Monday, November 16, 2015

Acquisition and Transfer of Immovable Property in India by NRIs/PIOs/Foreign Nationals

Acquisition and Transfer of Immovable Property in India

A. Non- Resident Indian (NRI)

(i) Purchase of immovable property: Any immovable property (other than agricultural land/ plantation property / farm house) in India.

(ii) Transfer of immovable property: A NRI may transfer any immovable property in India to a person resident in India. He may also transfer his property (other than agricultural land or plantation property or farm house) to an Indian Citizen resident outside India or a PIO resident outside India.

(iii) Payment for Acquisition of Immovable Property: May be made out of Funds received through normal banking channels from abroad or by debit to his NRE / FCNR (B) / NRO account only.

(iv)         Documents: If purchased under general permission an NRI is not required to file any documents with the Reserve Bank.

B. Person of Indian Origin (PIO)

(i) Purchase of immovable property: Any immovable property (other than agricultural land/ plantation property / farm house) in India.

(ii) Gift/ Inheritance of immovable property:
(a)  By way of gift from a person resident in India or a NRI or a PIO.

(b)By way of inheritance from resident indian or a person resident outside India who had acquired such property as per FEMA regulations.

(iii) Transfer of immovable property: By way of sale to a person resident in India. He may, however gift or sell his agricultural land / farm house / plantation in India, to an India citizen  resident in India. He may also gift his residential or commercial property in India to a person resident in India or outside India, who is a citizen of India or to a PIO resident outside India.

(iv) Payment for Acquisition of Immovable Property in India:
a.   Out of funds received only by inward remittance through normal banking channels or by debit to his NRE / FCNR (B) / NRO account.

(v)  Documents: If purchased under general permission a PIO is not required to file any documents with the Reserve Bank.

Acquisition 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 –

i. Clearance from the Government of India, Ministry of External Affairs is obtained, and
ii. The consideration is paid out of funds remitted from abroad through the normal banking channels.

Acquisition by person resident outside India for carrying on a permitted activity

A person resident outside India who has established a Branch, Office or other place of business, other than a Liaison Office, for carrying on any activity in India, may –

a.   acquire any immovable property in India, which is necessary for or incidental to carrying on such activity and the person files with the RBI a declaration in the form IPI, not later than 90 days from the date of such acquisition; and

b.   Mortgage such property to an Authorised Dealer as a security for any borrowing.

Repatriation of sale proceeds of immovable property

(A) Immovable property acquired by way of purchase

(a)   A person or his successor shall not, except with the prior permission of the Reserve Bank, repatriate the sale proceeds of any immovable property.

(b) In the event of sale of immovable property other than agricultural land / farm house / plantation property in India by an Indian citizen resident outside India or a person of Indian origin, the Authorised Dealer may allow repatriation of the sale proceeds, provided:

(i)     the immovable property was acquired as per FEMA guidelines;
(ii)   amount to be repatriated does not exceed the amount paid for acquisition of the property in foreign exchange (Inward remittance, FCNR a/c or NRE a/c).
(iii) in case of residential property, the repatriation is restricted to two properties only.

(B) Immovable property acquired by way of inheritance/ legacy/ out of Rupee funds

A NRI / PIO may remit an amount, up to US $ 1,000,000 per financial year out of the balances held in NRO accounts or sale proceeds of assets by way of purchase / acquired by inheritance / legacy / out of Rupee funds. Remittances exceeding this limit require prior permission of the Reserve Bank.

In cases of the deed of settlement made by either of his parents or a close relative and the settlement taking effect on the death of the settler, the original deed of settlement should be produced for the remittance. All remittances will be subject to payment of applicable taxes in India.

Where the remittance as above is made in more than one instalment, the remittance shall be made through the same Authorised Dealer.

Refund of purchase consideration

Refund, made by the house building agencies on account of non-allotment, together with interest, if any may be allowed by the Authorised Dealers by credit to NRE/FCNR (B) account of the beneficiary, provided the original payment was made out of NRE / FCNR (B) account or inward remittance through normal banking channels.

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 lease, not exceeding five years.

Purchase of Immovable Property in India by a Foreign National of Non-Indian Origin resident outside India

i. Such persons are not permitted to acquire any immovable property in India unless by way of inheritance from a person resident in India. However, they can acquire or transfer immovable property in India, on lease, not exceeding five years without the prior permission of the Reserve Bank.

ii. Foreign Nationals of non-Indian origin, other than a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, Bhutan, Macau or Hong Kong can acquire immovable property in India on becoming resident provided he satisfies the condition of the period of stay.

iii. Foreign nationals of non-Indian origin who have acquired immovable property in India by any such way mentioned above cannot transfer such property without the prior permission of the RBI.

Payment of taxes Any transaction involving acquisition of immovable property under these regulations shall be subject to applicable tax laws in India.

Based on RBI Circular dt 01/07/15. Please visit www.rbi.org.in for any further clarification if required…..       Poppy