An NRI who owns Indian property financed by a home loan is entitled to the same deductions as a resident owner: up to Rs 2 lakh per year under Section 24(b) for interest on a self-occupied property (uncapped for a let-out property, subject to the overall loss set-off rules), and up to Rs 1.5 lakh under Section 80C for principal repayment. Residency status alone doesn't restrict eligibility for either deduction.
The joint-ownership catch
Where the property and the loan are jointly held -- commonly an NRI with a resident parent or sibling as co-owner and co-borrower -- each person can claim Section 24(b) and 80C deductions independently, but only up to their own ownership share, not the full Rs 2 lakh and Rs 1.5 lakh limits each. A 50-50 co-owned property with a 50-50 co-borrowed loan means each co-owner's deduction is capped at their 50% share of the interest and principal actually paid, not the statutory ceiling in isolation.
Both co-ownership and co-borrowing generally need to exist together for each person to claim a deduction -- being a co-borrower on the loan without being a co-owner of the property (or the reverse) typically doesn't support an independent claim for that person.
One more wrinkle for NRIs
Most of these home loan deductions are only available under India's old tax regime; under the new regime (the current default), interest deductions are generally restricted to let-out properties, which changes the calculus for an NRI-owned property that sits vacant or is used only during India visits rather than rented out. Which regime applies, and whether it's worth explicitly opting for the old one, is worth checking each year rather than assuming the prior year's choice.