Rules for Buying Property in India by NRIs
For many important reasons, people
dwelling outside India that is Non Resident Indians (NRIs), Person of Indian
Origins (PIOs) and foreign nationals have been procuring immovable properties
like Bungalows, flats, luxury villas and commercial properties in India.
Obviously for an NRI it is always a comfort at the back of his mind that there
is a real estate asset that he owns in his native country or the country of his
origin. However, an NRI or PIO has to consider various aspects before procuring
immovable properties in India. Such NRI\ PIO has to have complete clarity of
the rules, regulations and the applicable procedures to purchase real estate in
India.
Real Estate purchase monitored and regularized : A person residing outside India, planning to buy or sale an immovable property is regulated by Foreign Exchange Management Act, 1999(FEMA) under Section 6 (3) (i), Foreign Exchange Management Regulations, 2000 (Acquisition and Transfer of Immovable Property in India) and Master Circular on Acquisition and Transfer of Immovable Property in India.
The regulations for acquiring or transferring the immovable property in India are administered by the residential status of a person under FEMA. FEMA has sorted persons in two distinct categories namely ‘Person Resident in India’ and ‘Person Resident outside India’ which has been further categorized as Non- Residential Indian, Foreign National of Non-Indian Origin and Foreign National of Indian Origin.
FEMA has further defined Non- Residential Indian (NRI) as a person who is a citizen of India but resides outside India. This puts forth another term, Person of Indian Origin (PIO). PIO means an individual (not a resident of Afghanistan or Bhutan or Bangladesh or China or Nepal or Pakistan or Sri Lanka.) who at some point of time held an Indian Passport; or who or either of whose parents or either of whose grandparents was a citizen of India under the Constitution of India or the Act of Citizenship, 1955 (57 of 1955).
Under Section 6 (5) of FEMA, a Person Resident Outside India can purchase, transfer, invest or own any immovable property in India if it was owned, acquired by a person residing in India or inherited from a person who was a resident of India.
Rules applying to Purchase of realty in India by NRIs: A general permission is given under the Regulation to NRI to obtain immovable properties in India. The payment of purchase price has to be made out of the capital received in India through banks, or any non-resident account as per the provisions of FEMA and regulations of the RBI. Though, NRI’s cannot buy any agricultural property, plantation or farm house in India.
There are no limits levied by the RBI on the number of purchases of immovable properties by an NRI or PIO either for residential or commercial purposes. In the Master Circular it is stated that an NRI or PIO who purchases any commercial or residential property under the general permission, doesn’t need to file any documents or permissions with the Reserve Bank of India.
Rules applying to Purchase of realty in India by foreign national of non-Indian origin resident: Foreigners of Non- Indian Origin cannot purchase, own or acquire immovable properties in India, has been stated in the Master Circular. Though, a foreigner of Non-Indian Origin can purchase immovable property in India as per the terms mentioned in the Section 2(v) of FEMA. A foreign national who is residing in India for more than 182 days in a foregoing financial year, for employment, undertaking a business or vocation or any other purpose expressing his intentions to reside in India for an uncertain period can purchase an immovable property in India as he will be a “person resident in India” as per section 2(v) of FEMA, 1999. A person should also specify his purpose of stay as well as the type of Indian Visa granted to him should mention that the stay is for uncertain period and the intentions to stay should be explicitly established with supporting documents. While a foreign national of non- Indian origin hailing from Afghanistan or Bhutan or Bangladesh or China or Nepal or Pakistan or Sri Lanka would require aforementioned approval from The Reserve Bank of India.
Real Estate purchase monitored and regularized : A person residing outside India, planning to buy or sale an immovable property is regulated by Foreign Exchange Management Act, 1999(FEMA) under Section 6 (3) (i), Foreign Exchange Management Regulations, 2000 (Acquisition and Transfer of Immovable Property in India) and Master Circular on Acquisition and Transfer of Immovable Property in India.
The regulations for acquiring or transferring the immovable property in India are administered by the residential status of a person under FEMA. FEMA has sorted persons in two distinct categories namely ‘Person Resident in India’ and ‘Person Resident outside India’ which has been further categorized as Non- Residential Indian, Foreign National of Non-Indian Origin and Foreign National of Indian Origin.
FEMA has further defined Non- Residential Indian (NRI) as a person who is a citizen of India but resides outside India. This puts forth another term, Person of Indian Origin (PIO). PIO means an individual (not a resident of Afghanistan or Bhutan or Bangladesh or China or Nepal or Pakistan or Sri Lanka.) who at some point of time held an Indian Passport; or who or either of whose parents or either of whose grandparents was a citizen of India under the Constitution of India or the Act of Citizenship, 1955 (57 of 1955).
Under Section 6 (5) of FEMA, a Person Resident Outside India can purchase, transfer, invest or own any immovable property in India if it was owned, acquired by a person residing in India or inherited from a person who was a resident of India.
Rules applying to Purchase of realty in India by NRIs: A general permission is given under the Regulation to NRI to obtain immovable properties in India. The payment of purchase price has to be made out of the capital received in India through banks, or any non-resident account as per the provisions of FEMA and regulations of the RBI. Though, NRI’s cannot buy any agricultural property, plantation or farm house in India.
There are no limits levied by the RBI on the number of purchases of immovable properties by an NRI or PIO either for residential or commercial purposes. In the Master Circular it is stated that an NRI or PIO who purchases any commercial or residential property under the general permission, doesn’t need to file any documents or permissions with the Reserve Bank of India.
Rules applying to Purchase of realty in India by foreign national of non-Indian origin resident: Foreigners of Non- Indian Origin cannot purchase, own or acquire immovable properties in India, has been stated in the Master Circular. Though, a foreigner of Non-Indian Origin can purchase immovable property in India as per the terms mentioned in the Section 2(v) of FEMA. A foreign national who is residing in India for more than 182 days in a foregoing financial year, for employment, undertaking a business or vocation or any other purpose expressing his intentions to reside in India for an uncertain period can purchase an immovable property in India as he will be a “person resident in India” as per section 2(v) of FEMA, 1999. A person should also specify his purpose of stay as well as the type of Indian Visa granted to him should mention that the stay is for uncertain period and the intentions to stay should be explicitly established with supporting documents. While a foreign national of non- Indian origin hailing from Afghanistan or Bhutan or Bangladesh or China or Nepal or Pakistan or Sri Lanka would require aforementioned approval from The Reserve Bank of India.
Due Diligence : Many times a property is purchased in India by PIOs and
NRIs by consulting with friends, relatives and colleagues who do not have real
knowledge of the rules and regulations applicable which purchasing real estate
assets in India. Instead one should consult real estate professionals like Property
Consultants and Property Lawyers who are well versed with all such real estate
laws. Proper market research should be conducted by the investor to avoid any
kind of miscommunication that could lead to huge losses and legal wrangles.
Thanks and Regards
Amar Jadhav 9323830029
LIFESTYLE PROPERTY CONSULTANTS
204, Auto Commerce House,
Nana Chowk, Nr Kennedy Bridge,
Grant Road (West), Mumbai 400007
Landline Number Tel : 022-23888744
Affiliations:
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