TRANSFER OF IMMOVABLE PROPERTY IN INDIA BY NON RESIDENTS INDIAN (NRI) AND FOREIGN NATIONALS
The procedure and regulation for acquisition and transfer of immovable property by Non-Resident Indians (NRIs) is governed by Foreign Exchange Management Act, 1999 (FEMA). The Reserve Bank of India has been empowered under Foreign Exchange Management Act, 1999 (FEMA) to frame regulations for restricting, prohibiting and regulating the acquisition or transfer of immovable property in India by Non- Resident Indians.
As per the direction of the regulations, a person residing outside India who is a citizen of India, Non-Resident Indian (NRI) or Person of Indian Origin (PIO) can acquire by way of purchase, any immovable property in India, other than agricultural land, plantation property, and farmhouse. Such a person can also transfer immovable property to a person residing outside India but only to persons who are of Indian origin or Non- Resident Indian. Lands having nature of agricultural, plantation, and the farmhouse is acquired by way of inheritance and is only transferred to persons who are permanent citizens. Transfer of residential or commercial property by way of gift to Non- Resident Indian (NRI) or Person of Indian Origin (PIO) is also permitted under the Regulation.
The payment for acquisition or purchase of property can be made out of funds received in India through banking channels by way of inward remittance from any place outside India or funds held in any Non-Resident Rupee (NRE)/ Non Resident Ordinary Rupee (NRO)/ Foreign Currency Non-Repatriable (FCNR-B) maintained in accordance with provisions of the Foreign Exchange Management Act, 1999 and the regulations made by Reserve Bank of India from time to time. No payments can be made in the form of a cheque or foreign currency notes or any other mode except those which are specifically mentioned in the Foreign Exchange Management Act, 1999.
In the case of Foreign National resident, such resident does not require approval from Reserve Bank of India, but approvals if required in terms of regulations prescribed by other authorities such as the concerned State Government, etc. must be obtained by him/her. The residents of only Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, and Bhutan require specific prior approval of the Reserve Bank of India. A foreign national who is residing in India for more than 182 days during the preceding financial year for taking up employment or carrying business/vocation or for any other purpose indicating his intention to stay for an uncertain period can acquire immovable property in India as he falls under the definition of a ‘person resident in India’ as per Foreign Exchange Management Act, 1999. To be considered as a person resident in India under Foreign Exchange Management Act, 1999, a person has to not only satisfy the condition of the period of the stay but also his purpose of stay in India for an uncertain period. In this regard, to be eligible, the intention to stay has to be unambiguously established with supporting documentation including visa.