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I Regulations/Directions issued by Reserve Bank of India
II Acquisition of immovable property in India by way of purchase by a person resident outside India
III Acquisition of immovable property in India by way of
gift by a person resident outside India
V Transfer of immovable property in India by way of sale by a person resident outside India
VI Transfer of immovable property in India by way of gift by a person resident outside India
VII Transfer of residential/commercial property in India by way of mortgage by a person resident outside India
VIII Mode of payment for purchase of residential/commercial
property in India by NRI/PIO
IX Repatriation of sale proceeds of residential/commercial
property purchased by NRI/PIO
X Remittance of sale proceeds of residential/commercial property
received by way of gift by NRI/PIO
XI Remittance of sale proceeds of inherited immovable property
by a person resident outside India
XII Acquisition of immovable property for carrying on a permitted
activity in India
I Regulations/Directions issued by Reserve Bank of
India
Q.1.
Where can one find
regulations/directions issued by Reserve Bank for acquisition and transfer
of immovable property in India by a person resident outside India?
A.1. Regulations regarding acquisition and transfer of immovable
property in India by a person resident outside India have been notified vide
RBI Notification No. FEMA 21/2000-RB dated May 3, 2000 as amended
vide Notification No. FEMA 64/2002-RB dated June 29, 2002 and
Notification No. FEMA 65/2002-RB dated June 29, 2002 and
relevant directions issued in the form of A.P. (DIR Series) Circulars. These
are available on RBI website: www.fema.rbi.org.in
II Acquisition of immovable property in India by way
of purchase by a person resident outside India
Q.2. Under the extant foreign exchange regulations to whom
is general permission available for purchase immovable property in India?
A.2. General Permission is available to purchase only a residential/commercial
property in India to a person resident outside India who is a citizen of India
(NRI) and who is a Person of Indian Origin (PIO).
Q.3. Who is a Person of Indian Origin (PIO)?
A.3. For the purpose of acquisition and transfer of immovable
property in India, a PIO means an individual (not being a citizen of Pakistan
or Bangladesh or Sri Lanka or Afghanistan or China or Iran or Nepal or Bhutan),
who (i) at any time, held Indian passport; or (ii) 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).
Q.4. Is NRI/PIO who has purchased residential/commercial
property under general permission required to file any documents with Reserve
Bank of India?
A.4. NRI/PIO who has purchased residential/commercial property
under general permission is not required to file any documents with the Reserve
Bank.
Q.5. Is there any restriction on number of residential/commercial
property that NRI/PIO can purchase under the general permission available?
A.5. There is no restriction on number of residential/commercial
property that NRI/PIO can purchase under the general permission available
Q.6. Can a name of a foreign national of non-Indian origin
be added as a second holder to a residential/commercial property purchased
by NRI/PIO?
A.6. No.
Q.7. Can a foreign national of non-Indian origin resident
outside India acquire any immovable property in India by way of purchase?
A.7. No. Under section 2 (ze) of the Foreign Exchange Management
Act, 1999 ‘transfer’ includes among others, ‘purchase’. Therefore, a foreign
national of non-Indian origin resident outside India cannot acquire any immovable
property in India by way of purchase.
Q.8. Can a foreign national of non-Indian origin acquire
residential property on a lease in India?
A.8. Yes. A Foreign National of non-Indian origin including a
citizen of Pakistan or Bangladesh or Sri Lanka or Afghanistan or China or
Iran or Nepal or Bhutan may acquire only residential accommodation on lease,
not exceeding five years for which he/she does not require prior permission
of Reserve Bank of India.
Q.9. Can a person resident outside India (i.e. a NRI or a
PIO or a foreign national of non-Indian origin) acquire agricultural land/plantation
property/farm house in India by way of purchase?
A.9. No. A person resident outside India cannot acquire by way
of purchase agricultural land/plantation property/farm house in India.
III Acquisition of immovable property in India by way of gift by a person resident outside
India
Q. 10. Can NRI/PIO acquire residential/commercial property
by way of gift under the general permission available?
A. 10.Yes. Under general permission available NRI/PIO may acquire
residential/commercial property by way of gift from a person resident in India
or a NRI or a PIO.
Q. 11. Can a foreign national of non-Indian origin resident
outside India acquire residential/commercial in India by way of gift?
