Acquisition and Transfer of Immovable Property – FEMA

1. How can NRIs and OCIs acquire immovable property in India?

Ans.

NRIs cand OCIs can acquire immovable property in India in below manner:

 

Nature of Immovable Property

Mode of acquisition

Acquire from

Any immovable property – eg. residential/ commercial etc.

 

(other than agricultural land/ farmhouse/ plantation property)

Purchase

Resident/ NRI/ OCI

Acquire as Gift

Resident/ NRI/ OCI -  who is a relative

Acquire by way of inheritance

a. Any person who has acquired it under laws in force;
b. Resident

Agricultural land/farmhouse/plantation property  

Purchase/Gift

Not permissible. RBI  permission required

Inheritance

a. Any person who has acquired it under laws in force;
b. Resident

2. How can NRIs and OCIs transfer immovable property in India?

Ans.

NRIs can transfer immovable property in India in below manner:

 

Nature of IP

Mode of transfer

Transfer To

Any immovable property eg. residential/ commercial etc.

 

(other than agricultural land/ farmhouse/ plantation property)

Sell/ Gift

Resident/NRI/ OCI

Agricultural land/farmhouse/plantation property

Sell/ Gift

Resident

3. As per FAQ 1, who all are covered under relative?

Ans.

Relative shall cover the following:

 

1.Father (including step-father)

2.Mother (including step-mother)

3.Son (including step-son)

4.Son’s wife

5.Daughter

6.Daughter’s husband

7.Brother (including step-brother)

8.Sister (including step-sister)

9. Members of HUF

10. Spouse

4. What are the accepted modes of payment for NRIs and OCIs to acquire immovable property in India?

Ans.

Payment for immovable property has to be received in India through banking channels and is subject to payment of all taxes and other duties/ levies in India. The consideration to purchase the immovable property should be made out of the following:

a.    Foreign inward remittance

b.    Funds held in NRE/NRO/FCNR(B) account

c.    Housing loan can be availed from Authorized Dealer (AD) Bank or a housing finance institution in India.

The payments cannot be made either by traveller’s cheque or by foreign currency notes or by any other mode other than those specified above.

5. How many immovable properties can NRI/OCI acquire in India?

Ans.


There are no restrictions on number of immovable properties that can be acquired by NRI/OCI in India. 

6. Whether RBI permission or any documents are required to be filed with RBI by NRI/OCI for acquisition of any immovable property as per FAQ 1?

Ans.

No. NRI/OCI who has acquired immovable property in India as per FAQ 1 is not required obtain permission or file any documents with RBI (except for exceptional cases as mentioned in FAQ 1)

7. Can NRI/OCI acquire agricultural land/farmhouse/plantation in India by way of purchase/gift?

Ans.

No. Prior RBI permission is required.

8. Can NRI/OCI inherit immovable property in India?

Ans.

Yes, NRI/OCI can inherit and hold immovable property in India from:

 

-      A person resident in India or

-      A person resident outside India, provided such immovable property was acquired by the transferor in accordance with the provisions of Foreign Exchange Laws in force at the time of acquisition.

9. A NRI has inherited an agricultural land in India from his father who was also a non-resident. Is he permitted to inherit such land from a non-resident?

Ans.

Yes, he is permitted to inherit agricultural land property from his father who was also a non-resident provided the father had acquired the property in accordance with the Foreign Exchange laws in force at the time of acquisition.

10. Suppose an NRI/OCI acquired agricultural land by way of inheritance, to whom can such property be transferred?

Ans.

The NRI/OCI may transfer agricultural land/ farm house/ plantation property in India, by way of gift or sale to a person resident in India only (subject to applicable state laws)

11. Can a NRI sell immovable property other than agricultural land in India?

Ans.

Yes, he can sell such property to a person resident in India/ NRI/ OCI.

12. Can NRI continue to hold immovable property in India, which was purchased by him while he was Resident?

Ans.

Yes. No RBI permission required.

13. Can NRI be eligible to sell agricultural land, in case the same was purchased by him while he was a Resident?

Ans.

Yes. However, he can sell the agricultural land to a person resident in India only.

14. Can NRI/OCI repatriate the sale proceeds of immovable property in India and how?

Ans.

Yes. NRIs can repatriate sale proceeds from immovable property in below manner:

 

a.   Immovable property (other agricultural land/ farmhouse/ plantation property) purchased in Forex – Entire sale proceeds is freely repatriable subject to the following conditions:


-    The immovable property was acquired in accordance with the provisions of the foreign exchange law in force at the time of acquisition or the provisions of Foreign Exchange Management (Non-Debt Instrument) Rules, 2019.;

-      The amount for acquisition of the property was paid by way of foreign inward remittance or out of the funds held in FCNR(B)/NRE account

 

However, in case of residential property acquired in forex, sale proceeds are freely repatriable only upto two such properties. Repatriation of sale proceeds from 3rd property onwards shall be allowed under USD 1 million Scheme per Financial Year (FY).

