Bengaluru Real Estate: A 2026 Guide for Non-Resident Indians

Strict federal regulations and new municipal laws have changed how foreign capital enters Bengaluru. Here is the operational protocol for purchasing property safely.

Bengaluru remains a primary destination for foreign capital. NRIs and OCIs continue to invest in the city due to its infrastructure expansion and the growth of global capability centers. These factors sustain demand for residential and commercial assets. However, investing as a non-resident requires following specific rules. A mix of federal foreign exchange regulations, state laws, and municipal protocols governs every purchase.

Buyers must understand the Foreign Exchange Management Act (FEMA), Reserve Bank of India (RBI) rules, and local documentation like the BBMP Khata. The environment has shifted in the 2025 and 2026 fiscal cycles. Changes include mandatory E-Khata digitization, B-Khata regularization schemes, and revised tax laws. This report details the necessary legal verifications, cash transfer protocols, and due diligence steps.

Strategic Micro-Markets: North vs. East

Investment viability in Bengaluru is dictated by two corridors: the Airport corridor (North) and the IT corridor (East). Capital appreciation varies significantly based on infrastructure completion dates.

Analysis: While North Bengaluru offers better long-term land value appreciation due to the Aerotropolis project, East Bengaluru provides immediate and higher rental yields due to the density of the workforce.

Infrastructure Investment Corridors (2026-2030)

Property valuation in Bengaluru is heavily correlated with mass transit connectivity. Two major infrastructure projects will dictate price appreciation over the next 48 months.

The “Real Cost” Simulation

Investors often miscalculate the total outlay by ignoring statutory dues. Below is an accurate cost breakdown for a standard premium apartment in Bengaluru priced at ₹1.5 Crores.

The Secondary (Resale) Market Protocol

Buying a resale property offers immediate rental income and no GST liability. However, the legal complexity is higher. NRIs must adhere to specific protocols when buying from an existing owner.

The FEMA Regulatory Framework

FEMA (1999) dictates cross-border property investments. The law facilitates foreign investment in urban infrastructure while protecting agricultural land.

Permitted and Prohibited Assets

NRIs and OCIs can purchase unlimited residential and commercial properties. This includes apartments, villas, offices, and retail outlets. No prior permission from the RBI is needed. This reduces bureaucratic delays.

However, purchasing agricultural land, plantation properties, or farmhouses is prohibited. This rule applies even if the buyer holds Indian citizenship but resides abroad. The state can confiscate assets bought in violation of this rule. The only exception is inheritance. NRIs can inherit agricultural land but must sell it to a resident Indian citizen.

Financial Mechanics and Banking

Transactions must occur through authorized banking channels. Cash, foreign currency notes, or informal networks are prohibited. Use NRE, NRO, or FCNR accounts.

Account Types

• NRE Account: Funds are fully repatriable. Interest is tax-free in India. Best for funding the purchase.
• NRO Account: Used for income generated in India (rent, sale proceeds). Funds are subject to restricted repatriation limits.
• FCNR Account: Holds foreign currency to avoid exchange rate risk.

Credit Access: Loans for NRIs

Indian banks readily fund NRI purchases, but the terms differ from resident loans. The Loan-to-Value (LTV) ratio is capped strictly.

• Max Funding: 80% of the Agreement Value (not market value).
• Tenure: Typically restricted to 15 years (vs. 20-30 for residents) based on retirement age in the country of residence.
• Documentation: 6 months of overseas bank statements, employment contract, and NRE/NRO account details.
• Power of Attorney: A resident PoA holder is often mandatory for executing loan documents.

Hidden Ownership Costs: CAM & Corpus

Beyond the purchase price, owning a premium asset in Bangalore incurs specific operational costs.

• Corpus Fund (Sinking Fund): A one-time deposit (usually ₹100-₹250/sq.ft) collected by the builder. It generates interest used for major repairs (e.g., painting, lift replacement) after 10 years. Ensure this is transferred to the Association upon handover.
• Common Area Maintenance (CAM): Charged monthly on “Super Built-up Area”. If the monthly maintenance exceeds ₹7,500 per member, an additional 18% GST is levied on the entire amount, increasing holding costs.

Repatriation Limits

NRIs can repatriate up to USD 1 million per financial year from their NRO accounts. This includes sale proceeds from assets. You must submit Form 15CA and Form 15CB (certified by a Chartered Accountant) to the bank. Amounts exceeding USD 1 million require special RBI approval.

Taxation Protocols: TDS and GST

TDS (Tax Deducted at Source) rules depend on the residency of the seller. Confusing these rules can lead to penalties.

Buying from a Resident vs. Buying from an NRI

If buying from a resident Indian, deduct 1% TDS if the property value exceeds ₹50 Lakhs. Use Form 26QB. If buying from an NRI, the rules are stricter. You must deduct 20% to 30% (plus cess) on the gross value unless the seller produces a Lower Deduction Certificate (LDC).

The Exit Strategy: Capital Gains Tax

When selling the property, the tax implication depends on the holding period.

• Short Term Capital Gains (STCG): If sold within 24 months of purchase. Taxed according to your income slab in India.
• Long Term Capital Gains (LTCG): If sold after 24 months. Taxed at 20% with indexation benefits (adjusting purchase cost for inflation).

Note: NRIs can save on LTCG by reinvesting in another residential property in India (Section 54) or Capital Gains Bonds (Section 54EC) within 6 months of the sale.

Goods and Services Tax (GST)

GST applies to under-construction properties. Completed properties with an Occupancy Certificate (OC) are exempt. Most NRI investments fall into the 5% GST slab as “Affordable Housing” (1% rate) is capped at ₹45 Lakhs and 60 sqm, which is rare in Bengaluru’s premium market.

