Purchase of immovable property in India by Non-Resident Individuals
1. What are the accepted modes of payment for property acquired in India?
Payment for immovable property has to be received in India and is subject to payment of all taxes and other duties/ levies in India. The payment should be received in the form of funds remitted to India through banking channels or through funds held in NRE/ FCNR(B)/ NRO accounts of the NRIs/ PIOs. Payments should not be made through travellers’ cheque and foreign currency notes. NRIs/ PIOs can avail of housing loan in Rupees from an Authorized Dealer or housing finance Institution in India subject to conditions.
2. Can Foreign Embassies/ Diplomats/ Consulate Generals acquire property in India?
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 the normal banking channels
3. How can Non-resident Indians (NRIs)i/ Persons of Indian Origin (PIOs)ii acquire immovable property in India?
|Purchase (other than agricultural land/ farmhouse/ plantation etc) from||Resident/ NRI||Resident/ NRI|
|Acquire as gift (other than agricultural land/ farmhouse/ plantation etc) from||Resident / NRI/ PIO||Resident/ NRI/ PIO|
|Acquire (any IP) as inheritance from||(a) Any person who has acquired it under laws in force
(b) under section 6(5)iii of FEMA
|Sell (other than agricultural land/ farmhouse/ plantation etc) to||Resident / NRI/ PIO||Resident|
|Sell (agricultural land) to||Resident||Resident who is a citizen of India|
|Gift (other than agricultural land) to||Resident / NRI/ PIO||Resident / NRI/ PIO|
|Gift (agricultural land) to||Resident||Resident who is a citizen of India|
|Gift residential/ commercial property to||Resident / NRI/ PIO||Resident / NRI/ PIO|
4. Can foreign nationals acquire property in India?
- Citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, Bhutan, Macau or Hong Kong, 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.
- Foreign nationals of non-Indian origin resident in India (except 10 countries listed at (a) above) can acquire immovable property in India.
- 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 by way of inheritance from a resident. All other acquisitions/ transfers will require the prior permission of RBI
5. Can a non-resident repatriate the sale proceeds of immovable property in India?
A person who has acquired the property U/s 6(5) of FEMA or his successor cannot repatriate the sale proceeds of such property without RBI approval. However, repatriation up to USD I million per financial year is allowed, along with other assets under (Foreign Exchange Management (Remittance of Assets) Regulations, 2016) for NRIs/ PIOs and a foreign citizen (except Nepal/ Bhutan/ PIO) who has (a) inherited from a person referred to in section 6(5) of FEMA, or (b) retired from employment in India or(c) is a non-resident widow/ widower and has inherited assets from her/ his deceased spouse who was an Indian national resident in India. NRIs/ PIOs can remit the sale proceeds of immovable property (other than agricultural land/ farm house/ plantation property) in India 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 by him or the provisions of Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations 2000;
- the amount to be repatriated does not exceed the amount paid for acquisition of the immovable property received through normal banking channels or out of funds held in FCNR(B) account or NRE account;
- in the case of residential property, the repatriation of sale proceeds is restricted to not more than two such properties.
6. What is the meaning of transfer?
As per section 2(ze) of FEMA transfer means, sale, purchase, exchange, mortgage, pledge, gift, loan or any other form of transfer of right, title, possession or lien.
Amendments to the Principal Regulations
1. Notification No. FEMA 65/2002-RB dated June 29, 2002
2. Notification No. FEMA 93/2003-RB dated June 9, 2003
3. Notification No. FEMA 146/2006-RB dated February 10, 2006
4. Notification No. FEMA 186/2009-RB dated February 3, 2009
5. Notification No. FEMA 200/2009-RB dated October 5, 2009
6. Notification No. FEMA 321/2014-RB dated September 26, 2014
7. Notification No. FEMA 335/2015-RB dated February 4, 2015
- NRI refers to a person resident outside India who is a citizen of India
- PIO refers to a person resident outside India who is not a citizen of Pakistan/ Bangladesh/ Iran/ Nepal/ Bhutan/ China/ Afghanistan/ Sri Lanka and (a) At any time held an Indian Passport or (b) Who or either father or mother or grandfather or grandmother was a citizen of India (either through the Constitution or Citizenship Act)
- Section 6(5) of FEMA states that a person resident outside India may hold, own, transfer or invest in any immovable property situated in India if such property was acquired, held or owned by such person when he was resident in India or inherited from a person who was resident in India.