A. 11. No. Under section 2 (ze) of the Foreign Exchange Management
Act, 1999 ‘transfer’ includes among others, ‘gift’. Therefore, a foreign national
of non-Indian origin resident outside India cannot acquire residential/commercial
property in India by way of gift.
Q. 12. Can a person resident outside India (i.e. a NRI or
a PIO or a foreign national of non-Indian origin) acquire agricultural land/plantation
property/farm house in India by way of gift?
A. 12. No. A person resident outside India cannot acquire agricultural
land/plantation property/farm house in India by way of gift.
IV Acquisition of immovable property in India by way of inheritance by a person resident outside
India
Q.13. Can a person resident outside India (i.e. NRI or PIO
or foreign national of non-Indian origin) hold any immovable property in India
acquired by way of inheritance from a person resident in India?
A.13. Yes. A person resident outside India can hold immovable
property acquired by way of inheritance from a person resident in India as
per the provisions of Section 6(5) of the Foreign Exchange Management Act,
1999.
Q.14. Can a person resident outside India (i.e. NRI or PIO
or foreign national of non-Indian origin) hold any immovable property in India
acquired by way of inheritance from a person resident outside India?
A. 14. With the specific approval of Reserve Bank a person resident
outside India may hold any immovable property in India acquired by way of
inheritance from a person resident outside India, provided the bequeathor
had acquired such property in accordance with the provisions of foreign exchange
law in force at the time of acquisition or under FEMA regulations.
V Transfer of immovable property in India by way of sale by a person resident outside
India
Q.15. Under general permission available to whom can NRI
transfer by way of sale his residential/commercial property?
A.15. NRI can transfer by way of sale residential/commercial
property in India to a person resident in India or to a NRI or a PIO.
Q.16. Under general permission available to whom can a PIO
transfer his residential/commercial property by way of sale?
A.16. PIO can transfer by way of sale residential/commercial
property in India only to a person resident in India.
Q. 17. Can a PIO transfer by way of sale his residential/commercial
property to a NRI or a PIO?
A.17. No. He would need to seek Reserve Bank prior approval for
transfer by way of sale residential/commercial property in India to a NRI
or a PIO.
Q. 18. Can a foreign national of non-Indian origin whether
resident in India or outside India transfer by way of sale residential/property
in India acquired with the specific permission of Reserve Bank to a person
resident in India or outside India?
A. 18. No. A foreign national of non-Indian origin whether resident
in India or outside India would need to seek prior approval of Reserve Bank
for transfer by way of sale residential/property in India acquired with the
specific permission of Reserve Bank to a person resident in India or outside
India.
Q.19. Under general permission available to whom can NRI/PIO
transfer by way of sale his agricultural land/plantation property/farm house
in India?
A.19. Under the general permission available NRI/PIO may transfer
by way of sale his agricultural
land/plantation property/farm house in India to a person resident in India
who is a citizen of India.
Q.20. Can a foreign national of non-Indian origin resident
outside India transfer by way of sale agricultural land/plantation property/farm
house acquired by him in India?
A. 20. A foreign national of non-Indian origin resident outside
India would need to seek prior approval of Reserve Bank for transfer, by way
of sale, agricultural land/plantation property/farm house acquired in India.
VI Transfer of immovable property in India by way of gift
by a person resident outside India
Q.21. Under general permission available can NRI/PIO transfer
his residential/commercial property by way of gift?
A. 21. Yes. NRI/PIO may transfer by way of gift residential/commercial
property in India to a person resident in India or to a NRI or a PIO.
Q. 22. Under general permission available to whom can NRI/PIO
transfer by way of gift agricultural land/plantation property/farm house in
India?
A.22. Under the general permission available NRI/PIO may transfer
by way of gift agricultural land/plantation property/farm house in India to
a person resident in India who is a citizen of India.
Q.23. Can a foreign national of non-Indian origin resident
outside India transfer by way of gift agricultural land/plantation property/farm
house acquired by him in India?
A.23. No. A foreign national of non-Indian origin resident outside
India would need to seek prior approval of Reserve Bank for transfer by way
of gift agricultural land/plantation property/farm house acquired by him in
India.
VII Transfer of residential/commercial property in India by way of mortgage by a person resident outside
India
Q.24. Can NRI/PIO transfer by way of mortgage his residential/commercial
property to an authorized dealer/housing finance institution in India?
