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NRI FAQ'S

Acquisition of Immovable Property in India by Individuals

What category of Individuals residents outside India can acquire immovable property in India?

Individuals under following categories resident outside India can acquire immovable property in India:

  • Non Resident Indian.
  • Person of Indian Origin.
  • Overseas Citizen of India (OCI)

Who is a Non Resident Indian?

Non Resident Indian (NRI) is a citizen of India resident outside of India.

Which category of Individuals falls under the category of Person of India Origin (PIO)?

A "Person of Indian Origin" 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

  • at any time, held an Indian Passport, or
  • who or either of whose father or mother or whose grandfather or grandmother was a citizen of India by virtue of Constitution of India or the Citizenship Act, 1955 (57 of 1955).

Such PIO shall hold PIO card as issued by Ministry of Home Affairs in India. Such PIO card can be issued by way of making application to Ministry of Home Affairs by making application in appropriate format.

Whether Overseas Citizen of India can acquire property in India?

As per S.O 542(e) dated April 11th, 2005 published in the Gazette of India, an OCI shall have parity with NRI in respect of all facilities available to them in economic, financial and education field except in the matters relation to acquisition of agricultural and plantation properties.

Having said that, as per the Foreign Exchange Management Acquisition and Transfer of Immovable Property in India) Regulation, 2000, an NRI can acquire immovable property in India other than an agricultural property, plantation or farm house, provided that in case of acquisition of immovable property, payment of purchase price, if any, shall be made out of (i) funds received in India through normal banking channels by way of inward remittance from any place out of India or (ii) fund held in any non-resident bank account.

Since, it is clear that OCI is treated at par with NRI, therefore, OCI will have same powers as NRI in relation to acquisition of immovable property as mentioned above.

What kind of immovable property can be purchased by NRIs/PIOs by way of purchase?

An NRI/PIO under general permission of RBI can acquire by way of purchase any immovable property (Other than agricultural land/plantation property/farm house) in India.

Is there any requirement of making filing to Reserve Bank of India for the property purchased by NRI/PIO?

A NRI or a PIO who has purchased residential/ commercial property under general permission from RBI is not required to file any documents with the Reserve Bank of India.

How can NRIs/PIO make payment for acquisition of immovable properties?

NRIs/PIOs can make payment for acquisition of immovable property (other than agricultural land/plantation property/farm house) through normal banking channels in India by way of inward remittance from any place outside India or by debit to his NRE/FCNR(B) account.

It is to be noted payment for acquisition of immovable property cannot be made either by travellers cheque or by currency notes or by other modes. Such methods of payments are illegal and shall not be implied under any circumstances whatsoever.

How many residential / commercial properties can be purchased under general permission?

There areno restrictions on the number of residential/commercial properties that can be purchased by an NRI/PIO.

Can NRI transfer an immovable property acquired by them in India?

A NRI may transfer any immovable property in India to a person resident in India. Such NRI can also transfer any immovable property (other than plantation property or farm house) to an Indian Citizen Resident Outside India i.e. NRI or a PIO resident outside India.

Can PIO receive any immovable property by way of a gift/inheritance?

A PIO may acquire any immovable property (other than agricultural land/plantation property/farm house) in India by way of gift by a person resident in India or a NRI or a PIO.

A PIO may acquire any immovable property including agricultural land/plantation property/farm house, in India by way of inheritance rom a person resident in India or a person resident outside India who had acquired such property in accordance with the provisions of foreign exchange law in force of FEMA regulations, at the time of acquisition of property.

Can PIO transfer an immovable property acquired by them in India?

PIO can transfer any immovable property in India (other than agricultural land/farm house/plantation property) by way of sale to a person resident in India. He may transfer agricultural land/farm house/plantation property in India by way of gift or sale to a person resident in India, who is a citizen of India.

PIO may also transfer residential or commercial property in India by way of gift to a person resident in India or to a person resident outside India, who is a citizen of India or to a Person of India Origin resident outside India.

How can sale proceeds of immovable property held by Person Resident outside India are repatriated?

A "Person Resident Outside India" or his successor shall not except with the prior permission of Reserve Bank, repatriate outside India the proceeds of any immovable property.

