I
Acquisition of Immovable Property in India
Q.1 Who can purchase immovable property in India?
A.1 Under the general permission available, the following
categories can freely purchase immovable property in India:
i) Non-Resident Indian (NRI)- that is a citizen of India
resident outside India
ii) Person of Indian Origin (PIO)- that is an individual
(not being a citizen of Pakistan or Bangladesh or Sri Lanka
or Afghanistan or China or Iran or Nepal or Bhutan), who
1. at
any time, held Indian passport, or
2. who or either of whose father or grandfather was a
citizen of India by virtue of the Constitution of India or
the Citizenship Act, 1955 (57 of 1955).
The
general permission, however, covers only purchase of
residential and commercial property and not for purchase of
agricultural land / plantation property / farm house in
India.
Q.2. Whether NRI/PIO can acquire agricultural land/
plantation property / farm house in India?
A.2. No. Since general permission is not available to NRI/PIO
to acquire agricultural land/ plantation property / farm
house in India, such proposals will require specific
approval of Reserve Bank and the proposals are considered in
consultation with the Government of India.
Q.3. Do any documents need to be filed with Reserve Bank of
India after purchase?
A.3.
No. An NRI / PIO who has purchased residential / commercial
property under general permission, is not required to file
any documents with the Reserve Bank.
Q.4. How many residential / commercial properties can NRI /
PIO purchase under the general permission?
A.4. There are no restrictions on the number of residential
/ commercial properties that can be purchased.
Q.5. Can a foreign national of non-Indian origin be a second
holder to immovable property purchased by NRI / PIO?
A.5. No.
Q.6. Can a foreign national of non-Indian origin resident
outside India purchase immovable property in India?
A.6. No. A foreign national of non-Indian origin, resident
outside India cannot purchase any immovable property in
India. But, he/she may take residential accommodation on
lease provided the period of lease does not exceed five
years. In such cases, there is no requirement of taking any
permission of or reporting to Reserve Bank
Q.7 Can a foreign national who is a person resident in India
purchase immovable property in India?
A.7. Yes, but the person concerned would have to obtain
the approvals, and fulfil the requirements if any,
prescribed by other authorities, such as the concerned State
Government, etc However, a foreign national resident in
India who is a citizen of Pakistan, Bangladesh, Sri Lanka,
Afghanistan, China, Iran, Nepal and Bhutan would require
prior approval of Reserve Bank. Such requests are considered
by Reserve Bank in consultation with the Government of
India.
Q.8 Can an office of a foreign company purchase immovable
property in India?
A.8. A foreign company which has established a Branch Office
or other place of business in India, in accordance with FERA
/ FEMA regulations, can acquire any immovable property in
India, which is necessary for or incidental to carrying on
such activity. The payment for acquiring such a property
should be made by way of foreign inward remittance through
proper banking channel. A declaration in form IPI should be
filed with Reserve Bank within ninety days from the date of
acquiring the property. Such a property can also be
mortgaged with an Authorised Dealer as a security for other
borrowings. On winding up of the business, the sale proceeds
of such property can be repatriated only with the
prior approval of Reserve Bank. Further, acquisition of
immovable property by entities who had set up Branch Offices
in India and incorporated in Pakistan, Bangladesh, Sri
Lanka, Afghanistan, China, Iran, Nepal and Bhutan would
require prior approval of Reserve Bank to acquire such
immovable property. However, if the foreign company has
established a Liaison Office, it can not acquire immovable
property . In such cases, Liaison Offices, can take property
by way of lease not exceeding 5 years.
Q.9 Whether immovable property in India can be
acquired by way of gift ?
A.9. (a) Yes, NRIs and PIOs can freely acquire immovable
property by way of gift either from
i) a person resident in India or
ii) an NRI or
iii) a PIO.
However, the property can only be commercial or residential.
Agricultural land / plantation property / farm house in
India cannot be acquired by way of
gift.
(b) A foreign national of non-Indian origin resident outside
India cannot acquire any immovable property in India
through gift.
