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Home builders in India help you with these guidelines
which has been prepared for investment properties in india in order to address various issues relating to
acquisition and transfer of immovable residential
property in India by a person resident outside India
under the provisions of the Foreign Exchange Management
Act, 1999. These FAQs seek to cover the broad spectrum
of issues relating to acquisition and transfer of
immovable property in India by a non-resident Indian (NRI)
or a foreign national of Indian origin (PIO) or a
foreign national of non-Indian origin as also by a
person resident in India who is not a citizen of India.
These FAQs cover the following topics:
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Regulations/Directions issued by Reserve Bank of India |
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- 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?
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:
http://www.fema.rbi.org.in/
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Acquisition of immovable property in India by way of
purchase by a person resident outside India |
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- Under the extant foreign exchange regulations to whom
is general permission available for purchase immovable
property in India?
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).
- Who is a Person of Indian Origin (PIO)?
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).
- Is NRI/PIO who has purchased residential or commercial
property in India under general permission required to
file any documents with Reserve Bank of India?
- NRI/PIO who has purchased residential or commercial
property under general permission is not required to
file any documents with the Reserve Bank.
- Is there any restriction on number of residential or
commercial property that NRI/PIO can purchase under the
general permission available?
There is no restriction on number of residential or
commercial property that NRI/PIO can purchase under the
general permission available.
- Can a name of a foreign national of non-Indian origin
be added as a second holder to a residential or
commercial 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. 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.
- Can a foreign national of non-Indian origin acquire
residential property on a lease in India?
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.
- 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?
No. A person resident outside India cannot acquire by
way of purchase agricultural land/plantation
property/farm house in India.
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Acquisition of immovable property in India by way of
gift by a person resident outside India |
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- Can NRI/PIO acquire residential or commercial property
by way of gift under the general permission available?
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.
- Can a foreign national of non-Indian origin resident
outside India acquire residential/commercial in India by
way of gift?
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.
- 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?
No. A person resident outside India cannot acquire
agricultural land/plantation property/farm house in
India by way of gift.
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Acquisition of immovable residential property in India
by way of inheritance by a person resident outside India |
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- 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?
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.
- Can a person resident outside India (i.e. NRI or
PIO or foreign national of non-Indian origin) hold any
immovable residential property in India acquired by
way of inheritance from a person resident outside
India?
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.
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Transfer of immovable property in India by way of sale
by a person resident outside India |
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- Under general permission available to whom can NRI
transfer by way of sale his residential/commercial
property?
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. Under general permission available to whom
can a PIO transfer his residential/commercial property
by way of sale? PIO can transfer by way of sale
residential/commercial property in India only to a
person resident in India.
- Can a PIO transfer by way of sale his
residential/commercial property to a NRI or a PIO?
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.
- 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?
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.
- Under general permission available to whom can NRI/PIO
transfer by way of sale his agricultural land/plantation
property/farm house in India?
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.
- 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 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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Transfer of immovable residential property in India by
way of gift by a person resident outside India |
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- Under general permission available can NRI/PIO
transfer his residential or commercial property by way
of gift?
Yes. NRI/PIO may transfer by way of gift
residential/commercial property in India to a person
resident in India or to a NRI or a PIO.
- Under general permission available to whom can NRI/PIO
transfer by way of gift agricultural land/plantation
property/farm house in India?
Under the general permission available NRI/PIO may
transfer by way of gift agricultural land/plantation
property/farm house in India to a person resident in
India who is a citizen of India.
- Can a foreign national of non-Indian origin resident
outside India transfer by way of gift agricultural
land/plantation property/farm house acquired by him in
India? No. A foreign national of non-Indian origin
resident outside India would need to seek prior approval
of Reserve Bank for transfer by way of gift agricultural
land/plantation property/farm house acquired by him in
India.
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Transfer of residential/commercial property in India by
way of mortgage by a person resident outside India |
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- Can NRI/PIO transfer by way of mortgage his
residential commercial property in India to an
authorized dealer/housing finance institution in
India?
Yes.
- Can NRI/PIO transfer by way of mortgage his
residential or commercial property in India to a party
abroad?
No. He should seek prior approval of RBI.
- Can a foreign national of non-Indian origin
resident in India or outside India transfer by way of
mortgage his residential/commercial property in India
acquired with the specific approval of Reserve Bank to
a party in India or abroad?
