According to an estimate, over 25 million Non Resident Indians are looking homewards for potential investment opportunities in real estate. The foreign direct investment under automated route in real estate development has also boosted the confidence of Indians abroad to forge alliances with global realty giants for testing select markets across the country.
Under the Foreign Exchange Management Act, 1999, commonly known as the FEMA, the Reserve Bank of India is empowered to frame rules and regulations to prohibit, restrict or regulate the acquisition or transfer of immovable property in India by certain persons mainly residing out of India. The restrictions contained therein are however, not applicable to a lease of immovable property for a period less than five years.
The regulations made by the Reserve Bank are called Foreign Management (Acquisition and Transfer of Immovable Property in India) regulations, 2000, the full text of the said provisions are available on the bank’s website.
Herein follows the answers to some commonly asked question pertaining to foreign investments in India.
Q1: Who are the persons who can purchase immovable property in India ?
A; Under the present regulations only a person who is citizen of India (an NRI) or a person who is of Indian origin (a PIO) can purchase only a residential or a commercial property in India.
Q2: 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).
Q3: Is an NRI or PIO who has purchased any residential/commercial property under the General permission required to file any documents with the Reserve Bank of India?
A: No, an NRI or PIO who has purchased any residential/commercial property under the General permission is not required to file any documents with the Reserve Bank of India.
Q4. Is there any restriction on the number of residential or commercial properties that NRI/PIO can purchase under the general permission available?
A. No, there is no restriction on the number of residential or commercial properties that NRI/PIO can purchase under the general permission available.
Q5. Can a name of foreign national or non-Indian origin be added as a share holder to a residential or commercial property purchased by NRI or PIO?
A. No.
Q6. Can a foreign national or non Indian origin resident outside India acquire any immovable property in India by way of purchase?
A. No, under Section 2 (zed) of the Foreign Exchange Management Act, 1999 ‘transfer’ includes among others, ‘purchase’. Therefore, a foreign national of non-Indian origin resident outside India can not acquire any immovable property in India by way of purchase.
Q7. Can a foreign national of non-Indian origin acquire residential property on a lease in India?
A. Yes. A Foreign National of anon-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 or she does not require prior permission of Reserve Bank of India.
Q8. 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/farmhouse in India by way of purchase?
A. No. A person resident outside India can not acquire by way of purchase agricultural land/plantation property or farmhouse in India.
Q9. Can NRI or PIO acquire residential or commercial property by way of gift under the general permission available?
A. Yes. Under the general permission available NRI or PIO may acquire residential or commercial property by way of gift from a person resident in India or a NRI or a PIO..
Q10. Can a foreign national of non-Indian origin resident outside India acquire residential or commercial property 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 can not acquire residential or commercial property in India by way of gift.
Q11. Can a person resident outside India (i.e. a NRI or a PIO, or a foreign national of non-Indian Origin) acquire agricultural land or plantation property or farmhouse in India by way of gift?
A. No. A person resident outside India can not acquire agricultural land or plantation property or farm house in India by way of gift.
Q12. Can a person resident outside India (i.e. a NRI or a PIO, or a 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.
Q13. Can a person resident outside India (i.e. a NRI or a PIO, or a 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 bequeathor had acquired such property in accordance with the provisions of foreign exchange law in force at the time of acquisition or under FEMA regulations.
Q14. Under general permission available to who can NRI transfer by way of sale his residential or commercial property?
A. NRI can transfer by way of sale residential or commercial property in India to a person resident in India or to a NRI or a PIO.
Q15. Under the general permission available to who can PIO transfer his residential or commercial property by way of sale?
A. PIO can transfer by way of sale residential or commercial property in India to a person resident in India.
Q16. Can a PIO transfer by way of sale his residential or commercial property to a NRI of a PIO?
A. No. He would need to seek Reserve Bank prior approval for transfer by way of sale residential or commercial property in India to NRI or a PIO.
Q17. 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 acquire with specific permission of Reserve Bank to a person resident in India or outside India.
Q18. Under the general permission available to whom can NRI or PIO transfer by way of sale his agricultural land or plantation property or farm house in India?
A. Under the general permission available NRI or PIO may transfer by way of sale his agricultural land or plantation property or farm house in India to a person resident in India who is a citizen of India.
Q19. Can a foreign national of non-Indian origin resident outside India transfer by way of sale agricultural land or plantation property or 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 share, by way of sale, agricultural land or plantation property or farm house acquired in India.
Q20. Under general permission available can NRI or PIO transfer his residential or commercial property way of gift?
A. Yes. NRI or PIO may transfer by way of gift residential or commercial property in India to a person resident in India or to a NRI or a PIO.
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