Definition of an NRI
An
Indian Citizen who stays abroad for employment/ carrying on business or
vacation outside India or stays abroad under circumstances indicating
an intention for an uncertain duration of stay abroad is a
non-resident. (Persons posted in U.N. organizations and officials
deputed abroad by Central/ State Government and Public Sector
Undertakings on temporary assignments are also treated as non-resident)
Non-resident foreign citizens of Indian Origin are treated on par with
non-resident Indian citizens.
For Investment in immovable properties:
A foreign citizen (other than a citizen of Pakistan, Bangladesh,
Afghanistan, Bhutan, Sri lanka or Nepal), is deemed to be of Indian
origin if,
- (i) he held an Indian passport at any time, OR
- (ii)
he or his father or paternal grand-father was a citizen of India by
virtue of the Constitution of India or the Citizenship Act, 1955 ( 57
of 1955).
FAQs
Q) Do non-resident Indian citizens require permission of Reserve Bank to acquire residential/commercial properly in India?
A)
No.
Q)
Do foreign citizens of Indian origin require permission of Reserve Bank
to purchase immovable property in India for their residential use?
A) Yes. However, Reserve Bank has granted general permission to foreign
citizens of Indian origin, whether resident in India or abroad, to
purchase immovable property in India for their bona fide residential
purpose. They are, therefore, not required to obtain separate
permission of Reserve Bank.
Q)
In what manner the purchase consideration for the residential immovable
property should be paid by foreign citizens of Indian origin under the
general permission?
A) The purchase consideration should be met either out of inward
remittances in foreign exchange through normal banking channels or out
of funds from NTE/FCNR accounts maintained with banks in India.
Q)
What are the formalities required to be completed by foreign citizens
of Indian origin for purchasing residential immovable property in India
under the general permission.?
A) They are required to file a declaration in form IPI 7 with the
Central Office of Reserve Bank at Mumbai within a period of 90 days
from the date of purchase of immovable property or final payment of
purchase consideration along with a certified copy of the document
evidencing the transaction and bank certificate regarding the
consideration paid.
Q)
Can such property be sold without the permission of Reserve Bank?
A) Yes. Reserve Bank has granted general permission for sale of such
property. However, where the property is purchased by another foreign
citizen of Indian origin, funds towards the purchase consideration
should either be remitted to India or paid out of balances in NRE/FCNR
accounts.
Q)
Can sale proceeds of such property if and when sold be remitted out of India?
A) In respect of residential properties purchased on or after 26th
May,1993, Reserve Bank considers applications for repatriation of sale
proceeds up to the consideration amount remitted in foreign exchange
for the acquisition of the property for two such properties. The
balance amount of sale proceeds if any or sale proceeds in respect of
properties purchased prior to 26th May, 1993, will have to be credited
to the ordinary non-resident rupee account of the owner of the
property.
Q)
Are any conditions required to be fulfilled if repatriation of sale proceeds is desired?
A) Applications for repatriation of sale proceeds are considered
provided the sale takes place after three years from the date of final
purchase deed or from the date of payment of final installment of
consideration amount, whichever is later.
Q)
What is the procedure for seeking such repatriation?
A) Applications for necessary permission for remittance of sale
proceeds should be made in form IPI 8 to the Central Office of Reserve
Bank at Mumbai within 90 days of the sale of the property.
Q) Can foreign citizens of Indian origin acquire or dispose of residential property by way of gift?
A) Yes. Reserve Bank has granted general permission to foreign citizens
of Indian origin to acquire or dispose of properties up to two houses
by way of gift from or to a relative who may be an Indian citizen or a
person of Indian origin whether resident in India or not,provided gift
tax has been paid.
Q) Can foreign citizens of Indian origin acquire commercial properties in India?
A) Yes. Under the general permission granted by Reserve Bank properties
other than agricultural land/farm house/plantation property can be
acquired by foreign citizens of Indian origin provided the purchase
consideration is met either out of inward remittances in foreign
exchange through normal banking channels or out of funds from the
purchasers' NRE/FCNR accounts maintained with banks in India and a
declaration is submitted to the Central Office of Reserve Bank in form
IPI 7 within a period of 90 days from the date of purchase of the
property/final payment of purchase consideration.
Q)
Can they dispose of such properties?