Q.10. Whether a non-resident can inherit immovable property
in India?
A.10. Yes, a person resident outside India i.e.
i) an NRI
ii) a PIO and
iii) a foreign national of non-Indian origin can inherit and
hold immovable property in India from a person who was
resident in India. However, a citizen of Pakistan,
Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal and
Bhutan should seek specific approval of Reserve Bank.
Q.11. From whom can the non-resident inherit
immovable property?
A.11. A person resident outside India (i.e. NRI or PIO or
foreign national of non-Indian origin) can inherit immovable
property from
(a) a person resident in India.
(b) a person resident outside India
However, the person from whom the property is inherited
should have acquired the same in accordance with the foreign
exchange regulations applicable at that point of time.
II.
Transfer
of immovable property in India
(i) Transfer by Sale
Q.12 Can an NRI/ PIO/foreign national sell his
residential / commercial property?
A.12. (a) NRI can sell property in India to-
i) a person resident in India or
ii) an NRI or
iii) a PIO.
(b)
PIO can sell property in India to
i) a person resident in India.
ii) an NRI or
iii) a PIO – with the prior approval of Reserve
Bank
(c ) Foreign national of non-Indian origin including a
citizen of Pakistan or Bangaladesh or Sri Lanka or
Afghanistan or China or Iran or Nepal or Bhutan can sell
property in India with prior approval of Reserve Bank to
i) a person resident in India
ii) an NRI
iii) a PIO
Q.13. Can an agricultural land / plantation property
/ farm house in India owned / held by a non-resident be
sold?
A.13. (a) NRI / PIO may sell agricultural land /plantation
property/farm house to a person resident in India who is a
citizen of India.
(b) Foreign national of non-Indian origin resident outside
India would need prior approval of Reserve Bank to
sell agricultural land/plantation property/ farm house in
India
(ii) Transfer by gift
Q.14. Can a non-resident gift his residential /
commercial property?
A.14. Yes.
(a) NRI / PIO may gift residential / commercial property to
-
(i) person resident in India or
(ii) an NRI or
(iii) PIO.
(b) foreign national of non-Indian origin needs prior
approval of Reserve Bank.
Q.15. Can an NRI / PIO / Foreign national holding an
agricultural land / plantation property / farm house in
India gift the same?
A.15. (a) NRI / PIO can gift but only to a person resident
in India who is a citizen of India.
(b) foreign national of non-Indian origin needs prior
approval of Reserve Bank
(iii) Transfer through mortgage
Q.16. Can residential / commercial property be
mortgaged?
A.16. i) NRI / PIO can mortgage to:
(a) an authorised dealer / housing finance institution in
India –
without the approval of Reserve Bank.
(b) a party abroad - with prior approval of Reserve Bank.
ii) a foreign national of non-Indian origin can mortgage
only with prior approval of Reserve Bank
iii) a foreign company which has established a Branch Office
or other place of business in accordance with FERA/FEMA
regulations has general permission to mortgage the property
with an authorized dealer in India.
III.
Mode
of payment for purchase
Q.17. How can an NRI / PIO make payment for purchase
of residential / commercial property in India ?
A.17. Payment can be made by NRI / PIO out of
(a) funds remitted to India through normal banking channel
or
(b) funds held in NRE / FCNR (B) / NRO account maintained
in India
No payment can be made either by traveller’s cheque or by
foreign currency notes.
No payment can be made outside India.
Q.18 What shall be the option if there is refund of
application money / payment made by the building agencies /
seller because of non-allotment of flat / plot /
cancellation of bookings / contracts ?
A.18. The amount of refund, together with interest (net of
income tax) can be credited to NRE account. This is subject
to condition that the original payment was made by way of
inward remittance or by debit to NRE / FCNR (B) account.
(Please refer to
A.P. (DIR) Series Circular No. 46 dated 12.11.2002)
Q.19. Can NRI / PIO avail of loan from an authorised dealer
for acquiring flat / house in India for his own residential
use against the security of funds held in his NRE Fixed
Deposit account / FCNR (B) account?
