Can our foreign-owned Indian company buy office property?

You have set up an Indian company. Your parent, your overseas investors or a foreign founder own all or most of the shares. Now you want a floor of an office building, or a small unit, in your company's name. Does FEMA stop you? Do you need the Reserve Bank of India (RBI) to say yes first?

This article names the two traps that catch founders: the ban on "real estate business", and the land-border ownership checks.

Start with who is buying

FEMA means the Foreign Exchange Management Act, 1999. It sorts people into "resident in India" and "resident outside India". The Act says "person resident in India" means, among others, "any person or body corporate registered or incorporated in India" (s.2(v)(ii), Foreign Exchange Management Act, 1999).

So a company you incorporated in India is a resident for FEMA purposes. Its shareholders can all be foreign. The company is still resident.

This matters because the old rulebook for buying Indian property was written for people resident outside India. That rulebook was the Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations, 2018. It no longer stands alone. The Non-debt Instruments Rules were made "in supersession of" those 2018 Regulations, "except as respects things done or omitted to be done before such supersession" (preamble, Foreign Exchange Management (Non-debt Instruments) Rules, 2019). The property rules now sit in Chapter IX of the Non-debt Instruments (NDI) Rules, 2019, rules 24 to 33.

Chapter IX speaks to NRIs and OCIs (rule 24), their foreign spouses (rule 25), branches of foreign companies (rule 26), embassies (rule 27), and "no person resident outside India" (rule 30).

None of these addresses a company incorporated in India. The text of Chapter IX contains no rule that makes your Indian company seek RBI permission before buying office property for its own use. Your company buys as a resident, under the ordinary law of property and tax.

That is a reading of the text, and the absence of a rule is not a clearance of your deal. A CA must confirm it against the current RBI directions before you sign. The next sections cover what can still go wrong.

Trap one: the ban on "real estate business"

FEMA does not ask who owns the building. It asks what your company does with its money. Schedule I of the NDI Rules lists sectors "prohibited for FDI". One of them is "Real estate business or construction of farm houses" (para 2(f), Schedule I, NDI Rules, 2019).

The sector table adds: "Foreign investment is not permitted in an entity which is engaged or proposes to engage in real estate business, construction of farm houses and trading in transferable development rights (TDRs)" (Schedule I, NDI Rules, 2019).

Your company is foreign-owned, so its shares are foreign investment. If it is, or proposes to be, in real estate business, the investment itself is in a prohibited sector.

The rules define the term. "Real estate business" means "dealing in land and immovable property with a view to earning profit therefrom" (para 2(f) Explanation, Schedule I, NDI Rules, 2019). The definition does not include:

• development of townships;
• construction of residential or commercial premises, roads or bridges;
• educational institutions, recreational facilities and city-level infrastructure;
• real estate broking services; and
• REITs registered with SEBI.

The Explanation also says "earning of rent or income on lease of the property, not amounting to transfer" is not real estate business (para 2(f) Explanation, Schedule I, NDI Rules, 2019).

Put plainly, buying an office to work from is not dealing in land for profit. The line gets close when you:

• buy several units and plan to sell them at a gain;
• buy a building and flip it;
• buy and let it out through a structure that amounts to a sale of the property.

The rules say "transfer" here includes a sale, an exchange, or letting a buyer take possession under a part-performed contract of the kind covered by s.53A of the Transfer of Property Act, 1882 (Schedule I, NDI Rules, 2019).

Ask: is the property a tool for running your business, or your stock in trade? If stock, take advice before you buy.

Trap two: who stands behind your shareholders

The second trap is not about the property at all. It is about your shareholders, and it can be triggered after you buy.

Press Note No. 2 (2026 Series) from the Department for Promotion of Industry and Internal Trade, dated 15 March 2026 (DPIIT File No. 5(5)/2020-FDI Policy (Pt-1)), reviews investment from countries that share a land border with India. It says an entity or a citizen of such a country, "or where the beneficial owner of an investment into India is a citizen of any such country, can invest only under the Government route" (para 3.1.1(a), FDI Policy, as substituted by Press Note No. 2 (2026 Series)).

It adds that where ownership of existing or future foreign investment changes, "directly or indirectly", and the beneficial ownership then falls within that restriction, "such subsequent change in beneficial ownership shall require prior Government approval" (para 3.1.1(b), same Press Note).

The Press Note says its decision "will take effect from the date of FEMA notification". That notification is S.O. 2174(E), dated 1 May 2026, the Foreign Exchange Management (Non-debt Instruments) (Amendment) Rules, 2026. It substitutes clause (a) of rule 6 and says the rules "shall come into force on the date of their publication in the Official Gazette" (rule 1(2), S.O. 2174(E), 1 May 2026). The Gazette copy carries the date 2 May 2026.

Rule 6(a) of the NDI Rules, 2019 now carries the same proviso. It says an entity or citizen of a land-border country, or where the beneficial owner is a citizen of one, "shall invest only under the Government route" (rule 6(a), first proviso, NDI Rules, 2019). It also says investment from an investor entity with any direct or indirect ownership by such a citizen or entity, that does not need prior approval, is subject to reporting "specified by the Reserve Bank" (rule 6(a), as amended by S.O. 2174(E)). The Press Note says the reporting follows "the Standard Operating Procedure laid down by DPIIT".

