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