A.19. Yes, such loans are subject to the terms and
conditions as laid down in Schedules 1 and 2 to Notification
No. FEMA 5/2000-RB dated May 3, 2000 as amended from time to
time. However, banks cannot grant fresh loans or renew
existing loans in excess of Rupees 20 lakh against NRE and
FCNR(B) deposits either to the depositors or to third
parties [cf.
A.P. (DIR Series) Circular No. 29 dated January 31, 2007].
Such loans can be repaid
(a) by way of inward remittance through normal banking
channel or
(b) by debit to his NRE / FCNR (B) / NRO account or
(c) out of rental income from such property.
(d) by the borrower's close relatives, as defined in section
6 of the Companies Act, 1956, through their account in India
by crediting the borrower's loan account.
Repatriation:
(a). In case the amount has been received
from inward remittance or debit to NRE/FCNR(B)/NRO account
for acquiring the property or for repayment of the loan, the
principal amount can be repatriated outside India.
For this purpose, repatriation outside India
means the buying or drawing of foreign exchange
from an authorised dealer in India and remitting it outside
India through normal banking channels or crediting it to an
account denominated in foreign currency or to an account in
Indian currency maintained with an authorised dealer from
which it can be converted in foreign currency
(b) in case the property is acquired out of Rupee resources
and/or the loan is repaid by close relatives in India ( as
defined in Section 6 of the Companies Act, 1956), the amount
can be credited to the NRO account of the NRI/PIO. The
amount of capital gains, if any, arising out of sale of the
property can also be credited to the NRO account.
NRI/PIO are also allowed by the Authorised Dealers to
repatriate an amount up to USD 1 million per financial year
out of the balance in the NRO account for all bonafide
purposes to the satisfaction of the authorised dealers,
subject to tax compliance.
Q.20. Can NRI / PIO, avail of housing loan in rupees from an
authorised dealer or housing finance institution in India
approved by the National Housing Bank for purchase of
residential accommodation or for the purpose of repairs /
renovation / improvement of residential accommodation ? How
can such loan be repaid?
A.20. Yes, NRI/PIO can avail of housing loan in
rupees from an Authorised Dealer or housing finance
institution subject to certain terms and
conditions. (Please refer to Regulation 8 of
Notification No. FEMA 4/2000-RB dated 3.5.2000 and
A.P. (DIR) Series Circular No. 95 dated April 26, 2003).
Such a loan can be repaid
(a) by way of inward remittance through normal banking
channel or
(b) by debit to his NRE / FCNR (B) / NRO account or
(c) out of rental income from such property.
(d) by the borrower's close relatives, as defined in section
6 of the Companies Act, 1956, through their account in India
by crediting the borrower's loan account.
Q.21. Can NRI/PIO avail of housing loan in rupees
from his employer in India?
A.21. Yes, subject to certain terms and conditions (Please
refer to Regulation 8A of
Notification No. FEMA 4/2000-RB dated May 3, 2000 and
A.P. (DIR Series) Circular No.27 dated October 10, 2003).
IV
Repatriation of sale proceeds of residential / commercial
property purchased by NRI / PIO
Q.22. Can NRI / PIO repatriate the sale proceeds of
immovable property? If so, what are the terms?
A.22. NRI / PIO may repatriate the sale proceeds of
immovable property in India
(a) If the property was acquired out of foreign exchange
sources i.e. remitted through normal banking channels / by
debit to NRE / FCNR (B) account
The amount to be repatriated should not
exceed the amount paid for the property:
1. in
foreign exchange received through normal banking channel or
2. by debit to NRE account(foreign currency equivalent, as
on the date of payment) or debit to FCNR (B) account.
Repatriation of sale proceeds of residential property
purchased by NRI / PIO out of foreign exchange is restricted
to not more than two such properties.
