Invest in India

Below Are A Set Of Guidelines For Your Perusal, To Keep In Mind Before Purchasing Property As A Non-Residential Indian Or A Foreign National Residing In India.

Exchange Control Regulations Affecting The Acquisition Of Residential Property In India

Consequent to the introduction of Foreign Exchange Management Act (FEMA), 1999 the Reserve Bank of India has made the following regulation called as the Foreign Exchange Management (Acquisition & Transfer of Immovable Property in India) Regulation with effect from June 1, 2000.

The current position is therefore as under:

Important Definitions

• A person of Indian origin (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)
  • At any time, held Indian passport; or
  • Who or either of whose father or mother or whose grandfather or grandmother was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955);
• A person residing in India means
  • A person residing in India for more than 182 days during the preceding financial year but does not include
    • A person who has gone out of India or who stays outside, in either case
      • For taking up employment outside India; or
      • For carrying on outside India business or vocation or for any other purpose as would indicate his intention to stay outside India for an uncertain period
    • A person who comes to or stays in India otherwise than
      • For taking up employment in India
      • For carrying on business or vocation in India or
      • For any other purpose as would indicate his intention to stay in India for an uncertain period.
  • Any person or body corporate registered or incorporated in India.
  • An office, branch or agency in India owned or controlled by a person residing outside India
  • An office, branch or agency outside India owned or controlled by a person residing inside India
• Person residing outside India means a person who is not residing in India.

Acquisition & Transfer Of Property In India By An Indian Citizen Residing Outside India

• Acquire any immovable property in India other than agricultural plantation/ farmhouse; Further, in case of purchase the funds should be received in India by way of inward remittance from any place outside India or from funds held in any Non-Residing Account maintained under FEMA/ RBI regulations.
• Transfer any immovable property other than agricultural plantation/ farmhouse to a person residing outside India if he is a citizen of India or person of Indian origin.
• Person residing outside India means a person who is not residing in India.

Acquisition & Transfer Of Property In India By A Person Of Indian Origin Residing Outside India

• Acquire any immovable property other than agricultural land, farm house & plantation by purchase, gift, and inheritance subject to the following conditions:
  • In case of purchase the funds should be received in India by way of inward remittance from any place outside India or from funds held in any Non-Residing Account maintained under FEMA/ RBI regulations.
  • Gift can be from a person residing in India or from a person residing outside India who is either a citizen of India or a Person of Indian origin. However, the property can only be commercial or residential in nature. Agricultural land / plantation property / farm house in India cannot be acquired by way of gift.
  • Inheritance can be from a person residing outside India provided that person had acquired the property in accordance with the provisions of the Foreign Exchange Law in force at the time of acquisition or from a person residing in India.
• Transfer any immovable property in India other than agricultural land, farm house, plantation by way of sale to a person residing in India or transfer residential or commercial property in India by way of gift to a person residing in India or to person residing outside India who is either a citizen of India or a person of Indian origin.
• Transfer agricultural land, farm house or plantation property in land by way of gift or sale to a person residing in India who is a citizen of India.

Repatriation Of Sale Proceeds

• Immovable property was acquired in accordance with the provisions of Foreign Exchange law/ Regulations in force at the time of acquisition.
• Amount to be repatriated should not exceed (a) amount paid for acquisition of the property in foreign exchange remitted into India or out of Funds held in FCNR account OR (b) the foreign currency equivalent as on the date of payment of the amount paid from funds held in NRE account for acquisition of property.
• Repatriation of sale proceeds in case of residential properties is restricted to maximum two properties.

In the event of sale of immovable property other than agricultural land/ farm house/ plantation property in India by the above two categories of persons repatriation of sale proceeds is possible subject to the following conditions:-

In case the property is acquired out of Rupee resources and/or the loan is repaid by close relatives in India (as defined in Section 6 of the Companies Act, 1956), the amount can be credited to the NRO account of the NRI/PIO. The amount of capital gains, if any, arising out of sale of the property can also be credited to the NRO account. NRI/PIO are also allowed to repatriate an amount up to USD 1 million per financial year out of the balance in the NRO account / sale proceeds of assets by way of purchase / the assets in India acquired by him by way of inheritance / legacy. This is subject to production of documentary evidence in support of acquisition, inheritance or legacy of assets by the remitter, and a tax clearance / no objection certificate from the Income Tax Authority for the remittance. Remittances exceeding US $ 1,000,000 (US Dollar One million only) in any financial year requires prior permission of the Reserve Bank.

Acquisition Or Transfer Of Immovable Property In India By Citizens Of Certain Countries

Citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal , Bhutan, Macau or Hong Kong can take immovable property in India by way of lease for a period not exceeding 5 years without permission from RBI. For all other types of acquisition or transfer of immovable property in India they need to take prior permission of RBI.