No. He should seek prior approval of RBI. However,
immovable property purchased by a person resident
outside India who has established a Branch Office or
other place of business for carrying on in India any
activity in accordance with FERA/FEMA regulations, may
under general permission available, mortgage such a
property with an authorized dealer as a security for
any borrowing.
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Mode of payment for purchase of residential/commercial
property in India by NRI/PIO |
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- Under the general permission available what is
mode of payment for purchase of residential/commercial
property in India by NRI/PIO?
Under the general permission available NRI/PIO may
purchase residential/commercial property in India out
of funds remitted to India through normal banking
channel or funds held in his NRE/FCNR (B)/NRO account.
No consideration shall be paid outside India.
- Can refund of application/earnest money/purchase
consideration made by the house building
agencies/seller on account of non-allotment of
flat/plot/cancellation of bookings/deals for purchase
of residential/commercial property together with
interest, if any (net of income tax payable thereon)
be credited to NRE account?
Yes, provided original payment was made by way of
inward remittance or by debit to NRE/FCNR (B) account.
For this purpose no permission of Reserve Bank is
required and they may approach the Authorised Dealer
directly in the matter. (Please refer to A. P. (DIR
Series Circular No. 46 dated November 12, 2002).
- Can NRI/PIO for the purpose of acquisition of
flat/house in India for his own residential use avail
of loan from authorized dealer against the security of
funds held in his NRE Fixed Deposit account/FCNR (B)
account?
Yes, subject to certain terms and conditions.
- Can NRI/PIO, avail of housing loan in rupees from
an authorized dealer or housing finance institution in
India approved by the National Housing Finance Bank
for purchase of residential accommodation or for the
purpose of repairs/renovation/improvement of
residential accommodation?
Yes, subject to certain terms and conditions. Such
loans can be repaid by the borrower by way of inward
remittance through normal banking channel or by debit
to his NRE/FCNR (B)/NRO account or out of rental
income derived from renting out such property. Such
loan can also be repaid by the borrower's close
relatives through their account in India by crediting
the borrower's loan account. (Please refer to
Regulation 8 to Notification No. FEMA 4/2000-RB dated
3rd May 2000 and A.P. (DIR Series) Circular No.95
dated April 20, 2003 and A.P. (DIR Series) Circular
No.94 dated May 25, 2003).
- Can NRI avail of housing loan in rupees from his
employer in India? Yes, subject to certain terms and
conditions (Please refer to Regulation 8A to
Notification No. FEMA 4/2000-RB dated 3rd May 2000 and
A.P. (DIR Series Circular No.27 dated October 10,
2003).
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Repatriation of sale proceeds of residential/commercial
property purchased by NRI/PIO |
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- Can NRI/PIO repatriate the sale proceeds of
residential/commercial property in India acquired by way
of inward remittance through normal banking channel or
by debit to NRE/FCNR (B)/NRO account?If so, what is the
quantum?
NRI/PIO may repatriate the sale proceeds of
residential/commercial property in India acquired by way
of inward remittance through normal banking channel or
by debit to NRE/FCNR (B) account. The amount to be
repatriated should not exceed the amount paid for
acquisition of residential/commercial property (a) in
foreign exchange received through normal banking channel
or by debit to FCNR (B) account or (b) the foreign
currency equivalent, as on the date of payment, of the
amount paid by debit to NRE account. The sale proceeds
of residential/commercial property in India acquired by
way of debit to NRO account cannot be repatriated and
should be credited to NRO account only.
- The rupee loan availed by NRI for purchase of
residential accommodation was repaid either by inward
remittance or by debit to NRE/FCNR (B) account. Can the
sale proceeds of such property be repatriated?
Yes. Repayment of loan in foreign exchange is treated as
equivalent to the foreign exchange received for purchase
of residential accommodation.
- Is there any lock in period for sale of
residential/commercial property purchased out of inward
remittance/debit to NRE/FCNR(B) account?
No lock in period is applicable for sale of such
property.
- Is there any restriction on repatriation of sale
proceeds of residential property purchased by NRI/PIO
out of funds remitted to India through normal banking
channel or funds held in his NRE/FCNR (B) account?
Yes. Repatriation of sale proceeds is restricted to not
more than two residential properties.