Capital gains, if any, may be credited to the NRO account
from where the NRI/PIO may repatriate an amount up to USD
one million, per financial year, as discussed below.
(b) If the property was acquired out of Rupee sources, NRI
or PIO may remit an amount up to USD one million, per
financial year, out of the balances held in the NRO account
(inclusive of sale proceeds of assets acquired by way of
inheritance or settlement), for all the bonafide purposes to
the satisfaction of the Authorized Dealer bank and subject
to tax compliance.
Q.23. Can an NRI/PIO repatriate the proceeds in case
the sale proceed was deposited in NRO account?
A.23. From the NRO account, NRI/PIO may repatriate up to USD
one million per financial year (April-March), which would
also include the sale proceeds of immovable property.
Q.24. If a Rupee loan was taken by NRI/PIO from Authorised
Dealer or housing finance institution for purchase of
residential property can an NRI / PIO repatriate the sale
proceeds of such property?
A.24. Yes, provided the loan has been subsequently repaid by
remitting funds from abroad or by debit to NRE/FCNR(B)
accounts (Please see
A.P. (DIR) Series Circular No. 101 dated 5.5.2003)
Q.25. If the property was purchased from foreign
inward remittance or from NRE / FCNR (B) account, can the
sale proceeds of property be repatriated immediately?
A.25. Yes.
Q.26. Is there any restriction on number of
residential properties in respect of which sale proceeds can
be repatriated by NRI / PIO?
A.26. Yes, sale proceeds of not more than two residential
properties can be repatriated.
Q.27. If the immovable property was acquired by way
of gift by the NRI/PIO, can he repatriate abroad the funds
from sale?
A.27. The sale proceeds of immovable property acquired by
way of gift should be credited to NRO account only. From the
balance in the NRO account, NRI/PIO may remit up to USD one
million, per financial year, subject to the satisfaction of
Authorised Dealer and payment of applicable taxes.
Q.28 If the immovable property was received as
inheritance by the NRI/PIO can he repatriate the sale
proceeds?
A.28. Yes, general permission is available to the NRIs/PIO
to repatriate the sale proceeds of the immovable property
inherited from a person resident in India.
NRIs/PIO may repatriate an amount not exceeding USD one
million, per financial year, on production of documentary
evidence in support of acquisition / inheritance of assets,
an undertaking by the remitter and certificate by a
Chartered Accountant in the formats prescribed by the
Central Board of Direct Taxes vide their Circular No.10/2002
dated October 9, 2002. [cf.
A. P. (DIR Series) Circular No.56 dated November 26, 2002].
In case of a foreign national, sale proceeds can also be
repatriated even if the property is inherited from a
person resident outside India. But this is allowed
only with prior approval of Reserve Bank. The foreign
national has to approach Reserve Bank with documentary
evidence in support of inheritance of the immovable property
and the undertaking and the C.A. Certificate as mentioned
above.
The general permission for repatriation of sale proceeds of
immovable property is not available to a citizen of
Pakistan, Bangladesh, Sri Lanka, China, Afghanistan and Iran
and he has to seek specific approval of Reserve Bank.
As FEMA specifically permits transactions only in Indian
Rupees with citizens of Nepal and Bhutan, the question of
repatriation of the sale proceeds in foreign exchange to
Nepal and Bhutan would not arise.
V.
Provisions for Foreign Embassies / Diplomats / Consulate
Generals
Q.29. Can Foreign Embassies / Diplomats / Consulate
General purchase / sell immovable property in India ?
A.29. Yes, Foreign Embassies / Diplomats / Consulate
Generals can purchase and sell any immovable property
other than agricultural land / plantation property /
farm house in India with prior clearance from the
Government of India, Ministry of External Affairs. The
payment should be made by foreign inward remittance through
normal banking channel.
VI. Other issues
Q.30. Can NRI / PIO rent out the residential /
commercial property purchased out of foreign exchange /
rupee funds?