 

b.    Immovable property acquired from Rupee funds/Other cases – Repatriation is allowed under USD 1 million Scheme per FY

15. Mr. A is an NRI and who had acquired a residential property in India for Rs. 10 Crore in the year 2015 out of inward remittance from USA bank. Mr. A now wishes to sell such property for Rs. 6 Crore in the year 2023. Is repatriation of sale proceeds of Rs. 6 Crore permissible under FEMA? Will it fall under USD 1 Million Scheme?

Ans.

Since Mr. A acquired the residential property in India out of inward remittance from USA bank (i.e. in forex), entire sale proceeds of Rs. 6 Crore is freely repatriable outside India and same is not subject to USD 1 million Scheme.

16. In the above FAQ 15, what would be your answer if Mr. A wishes to sell such property for Rs. 15 Crore in the year 2023?

Ans.

Since Mr. A acquired the residential property in India out of inward remittance from USA bank i.e. in forex, he would still be eligible to repatriate the entire sale proceeds of Rs. 15 Crore, without any restriction or permission. Repatriation shall be subject to satisfaction of AD Bank and payment of applicable taxes.

17. In the above FAQ 15, would your answer remain same if Mr. A had already repatriated the sale proceeds of two other residential properties outside India?

Ans.

In the case of residential property acquired in forex, sale proceeds are freely repatriable only upto two such properties. Repatriation of sale proceeds from 3rd property onwards is allowed under USD 1 million Scheme per FY.

Accordingly, proceeds of Rs. 6 Crore received from sale of 3rd property shall be repatriable under USD 1 million Scheme.

18. In the above FAQ 15, 16 and 17, would your answer remain same if Mr. A now wishes to sell a commercial property?

Ans.

The restriction of two properties applies only to residential property and there is no restriction in case of commercial immovable (acquired in forex). Accordingly, Mr. A shall be eligible to repatriate the entire sale proceeds without any restriction.

19. In the above FAQ 15 and 16, would your answer remain same if Mr. A had acquired the residential property from NRO funds (Rupee funds)?

Ans.

No. In this case, since the property was not purchased by way of foreign inward remittance or funds held in FCNR(B)/NRE account, Mr. A shall be eligible to repatriate the sale proceeds subject to USD 1 million Scheme. Further, repatriation of sale proceeds in excess of USD 1 million shall require RBI permission

20. NRI acquired an immovable property by way of gift. Can the funds received on sale of said immovable property be repatriated abroad?

Ans.

Yes. NRI shall be eligible to repatriate the sale proceeds from gifted property under the USD 1 million Scheme. Repatriation shall be subject to satisfaction of AD Bank and payment of applicable taxes.

21. If immovable property was received as inheritance by NRI/OCI from a person resident in India, can he repatriate the sale proceeds?

Ans.

Yes, NRI/OCI shall be eligible to repatriate the sale proceeds under the USD 1 million Scheme, subject to satisfaction of AD Bank and payment of applicable taxes.

22. Can foreign nationals acquire property in India?

Ans.

a.   Citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, Bhutan, Macau, Hong Kong or Democratic People’s Republic of Korea (DPRK), irrespective of their residential status, cannot, without prior permission of the Reserve Bank, acquire or transfer immovable property in India, other than on lease, not exceeding five years. This prohibition shall not be applicable to an OCI.

b.    Foreign nationals of non-Indian origin resident in India (except 11 countries listed at (a) above) can acquire immovable property in India.

c.     Foreign nationals of non-Indian origin resident outside India can acquire/ transfer immovable property in India, on lease not exceeding five years and can acquire immovable property in India jointly with NRI/OCI spouse (as explained in FAQ 23) or by way of inheritance from a resident.


All other acquisitions/ transfers by foreign nationals will require the prior permission of RBI.

23. Can a spouse of an NRI/ OCI who is not a NRI/ OCI acquire property in India

Ans.