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Remittance of sale proceeds of residential/commercial
property received by way of gift by NRI/PIO |
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- Into which account the sale proceeds of
residential/commercial property received by way of
gift by NRI/PIO can be credited?
The sale proceeds of residential/commercial property
received by way of gift by NRI/PIO should be credited
to NRO account only
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Remittance of sale proceeds of immovable property
inherited by a person resident outside India |
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- Can sale proceeds of any immovable property
inherited by NRI/PIO from a person resident in India
be remitted abroad?
Yes. Amount not exceeding USD one million, per
calendar year subject to production of documentary
evidence in support of inheritance and Tax clearance
certificate/no objection certificate from Income Tax
authority to authorized dealer for remittances.
However, if a PIO is a citizen of Pakistan or
Bangladesh or Sri Lanka or Afghanistan or China or
Iran he should seek prior approval of Reserve Bank
with documentary evidence in support of inheritance
and tax clearance/no objection certificate from Income
Tax authority. This remittance facility is not
available to a citizen of Nepal or Bhutan. (Please
refer to Regulation 4 (3) to Notification No. FEMA
13/RB-2000 dated 3rd May 2000)
- Can sale proceeds of any immovable property in
India inherited, by a foreign national of non-Indian
origin resident outside India, from a person resident
in India be repatriated by him?
Yes. Amount not exceeding USD one million, per
calendar year subject to production of documentary
evidence in support of inheritance and Tax clearance
certificate/no objection certificate from Income Tax
authority to authorized dealer for remittances.
However, a citizen of Pakistan or Bangladesh or Sri
Lanka or Afghanistan or China or Iran shall seek prior
approval of Reserve Bank with documentary evidence in
support of inheritance and tax clearance/no objection
certificate from Income Tax authority. This remittance
facility is not available to a citizen of Nepal or
Bhutan. (Please refer to Regulation 4 (2) (ii) to
Notification No. FEMA 13/RB-2000 dated 3rd May 2000)
- Can sale proceeds of any immovable property in
India inherited, by a person resident outside India
(i.e. NRI or PIO or foreign national of non-Indian
origin resident outside India), from a person resident
outside India be repatriated by him or his successor?
No. He needs to seek prior approval of Reserve Bank
with documentary evidence in support of inheritance
and tax clearance/no objection certificate from Income
Tax authority.
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Acquisition of immovable property for carrying on a
permitted activity in India |
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- Can a person resident outside India who has
established a Liaison Office in India in accordance with FERA/FEMA regulations purchase immovable property?
No.
- Can a person resident outside India who has
established a Branch Office or other place of business
for carrying on in India any activity in accordance with FERA/FEMA regulations purchase commercial/residential
property?
Yes, provided it is necessary for or incidental to
carrying on such activity and all applicable laws,
rules, regulations or directions are duly complied with.
The purchase price should be paid by way of inward
remittance through proper banking channel. A declaration
in form IPI should be filed with Reserve Bank within
ninety days from the date of acquisition of
commercial/residential property.
- Can such a property referred to in Q. No.41 be
mortgaged with an authorized dealer as a security for
any borrowing?
Yes, RBI has granted general permission for such a
mortgage.
- On winding up of the business can the sale proceeds of
such property be repatriated?
Yes, with prior approval of Reserve Bank.
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Acquisition/Transfer of immovable property in India by
Foreign Embassies/Diplomats/Counsel Generals |
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- Can Foreign Embassies/Diplomats/Counsel General
purchase/sell immovable property in India?
Yes. Under general permission available Foreign
Embassies/Diplomats/Counsel General may acquire any
immovable property other than agricultural
land/plantation property/farm house in India. Such
property may be purchased/sold provided prior
clearance from the Government of India, Ministry of
External Affairs has been obtained for such
purchase/sale. The consideration for purchase of such
property should be paid by way of inward remittance
through normal banking channel.
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Other issues |
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- Can NRI/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 be
credited to NRO/NRE account or remitted abroad.
- Can NRI who had acquired immovable property viz.,
residential/commercial property/agricultural
land/plantation property/farm house in India while he
was a person resident in India continue to hold or
transfer such immovable property? In which account the
sale proceeds may be credited?
