ACQUISITION
AND TRANSFER OF IMMOVABLE PROPERTY IN INDIA
The Foreign Exchange Management Act, 1999 (FEMA) and
the Regulations notified by the Reserve Bank of India (RBI), regulates the
acquisition and transfer of immovable property in India by Persons resident
outside India.
A.
Acquisition of immovable property by NRI/OCI:
·
NRI/OCI
can acquire immovable property in India without prior approval of RBI (under
general permission) in the following manner:
Sr. No.
|
Nature of Property
|
Acquisition mode
|
Permissible to
acquire From
|
|
1
|
Agricultural land/ farmhouse/ plantation etc.
|
Purchase/Gift
|
Not
allowed
|
Inheritance
|
Any
person resident in India and outside India
|
|
2
|
Property
other than agricultural land/ farmhouse/ plantation etc.
|
Purchase
|
Resident/
NRI/ OCI
|
Gift
|
Resident/
NRI/ OCI - who is a relative
|
Inheritance
|
Any
person resident in India and outside India
|
·
Further,
NRI/OCI can transfer immovable property in India under general permission in
the following manner:
Sr. No.
|
Nature of Property
|
Transfer mode
|
Permissible to
transfer To
|
|
1
|
Agricultural land/ farmhouse/plantation etc.
|
Sell/Gift
|
Resident
|
|
2
|
Property
other than agricultural land/ farmhouse/plantation etc.
|
Sell/Gift
|
Resident/
NRI/ OCI
|
·
The
consideration to acquire/purchase the immovable property should be made out of
the following:
a. Foreign
inward remittance
b. Balances
held in Non-Resident (Ordinary) account (NRO account)/Non-Resident (External)
account (NRE account)/ Foreign Currency Non-Resident account (FCNR account)
c. Housing loan can be availed from Authorised
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.
B. Joint
Acquisition by the spouse of a NRI/OCI:
Foreign national resident outside
India, can acquire one immovable property (other than agricultural land/ farm
house/ plantation property) jointly with spouse who is NRI or
OCI, subject to below conditions:
·
The consideration is paid only through the modes
specified above
·
The marriage has been registered and subsisted for
continuous period of atleast 2 years
·
The non-resident spouse is not otherwise prohibited
from such acquisition (see para E below)
C. Acquisition by a Long Term Visa
holder:
A person who is citizen of Afghanistan, Bangladesh or
Pakistan belonging to minority namely, Hindu, Sikh, Buddhist, Jain, Parsis and
Christians and residing in India under Long Term Visa can acquire one
residential house for self – occupation and one immovable property for carrying
on self-employment, subject to specified conditions.
D. Acquisition/Transfer
by Foreign Embassies/Diplomats/Consulate Generals
Foreign Embassy/Diplomat/Consulate General, can
purchase/sell immovable property (other than agricultural land/plantation
property/farm house) in India provided:
·
Clearance
from the Government of India, Ministry of External Affairs is obtained for such
purchase/sale, and
·
The
consideration for acquisition of immovable property in India is paid out of
funds remitted from abroad through banking channels.
E. Acquisition/Transfer by
Foreign Nationals (other than OCI cardholder):
·
Foreign
Nationals of 11 Countries:
Citizens of Pakistan, Bangladesh, Sri Lanka,
Afghanistan, China, Iran, Nepal, Bhutan, Macau, Hong Kong or Democratic
People’s Republic of Korea (DPRK),
a. Irrespective of their residential
status, cannot acquire or transfer immovable property in India, without
prior RBI permission.
b. However, they can acquire immovable
property by way of lease, not exceeding five years.
· Foreign
Nationals of other countries:
a. Foreign nationals
of non-Indian origin resident in India can acquire immovable property
in India.
b. Foreign nationals of
non-Indian origin resident outside India cannot acquire/ transfer
immovable property in India except by way of inheritance from a resident or by
way of lease not exceeding five years.
F. Acquisition of Immovable Property
for carrying on permitted activity
A person resident outside India who has established
branch in India can acquire immovable property which is necessary for or
incidental to carry on such activity. The person resident outside India can
also mortgage the said property.
Further, such person resident outside India has
to file a declaration in Form IPI with the Reserve Bank within ninety days
from the date of acquisition of immovable property;
However, person of 11 countries mentioned in point E
above will require prior RBI permission if such property is to be acquired for
period exceeding five years.
1. Exceptional Cases:
·
A
person resident outside India can continue to hold, transfer any immovable
property situated in India if such property was acquired, held or owned by
him/her when he/she was resident in India or inherited from a person resident
in India.
·
Any
existing holding of immovable property in India by a person resident outside
India made in accordance with the applicable regulation at the time of such
acquisition would not require any further compliance/permission.
2. Typical Guidance:
·
NRIs/PIOs
can remit the sale proceeds of immovable property in India subject to certain
conditions and payment of applicable taxes.
· Transfer
of immovable property has to be routed through banking channels in India only.
Direct payment from a Person resident outside India to another Person
resident outside India is not permitted.
·
It
is advisable to obtain Foreign Inward Remittance Certificate (FIRC) and
documents evidencing repayment of loan in foreign exchange to facilitate
smoother repatriation process at later stage.
-Updated
01/2023