REGULATIONS / DIRECTIONS ISSUED BY RESERVE BANK OF INDIA (RBI)


Where can one find regulations / directions issued by the Reserve Bank for acquisition and transfer of immovable property in India by a person resident outside India ?
Regulations regarding acquisition and transfer of immovable property in India by a person resident outside India have been notified by RBI. These are available on RBI website: www.fema.rbi.org.in

ACQUISITION OF IMMOVABLE PROPERTY IN INDIA BY WAY OF PURCHASE


Who can purchase immovable property in India?
Under the general permission available, the following categories can freely purchase immovable property in India: i) Non-Resident Indian (NRI) ii) Person of Indian Origin (PIO)

Who are NRI and PIO?
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 1. at any time, held Indian passport, or 2. 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).

Do any documents need to be filed with Reserve Bank of India after purchase?
No.

How many residential / commercial properties can NRI / PIO purchase under the general permission?
There are no such restrictions

Can a foreign national of non-Indian origin be a second holder to immovable property purchased by NRI / PIO?
No.

Can a foreign national of non-Indian origin resident outside India acquire any immovable property in India by way of purchase?
No.

Can a foreign national who is a person resident in India purchase 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 and Bhutan would require prior approval of Reserve Bank.

Whether NRI/PIO can acquire agricultural land / plantation property / farm house in India?
No.

ACQUISITION OF IMMOVALE PROPERTY IN INDIA BY WAY OF GIFT

Whether immovable property in India can be acquired by way of gift?
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.

ACQUISITION OF IMMOVALE PROPERTY IN INDIA BY WAY OF INHERITANCE


Whether a non-resident can inherit immovable property in India?
Yes.

Can an NRI or a 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?
Yes, but with the specific approval of the Reserve Bank India.

TRANSFER OF IMMOVABLE PROPERTY IN INDIA BY WAY OF SALE


Can an NRI/ PIO/foreign national sell his residential / commercial property?
(a) NRI can sell property in India to- i) a person resident in India or ii) an NRI or iii) a PIO.
(b) PIO can sell property in India to i) a person resident in India. ii) an NRI or iii) a PIO - with the prior approval of Reserve Bank.
(c) Foreign national of non-Indian origin including a citizen of Pakistan or Bangaladesh 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 i) a person resident in India ii) an NRI iii) a PIO

Under the general permission available, to whom can an NRI / a PIO transfer by way of sale his agricultural land / plantation property / farmhouse in India ?
Under the general permission available, an NRI/a PIO may transfer by way of sale his agricultural land / plantation / farmhouse in India to a person who is a citizen of India and who is resident in India.

Can a foreign national of non-Indian origin resident outside India transfer by way of gift any agricultural land/ plantation property / farmhouse acquired by him in India?
No. A foreign national of non-Indian origin resident outside India would need to seek prior approval of the Reserve Bank for transfer by way of gift any agricultural land / plantation property / farmhouse acquired by him in India.

TRNASFER OF RESIDENTIAL / COMMERCIAL PROPERTY IN INDIA BY WAY OF MORTGAGE


Can residential / commercial property be mortgaged?
i) NRI / PIO can mortgage to: (a) an authorised dealer / housing finance institution in India - without the approval of Reserve Bank. (b) a party abroad - with prior approval of Reserve Bank

MODE OF PAYMENT FOR PURCHASE


How can an NRI / PIO make payment for purchase of residential / commercial property in India?
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 traveller's cheque or by foreign currency notes. No payment can be made outside India.

What shall be the option if there is refund of application money / payment made by the building agencies / seller because of non-allotment of flat / plot / cancellation of bookings / contracts?
The amount of refund, together with interest (net of income tax) can be credited to NRE account. This is subject to condition that the original payment was made by way of inward remittance or by debit to NRE / FCNR (B) account. (Please refer to A.P. (DIR) Series Circular No. 46 dated 12.11.2002)

Can NRI / PIO avail of loan from an authorised dealer for acquiring flat / house in India for his own residential use against the security of funds held in his NRE Fixed Deposit account / FCNR (B) account?
Yes, such loans are subject to the terms and conditions as laid down in Schedules 1 and 2 to Notification No. FEMA 5/2000-RB dated May 3, 2000 as amended from time to time. However, banks cannot grant fresh loans or renew existing loans in excess of Rupees 20 lakh against NRE and FCNR(B) deposits either to the depositors or to third parties [cf. A.P. (DIR Series) Circular No. 29 dated January 31, 2007]. Such loans can be repaid (a) by way of inward remittance through normal banking channel or (b) by debit to his NRE / FCNR (B) / NRO account or (c) out of rental income from such property. (d) 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.

REPATRIATION


Can NRI / PIO, avail of housing loan in rupees from an authorised dealer or housing finance institution in India approved by the National Housing Bank for purchase of residential accommodation or for the purpose of repairs / renovation / improvement of residential accommodation ? How can such loan be repaid?
Yes, NRI/PIO can avail of housing loan in rupees from an Authorised Dealer or housing finance institution subject to certain terms and conditions. (Please refer to Regulation 8 of Notification No. FEMA 4/2000-RB dated 3.5.2000 and A.P. (DIR) Series Circular No. 95 dated April 26, 2003). Such a loan can be repaid (a) by way of inward remittance through normal banking channel or (b) by debit to his NRE / FCNR (B) / NRO account or (c) out of rental income from such property. (d) 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.

Can NRI/PIO avail of housing loan in rupees from his employer in India?
Yes, subject to certain terms and conditions (Please refer to Regulation 8A of Notification No. FEMA 4/2000-RB dated May 3, 2000 and A.P. (DIR Series) Circular No.27 dated October 10, 2003).

RENTING


Can an NIR / a PIO rent out the residential / commercial property purchased out of foreign exchange / rupee funds, if not required for immediate use?
Yes. Rent received, being current income may credited to NRO / NRE account or remitted abroad.