ACQUISITION AND TRANSFER OF IMMOVABLE PROPERTY IN INDIA BY FOREIGN NATIONALS, NRI AND PERSON OF INDIAN ORIGIN (PIO)

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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 resident outside India.  FEMA also prohibits acquisition or transfer of immovable property in India by citizens of certain countries, it states – “No person being a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan without prior permission of the Reserve Bank shall acquire or transfer immovable property in India, other than lease, not exceeding five years”.

The FEMA regulates the purchase of properties by Non-Resident Indians (NRI), Persons of Indian Origin (PIO), and Foreign Nationals/Citizens.

DEFINITIONS –

  • NON-RESIDENT INDIAN – Non-Resident Indian (NRI) is a citizen of India resident outside India.
  • PERSON OF INDIAN ORIGIN – Person of Indian Origin (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 at any time, held an Indian Passport or who or either of whose father or mother or whose grandfather or grandmother was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955.
  • FOREIGN NATIONALS – A person is a Foreign National to India, who lives outside the India and not a citizen of India.

 

PURCHASE OF IMMOVABLE PROPERTY IN INDIA BY A FOREIGN NATIONAL OF NON- INDIAN ORIGIN, NRI AND PIO RESIDENT OUTSIDE INDIA –

NRI – An Indian citizen resident outside India does not require any special permission to buy immovable property in India. An NRI can buy or acquire any immovable property in India other than agricultural/plantation/farm house, and transfer any immovable property in India to a person resident in India and to a person resident outside India who is a citizen of India or to a person of Indian origin resident outside India.

PIO – A PIO does not require any special permission to buy immovable property other than agricultural land / farm house / plantation property in India.

A PIO can acquire an immovable property other than agricultural land / farm house / plantation property in India, by way of gift from a person resident in India or from a person resident outside India who is a citizen of India or from a person of Indian origin resident outside India, and 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 at the time of acquisition by him or the provisions of these Regulations or from a person resident in India.

A PIO can transfer any immovable property in India other than agricultural land/farm house/plantation property, by way of sale to a person resident in India. He/ she can also transfer agricultural land/farm house/ plantation property in India, by way of gift or sale to a person resident in India who is a citizen of India and any residential or commercial property in India and by way of gift to a person resident in India or to a person resident outside India who is a citizen of India or to a person of Indian Origin resident outside India.

FOREIGN NATIONALS – A Foreign National resident outside India cannot buy immovable property in India. Also he cannot acquire any immovable property in India unless such property is acquired by way of inheritance from a person who was resident in India. However, he can acquire or transfer immovable property in India, on lease, not exceeding five years without the prior permission of the Reserve Bank.

However, a Foreign National on becoming ‘resident in India’ other than a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, or Bhutan, can purchase immovable property in India without any prior approval from the RBI.

The terms ‘Resident in India’ defined under FEMA, according to that a Foreign National would have to satisfy the conditions given under FEMA to become a resident in India that are :- (a) a person must be residing in India for more than one hundred and eighty-two days (182 days) during the course of the preceding financial year and  (b) a person who has come to or stays in India in the current financial year for the purpose of taking up employment, carrying on business or vocation in India or for any other purpose that would indicate your intention to stay in India for an uncertain period.

Foreign Nationals who have acquired immovable property in India by way of inheritance with the specific approval of the Reserve Bank or have purchased the immovable property with the specific approval of the Reserve Bank cannot transfer such property without the prior permission of the Reserve Bank.

 

Parul

Senior Associate

The Indian Lawyer

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