A) Yes.
Q)
Can sale proceeds of such property be remitted out of India?
A) Yes. Repatriation of original investment in respect of properties
purchased by foreign citizens of Indian origin on or after 26th May
1993 will be allowed to be remitted up to the consideration amount
originally remitted from abroad provided the property is sold after a
period of three years from the date of the final purchase deed or from
the date of payment of final installment of consideration amount,
whichever is later. Applications for the purpose are required to be
made to the Central Office of Reserve Bank within 90 days of the sale
of property in form IPI 8.
Q)
Can the properties (residential/commercial) be given on rent if not required for immediate use?
A) Yes. Reserve Bank has granted general permission for letting out of
any immovable property in India. The rental income or proceeds of any
investment of such income has to be credited to NRO account.
Q)
Can NRIs obtain loans for acquisition of a house/flat for residential
purpose from financial institutions providing housing finance?
A) Reserve Bank has granted general permission to certain financial
institutions providing housing finance e.g. HDFC,LIC Housing Finance
Ltd.,etc. to grant housing loans to non-resident Indian nationals for
acquisition of houses/flats for self-occupation subject to certain
conditions.
Q) Can authorized dealer grant loans to NRIs for acquisition of a flat/house for residential purposes?
A) Authorized dealers have been granted permission to grant loans up to
non-resident Indian nationals for acquisition of house/flat for
self-occupation on their return to India subject to certain conditions.
Repayment of the loan should be made within a period not exceeding 15
years out of inward remittance through banking channels or out of funds
held in the investments' NRE/FCNR accounts.
Q)
Can Indian companies grant loans to their NRI staff?
A) Reserve Bank permits Indian firms/companies to grant housing loans
to their employees deputed abroad and holding Indian passport subject
to certain conditions.
Source: Reserve Bank of India
Q)
What are the options available for obtaining guarantors while applying for a HDFC/LIC loan?
A) One will need a guarantor for a loan mainly for collateral security.
The guarantor will have to demonstrate appropriate net worth to cover
for the loan. Usually one can have a guarantor in any city where the
loan issuer has a branch. Talk to loan issuers they will work something
out for NRIs and foreign banks.
Q) While purchasing real estate most developers demand a Power of Attorney in their favor, is there a way to avoid it?
A) One can choose not to grant the Power of Attorney (POA) to the
developers. However this will mandate the mailing of all documents to
your foreign residence and associated time delays. A good compromise is
to grant the POA to the builder only for specific necessary items.
Regulations/Directions issued by Reserve Bank of India
Q:
Where can one find regulations/directions issued by Reserve Bank for
acquisition and transfer of immovable property in India by a person
resident outside India?
A:
Regulations regarding acquisition and transfer of immovable property in
India by a person resident outside India have been notified vide RBI
Notification No. FEMA 21/2000-RB dated May 3, 2000 as amended vide
Notification No. FEMA 64/2002-RB dated June 29, 2002 and Notification
No. FEMA 65/2002-RB dated June 29, 2002 and relevant directions issued
in the form of A.P. (DIR Series) Circulars. These are available on RBI
website: www.fema.rbi.org.in
Acquisition of immovable property in India by way of purchase by a person resident outside India
Q:
Under the extant foreign exchange regulations to whom is general
permission available for purchase immovable property in India?
A:
General Permission is available to purchase only a
residential/commercial property in India to a person resident outside
India who is a citizen of India (NRI) and who is a Person of Indian
Origin (PIO).
Q: Who is a Person of Indian Origin (PIO)?
A:
For the purpose of acquisition and transfer of immovable property in
India, a 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), who (i) at any time, held Indian passport; or (ii) 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).
Q: Is NRI/PIO
who has purchased residential/commercial property under general
permission required to file any documents with Reserve Bank of India?
A:
NRI/PIO who has purchased residential/commercial property under general
permission is not required to file any documents with the Reserve Bank.
Q: Is there
any restriction on number of residential/commercial property that
NRI/PIO can purchase under the general permission available?
A:
There is no restriction on number of residential/commercial property
that NRI/PIO can purchase under the general permission available.
Q:
Can a name of a foreign national of non-Indian origin be added as a
second holder to a residential/commercial property purchased by
NRI/PIO?
A: No.