The Municipal Paradigm: Khata and Digitization

The “Khata” is the municipal assessment record. It is not a title deed but is vital for legality.

A-Khata vs. B-Khata

A-Khata: Signifies the property follows all zoning and building laws. It allows for bank loans and construction permits.
B-Khata: Indicates deviations or unauthorized layouts. Banks generally reject these properties. NRIs should avoid B-Khata assets despite the 2026 regularization schemes.

E-Khata and Digital Systems

Physical Khata documents are obsolete. The E-Khata is mandatory for registration. While the system initially required Aadhaar, NRIs can now use passports or PAN cards via a caseworker login. This manual verification takes 15 to 30 days.

RERA Karnataka Verification Protocol

The Real Estate Regulatory Authority (RERA) is the primary safeguard for buyers of under-construction property. Before paying a booking amount, verification on the Karnataka RERA portal is mandatory.

Visualizing the Acquisition Workflow

The following diagram illustrates the critical path for a safe acquisition, highlighting the “Safe” vs “Risky” decision points.

Due Diligence Checklist

Do not rely on verbal assurances. Verify these 10 documents.

• Title Deed / Mother Deed: Trace ownership back 30 years.
• Encumbrance Certificate (EC): Ensure 13-30 years of nil encumbrance.
• Land Conversion Order: Confirm agricultural to non-agricultural conversion.
• Approved Layout Plan: Verify BDA/BMRDA approval.
• E-Khata: Ensure digital migration is complete.
• Tax Receipts: Check for outstanding dues.
• Power of Attorney: If used, must be adjudicated in India.
• Bhoomi RTC: Verify historical land records.

Environmental Zoning

Bengaluru has strict buffer zones for lakes and storm water drains (Rajakaluves). Act 33 of 2025 introduced size-dependent buffers (3m to 30m). Use the Dishaank App to physically verify that the land does not encroach on these zones. Encroachment leads to demolition.

The Handover & Possession Protocol

Taking possession is the most overlooked risk phase. Builders often push for handover before 100% completion. NRIs must enforce a strict “Snagging Protocol” before signing the satisfaction note.

Vaastu Compliance for Resale Liquidity

Even if you do not believe in Vaastu, the Bangalore secondary market does. Properties with poor Vaastu trade at a 5-10% discount and are harder to sell.

The “Non-Negotiable” Checklist:

• Entrance: Should face East, North, or North-East. Avoid South-facing entrances unless rectified.
• Kitchen: South-East corner (Agni) is preferred.
• Master Bedroom: South-West corner is ideal for stability.

Post-Registration: Utility Transfer Guide

Once the Sale Deed is registered, the utilities are not automatically transferred. You must manually transfer the meter ownership to avoid legal liability.

• BESCOM (Electricity): Submit ‘Form A’, the Registered Sale Deed, and the latest paid bill to the local sub-division office. Usually takes 7-14 days.
• BWSSB (Water): Required for independent houses. Apartments typically have a bulk connection in the Association’s name.
• Property Tax Name Change: Apply via the BBMP Sahaaya portal or physically at the ARO (Assistant Revenue Officer) office. This triggers the mutation of the Khata into your name.

Post-Acquisition: Property Management

For NRIs, the asset cycle does not end at purchase. Managing a vacancy from abroad requires local adherence to Karnataka’s security laws.

Execution and Costs

The Power of Attorney (PoA) Adjudication

For NRIs unable to travel to Bengaluru for registration, a Specific Power of Attorney (PoA) is the standard solution. However, a simple signature is insufficient.

The Protocol:

1. Drafting: Create a “Specific PoA” restricted to the purchase of the specific unit. Avoid “General PoA” to prevent misuse.
2. Embassy Attestation: Sign the PoA in the presence of an official at the Indian Embassy or Consulate in your country of residence. They will stamp it.
3. Adjudication in Bengaluru: Send the physical document to India. The PoA holder must take it to the District Registrar’s Office in Bengaluru (Shivajinagar or Gandhinagar) for “Adjudication” (stamping and validation) within 3 months of receipt.

Critical: Registrars will reject a PoA that is only notarized abroad but not adjudicated in Karnataka.

The “Day of Registration” Protocol

On the specific day of registration at the Sub-Registrar’s Office (SRO), accuracy is vital to prevent cancellation.

• Witnesses: You need two witnesses who must carry their original Aadhaar cards.
• Demand Drafts (DD): While Stamp Duty is paid online via Kaveri 2.0, carry backup DDs for minor surcharges or scanning fees.
• PAN/Passport: The PoA holder must carry their original ID and the original Adjudicated PoA.

Stamp duty in Karnataka is high. For properties above ₹45 Lakhs, the base rate is 5%, plus a 10% cess and 2% surcharge on the duty. Registration fees are 2%. The total cost is approximately 7.6% of the property value.

Use the Kaveri 2.0 portal for deed drafting and payment. This digital system reduces time spent at the Sub-Registrar’s office.

Succession and Inheritance

Succession laws in India depend on religion. However, for NRIs holding assets in India, a Will is the only way to ensure smooth transfer to heirs.

If you die intestate (without a will), the property is distributed according to religious personal laws, which is complex. NRIs should execute a separate Will for Indian assets, registered in India. This avoids the requirement for a “Probate” order from a court, which can take 1-2 years to process.

Operational Protocols

Templates & Tools

Copy these templates to communicate with sellers or banks.

Frequently Asked Questions