, NRIs with Indian property holdings should have an India-specific will drawn by an India-qualified lawyer, registered with the relevant Sub-Registrar, clearly designating beneficiaries.
India does not impose estate or inheritance tax (there is no Indian equivalent of UK IHT), which is a material advantage for long-term estate planning involving Indian assets.
Banking
The NRI banking framework provides three principal account types:
NRE Account (Non-Resident External): held in Indian rupees; interest income is fully tax-free in India; funds are freely repatriable (both principal and interest) to the home country at any time. This is the most commonly used account for NRIs parking foreign earnings in India.
NRO Account (Non-Resident Ordinary): held in Indian rupees; used for Indian-source income (rent, dividends, pension). Interest on NRO accounts is taxable in India at 30% (TDS). Repatriation is limited to USD 1 million per year (net of applicable taxes).
FCNR Account (Foreign Currency Non-Resident [Bank]): term deposit accounts denominated in a foreign currency (USD, GBP, EUR, etc.), held with Indian banks. No currency conversion risk on deposit; no Indian income tax on interest for NRIs; freely repatriable. FCNR accounts offer a useful tool for parking foreign currency in India without rupee exposure.
Major Indian banks with dedicated NRI banking divisions include SBI, HDFC Bank, ICICI Bank, Axis Bank, and Kotak Mahindra Bank. International banks including HSBC, Standard Chartered, and Barclays also maintain India presences.
Investment environment
India's capital markets have deepened substantially over the past decade. The National Stock Exchange (NSE) and BSE (Bombay Stock Exchange) are well-regulated, with good disclosure standards and robust exchange infrastructure. India achieved MSCI Emerging Market Index inclusion with increasing weightings, reflecting its growing significance for global portfolios.
NRIs may invest in Indian equities, mutual funds, and bonds through the Portfolio Investment Scheme (PIS) administered by their designated Indian bank. NRI equity investments are subject to FEMA limits on total foreign ownership per company (sector-specific).
Direct equity investment in unlisted companies (FDI) is regulated by FEMA and the Foreign Direct Investment Policy. Certain sectors are fully open to 100% foreign investment; others require government approval or have equity caps. The FDI policy is updated periodically.
India's mutual fund industry (AMCs including HDFC AMC, Nippon India, ICICI Prudential, etc.) offers NRIs access to Indian equity, fixed income, and hybrid funds. However, US and Canadian-resident NRIs face restrictions from Indian AMCs due to FATCA/QI compliance complexities; UK-resident NRIs do not face this particular issue.
Currency considerations
The Indian Rupee (INR) has historically depreciated gradually against major currencies, including sterling, reflecting India's inflation differential. Long-term investors in INR-denominated assets should incorporate this depreciation trend into their return expectations — a property that appreciates 10% per annum in INR terms may deliver a significantly lower return in sterling terms after currency effects.
The RBI manages the rupee within a managed float framework; the currency is fully current account convertible but capital account controls remain (FEMA). There is no official peg, but the RBI intervenes to smooth excessive volatility.
Practical UK and expat investor considerations
The FATCA/CRS compliance burden for NRIs has increased significantly. All Indian bank accounts and investment holdings are reported to the relevant home country tax authority under CRS. UK-resident NRIs with Indian assets must disclose these on their UK tax returns; HMRC's risk appetite for undisclosed overseas assets is low.
India's property market offers genuine long-term growth potential, but liquidity (particularly for residential property) is lower than comparable Western markets, and the legal and transactional process is more complex. RERA has improved the development-phase risk materially but not eliminated it. Established secondary market properties with clear title are preferable for NRI investors unfamiliar with the local market.
Engaging a credible Indian CA (Chartered Accountant) for India tax compliance and a FEMA-specialist lawyer for investment structuring and property transactions is essential. These professionals should operate alongside your UK-side financial adviser to ensure both regimes are addressed coherently.
How Global Investments can help
India is one of the most complex major markets for internationally mobile investors — rich in opportunity, demanding in execution. Global Investments works with NRI clients and UK nationals with Indian interests to provide a coordinated cross-border financial planning framework. We can help you review your NRE/NRO account structure, assess property holding arrangements, ensure UK and Indian tax compliance is aligned, and plan for succession across both jurisdictions.
Our team has experience working alongside India-qualified professionals and can introduce you to the right specialists for the technical India-side work whilst providing the overarching wealth management perspective.
Contact us for a confidential consultation on your India financial planning.
This guide is for general information only and does not constitute financial advice or a personal recommendation. The value of investments can fall as well as rise and you may get back less than you invest. Tax rules, pension legislation, and investment regulations change — always verify current rules and seek advice from a qualified independent financial adviser before making any financial decisions.