However, in the event of sale of immovable property other than agricultural land/farm house/plantation property in India by a person resident outside India who is a citizen of India or a Person of Indian Origin, the authorised dealer may allow repatriation of the sale proceeds outside India, provided following conditions are satisfied

  • the immovable property was acquired by the seller in accordance with the foreign exchange law in force at the time of acquisition by him
  • the amount does not exceed
    » the amount paid for acquisition of the immovable property in foreign exchange received through normal banking channels, or
    » the amount paid out of funds held in foreign currency non-resident account; or
    » the foreign currency equivalent (as in the date of payment) of the amount paid where such payment was made from the funds held in the Non-Resident External account for acquisition of the property; and
  • in case of residential property, the repatriation of sale proceeds is restricted to not more than two of such properties.

How can sale proceeds of immovable property acquired by way of inheritance/legacy/out of rupees funds can be repatriated outside India?

A Non-Resident Indian (NRI) / Person of Indian Origin (PIO) may remit an amount, not exceeding US $ 1,000,000 (US Dollar One million only) per financial year out of the balances held in NRO accounts / sale proceeds of assets by way of purchase / the assets in India acquired by him by way of inheritance / legacy/ out of Rupee funds. This is subject to production of documentary evidence in support of acquisition, inheritance or legacy of assets by the remitter, and a tax clearance / no objection certificate from the Income Tax Authority for the remittance. Remittances exceeding US $ 1,000,000 (US Dollar One million only) in any financial year requires prior permission of the Reserve Bank.

In cases of deed of settlement made by either of his parents or a close relative and the settlement taking effect on the death of the settler, the original deed of settlement and a tax clearance / No objection certificate from the Income-Tax Authority should be produced for the remittance. Where the remittance as above is made in more than one installment, the remittance of all such installments shall be made through the same Authorised Dealer.

How can purchase consideration given by NRI/PIO to house building agencies/seller of properties can be refunded and remitted back in case of cancellation of booking/non allotment of flat?

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) may be allowed by the Authorised Dealers by way of credit to NRE/FCNR (B) account, provided the original payment was made out of NRE / FCNR (B) account of the account holder or remittance from outside India through normal banking channels and the Authorised Dealer is satisfied about the bonafides of the transaction.

Can a foreign national of non-Indian origin resident outside India purchase immovable property in India?

NO. A foreign national of non-Indian origin can only take residential accommodation on lease, provided the period of lease does not exceed five years. In such cases, there is no need of taking permission from or reporting to the RBI

Can a foreign national of non-Indian origin be a second holder to immovable property purchased by an NRI / PIO?

NO.

Can a foreign national of non-Indian origin be a second holder to immovable property purchased by an NRI / PIO?

Yes, A person resident outside India who has established a Branch, Office or other place of business, excluding a Liaison Office, for carrying on in India any activity in accordance with the Foreign Exchange Management (Establishment in India of Branch or Office or other Place of Business) Regulations, 2000 may –

  • acquire any immovable property in India, which is necessary for or incidental to carrying on such activity, provided that all applicable laws, rules, regulations or directions for the time being in force are duly complied with; and the person files with the Reserve Bank a declaration in the form IPI, not later than ninety days from the date of such acquisition; and
  • transfer by way of mortgage to an Authorised Dealer as a security for any borrowing, the immovable property acquired in pursuance of clause (a) above.

On winding up of the business, the sale proceeds of such property can be repatriated only with the prior approval of RBI.

Prior approval of RBI would be required for the acquisition of immovable property by entities that have been incorporated in Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan and have set up Branch Offices in India.

Is there any prior permission required for citizens of certain countries for acquisition or transfer of immovable property in India?

Yes, A citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan, whether resident in India or outside India, cannot acquire or transfer immovable property in India, without the prior permission of the Reserve Bank. This restriction is not applicable where the immovable property is taken on lease for a period not exceeding five years.

Can a foreign national who is resident in India as per the provisions of Section 2(v) (i) B of the FEMA, 1999 purchase immovable property in India?

Yes. Approvals from concerned state governments would have to be obtained and requirements of other authorities fulfilled.

A foreign national resident in India who is a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan would require prior approval of the RBI considered in consultation with the Government of India.


Transfer through Mortgage

Can residential / commercial property be mortgaged by NRI/PIO?

