I. |
ACQUISITION
OF IMMOVABLE PROPERTY IN INDIA |
Q. |
Who
can purchase immovable property in India? |
A. |
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. |
Whether
NRI/PIO can acquire agricultural land/ plantation
property / farm house in India? |
A. |
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. |
Do
any documents need to be filed with Reserve
Bank of India after purchase? |
A. |
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. |
How
many residential / commercial properties
can NRI / PIO purchase under the general
permission? |
A. |
There
are no restrictions on the number of residential
/ commercial properties that can be purchased. |
Q. |
Can
a foreign national of non-Indian origin
be a second holder to immovable property
purchased by NRI / PIO? |
A. |
No. |
Q. |
Can
a foreign national of non-Indian origin
resident outside India purchase immovable
property in India? |
A. |
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. |
Can
a foreign national who is a person resident
in India purchase immovable property in
India? |
A. |
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. |
Can
an office of a foreign company purchase
immovable property in India? |
A. |
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. |
Whether
immovable property in India can be acquired
by way of gift ? |
A. |
(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. |
Whether
a non-resident can inherit immovable property
in India? |
A. |
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. |
From
whom can the non-resident inherit immovable
property? |
A. |
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. |
Can
an NRI/ PIO/foreign national sell his residential
/ commercial property? |
A. |
(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. |
Can
an agricultural land / plantation property
/ farm house in India owned / held by a
non-resident be sold? |
A. |
(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. |
Can
a non-resident gift his residential / commercial
property? |
A. |
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. |
Can
an NRI / PIO / Foreign national holding
an agricultural land / plantation property
/ farm house in India gift the same? |
A. |
(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. |
Can
residential / commercial property be mortgaged? |
A. |
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. |
How
can an NRI / PIO make payment for purchase
of residential / commercial property in
India ? |
A. |
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. |
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. |
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. |
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. |
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. |
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. |
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. |
Can
NRI/PIO avail of housing loan in rupees from
his employer in India? |
A. |
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. |
Can
NRI / PIO repatriate the sale proceeds of
immovable property? If so, what are the
terms? |
A. |
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. |
Can
an NRI/PIO repatriate the proceeds in case
the sale proceed was deposited in NRO account? |
A. |
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. |
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. |
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. |
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. |
Yes. |
Q. |
Is
there any restriction on number of residential
properties in respect of which sale proceeds
can be repatriated by NRI / PIO? |
A. |
Yes, sale
proceeds of not more than two residential
properties can be repatriated. |
Q. |
If
the immovable property was acquired by way
of gift by the NRI/PIO, can he repatriate
abroad the funds from sale? |
A. |
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. |
If
the immovable property was received as inheritance
by the NRI/PIO can he repatriate the sale
proceeds? |
A. |
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. |
Can
Foreign Embassies / Diplomats / Consulate
General purchase / sell immovable property
in India ? |
A. |
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. |
Can
NRI / PIO rent out the residential / commercial
property purchased out of foreign exchange
/ rupee funds? |
A. |
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. |
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. |
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. |
In which account can the sale proceeds of
such immovable property be credited ? |
A. |
The sale
proceeds may be credited to NRO account. |
Q. |
Can
the sale proceeds of the immovable property
referred to in Q.No. 31 be remitted abroad
? |
A. |
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. |
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. |
Yes,
they may continue to hold the immovable
property. However, they can transfer the
property only with the prior approval of
Reserve Bank. |
Q. |
Is
a resident in India governed by the provisions
of Foreign Exchange Management (Acquisition
and transfer of immovable property in India)
Regulations, 2000? |
A. |
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. |
Where
are the terms a `person resident in India'
and a `person resident outside India' defined
? |
A. |
Section
2 (v) and Section 2 (w) of the FEMA, 1999
defines `person resident in India' and a
`person resident outside India' respectively.
|
Q. |
What
is meant by a person resident in India ? |
A. |
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. |
What is meant by a person resident outside
India ? |
A. |
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. |
Who
can determine whether a person is resident
in India or not? |
A. |
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. |
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. |
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. |