A. 24. Yes.
Q.25. Can NRI/PIO transfer by way of mortgage his residential/commercial
property in India to a party abroad?
A.25. No. He should seek prior approval of RBI.
Q.26. Can a foreign national of non-Indian origin resident
in India or outside India transfer by way of mortgage his residential/commercial
property in India acquired with the specific approval of Reserve Bank to a
party in India or abroad?
A. 26. No. He should seek prior approval of RBI. However, immovable
property purchased by a person resident outside India who has established
a Branch Office or other place of business for carrying on in India any activity
in accordance with FERA/FEMA regulations, may under general permission available,
mortgage such a property with an authorized dealer as a security for any borrowing.
VIII Mode of payment for purchase of residential/commercial property
in India by NRI/PIO
Q.27. Under the general permission available what is mode
of payment for purchase of residential/commercial property in India by NRI/PIO?
A.27. Under the general permission available NRI/PIO may purchase
residential/commercial property in India out of funds remitted to India through
normal banking channel or funds held in his NRE/FCNR (B)/NRO account. No consideration
shall be paid outside India.
Q.28. Can refund of application/earnest money/purchase consideration
made by the house building agencies/seller on account of non-allotment of
flat/plot/cancellation of bookings/deals for purchase of residential/commercial
property together with interest, if any (net of income tax payable thereon)
be credited to NRE account?
A. 28. Yes, provided original payment was made by way of inward
remittance or by debit to NRE/FCNR (B) account. For this purpose no permission
of Reserve Bank is required and they may approach the Authorised Dealer directly
in the matter. (Please refer to A. P. (DIR Series Circular No. 46 dated November 12, 2002).
Q. 29. Can NRI/PIO for the purpose of acquisition of flat/house
in India for his own residential use avail of loan from authorized dealer
against the security of funds held in his NRE Fixed Deposit account/FCNR (B)
account?
A. 29. Yes, subject to certain terms and conditions (Please refer
to Schedules 1 and Schedules 2 to Notification No. FEMA 5/2000-RB dated 3rd May 2000).
Q.30. Can NRI/PIO, avail of housing loan in rupees from an
authorized dealer or housing finance institution in India approved by the
National Housing Finance Bank for purchase of residential accommodation or
for the purpose of repairs/renovation/improvement of residential accommodation?
A. 30. Yes, subject to certain terms and conditions. Such loans
can be repaid by the borrower by way of inward remittance through normal banking
channel or by debit to his NRE/FCNR (B)/NRO account or out of rental income
derived from renting out such property. Such loan can also be repaid by the
borrower's close relatives through their account in India by crediting the
borrower's loan account. (Please refer to Regulation 8 to
Notification No. FEMA 4/2000-RB dated 3rd May 2000 and A.P. (DIR Series) Circular No.95 dated April 20, 2003 and
A.P. (DIR Series) Circular No.94 dated May 25, 2003).
Q. 31. Can NRI avail of housing loan in rupees from his employer
in India?
A. 31. Yes, subject to certain terms and conditions (Please refer
to Regulation 8A to Notification No. FEMA 4/2000-RB dated 3rd May 2000 and A.P. (DIR Series Circular No.27 dated October 10, 2003).
IX Repatriation of sale proceeds of residential/commercial property purchased
by NRI/PIO
Q.32. Can NRI/PIO repatriate the sale proceeds of residential/commercial
property in India acquired by way of inward remittance through normal banking
channel or by debit to NRE/FCNR (B)/NRO account? If so, what is the quantum?
A.32. NRI/PIO may repatriate the sale proceeds of residential/commercial
property in India acquired by way of inward remittance through normal banking
channel or by debit to NRE/FCNR (B) account. The amount to be repatriated
should not exceed the amount paid for acquisition of residential/commercial
property (a) in foreign exchange received through normal banking channel or
by debit to FCNR (B) account or (b) the foreign currency equivalent, as on
the date of payment, of the amount paid by debit to NRE account. The sale
proceeds of residential/commercial property in India acquired by way of debit
to NRO account cannot be repatriated and should be credited to NRO account
only.
Q.33. The rupee loan availed by NRI for purchase of residential accommodation
was repaid either by inward remittance or by debit to NRE/FCNR (B) account.
