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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
by Notification No.FEMA 64/2002-RB dated June 29, 2002, Notification No.FEMA
65/2002-RB dated June 29, 2002, Notification No.FEMA 93/2003-RB dated June 6,
2003 and Notification No. 146/2006-RB dated 10/02/06 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) or 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. However, payment for
acquisition of immovable property in India by NRI/PIO cannot be made either by
Travellers cheques or by foreign currency notes.
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) 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.
From out of balances in NRO account, he may remit upto USD one
million per financial year for any bonafide purposes, eligible balances
including the sale proceeds of immovable property.
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 / Consulate Generals 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.
Q.49. 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.49. Yes; only with the prior approval of Reserve Bank.
Q.50. 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.50. 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.51. Where are the terms a ‘person resident in India’ and a
‘person resident outside India’ defined?
A.51. 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.52. What is meant by a person resident in India?
A.52. 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.53. Does Reserve Bank determine the residential status of
a person for the purpose of acquisition of immovable property in India?
A.53. 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.54. 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.54. 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 obtained by him/her
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