FEMA & RBI Rules — Buying Phuket Property from India 2026

The compliance workflow in plain English. Section 6 of FEMA 1999 plus the RBI Liberalised Remittance Scheme define the legal route for an Indian resident sending up to USD 250,000 per financial year for overseas immovable property. This page is the operational checklist — Form A2, AD-1 banks, Form 15CA / 15CB, TCS at 20%, FET certificate, Schedule FA disclosure — with the documents you need lined up in the right order.

• USD 250K

  LRS cap per individual, per FY (April–March)

• S0023

  Form A2 purpose code — overseas immovable property

• 20% TCS

  Collected at source above ₹7 lakh; refundable in ITR

The legal framework — three documents

Three pieces of legislation together define what an Indian resident can and cannot do when buying overseas property:

• FEMA 1999, Section 6 — empowers the RBI to specify capital account transactions. The Liberalised Remittance Scheme is the operational facility under this section.
• RBI Master Direction on LRS — sets the USD 250,000 per individual per financial year cap and lists the permitted purposes (overseas equity, debt, immovable property, education, gifts, donations, employment, emigration, maintenance of relatives, business trips, medical treatment).
• Income Tax Act 1961, Section 206C(1G) — applies 20% Tax Collected at Source on LRS remittances above ₹7 lakh from October 2023, refundable through ITR.

What this allows: a single Indian resident transfers up to USD 250K per FY for a Phuket condo. Two spouses combine to USD 500K per FY. Off-plan SPAs with 24–36 month milestone schedules naturally stage across LRS resets, supporting purchases up to USD 1–2M over multiple FYs.

What this does not allow: routing through unrelated family members, splitting one purchase across five LRS allowances of distant relatives, undeclared cash transfers, or hawala-style settlement abroad. These are FEMA Section 13 contraventions; penalties run up to three times the amount remitted plus prosecution. We have seen this enforced — do not structure around the cap.

Four LRS structures compared — pick yours before you sign the SPA

Same Phuket buy, four legal pathways. Pick the one whose constraints match your reality before you book the wire — restructuring after Form A2 is filed is messy.

USD 250K LRS cap source: RBI Master Direction on Liberalised Remittance Scheme, FED Master Direction No. 7/2015-16 (last updated). NRI status definition: Income Tax Act 1961 Section 6, residency test based on days of physical presence in India.

Documents required at the AD-1 bank — full list

The 20% TCS — what it is and how to reclaim it

Tax Collected at Source under Section 206C(1G) of the Income Tax Act applies to LRS remittances above ₹7 lakh in a financial year. The rate moved from 5% (pre-Budget 2023) to 20% from 1 October 2023 for non-education and non-medical purposes — so all overseas property remittances are now caught at 20%.

How it works on a typical ₹2 Cr Phuket transfer:

• You instruct your AD bank to wire USD 240K (₹2.016 Cr at USD/INR 84).
• The AD bank deducts 20% TCS on the full amount above the ₹7 lakh threshold — roughly ₹40 lakh held back at source.
• You actually need to fund the wire plus the TCS amount from your resident account, so the bank can debit both simultaneously.
• The TCS amount appears in your Form 26AS / AIS for the year and is fully refundable through your ITR-2 / ITR-3 filing — typically refunded within 4–8 months of the assessment year.

Practical implication: budget 20% extra working capital for the TCS float between wire date and ITR refund. For a ₹2 Cr ticket that is ₹40 lakh sitting in escrow with the Income Tax Department for roughly a year. Most of our Indian buyers fund the TCS from a fixed-deposit liquidation or short-term bridge facility.

Five FEMA mistakes Indian buyers make most often

1. Splitting LRS across distant family members. Sending USD 50K each through an unmarried sister, a father and a cousin to fund a single USD 250K purchase is an obvious FEMA Section 13 contravention. Penalties run up to three times the amount remitted. Use your own LRS, your spouse's LRS, and multi-year staging — never proxies.
2. Wiring directly to a developer offshore account. Some buyers try to skip the Thai bank conversion to save fees — and lose the ability to register the freehold at the Land Office because no FET certificate is issued. The fee saved (around USD 150) costs years of friction at exit.
3. Using the wrong purpose code on Form A2. Selecting S0007 (gifts) or S0001 (private travel) instead of S0023 (overseas immovable property investment) is a misrepresentation under FEMA. Audit-time correction is messy. Always use S0023 for property.
4. Missing Form 15CB for transfers above ₹5 lakh. Form 15CA alone is not enough for property remittances. The CA-certified Form 15CB is mandatory above the ₹5 lakh threshold, which any Phuket purchase exceeds. AD banks will refuse the wire without it.
5. Not disclosing in Schedule FA. The Black Money Act 2015 imposes ₹10 lakh per asset per year for non-disclosure. The DTAA gives full credit for any Thai tax paid — there is no rational reason to hide the asset and significant criminal-prosecution downside if you do.

Three FEMA scenarios — how Indian buyers actually structure

Real India Desk closings 2024–25, name details masked. Each profile shows the FEMA structure choice, the documents that mattered, and the practical FEMA outcomes.

Decision framework — 8 questions before you book the wire

Run each in order. Each yes / no narrows your structure (single LRS, joint LRS, multi-year staging, NRI route) before your CA opens Form 15CB.

1. 1. Is your USD ticket under USD 250K (~₹2.1 Cr)? Yes → single LRS in one FY. No → joint LRS, multi-year staging, or NRI route.
2. 2. Are you Resident under Section 6 of the Income Tax Act? Yes → LRS applies. No (NRI) → fund directly from foreign bank, LRS rules do not apply, but Schedule FA still applies if you become Resident later.
3. 3. Have you used part of your LRS this FY for other purposes? The USD 250K cap is a single bucket spanning education, gifts, equity and property. Subtract used balance from your remaining headroom for Phuket.
4. 4. Is your spouse Resident with unused LRS this FY? Yes → joint LRS unlocks USD 500K and joint Chanote title (cleaner inheritance). No → look at multi-year staging.
5. 5. Is the SPA off-plan with milestone payments? Yes → milestone schedule maps onto multi-year LRS staging without RBI special approval. No (completed unit, full payment now) → all funds must fit inside one or two FYs.
6. 6. Can you fund the 20% TCS as working-capital float for 8–12 months? Yes → proceed normal route. No → split the wire across late-March and early-April to halve the TCS impact in each FY (each tranche stays under your refund-cycle planning).
7. 7. Is your CA experienced with overseas-property Form 15CB? Yes → engage immediately. No → the India Desk routes you to a Mumbai BCAS-member or Delhi / Bangalore equivalent who has filed property 15CB before.
8. 8. Do you have all source-of-funds documents (6 months salary slips, 3 ITRs, sale-deed if applicable)? Yes → AD bank file is ready. No → pause, gather documents, don't approach the bank with gaps.

Related — for Indian buyers

• India Desk hub
• LRS Thailand property process: ₹2 Cr step-by-step
• Buy Property in Phuket from India — pricing & 7-step process
• NRI Phuket investment guide — RNOR, Schedule FA, DTAA
• Indian community in Phuket
• LRS Scheme Thailand Property 2026 — full bank-by-bank guide
• Phuket Property for Indians 2026 — master guide
• FET certificate Thailand: complete guide