A.30. Yes, NRI/PIO can rent out the property without the
approval of the Reserve Bank. Rent received can be
credited to NRO / NRE account or remitted abroad.
Powers have been delegated to the Authorised Dealers to
allow repatriation of current income like rent, dividend,
pension, interest, etc. of NRIs/PIO who do not maintain an
NRO account in India based on an appropriate certification
by a Chartered Accountant, certifying that the amount
proposed to be remitted is eligible for remittance and that
applicable taxes have been paid/provided for.[cf.
A.P. (DIR Series) Circular No. 45 dated May 14, 2002].
Q.31. Can a person who had bought immovable property
when he was a resident, continue to hold such property even
after becoming an NRI/PIO?
A. 31. Yes, he can continue to hold the residential /
commercial property / agricultural land/ plantation property
/ farm house in India without the approval of the Reserve
Bank.
Q. 32. In which account can the sale proceeds of
such immovable property be credited ?
A.32. The sale proceeds may be credited to NRO account.
Q.33. Can the sale proceeds of the immovable
property referred to in Q.No. 31 be remitted abroad ?
A.33. Yes, provided the amount to be remitted does not
exceed USD one million per financial year, for all bonafide
purposes to the satisfaction of Authorised Dealers and
subject to tax compliance.
Q.34. Can foreign nationals of non-Indian origin
resident in India or outside India who had earlier acquired
immovable property under FERA with specific approval of
Reserve Bank continue to hold the same? Can they transfer
such property?
A.34. Yes, they may continue to hold the immovable property.
However, they can transfer the property only with the prior
approval of Reserve Bank.
Q.35. Is a resident in India governed by the
provisions of Foreign Exchange Management (Acquisition and
transfer of immovable property in India) Regulations, 2000?
A.35. A person resident in India who is a citizen of
Pakistan or Bangladesh or Sri Lanka or Afghanistan or China
or Iran or Nepal or Bhutan is governed by the provisions of
Foreign Exchange Management (Acquisition and Transfer of
Immovable Property in India) Regulations, 2000 ie. he would
require prior approval of Reserve Bank for acquisition and
transfer of immovable property in India even though he is
resident in India. Such requests are considered by Reserve
Bank in consultation with the Government in India
Definitions
Q.36.Where are the terms a `person resident in
India' and a `person resident outside India' defined ?
A.36. Section 2 (v) and Section 2 (w) of the FEMA, 1999
defines `person resident in India' and a `person resident
outside India' respectively.
Q.37. What is meant by a person resident in India ?
A.37. Under FEMA, a person resident in India is defined as a
person residing in India for more than one hundred and
eighty-two days during the course of the preceding financial
year (April-March) and who has come to or stays in India
either for taking up employment, carrying on business or
vocation in India or for any other purpose, that would
indicate his intention to stay in India for an uncertain
period. In other words, to be treated as `a person
resident in India' under FEMA, a person has not only to
satisfy the condition of the period of stay (being more than
182 days during the course of the preceding financial year)
but has also to comply with the condition of the purpose /
intention of stay.
Q.38. What is meant by a person resident outside
India ?
A.38. The Act defines a 'a person resident outside India' as
a person who is not a person resident in India' (As defined
in
Q.No. 37 above)
Q.39. Who can determine whether a person is resident in
India or not?
A.39. Reserve Bank does not determine the residential
status. Under FEMA, residential status is determined by
operation of law. The onus is on an individual to prove his
/ her residential status, if questioned by any authority.
Q.40. If a foreign national is a person resident in
India as per the provisions of Section 2(v) (i)B of the FEMA,
1999, does he require approval of Reserve Bank to purchase
any immovable property in India ?
A.40 A foreign national resident in India does not require
approval from Reserve Bank from FEMA angle, but approvals if
any required in terms of regulations prescribed by other
authorities such as the concerned State Government etc. will
have to be obtained by him / her. However, a foreign
national resident in India who is a citizen of Pakistan,
Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal and
Bhutan requires specific prior approval of Reserve Bank.
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