Q:
Can a foreign national of non-Indian origin resident outside India
acquire any immovable property in India by way of purchase?
A:
No. Under section 2 (ze) of the Foreign Exchange Management Act, 1999
‘transfer' includes among others, ‘purchase'. Therefore, a foreign
national of non-Indian origin resident outside India cannot acquire any
immovable property in India by way of purchase.
Q: Can a foreign national of non-Indian origin acquire residential property on a lease in India?
A:
Yes. A 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 may acquire only residential accommodation on lease,
not exceeding five years for which he/she does not require prior
permission of Reserve Bank of India.
Q:
Can a person resident outside India (i.e. a NRI or a PIO or a foreign
national of non-Indian origin) acquire agricultural land/plantation
property/farm house in India by way of purchase?
A:
No. A person resident outside India cannot acquire by way of purchase
agricultural land/plantation property/farm house in India.
Acquisition of immovable property in India by way of gift by a person resident outside India
Q: Can NRI/PIO acquire residential/commercial property by way of gift under the general permission available?
A:
Yes. Under general permission available NRI/PIO may acquire
residential/commercial property by way of gift from a person resident
in India or a NRI or a PIO.
Q: Can a foreign national of non-Indian origin resident outside India acquire residential/commercial in India by way of gift?
A:
No. Under section 2 (ze) of the Foreign Exchange Management Act, 1999
‘transfer' includes among others, ‘gift'. Therefore, a foreign national
of non-Indian origin resident outside India cannot acquire
residential/commercial property in India by way of gift.
Q:
Can a person resident outside India (i.e. a NRI or a PIO or a foreign
national of non-Indian origin) acquire agricultural land/plantation
property/farm house in India by way of gift?
A: No. A person resident outside India cannot acquire agricultural land/plantation property/farm house in India by way of gift.
Acquisition of immovable property in India by way of inheritance by a person resident outside India
Q:
Can a person resident outside India (i.e. NRI or PIO or foreign
national of non-Indian origin) hold any immovable property in India
acquired by way of inheritance from a person resident in India?
A:
Yes. A person resident outside India can hold immovable property
acquired by way of inheritance from a person resident in India as per
the provisions of Section 6(5) of the Foreign Exchange Management Act,
1999.
Q: Can
a person resident outside India (i.e. NRI or 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?
A:
With the specific approval of Reserve Bank a person resident outside
India may hold any immovable property in India acquired by way of
inheritance from a person resident outside India, provided the bequeath
or had acquired such property in accordance with the provisions of
foreign exchange law in force at the time of acquisition or under FEMA
regulations.
Transfer of immovable property in India by way of sale by a person resident outside India
Q: Under general permission available to whom can NRI transfer by way of sale his residential/commercial property?
A: NRI can transfer by way of sale residential/commercial property in India to a person resident in India or to a NRI or a PIO.
Q: Under general permission available to whom can a PIO transfer his residential/commercial property by way of sale?
A: PIO can transfer by way of sale residential/commercial property in India only to a person resident in India.
Q: Can a PIO transfer by way of sale his residential/commercial property to a NRI or a PIO?
A:
No. He would need to seek Reserve Bank prior approval for transfer by
way of sale residential/commercial property in India to a NRI or a PIO.
Q: Can a
foreign national of non-Indian origin whether resident in India or
outside India transfer by way of sale residential/property in India
acquired with the specific permission of Reserve Bank to a person
resident in India or outside India?
A:
No. A foreign national of non-Indian origin whether resident in India
or outside India would need to seek prior approval of Reserve Bank for
transfer by way of sale residential/property in India acquired with the
specific permission of Reserve Bank to a person resident in India or
outside India.
Q:
Under general permission available to whom can NRI/PIO transfer by way
of sale his agricultural land/plantation property/farm house in India?
A:
Under the general permission available NRI/PIO may transfer by way of
sale his agricultural land/plantation property/farm house in India to a
person resident in India who is a citizen of India.
Q:
Can a foreign national of non-Indian origin resident outside India
transfer by way of sale agricultural land/plantation property/farm
house acquired by him in India?
A:
A foreign national of non-Indian origin resident outside India would
need to seek prior approval of Reserve Bank for transfer, by way of
sale, agricultural land/plantation property/farm house acquired in
India.
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