A person resident outside India, not being a NRI or an OCI, who is a spouse of a NRI or an OCI may acquire one immovable property (other than agricultural land/ farm house/ plantation property), jointly with his/ her NRI/ OCI spouse subject to fulfilment of below conditions:

 

-      Consideration is paid out by way of foreign inward remittance or out of funds held in NRE/NRO/FCNR(B) account

-      Their marriage should have been registered and subsisted for a continuous period of not less than two years immediately preceding the acquisition of such property

-      The non-resident spouse is not otherwise prohibited from such acquisition (eg. If non-resident spouse is citizen of Sri Lanka, prior RBI permission may be required as per FAQ no. 22)

24. Can Mr. R, citizen of Australia and being resident in India can acquire an immovable property in India?

Ans. Yes. Mr. R, who is citizen of Australia and a ‘person resident in India’ as per FEMA can acquire immovable property in India. However, he would have to obtain the approvals and fulfil the requirements, if any, prescribed by other authorities, such as, the State Government concerned, etc. 

25. What if Mr. R is citizen of Sri Lanka, will the answer remain same as per FAQ 24?

Ans.

No. Mr. R, being a citizen of Sri Lanka (one of the 11 countries mentioned in FAQ 22) would require prior RBI permission to acquire an immovable property in India (other than lease upto 5 years)

26. Can Mr. P, an OCI cardholder who is citizen of China being employed in India, and thus being a person resident in India as per FEMA acquire an immovable property in India?

Ans. Yes. Mr. P, an OCI Cardholder who is a ‘person resident in India’ as per FEMA can acquire immovable property in India even after being a citizen of China since the prohibition on acquisition of immovable property in India by citizen of certain countries as specified in FAQ 22 shall not apply to an OCI cardholder. 

27. Can Mr. M, Foreign National who is a citizen of China acquire an immovable property in India under lease for three years?

Ans.

Yes. Mr. M, a foreign National who is a citizen of China can acquire an immovable property in India under lease for three years. The prohibition on acquisition of immovable property in India by citizen of certain countries as specifies in FAQ 22 shall not apply to lease contracts, not exceeding five years. 

28. As per FAQ 22, would your answer change, if the lease was for seven years?

Ans.

Yes. Mr. M, Foreign National who is a citizen of China would require RBI approval for acquisition of immovable property in India under lease for seven years (as exceeding 5 years)  

29. Can NRI / OCI avail housing loan from AD Bank / registered non-banking financial company (NBFC) or financial institutions in India?

Ans.

Yes, NRI/ OCI are permitted to obtain housing loans from AD Bank, registered NBFC and other financial institutions as specified from RBI from time to time.  

30. Is there requirement of minimum holding period for sale of immovable property by NRI/OCI in India?

Ans.

No. There is no requirement of minimum holding period applicable for sale of immovable property.

31. Can NRI / OCI rent residential/ commercial property purchased in India from foreign exchange/ rupee funds?

Ans. Yes, NRI/OCI can rent the property in India without RBI approval. 

32. Can NRI/OCI who had earlier acquired immovable property under FERA with specific approval of RBI continue to hold the same?

Ans. Yes, they may continue to hold the immovable property without any further approval.

33. Can foreign nationals of non-Indian origin who had earlier acquired immovable property in India in accordance with foreign exchange laws at the time of acquisition or with general or specific permission of the RBI sell such property when he leaves India without prior RBI permission?

Ans.

Yes, such foreign national on becoming person resident outside India can transfer such property to a person resident in India provided transaction takes place through banking channel in India and the resident is not otherwise prohibited from such acquisition.

34. Can a foreign company set up in Australia having a branch office in India acquire an immovable property in India?

Ans.

Yes. A foreign company having a branch office in India can acquire an immovable property in India which is necessary for or incidental to carrying on business activities subject to fulfillment of certain compliances as prescribed under FEMA Regulations.

35. Will the answer to FAQ no. 34 remain same, if the foreign company is set up in Sri Lanka?

Ans.

No. Person of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, Bhutan, Macau, Hong Kong or Democratic People’s Republic of Korea (DPRK) cannot acquire or transfer immovable property in India, without prior RBI permission, other than on lease, not exceeding five years.

 

Accordingly, the Sri Lankan Company having branch office in India shall require prior RBI permission to acquire immovable in India (other than lease upto 5 years)

36. As per FAQ 34, upon acquisition of immovable property by a branch office in India, are there any reporting requirements to RBI?

Ans.

Yes. The branch office acquiring such immovable property in India, is liable to file with RBI a declaration in the Form IPI as prescribed by RBI from time to time, not later than 90 days from the date of such acquisition.

37. Can a foreign company having a liaison office in India acquire an immovable property in India?

Ans.

No. A foreign company having a liaison office in India cannot acquire an immovable property in India.

 

The meaning of abbreviations used for the purpose of above Chapter: 

1. NRI – An individual who is a citizen of India but resident outside India as per FEMA

2. OCI – An individual who resident outside India as per FEMA and registered as an Overseas Citizen of India Cardholder under section 7A of the Citizenship Act, 1955

 

                                                                                                                                                                                                                - Update 10/2023