Yes, under the provisions of Section 6 (5) of the
Foreign Exchange Management Act, 1999 NRI who had
acquired immovable property in India while he was a
person resident in India may continue to hold such
property. Under the general permission available he
may transfer by way of sale or gift agricultural
land/plantation property/farm house in India to a
person resident in India who is a citizen of India and
may transfer by way of sale or gift
residential/commercial property in India to a person
resident in India or to a NRI/PIO. The sale proceeds
may be credited to NRO account.
- Can a PIO who had acquired immovable property
viz., residential/commercial property/agricultural
land/plantation property/farm house in India while he
was a person resident in India continue to hold or
transfer such immovable property? In which account the
sale proceeds may be credited?
Yes, under the provisions of Section 6 (5) of the
Foreign Exchange Management Act, 1999, PIO who had
acquired immovable property in India while he was a
person resident in India may continue to hold such
property. Under the general permission available he
may transfer agricultural land/plantation
property/farm house in India by way of sale or gift to
a person resident in India who is a citizen of India
and residential/commercial property in India by way of
sale to a person resident in India and way of gift
residential/commercial property in India to to a
person resident in India or to a NRI/PIO. However, if
a PIO is a citizen of Pakistan or Bangladesh or Sri
Lanka or Afghanistan or China or Iran or Nepal or
Bhutan he should seek prior approval of Reserve Bank
for transfer of such immovable property in India. The
sale proceeds may be credited to NRO account.
- Can the sale proceeds of the immovable property
referred to in Q. Nos. 46 and 47credited to NRO
account of NRI/PIO, be remitted abroad?
Yes, provided the immovable property was held for a
period not less than ten years.
What if such an immovable property was held for less
than ten years?
If such a property acquired out of rupee funds is sold
after being held for less than ten years, remittance
can be made, if the sale proceeds were held for the
balance period in NRO account (Savings/Term Deposit)
or in any other eligible investment, provided such
investment is traced to the sale proceeds of the
immovable property.
- Under erstwhile FERA, foreign nationals of
non-Indian origin resident in India or outside India
had with the specific approval of Reserve Bank
acquired residential property in India. While they can
continue to hold the same under the provisions of
Section 6 (5) of the FEMA, 1999 can they transfer such
property?
Yes. only with the prior approval of Reserve Bank.
- Is a person resident in India governed by the
provisions of Foreign Exchange Management (Acquisition
and transfer of immovable property in India)
Regulations, 2000?
A person resident in India who is a citizen of
Pakistan or Bangladesh or Sri Lanka or Afghanistan or
China or Iran or Nepal or Bhutan is governed by the
provisions of Foreign Exchange Management (Acquisition
and transfer of immovable property in India)
Regulations, 2000.
- Where are the terms a ‘person resident in India’
and a ‘person resident outside India’ defined?
Section 2 (v) and section 2 (w) of the Foreign
Exchange Management Act, 1999 defines a 'person
resident in India' and a 'person resident outside
India' respectively.
- What is meant by a person resident in India?
From FEMA angle, a person resident in India means a
person residing in India for more than one hundred and
eighty-two days during the course of the preceding
financial year (April-March) and who has come to or
stays in India either for taking up employment,
carrying on business or vocation in India or for any
other purpose, that would indicate his intention to
stay in India for an uncertain period. In other words,
to be treated as ‘a person resident in India’, under
FEMA a person has not only to satisfy the condition of
the period of stay (being more than 182 days during
the course of the preceding financial year) but has
also to comply with the condition of the
purpose/intention of stay.
- Does Reserve Bank determine the residential status
of a person for the purpose of acquisition of
immovable property in India?
No. Under FEMA residential status is determined by
operation of law. The onus is on an individual to
prove his/her residential status if questioned by any
other authority.
- If a foreign national (except a citizen of
Pakistan, Bangladesh, Sri Lanka, Afghanistan, China,
Iran, Nepal and Bhutan) is a person resident in India
as per the provisions of Section 2 (v) (i) B of the
Foreign Exchange Management Act, 1999 does he require
approval of RBI to purchase any immovable property in
India?
No, he does not require approval from Reserve Bank
from FEMA angle. However, approvals if any, required
in terms of regulations prescribed by other
authorities such as the concerned State Government
etc., will have to be obtained by him/her.
