NRI Guidelines

In today′s world, distance should never come between your dreams. We help you live with the times. Read through the document to get a good idea about regulations for NRIs buying property in India.

Exchange Control Regulations Affecting the Acquisition of Residential Property in India

Consequent to the introduction of Foreign Exchange Management Act (FEMA), 1999,the Reserve Bank of India has made the following regulation called the Foreign Exchange Management(Acquisition and Transfer of Immovable Property in India)Regulation with effect from 1st June, 2000. The current position is therefore as under:-

Important Definitions

A person of Indian Origin (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- At any time, held an Indian passport; or Who, or whose father or whose grandfather was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955)

A person resident in India means

1.A person residing in India for more than 182 days during the preceding financial year but does not include

i. A person who has gone out of India or who stays outside
  a)For taking up employment outside India or
  b)For carrying on outside India business or vocation or for any other purpose as would indicate his intention to stay outside India for an uncertain period.

ii. A person who comes to or stays in India otherwise than
  a) For taking up employment in India
   b)For carrying on business or vocation in India, or
   c)For any other purpose as would indicate his intention to stay in India for an uncertain period.

2.Any person or body corporate registered or incorporated in India.

3.An office, branch or agency in India owned or controlled by a person resident outside India

4.An office, branch or agency outside India owned or controlled by a person resident inside India

5.A person resident outside India means a person who is not residing in India.

Acquisition and transfer of property in India by an Indian citizen resident outside India

He Can:–

1.Acquire any immovable property in India other than agricultural plantation/ farmhouse;

2.Transfer any immovable property in India to a person resident in India and

3.Transfer any immovable property other than agricultural plantation/ farmhouse to a person resident outside India if he is a citizen of India or Person of Indian Origin.

Acquisition and transfer of property in India by a Person of Indian Origin resident outside India

He May:-
Acquire any immovable property other than agricultural land, farmhouse and plantation by purchase, gift, inheritance, subject to the following conditions:

In case of purchase, the funds should be received in India by way of inward remittance from any place outside India or from funds held in any Non-Resident Account maintained under FEMA/ RBI regulations.
Gift can be from a person resident in India or from a person resident outside India who is either a citizen of India or a Person of Indian Origin.
Inheritance can be from a person resident outside India provided that the person had acquired the property in accordance with the provisions of the Foreign Exchange Law in force at the time of acquisition or from a person resident in India.

Transfer any immovable property in India other than agricultural land, farmhouse, plantation by way of sale to a person resident in India or by way of gift to a person resident in India or to a person resident outside India who is either a citizen of India or a Person of Indian Origin.

Transfer agricultural land, farmhouse or plantation property by way of gift or sale to a person resident in India who is a citizen of India.

Other Conditions

Whenever immovable property is acquired in India by a person resident outside India, the acquisition must be declared to RBI within 90 days from the date of acquisition in Form IPI.

Repatriation of sale proceeds

In the event of sale of immovable property other than agricultural land / farmhouse / plantation property in India by the above 2 categories of persons repatriation of sale proceeds is possible subject to the following conditions:-

1. Immovable property was acquired in accordance with the provisions of Foreign Exchange law/ Regulations in force at the time of acquisition.
2. The property is held for at least 3 years from the date of its acquisition or from the date of payment of final installment of consideration whichever is later;
3. The amount to be repatriated should not exceed
   
   1. The amount paid for acquisition of the property in foreign exchange remitted into India or out of Funds held in FCNR account OR
   2. The foreign currency equivalent as on the date of payment of the amount paid from funds held in NRE account for acquisition of property.

Repatriation of sale proceeds in case of residential properties is restricted to maximum 2 properties.

Acquisition or transfer of immovable property in India by citizens of certain countries

Citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan can take immovable property in India by way of lease for a period not exceeding 5 years without permission from Reserve Bank Of India (RBI). For all other types of acquisition or transfer of immovable property in India they need to take prior permission of RBI.

Summary of acquisition and transfer of immovable property in India:

Indian Nationals Residents In India

No Restrictions

Indian Nationals Resident Outside India

1. Can acquire any immovable property other than agricultural land / plantation / farm house.
2. 2. Can transfer any immovable property to a person resident in India.
3. Can transfer any immovable property other than agricultural land / plantation/ farm house to a PIO/ Indian National Resident outside India.

Persons of Indian Origin Resident Outside India

1. Can acquire any immovable property other than agricultural land / plantation / farm house out of foreign currency funds or by way of gift or by way of inheritance.
2. Can sell any immovable property other than agricultural land / Plantation / farm house to a person resident in India.
3. Can gift any immovable property to a person Resident in India or to a PIO / Indian National Resident outside India.
4. Can sell / gift any agricultural land / plantation / farm house to an Indian citizen resident in India.

Foreign Citizens Residents in India

No restrictions, except in case of Nationals of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal and Bhutan who will require prior permission from RBI in all cases except where the immovable property is acquired by way of lease for less than 5 years.

Foreign Citizens Residents Outside India

Can acquire only after prior permission from RBI.

Indian Branch/ Office of Foreign Concern

Can acquire immovable property which is required for carrying on its activities, a declaration in From IPI will have to be filed with RBI within 90 days of such acquisition (the above procedure is not applicable to a liaison office)