Acquisition/ Transfer of Immovable Property

Acquisition and transfer of immovable property by Indian Residents outside India and NRIs in India is regulated by FEMA. FEMA empowers the RBI to frame regulations to prohibit, restrict, or regulate the acquisition and transfer of immovable property in India by person’s resident outside India.

A person resident outside India can hold, own, transfer or invest in any immovable property situated in India if such property was acquired, held or owned by him when he was resident in India or inherited from a person resident in India.

A. Acquisition of Immovable Property

 

Purchase of Immovable Property

Type of Property: Immovable property (other than agricultural land/ plantation property/ farm house)

  • NRIs and PIOs from Resident/ NRI.

  • Foreign Embassy/ Diplomat/ Consulate General subject to:

    • Clearance from GOI, Ministry of External Affairs

    • Consideration for acquisition is paid out of funds remitted from abroad through normal banking channels

  • Foreign Nationals of non-Indian origin resident in India (except 10 countries listed*)

  • Foreign Nationals of non-Indian origin resident outside India and of 10 countries listed* irrespective of their residential status subject to prior permission of the RBI.

 

Gift received

Type of Property: Immovable property (other than agricultural land/ plantation property/ farm house)

  • NRIs and PIOs from Resident/ NRI/ PIO

 

Inheritance

Type of Property: Any Immovable property

  • NRIs and PIOs from:

    • Any person who has acquired it under laws in force

    • Any person resident outside India, if such property was acquired, held or owned when he was resident in India.

  • Foreign Nationals of non-Indian origin resident outside India from a resident.

 

Lease

Type of Property: Any Immovable property

Citizens of 10 countries listed* irrespective of their residential status and Foreign Nationals of non-Indian origin resident outside India can acquire immovable property for:

  • Upto 5 years without prior permission of RBI

  • Exceeding 5 years with prior permission of RBI

 

*10 Listed Countries: Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, Bhutan, Macau, Hong Kong

B. Transfer of Immovable Property

 

Sale of Immovable Property

Type of Property: Any Immovable property (other than agricultural land/ plantation property/ farm house)

  • NRI can transfer to a Resident/ NRI/ PIO

  • PIO can transfer to a Resident

Type of Property: Agricultural Land

  • NRI can transfer to a Resident

  • PIO can transfer to a Resident who is a citizen of India

 

Gift

Type of Property: Any Immovable property (other than agricultural land)

  • NRI and PIO can gift to a Resident/ NRI/ PIO

Type of Property: Agricultural Land

  • NRI can transfer to a Resident

  • PIO can transfer to a Resident who is a citizen of India

Points to Remember:

  • Transactions involving acquisition of immovable property shall be subject to the applicable tax laws in India.

  • No payment of purchase price for acquisition of immovable property shall be made either by traveller’s cheque or by foreign currency notes or by other mode other than those specifically permitted.

  • A foreign company which has established a Branch office or Project office in India if acquires any immovable property in India, then such it is required to file with RBI a declaration in the Form IPI within 90 days from the date of such acquisition.

Frequently asked questions

A PIO intends to purchase an immovable property in India. Is she permitted to do so?


Under the general permission by RBI, NRIs and PIOs are permitted to purchase immovable property in India. The general permission, however, covers only purchase of residential and commercial property. NRIs and PIOs are not permitted to purchase agricultural land / plantation property / farm house in India.




Are any documents required to be filed by the above PIO with the RBI after the purchase?


PIO who has purchased residential / commercial property under general permission is not required to file any documents with the RBI.




How many residential / commercial properties can NRI / PIO purchase under the general permission?


There are no restrictions on the number of residential / commercial properties that can be purchased. However, NRI / PIO can repatriate sales proceeds of only 2 residential properties outside India.




Can a foreign national of non-Indian origin and resident outside India purchase immovable property in India?


No. A foreign national of non-Indian origin, resident outside India cannot purchase any immovable property in India. But, he may take residential accommodation on lease provided the period of lease does not exceed 5 years. In such cases, there is no requirement of taking any permission of or reporting to RBI. Further, he is not permitted to be a second holder to immovable property purchased by NRI / PIO.




Can a foreign national being employed in India, and thus called a person resident in India purchase an immovable property in India?


Yes, but the person concerned would have to obtain the approvals, and fulfill the requirements if any, prescribed by other authorities, such as the concerned State Government, etc. However, a foreign national resident in India who is a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, Bhutan, Macau and Hong Kong would require prior approval of the RBI. Such requests are considered by RBI in consultation with the Government of India.




Can a NRI/ PIO/ Foreign national acquire immovable property in India by way of gift?


Yes, NRIs and PIOs can freely acquire immovable property (residential and commercial properties) by way of gift either from a person resident in India, a NRI or a PIO. However they are not permitted to acquire an agricultural land / plantation property / farm house in India by way of gift. A foreign national of Non-Indian origin resident outside India cannot acquire any immovable property in India by way of gift.




Can a non-resident inherit immovable property in India?


Yes, a person resident outside India i.e.

  • A NRI
  • A PIO and
  • A foreign national of non-Indian origin can inherit and hold immovable property in India from a person who was resident in India. However, a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal and Bhutan should seek specific approval of RBI.




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


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.




Suppose a PIO acquired agricultural land by way of inheritance, to whom can such property be transferred?


The PIO may transfer agricultural land/ farm house/ plantation property in India, by way of gift or sale to a person resident in India, who is a citizen of India.




Can the branch / liaison office of a foreign company purchase immovable property in India?


