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Transaction of immovable properties
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Acquiring immovable property in India by persons residing outside the country is regulated by the Foreign Exchange Management Act and by RBI notifications, writes C.H. Gopinatha Rao
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Acquiring immovable property in India by persons resident outside India is regulated by the Foreign Exchange Management Act (FEMA) and by RBI notifications.The person residing outside India is categorised as Non- Resident Indian (NRIs) or a foreign national of Indian Origin (PIO). A person resident in India who is not a citizen of India is also covered by the notifications.
Person of Indian Origin means an individual who is a citizen of any other country other than Bangladesh, or Pakistan or Sri Lanka, Afghanistan or China, Iran, Nepal or Bhutan and at any point of time held an Indian passport for himself, or whose father or grandfather was a citizen of India. Foreign National means a person who is not a citizen of India.
Leasing properties
The restrictions on acquiring immovable property in India by a person residing outside India would not apply when the immovable property is to be acquired through lease for a period not exceeding 5 years or when a person is resident in India. Restrictions apply if the lease exceeds five years.
However, citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan cannot acquire or transfer immovable property in India, without prior permission of the Reserve Bank of India.
Acquisition by purchase
An NRI or POI can purchase any number of residential or commercial properties but cannot acquire agricultural land / plantation / farm house in India. There is no need to file any document with the RBI. The name of a foreign national of non-Indian origin cannot be added as a second holder. A foreign national of non-Indian origin resident outside India cannot acquire any immovable property in India by way of purchase.
Mode of payment
Payment can be made by NRI / PIO out of (a) funds remitted to India through normal banking channel or
(b) funds held in NRE (Non Resident External account) / FCNR (Foreign currency Non Resident (Bank account)/ NRO Non Resident Ordinary account () account maintained in India. No payment can be made either by traveller’s cheques or by foreign currency. No payment can be made outside India.
Acquisition by way of gift
i) An NRI or PIO may acquire residential or commercial property by way of gift from a person resident in India or from an NRI or a PIO.
ii) A foreign national of non-Indian origin resident outside India cannot acquire residential or commercial property in India by way of gift.
iii) A person residing outside India cannot acquire agricultural land, farm house in India by way of gift.
Acquisition by way of inheritance
A person resident outside India can hold immovable property in India acquired by way of inheritance from a person resident in India. A person resident outside India may hold any immovable property in India acquired by way of inheritance provided the person who bequeaths had acquired such property in accordance with the provisions of Foreign Exchange Act in force at the time of acquisition. A NRI / PIO may sell agricultural land or plantation property or farm house to a person resident in India who is a citizen of India.
Repatriation
The sale proceeds of an immovable property acquired by a NRI when he was in India can be credited to NRO account provided the property was held for a period of ten years. If such a property acquired out of rupee funds after being held for less than ten years, the remittance can be made in NRO account ( saving or term deposit ) or any other eligible investments provided such investment is traced to the sale proceeds of the immovable property .
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