Yes, An NRI/PIO can mortgage residential/commercial property to:

  • An authorized dealer/housing finance institution in India without the approval of the Reserve Bank.
  • A party abroad with prior approval of RBI.
  • A foreign national of non-Indian origin can mortgage residential/commercial property only with prior approval of the Reserve Bank.
  • A foreign company that has established a Branch Office or other place of business in India in accordance with Foreign Exchange Regulations has general permission to mortgage the property with an Authorized Dealer in India.

Can an NRI / PIO avail of loan from an Authorized Dealer for acquiring a flat / house in India for his own residential use against the security of funds held in his NRE Fixed Deposit account / FCNR (B) account?

YES, Such loans are subject to the terms and conditions as laid down in Schedules1 and 2 to Notification No. FEMA 5/2000-RB dated May 3, 2000 as amended from time to time.

Banks cannot grant fresh loans or renew existing loans in excess of Rs 100 lakh against NRE and FCNR (B) deposits, either to the depositors or to third parties Such loans can be repaid

  • by way of inward remittance through normal banking channels, or
  • by debit to NRE/FCNR (B)/NRO account, or
  • out of rental income from such property, or
  • 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.

Can an NRI / PIO, avail of housing loan in rupees from an Authorized Dealer or housing finance institution in India approved by the National Housing Bank for purchase of residential accommodation or for repairs / renovation / improvement of residential accommodation? How can such loan be repaid?

YES.

Such a loan can be repaid

  • by way of inward remittance through normal banking channels, or
  • by debit to NRE/FCNR (B)/NRO account, or
  • out of rental income from such property, or
  • 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.

Can an NRI / PIO avail of housing loan in rupees from his employer in India?

YES.

Can Foreign Embassies / Diplomats / Consulate Generals, purchase / sell immovable property in India?

Yes. They can purchase and sell any immovable property with prior clearance from theGovernment of India, Ministry of External Affairs.

The payment should be made by means of foreign inward remittance through normal banking channels.

However, agricultural land/plantation property/farm house in India cannot be purchased or sold.

Can Foreign Embassies / Diplomats / Consulate Generals, purchase / sell immovable property in India?

Yes. They can purchase and sell any immovable property with prior clearance from theGovernment of India, Ministry of External Affairs.

The payment should be made by means of foreign inward remittance through normal banking channels.

However, agricultural land/plantation property/farm house in India cannot be purchased or sold.

Can NRI / PIO rent out the residential/ commercial property purchased out of foreign exchange / rupee funds?

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 Authorized Dealers to allow repatriation of current income like rent, dividend, pension, interest, etc. of NRIs/PIOs who do not maintain an NRO account in India, based on an appropriate certification by a CA, certifying that the amount proposed to be remitted is eligible for remittance and that applicable taxes have been paid/provided for

Can a person who had bought immovable property when he was a resident, continue to hold such property even after becoming an NRI/PIO?

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.

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 RBI continue to hold the same? Can they transfer such property?

YES, they may continue to hold the immovable property under license obtained from RBI. However, they can transfer theproperty only with the prior approval of RBI


Definitions

Person resident in India

  • a person residing in India for more than one hundred and eighty-two days during the course of the preceding financial year but does not include— » A person who has gone out of India or who stays outside India, in either case— - for or on taking up employment outside India, or - for carrying on outside India a business or vocation outside India, or - for any other purpose, in such circumstances as would indicate his intention to stay outside India for an uncertain period
  • a person who has come to or stays in India, in either case, otherwise than— » for or on taking up employment in India, or » for carrying on in India a business or vocation in India, or » for any other purpose, in such circumstances as would indicate his intention to stay in India for an uncertain period
  • any person or body corporate registered or incorporated in India,
  • an office, branch or agency in India owned or controlled by a person resident outside India
  • an office, branch or agency outside India owned or controlled by a person resident in India

Person resident outside India

means a person who is not resident in India


Disclaimer: This FAQ list has been complied based on the documents and information issued by governmental authorities including Reserve Bank of India. Every attempt has been made to present the latest and updated information available in the public domain. However, we clearly advise readers of these FAQ to seek independent legal advice before entering into any transaction based on these FAQ. These FAQ should not be construed as an advice to any reader for entering into any transaction. We shall not be responsible for any action taken by any person after reading these FAQ list.We disclaim all and any liability and responsibility and shall not be liable or responsible in any manner nor entertain any claim in respect of any cost, charges, loss, penalty, damage, etc. resulting from or incurred or suffered by any person using these FAQs.

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