A foreign company which has established a Branch office or Project office in India can acquire any immovable property in India, which is necessary for or incidental to carrying on such activity, subject to certain conditions. A declaration is required to be submitted to RBI, in the prescribed Form. However, if the foreign company has established a liaison office in India, it cannot acquire immovable property. They can acquire property by way of lease not exceeding 5 years. Further, acquisition of immovable property by entities incorporated in Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Hong Kong, Macau, Nepal and Bhutan who have set up Branch Offices or other place of business in India would require prior approval of RBI.




How can NRI / PIO make payment for purchase of residential / commercial property in India?


Payment can be made by NRI / PIO only out of funds remitted to India through normal banking channels or funds held in NRE / FCNR / NRO a/c maintained in India.




Can NRI / PIO avail housing loan from an AD or financial institutions in India?


Yes, NRI/ PIO are permitted to obtain housing loans subject to conditions listed below:

  • The quantum of loans, margin money and the period of repayment shall be at par with those applicable to housing finance provided to a person resident in India;
  • The loan amount shall not be credited to NRE/ FCNR/ NRNR a/c of the borrower;
  • The loan shall be fully secured by equitable mortgage of the property proposed to be acquired, and if necessary, also by lien on the borrower’s other asset in India;
  • The installment of loan, interest and other charges, if any, shall be paid by remittances from outside India or out of funds in NRE/ FCNR/NRNR/NRO/NRSR a/c of the borrower in India;
  • The rate of interest on the loan shall be as per directions by the RBI and/or NHB.




What are the ways to repay housing loan availed?


Housing loan can be repaid:

  • by way of inward remittance through normal banking channel; or
  • by debit to the NRE / FCNR / NRO a/c of the NRI / PIO; or
  • out of rental income from such property; or
  • by the borrower's relatives, through their a/c in India by crediting the borrower's loan a/c.




Can NRI avail of housing loan in rupees from his employer in India?


Yes, subject to certain terms and conditions.




Can a NRI sell an agricultural land in India which was received by him as inheritance?


He may sell agricultural land to a person resident in India.




In the above case, will NRI still be eligible to sell an agricultural land, in case the same was purchased by him while he was a Resident?


Yes, he is eligible to sell an agricultural land, even if the same was purchased by him while he was a Resident.




Can a NRI/ PIO gift his immovable properties?


A NRI / PIO may gift residential / commercial property to a person resident in India, a NRI or a PIO. Foreign national of non-Indian origin requires prior approval of RBI for gifting the residential / commercial property. Gifting of agricultural land / a plantation property / a farm house situated in India: A NRI / PIO can gift the above only to a person resident in India who is a citizen of India. A foreign national would require prior approval of the RBI.




Can residential / commercial property be mortgaged?


NRI/ PIO can mortgage to:

  • An AD/ housing finance institution in India- without the approval of RBI.
  • A party abroad- with prior approval of RBI.
  • A foreign national of non-Indian origin can mortgage only with prior approval of RBI
  • A foreign company which has established a Branch Office or other place of business in accordance with FERA/ FEMA regulations has general permission to mortgage the property with an authorized dealer in India.




A PIO has acquired residential / commercial property in India by way of inward remittances through normal banking channel or by debit to NRE /FCNR/ NRO a/c. Can he repatriate the sale proceeds of the same? If yes, is there any limit on the quantum?


Yes, he may repatriate the sale proceeds of immovable property. The amount to be freely repatriated should not exceed the amount paid for acquisition of residential / commercial property:

  • In foreign exchange received through normal banking channel or by debit to FCNR a/c; or
  • The foreign currency equivalent, as on the date of payment, of the amount paid by NRE a/c.
Also, in case of residential property, the repatriation of sale proceeds is restricted to not more than 2 such properties. The sale proceeds of residential/ commercial property in India acquired by way of debit to NRO a/c cannot be freely repatriated and should be credited to NRO a/c only. Amount can be transferred from NRO a/c to NRE a/c/ overseas a/c subject to the limit of USD 1 million per FY.




Is there any lock in period for sale of residential / commercial property purchased out of inward remittance / debit to NRE / FCNR a/c?


There is no lock in-period applicable for sale of such properties.




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


The sale proceeds of immovable property acquired by NRI by way of gift should be credited to NRO a/c only. From the balance in the NRO a/c, NRI/PIO may remit up to USD 1 million, per FY, subject to the satisfaction of the Bank and payment of applicable taxes.




If the immovable property was received as inheritance in the above case from a person resident in India, can he repatriate the sale proceeds?


Yes, general permission is available to the NRI/PIO to repatriate the sale proceeds of the immovable property inherited from a person resident in India. The amount of repatriation is restricted to USD 1 million per FY. In case of a foreign national, sale proceeds can be repatriated in similar manner if the property is inherited from a person resident outside India with the prior approval of RBI. Citizen of Pakistan, Bangladesh, Sri Lanka, China, Afghanistan and Iran are required to obtain prior approval of RBI. Repatriation of sale proceeds in foreign exchange to Nepal and Bhutan is not permissible.




If the immovable property was received as inheritance by foreign national from a person resident outside India, can he repatriate the sale proceeds?


Yes, but only with a prior approval from RBI.




Can NRI / PIO rent out the residential / commercial property purchased out of foreign exchange / rupee funds?


Yes, NRI/PIO can rent the property without RBI approval. The rent received can be credited to NRO / NRE a/c or remitted abroad.




Can foreign nationals of non-Indian origin resident in India or outside India who had earlier acquired immovable property under FERA with specific approval of RBI continue to hold the same? Can they transfer such property?


Yes, they may continue to hold the immovable property under holding license obtained from RBI. However, they can transfer the property only with the prior approval of RBI.





 

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