By Dr Sanjay Chaturvedi, LLB PhD
To regulate Real Estate Transactions done by NRIs / PIO and Foreign Nationals, Government of India have time to time issued directions. To this effect The Foreign Exchange Management Act, 1999 (FEMA) the said Act, came in force with effect from June 1, 2000. Section 6(3)(i) of the Act empowers the Reserve Bank to frame regulations to prohibit, restrict or regulate the acquisition or transfer of Real Estate in India by NRIs/ PIOs and Foreign Nationals.
The restrictions under this clause are not applicable to a lease of immovable property for a period not exceeding five years. The regulations made by the Reserve Bank are called Foreign Exchange Management (Acquisition and Transfer of Immovable property in India) Regulations, 2000, and have been notified vide Notification FEMA No.21/2000-RB of May 3,2000. With this notification and Master Directions, many amendments were made time to time.
In this book, we shall mainly understand as how and what way a NRI or PIO or a Foreign National can acquire real estate, hold it and repatriation done with what conditions.
Many NRIs and PIOs get real estate through inheritance and by succession or family partition. In such case, how and what way they can repatriate funds received from real estate. RBI have time to time issued many circulars, which are produced verbatim as an annexures to this book for reference purposes. A text in Frequently Asked Questions from RBI is also reproduced in this book for reference and quick answer purpose.
All persons, whether resident in India or outside India, who are citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan, require prior permission of Reserve Bank for acquiring or transferring any immovable property in India.
A person resident outside India, who has been permitted by Reserve Bank to establish a branch, or office, or place of business in India( excluding a Laison Office), has general permission of Reserve Bank to acquire immovable property in India , which is necessary for, or incidental to, the activity. However, in such cases a declaration ,in prescribed form (IPI), is required to be filed with the Reserve Bank, within 90 days of the acquisition of immovable property.
According to RBI’s Notification FEMA No.21/2000-RB of May 3,2000. An Indian citizen resident outside India does not require any permission to acquire any immovable property in India other than agricultural/ plantation property or a farm house.
An Indian citizen resident outside India does not require any permission to transfer any immovable property, to a citizen of India who is resident in India.
An Indian citizen resident outside India does not require any permission to transfer any immovable property other than agricultural or plantation property or farm house, to a person who :-
- is a citizen of India resident outside India , or
- is a person of Indian origin resident outside India.
A person of Indian origin resident outside India does not require any permission to acquire any immovable property other than agricultural land/farm house/plantation property in India by purchase, from out of funds:
- received in India by way of inward remittance through banking channel from any place outside India, or
- held in any non-resident account maintained in accordance with the provisions of the Act and the regulations made by the Reserve Bank under the Act.
A person of Indian origin resident outside India does not require any permission to acquire any immovable property in India other than agricultural land/farm house/plantation property 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.
A person of Indian origin resident outside India does not require any permission to acquire any immovable property in India 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 person of Indian origin resident outside India does not require any permission to transfer any immovable property in India other than agricultural land/farm house/plantation property, by way of sale to a person resident in India.
A person of Indian origin resident outside India does not require any permission to 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.
A person of Indian origin resident outside India does not require any permission to transfer residential or commercial property in India 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.