NRI Corner
Rules for Acquisition & Transfer of Immovable Property in India by a Person Resident outside India
Acquiring immovable property in India by persons resident outside India is regulated under the various Sections of the Foreign Exchange Management Act (FEMA), 1999 as well as by the regulations contained in Notification issued by RBI from time to time.
We hereby reproduce some FAQ’s as clarified by RBI, on various issues relating to acquisition and transfer of immovable property in India by a person resident outside India and a person resident in India who is not a citizen of India. (Notification No. FEMA 21/2000-RB dated May 3, 2000)
Acquisition of Immovable Property in India
Under the general permission available, the following categories can freely purchase immovable property in India:
i) Non-Resident Indian (NRI)- that is a citizen of India resident outside India
ii) Person of Indian Origin (PIO)- that is an individual (not being a citizen of Pakistan or Bangladesh or Sri Lanka or Afghanistan or China or Iran or Nepal or Bhutan), who
- at any time, held Indian passport, or
- 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).
The general permission, however, covers only purchase of residential and commercial property.
An NRI / PIO who has purchased residential / commercial property under general permission, is not required to file any documents with the Reserve Bank.
Yes, NRIs and PIOs can freely acquire immovable property by way of gift either from
- a person resident in India or
- an NRI or
- a PIO.
However, the property can only be commercial or residential. A foreign national of Non-Indian origin resident outside India cannot acquire any immovable property in India through gift.
Yes, a person resident outside India i.e.
- an 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 Reserve Bank.
A person resident outside India (i.e. NRI or PIO or foreign national of Non-Indian origin) can inherit immovable property from
- a person resident in India.
- a person resident outside India
However, the person from whom the property is inherited should have acquired the same in accordance with the foreign exchange regulations applicable at that point of time.
Transfer of immovable property in India
(a) NRI can sell property in India to-
- a person resident in India or
- an NRI or
- a PIO.
(b) PIO can sell property in India to
- a person resident in India
- an NRI or
- a PIO – with the prior approval of Reserve Bank
(c) 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 can sell property in India with prior approval of Reserve Bank to
- a person resident in India
- an NRI
- a PIO
Yes. NRI / PIO may gift residential / commercial property to –
- Person resident in India or
- an NRI or
(b) Foreign national of Non-Indian origin needs prior approval of Reserve Bank.
i) NRI / PIO can mortgage to:
(a) an authorized dealer / housing finance institution in India – without the approval of Reserve Bank.
(b) a party abroad – with prior approval of Reserve Bank.
- ii) a foreign national of Non-Indian origin can mortgage only with prior approval of Reserve Bank
iii) 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.
Mode of payment for purchase
Payment can be made by NRI / PIO out of
(a) funds remitted to India through normal banking channel or
(b) funds held in NRE / FCNR (B) / NRO account maintained in India
No payment can be made either by traveler’s cheque or by foreign currency notes.
No payment can be made outside India.
Yes, NRI/PIO can avail of housing loan in rupees from an Authorized Dealer or housing finance institution subject to certain terms and conditions. Such a loan can be repaid
- by way of inward remittance through normal banking channel or
- by debit to his NRE / FCNR (B) / NRO account or
- out of rental income from such property.
- by the borrower’s close relatives, as defined in section 6 of the Companies Act, 1956, through their account in India by crediting the borrower’s loan account.
Repatriate
NRI / PIO may repatriate the sale proceeds of immovable property in India
(a) If the property was acquired out of foreign exchange sources i.e. remitted through normal banking channels / by debit to NRE / FCNR
(B) account
The amount to be repatriated should not exceed the amount paid for the property:
- in foreign exchange received through normal banking channel or
- by debit to NRE account (foreign currency equivalent, as on the date of payment) or debit to FCNR (B) account.
Repatriation of sale proceeds of residential property purchased by NRI / PIO out of foreign exchange is restricted to not more than two such properties.
Capital gains, if any, may be credited to the NRO account from where the NRI/PIO may repatriate an amount up to USD one million, per financial year, as discussed below.
(b) If the property was acquired out of Rupee sources, NRI or PIO may remit an amount up to USD one million, per financial year, out of the balances held in the NRO account (inclusive of sale proceeds of assets acquired by way of inheritance or settlement), for all the bonafide purposes to the satisfaction of the Authorized Dealer bank and subject to tax compliance.
The general permission for repatriation of sale proceeds of immovable property is not available to a citizen of Pakistan, Bangladesh, Sri Lanka, China, Afghanistan and Iran and he has to seek specific approval of Reserve Bank.