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RBI Guidelines for Buying Residential Properties by NRIs.
Urban Stories aims to provide solutions to every concern on the purchase of immovable property in India. Here’s a compiled legal information of the Reserve Bank of India (RBI) Guidelines that would help you invest in immovable properties in India.
The Foreign Exchange Management Act, 1999 (FEMA) empowers the Reserve Bank to frame regulations to prohibit, restrict or regulate the acquisition or transfer of immovable property in India by persons residing outside India. The regulations governing acquisition and transfer of immovable property in India are notified under Notification No. FEMA 21 / 2000-RB dated May 3, 2000, as amended from time to time. These restrictions do not apply to acquisition or transfer of immovable property in India by a person resident outside India on a lease not exceeding five years.
As per section 6(5) of FEMA, a person residing outside India can hold, own, transfer or invest in any immovable property situated in India if such property was acquired, held or owned by him / her when he / she was residing in India or inherited from a person residing in India. Acquisition / Transfer By a Non- Resident Indian (NRI).
An NRI can acquire by way of purchase any immovable property (other than agricultural land / plantation property / farm house) in India.
Transfer of immovable property:
a. An NRI may transfer any immovable property in India to a person resident in India;
b. An NRI may transfer any immovable property (other than agricultural land or plantation property or farm house) to an NRI or a PIO residing outside India.
Payment for Acquisition of Immovable Property:
a. NRIs can make payment for acquisition of immovable property (other than agricultural land/ plantation property/ farm house) out of funds received in India through normal banking channels by way of inward remittance from any place outside India or by debit to his NRE/ FCNR (B)/ NRO account;
b. Such payments cannot be made either by traveller’s cheque or by foreign currency notes or by other mode except those specifically mentioned above.
Acquisition/ Transfer By A Person Of Indian Origin (PIO)
PIO resident outside India can acquire by way of purchase immovable property (other than agricultural land / plantation property / farm house) in India.
Gift / Inheritance of immovable property:
A PIO resident outside India may acquire
a. any immovable property (other than agricultural land/ plantation property/ farm house) in India by way of gift from a person resident in India or an NRI or a PIO resident outside India;
b. any immovable property in India by way of inheritance from a person resident outside India who had acquired such property in accordance with the provisions of the foreign exchange law in force or FEMA regulations, at the time of acquisition of the property or from a person resident in India.
Transfer of immovable property:
A PIO resident outside India can transfer
a. by way of sale, any immovable property in India (other than agricultural land/ farm house/ plantation property), to a person resident in India;
b. by way of gift or sale, agricultural land/ farm house/ plantation property in India, to a person resident in India who is a citizen of India;
c. by way of gift, residential or commercial property in India, to a person resident in India or to an NRI or to a PIO resident outside India.
Payment for Acquisition of Immovable Property in India:
a. A PIO resident outside India can make payment for acquisition of immovable property in India (other than agricultural land/ farm house/ plantation property) by way of purchase out of funds received by inward remittance through normal banking channels or by debit to his NRE/ FCNR (B) / NRO account;
b. Such payments cannot be made either by traveller’s cheque or by foreign currency notes or by other mode other than those specifically mentioned above.
Acquisition Of Immovable Property By Foreign Embassies/ Diplomats/ Consulate Generals
Foreign Embassy/ Diplomat/ Consulate General, may purchase/ sell immovable property (other than agricultural land/ plantation property/ farm house) in India provided –
a. Clearance from the Government of India, Ministry of External Affairs is obtained for such purchase/sale, and
b. The consideration for the acquisition of immovable property in India is paid out of funds remitted from abroad through the normal banking channels.
Repatriation Of Sale Proceeds Of Immovable Property
A person acquiring property in accordance with section 6(5) of FEMA (reference para 1.2 of Part II) or his successor cannot repatriate outside India the sale proceeds of such immovable property without the prior permission of the Reserve Bank. However, if such a person is an NRI or a PIO resident outside India, he can make a remittance under the facilities available under the Foreign Exchange Management (Remittance of Assets) Regulations, 2000, as amended from time to time.
In the event of sale of immovable property other than agricultural land/ farm house/ plantation property in India by a NRI/ PIO resident outside India, the Authorised Dealer may allow repatriation of the sale proceeds outside India, provided the following conditions are satisfied, namely:
a. the immovable property was acquired by the seller in accordance with the provisions of the foreign exchange law in force at the time of acquisition by him or the provisions of Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations 2000;
b. the amount to be repatriated does not exceed the amount paid for acquisition of the immovable property received through normal banking channels or out of funds held in FCNR(B) account or NRE account.
c. in the case of residential property, the repatriation of sale proceeds is restricted to not more than two such properties.
In case an immovable property in India has been purchased by an NRI/ PIO out of housing loans availed in terms of Foreign Exchange Management (Borrowing and lending in rupees) Regulations, 2000, as amended from time to time, and the repayments for such loans are made out of remittances received from abroad through banking channels or by debit to the NRE/ FCNR(B) account of the NRI, such repayments may be treated as equivalent to foreign exchange received.
Prohibition On 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 cannot, without prior permission of the Reserve Bank, acquire or transfer immovable property in India, other than on lease, not exceeding five years.
For any further queries regarding the latest information or amendments in the guidelines, kindly visit : www.rbi.org.in
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