Can the sale proceeds of such property be repatriated?
A.33. Yes. Repayment of loan in foreign exchange is treated as equivalent to
the foreign exchange received for purchase of residential accommodation.
Q.34. Is there any lock in period for sale of residential/commercial property
purchased out of inward remittance/debit to NRE/FCNR(B) account?
A.34. No lock in period is applicable for sale of such property.
Q.35. Is there any restriction on repatriation of sale proceeds of residential
property purchased by NRI/PIO out of funds remitted to India through normal
banking channel or funds held in his NRE/FCNR (B) account?
A.35. Yes. Repatriation of sale proceeds is restricted to not more than two
residential properties.
X Remittance of sale proceeds of residential/commercial property received by
way of gift by NRI/PIO
Q.36 Into which account the sale proceeds of residential/commercial property
received by way of gift by NRI/PIO can be credited?
A.36. The sale proceeds of residential/commercial property received by way of
gift by NRI/PIO should be credited to NRO account only.
XI Remittance of sale proceeds of immovable property inherited by a person resident
outside India
Q.37. Can sale proceeds of any immovable property inherited by NRI/PIO from
a person resident in India be remitted abroad?
A. 37. Yes. Amount not exceeding USD one million, per calendar year subject
to production of documentary evidence in support of inheritance and Tax clearance
certificate/no objection certificate from Income Tax authority to authorized
dealer for remittances. However, if a PIO is a citizen of Pakistan or Bangladesh
or Sri Lanka or Afghanistan or China or Iran he should seek prior approval of
Reserve Bank with documentary evidence in support of inheritance and tax clearance/no
objection certificate from Income Tax authority. This remittance facility is
not available to a citizen of Nepal or Bhutan. (Please refer to Regulation 4
(3) to Notification No. FEMA 13/RB-2000 dated 3rd May 2000)
Q.38. Can sale proceeds of any immovable property in India inherited, by a foreign
national of non-Indian origin resident outside India, from a person resident
in India be repatriated by him?
A.38. Yes. Amount not exceeding USD one million, per calendar year subject to
production of documentary evidence in support of inheritance and Tax clearance
certificate/no objection certificate from Income Tax authority to authorized
dealer for remittances. However, a citizen of Pakistan or Bangladesh or Sri
Lanka or Afghanistan or China or Iran shall seek prior approval of Reserve Bank
with documentary evidence in support of inheritance and tax clearance/no objection
certificate from Income Tax authority. This remittance facility is not available
to a citizen of Nepal or Bhutan. (Please refer to Regulation 4 (2) (ii) to Notification No. FEMA 13/RB-2000 dated 3rd May 2000)
Q.39. Can sale proceeds of any immovable property in India inherited, by a person
resident outside India (i.e. NRI or PIO or foreign national of non-Indian origin
resident outside India), from a person resident outside India be repatriated
by him or his successor?
A.39. No. He needs to seek prior approval of Reserve Bank with documentary evidence
in support of inheritance and tax clearance/no objection certificate from Income
Tax authority.
XII Acquisition of immovable property for carrying on a permitted activity in
India
Q.40. Can a person resident outside India who has established a Liaison Office
in India in accordance with FERA/FEMA regulations purchase immovable property?
A.40. No.
Q. 41. Can a person resident outside India who has established a Branch Office
or other place of business for carrying on in India any activity in accordance
with FERA/FEMA regulations purchase commercial/residential property?
A.41. Yes, provided it is necessary for or incidental to carrying on such activity
and all applicable laws, rules, regulations or directions are duly complied
with. The purchase price should be paid by way of inward remittance through
proper banking channel. A declaration in form IPI should be filed with Reserve
Bank within ninety days from the date of acquisition of commercial/residential
property.
Q. 42. Can such a property referred to in Q. No.41 be mortgaged with an authorized
dealer as a security for any borrowing?
A.42. Yes, RBI has granted general permission for such a mortgage.
Q.43. On winding up of the business can the sale proceeds of such property be
repatriated?
A.43. Yes, with prior approval of Reserve Bank.
XIII Acquisition/Transfer of immovable property in India by Foreign Embassies/Diplomats/Counsel
Generals
Q.44. Can Foreign Embassies/Diplomats/Counsel General purchase/sell immovable
property in India?