Ownership counts as vested in a land-border country where its citizens or entities can hold rights above the thresholds in rule 9(3) of the Prevention of Money-laundering (Maintenance of Records) Rules, 2005, or can control the investor or the Indian company (para 3.1.1(c), FDI Policy, as substituted by Press Note No. 2 (2026 Series)).

What this means for an office purchase: buying the property does not trigger this test. Funding it with fresh foreign equity does, because that equity is foreign investment. Check your cap table, and your investors' own owners, first.

The Chapter IX text contains no stated limit on how a resident Indian company with such foreign shareholders may buy property. Rule 31 is the closest. It says no citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, Bhutan, Hong Kong or Macau, or the Democratic People's Republic of Korea, "without prior permission of the Reserve Bank shall acquire or transfer immovable property in India, other than lease not exceeding five years". The Explanation says "citizen" includes "natural persons and legal entities" (rule 31, NDI Rules, 2019).

Whether an Indian company with such shareholders is a "citizen" of one of those countries under rule 31 is not answered by the text of the rule. Put that question to your CA and your authorised dealer bank before you sign.

Contrast: a branch office is on a different clock

Some founders hold the Indian business through a branch of a foreign company. That is a different legal person, and rule 26 applies to it.

Such a person may "acquire any immovable property in India, which is necessary for or incidental to carrying on such activity". Two conditions apply. All applicable laws must be complied with, and the person must file with the Reserve Bank a declaration in Form IPI "not later than ninety days from the date of such acquisition" (rule 26(a), NDI Rules, 2019). Liaison offices are excluded from rule 26.

The ninety-day Form IPI clock is a branch-office rule. These rules contain no matching ninety-day filing for a resident company. If you are a subsidiary, do not copy it. If you are a branch, diarise it from the date you take the property.

Step by step

• Confirm who is buying. Check the certificate of incorporation and the share register. The buyer must be the Indian company, in its own name.
• Check the sector. Read the objects clause. Write down, in a board note, why the property is for the company's own use and not for dealing in land for profit.
• Map the owners. List every direct and indirect owner. Look at the land-border rule and the beneficial-owner test (para 3.1.1, FDI Policy, as substituted by Press Note No. 2 (2026 Series)).
• Plan the funding. If the parent or investors fund the purchase, decide whether that is fresh equity. Fresh equity brings in the entry route, the sectoral conditions and the reporting under rule 6 of the NDI Rules, 2019. Speak to your authorised dealer bank before the money moves.
• Pay through the banks. Rule 32 says any acquisition or transfer of immovable property under these rules is to be "through banking channels in India" and "subject to payment of applicable taxes and other duties or levies in India" (rule 32, NDI Rules, 2019). Stamp duty on the sale deed is set by the State where the property sits. Check the State's current figure before you budget.
• Pass a board resolution approving the purchase and naming the signatory.
• Register the sale deed in the company's name.

What not to do

• Do not buy through a director or the parent "for now". A later transfer is a second transaction with its own taxes and duties.
• Do not buy property as stock and call it an office.
• Do not take fresh foreign equity for the purchase without mapping beneficial owners.
• Do not pay outside the banking system (rule 32, NDI Rules, 2019).

What to do now

• Next step: Write a one-page own-use note for the board. State what the property is for, who the company's owners are, and how the purchase will be paid for. Basis: para 2(f), Schedule I, NDI Rules, 2019, on real estate business, and rule 32, NDI Rules, 2019, on banking channels.
• Deadline: There is no filing date for a resident company's own-use purchase in these rules. For a branch office, Form IPI is due within ninety days of acquisition (rule 26(a), NDI Rules, 2019). For land-border ownership changes, get Government approval before the change, not after (para 3.1.1(b), FDI Policy, as substituted by Press Note No. 2 (2026 Series)).
• Consequence of getting it wrong: If the company is in real estate business, the foreign investment into it is in a prohibited sector (para 2(f), Schedule I, NDI Rules, 2019). If beneficial ownership shifts into the land-border category without approval, you have breached the condition in rule 6(a) of the NDI Rules, 2019.

Have a CA review your facts before you act or file.

FAQs

Does our foreign-owned Indian company need RBI approval to buy an office?
The property rules in Chapter IX of the NDI Rules, 2019 speak to NRIs, OCIs, their spouses, branch offices of foreign companies, embassies and persons resident outside India. An Indian company is a resident under s.2(v)(ii) of the Foreign Exchange Management Act, 1999. The text contains no RBI permission requirement for its own-use purchase. Confirm with your CA.

Does the land-border rule stop us buying property?
The rule is about investment into your company. It sets the Government route and a prior approval for changes in beneficial ownership (rule 6(a), NDI Rules, 2019; Press Note No. 2 (2026 Series)). It does not itself speak of property purchases. Rule 31 does speak of property, for citizens of listed countries, and its reach to an Indian company is a question for your CA.

How much is the stamp duty?
Stamp duty on the conveyance is a State matter. I have not cited a rate. Check the current figure for the State where the property sits.

Do we need to report the purchase anywhere?
For a branch office, yes: Form IPI within ninety days (rule 26(a), NDI Rules, 2019). For a resident company these rules contain no such filing. Foreign equity that funds the purchase has its own reporting; ask your authorised dealer bank.

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• Starting a Section 8 company and getting 12A/80G: the steps in order