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 vide Notification
No. FEMA 64/2002-RB dated June 29, 2002
and Notification
No. FEMA 65/2002-RB dated June 29, 2002
and relevant directions issued in the
form of (DIR Series) Circulars. These
are available on RBI website: http://www.rbi.org.in/index.dll/25?sectionhomepage
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) and 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.
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
(DIR Series) Circular No.95 dated
April 20, 2003 and
(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
(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)/NRO 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. The sale proceeds of residential/commercial
property in India acquired by way of debit
to NRO account cannot be repatriated and
should be credited to NRO account only.
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/Counsel
General 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, provided the
immovable property was held for a period
not less than ten years.
Q. 49. What if such an
immovable property was held for less than
ten years?
A. 49. If such a property
acquired out of rupee funds is sold after
being held for less than ten years, remittance
can be made, if the sale proceeds were
held for the balance period in NRO account
(Savings/Term Deposit) or in any other
eligible investment, provided such investment
is traced to the sale proceeds of the
immovable property.
Q.50. 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.50. Yes; only with the
prior approval of Reserve Bank.
Q.51. 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.51. 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.52. Where are the terms
a ‘person resident in India’ and a ‘person
resident outside India’ defined?
A.52. 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.53. What is meant by
a person resident in India?
A.53. 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.54. Does Reserve Bank
determine the residential status of a
person for the purpose of acquisition
of immovable property in India?
A.54. 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.55. 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.55. 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 be
obtained by him/her.