A.44.Yes. Under general permission available Foreign Embassies/Diplomats/Counsel
General may acquire any immovable property other than agricultural land/plantation
property/farm house in India. Such property may be purchased/sold provided prior
clearance from the Government of India, Ministry of External Affairs has been
obtained for such purchase/sale. The consideration for purchase of such property
should be paid by way of inward remittance through normal banking channel.
XIV Other issues
Q. 45. Can NRI/PIO rent out the residential/commercial property purchased out
of foreign exchange/rupee funds, if not required for immediate use?
A. 45. Yes. Rent received, being current income may be credited to NRO/NRE account
or remitted abroad.
Q.46. Can NRI who had acquired immovable property viz., residential/commercial
property/agricultural land/plantation property/farm house in India while he
was a person resident in India continue to hold or transfer such immovable property?
In which account the sale proceeds may be credited?
A.46. Yes, under the provisions of Section 6 (5) of the Foreign Exchange Management
Act, 1999 NRI who had acquired immovable property in India while he was a person
resident in India may continue to hold such property. Under the general permission
available he may transfer by way of sale or gift agricultural land/plantation
property/farm house in India to a person resident in India who is a citizen
of India and may transfer by way of sale or gift residential/commercial property
in India to a person resident in India or to a NRI/PIO. The sale proceeds may
be credited to NRO account.
Q.47. Can a PIO who had acquired immovable property viz., residential/commercial
property/agricultural land/plantation property/farm house in India while he
was a person resident in India continue to hold or transfer such immovable property?
In which account the sale proceeds may be credited?
A.47. Yes, under the provisions of Section 6 (5) of the Foreign Exchange Management
Act, 1999, PIO who had acquired immovable property in India while he was a person
resident in India may continue to hold such property. Under the general permission
available he may transfer agricultural land/plantation property/farm house in
India by way of sale or gift to a person resident in India who is a citizen
of India and residential/commercial property in India by way of sale to a person
resident in India and way of gift residential/commercial property in India to
to a person resident in India or to a NRI/PIO. However, if a PIO is a citizen
of Pakistan or Bangladesh or Sri Lanka or Afghanistan or China or Iran or Nepal
or Bhutan he should seek prior approval of Reserve Bank for transfer of such
immovable property in India. The sale proceeds may be credited to NRO account.
Q.48. Can the sale proceeds of the immovable property referred to in Q. Nos.
46 and 47credited to NRO account of NRI/PIO, be remitted abroad?
A.48. Yes, provided the immovable property was held for a period not less than
ten years.
Q. 49. What if such an immovable property was held for less than ten years?
A. 49. If such a property acquired out of rupee funds is sold after being held
for less than ten years, remittance can be made, if the sale proceeds were held
for the balance period in NRO account (Savings/Term Deposit) or in any other
eligible investment, provided such investment is traced to the sale proceeds
of the immovable property.
Q.50. Under erstwhile FERA, foreign nationals of non-Indian origin resident
in India or outside India had with the specific approval of Reserve Bank acquired
residential property in India. While they can continue to hold the same under
the provisions of Section 6 (5) of the FEMA, 1999 can they transfer such property?
A.50. Yes; only with the prior approval of Reserve Bank.
Q.51. Is a person resident in India governed by the provisions of Foreign Exchange
Management (Acquisition and transfer of immovable property in India) Regulations,
2000?
A.51. 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.
Q.52. Where are the terms a ‘person resident in India’ and a ‘person resident
outside India’ defined?
A.52. Section 2 (v) and section 2 (w) of the Foreign Exchange Management Act,
1999 defines a 'person resident in India' and a 'person resident outside India'
respectively.
Q.53. What is meant by a person resident in India?
A.53. From FEMA angle, a person resident in India means 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.54. Does Reserve Bank determine the residential status of a person for the
purpose of acquisition of immovable property in India?
A.54. No. 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 other authority.
Q.55. If a foreign national (except a citizen of Pakistan, Bangladesh, Sri Lanka,
Afghanistan, China, Iran, Nepal and Bhutan) is a person resident in India as
per the provisions of Section 2 (v) (i) B of the Foreign Exchange Management
Act, 1999 does he require approval of RBI to purchase any immovable property
in India?
A.55. No, he does not require approval from Reserve Bank from FEMA angle. However,
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.
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