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What should be the method of payment for purchasing
residential immovable property in India by foreign
nationals of Indian origin under the general permission? |
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The purchase consideration should be met either out of
inward remittances in foreign exchange through normal
banking channels or out of funds from NRE/FCNR accounts
maintained with banks in India
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Do non-resident Indian nationals require permission of
Reserve Bank to acquire residential / commercial
property in India? |
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No permission is required by non-resident Indian
nationals to acquire immovable Property in India. |
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Are foreign nationals of Indian origin allowed to
purchase immovable property in India? |
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Yes, foreign nationals of Indian origin, whether
resident in India or abroad, have been granted general
permission to purchase immovable property in India |
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What way the Non-resident Indian can finance the flat? |
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The purchase of the flats can be financed from the fresh
remittance through the normal banking channels or from
payment from original non-resident account or from
Non-resident (External) Accounts. When the flat is under
construction, it may be possible to get instalment
facilities from the builder. Loan may also be available
in India for purchase of flats, for example from Housing
Development Finance Corporation, ANZ Grindlays Bank, Citi
Bank etc. Non-resident Indians who are citizens of India
(India Passport holders) are eligible for housing finance
for the acquisition of an immovable property or
construction of a new house, or a flat for their
occupation or for that of their family in India. But the
HDFC also considers granting of loans to non-resident
Indians even if they are abroad, provided a family member
of his or her in India is made a co-borrower and a power
of attorney is given to his representative in India. |
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Non-resident Indians are staying abroad can the property
be purchased through the agent or through the Power of
Attorney? |
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The non-resident Indians who are staying abroad may
enter into an agreement through their relatives and/or
by executing the Power of Attorney in their favour as it
is not possible for them to be present for completing
the formalities of purchase (negotiating with the
builder or Developer, drafting and signing of
agreements, taking possession, etc.) These formalities
can be completed through some known person who can be
given the Power of Attorney for this purpose. Power of
Attorney should be executed on the stamp paper before
the proper authorities in foreign countries. Power of
Attorney cannot be drafted on the stamp paper bought in
India. |
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Can such residential property be given on rent if not
required for immediate residential use? |
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YES |
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Can the rental income from such property be remitted
outside India? |
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No. Such income cannot be remitted abroad and will have
to be credited to the ordinary non-resident rupee account
of the owner of the property |
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Can such property be sold without the permission of
Reserve Bank? |
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Yes. However, such property can be sold to another foreign
national of Indian origin provided funds towards the
purchase consideration are either remitted to |
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What should be the method of payment for purchasing
residential immovable property in India by foreign
nationals of Indian origin under the general permission? |
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The purchase consideration should be met either out of
inward remittances in foreign exchange through normal
banking channels or out of funds from NRE/FCNR accounts
maintained with banks in India |
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Do non-resident Indian nationals require permission of
Reserve Bank to acquire residential / commercial property
in India? |
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No permission is required by non-resident Indian nationals
to acquire immovable Property in India. |
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Are foreign nationals of Indian origin allowed to purchase
immovable property in India? |
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Yes, foreign nationals of Indian origin, whether resident
in India or abroad, have been granted general permission
to purchase immovable property in India |
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What way the Non-resident Indian can finance the flat? |
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The purchase of the flats can be financed from the fresh
remittance through the normal banking channels or from
payment from original non-resident account or from
Non-resident (External) Accounts. When the flat is under
construction, it may be possible to get instalment
facilities from the builder. Loan may also be available in
India for purchase of flats, for example from Housing
Development Finance Corporation, ANZ Grindlays Bank, Citi
Bank etc. Non-resident Indians who are citizens of India
(India Passport holders) are eligible for housing finance
for the acquisition of an immovable property or
construction of a new house, or a flat for their
occupation or for that of their family in India. But the
HDFC also considers granting of loans to non-resident
Indians even if they are abroad, provided a family member
of his or her in India is made a co-borrower and a power
of attorney is given to his representative in India |
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Non-resident Indians are staying abroad can the property
be purchased through the agent or through the Power of
Attorney? |
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The non-resident Indians who are staying abroad may enter
into an agreement through their relatives and/or by
executing the Power of Attorney in their favour as it is
not possible for them to be present for completing the
formalities of purchase (negotiating with the builder or
Developer, drafting and signing of agreements, taking
possession, etc.) These formalities can be completed
through some known person who can be given the Power of
Attorney for this purpose. Power of Attorney should be
executed on the stamp paper before the proper authorities
in foreign countries. Power of Attorney cannot be drafted
on the stamp paper bought in India. |
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