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FOREIGN EXCHANGE
DEPARTMENT
FOREIGN INVESTMENT DIVISION
Frequently Asked Questions (FAQs)
Acquisition and Transfer of Immovable Property
in India by a person resident outside India
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In order to address
various issues relating to acquisition and transfer
of immovable property in India by a person resident
outside India under the provisions of the Foreign
Exchange Management Act, 1999, a set of FAQs has
been prepared for the information of all the concerned.
These FAQs seek to cover the broad spectrum of issues
relating to acquisition and transfer of immovable
property in India by a non-resident Indian (NRI)
or a foreign national of Indian origin (PIO) or
a foreign national of non-Indian origin as also
by a person resident in India who is not a citizen
of India. In case there are other issues to be resolved,
a reference may be made to the Chief General Manager,
Foreign Investment Division, Reserve Bank of India,
Central Office, Mumbai 400 001.
These FAQs cover the following topics: |
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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