1. Pinto, is a PIO holder and intends to purchase an immovable property in India. Is she permitted to do so?
Under the general permission by RBI, NRIs and PIOs are permitted to purchase immovable property in India. The general permission, however, covers only purchase of residential and commercial property. NRIs and PIOs are not permitted to purchase agricultural land / plantation property / farm house in India. 2. Are any documents required to be filed by Ms. Pinto with the RBI after the purchase?
Ms. Pinto who has purchased residential / commercial property under general permission, is not required to file any documents/reports with the RBI. 3. How many residential / commercial properties can NRI / PIO purchase under the general permission?
There are no restrictions on the number of residential / commercial properties that can be purchased. However, NRI / PIO can repatriate sales proceeds of only two residential properties outside India. 4. D’Costa, is a foreign national of non-Indian origin and resident outside India. He intends to purchase immovable property in India?
Mr. D’Costa cannot purchase any immovable property in India unless such property is acquired by way of inheritance from a person who was resident in India. Neither is he permitted to be a second holder to immovable property purchased by NRI / PIO.
However, he can acquire or transfer immovable property in India, on lease, not exceeding five years. In such cases, there is no requirement of taking any permission of /or reporting to the RBI. 5. Thomas, is a foreign national and employed in India, and thus called a person resident in India. He intends to purchase an immovable property in India?
Yes, Mr. Thomas can purchaseimmovable property in India. However, necessary approvals and compliances are to be made, if any. The onus to prove his residential status is on Mr. Thomas as per the existing FEMA provisions, if required by any authority.
However, a foreign national resident in India who is a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal ,Bhutan,Macau and Hongkong would require prior approval of the RBI. 6. Can a NRI/PIO/ Foreign national acquire immovable property in India by way of gift?
Yes, NRIs and PIOs can freely acquire immovable property (residential and commercial properties) by way of gift either from a person resident in India, a NRI or a PIO. They are not permitted to acquire an agricultural land / plantation property / farm house in India by way of gift.
A foreign national of non-Indian origin resident outside India cannot acquire any immovable property in India by way of gift. 7. Can a non-resident inherit immovable property in India?
Yes, a Non-resident (NRI / PIO and foreign national of non-Indian origin) can inherit and hold immovable property in India from a person who was resident in India and resident outside India. However, the person from whom the property is inherited should have acquired the same in accordance with the foreign exchange law in force at the time of acquisition of the property. 8. Shanti is a non-resident. She has inherited an agricultural land in India from her father who was also a non-resident. Is she permitted to inherit immovable property from a Non-resident?
Yes, Ms. Shanti is permitted to inherit agricultural land property from her father who was also a Non-resident. 9. Can the branch / liaison office of a foreign company purchase immovable property in India?
A foreign company which has established a Branch office or Project office in India can acquire any immovable property in India, which is necessary for or incidental to carrying on such activity, subject to certain conditions. A declaration is required to be submitted to RBI, in the prescribed Form.
However, if the foreign company has established a liaison office in India, it cannot acquire immovable property. They can acquire property by way of lease not exceeding 5 years.
Further, acquisition of immovable property by entities incorporated in Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, HongKong and Macau and who have set up Branch Offices in India would require prior approval of RBI. Mode of payment for purchase of immovable property in India 10. How can an NRI / PIO make payment for purchase of residential / commercial property in India?
Payment can be made by NRI / PIO only out of funds remitted to India through normal banking channels or funds held in NRE / FCNR (B) / NRO account maintained in India. 11. Can NRI / PIO avail housing loan from an AD or financial institutions in India?
Yes, NRIs are permitted to obtain housing loans subject to certain conditions. 12. What are the ways to repay housing loan availed as per Q. 58?
Housing loan can be repaid
by way of inward remittance through normal banking channel; or
by debit to the NRE / FCNR (B) / NRO a/c of the NRI / PIO; or
out of rental income from such property; or
by the borrower’s relatives, through their account in India by crediting the borrower’s loan account.
13. Can NRI avail of housing loan in rupees from his employer in India?
Yes, subject to certain terms and conditions. Transfer of immovable property in India (i) Transfer by way of sale 14. Can an NRI/ PIO/foreign national sell his immovable property(other than agricultural property, plantation or farm house)?
NRIs have a general permission to sell immovable properties in India to a person resident in India, a NRI or a PIO.
PIOs can sell properties in India to a person resident in India. Prior approval from RBI shall be required to sell properties to an NRI/ PIO.
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 or HongKong or Macau can sell properties to a person resident in India, a NRI, or a PIO. However, prior approval of RBI is required to be obtained in either of the cases.
15. Can Ms. Shanti (a NRI) sell an agricultural land in India which was received by her as inheritance?
Ms. Shanti may sell agricultural land to a person resident in India. 16. Would Ms. Shanti, still be eligible to sell an agricultural land, in case the same was purchased by her while she was a Resident?
Yes, Ms. Shanti is eligible to sell an agricultural land, even if the same was purchased by her while she was a Resident.
(ii) Transfer by way of gift 17. Can a non-resident gift his immovable properties? Gifting of residential / commercial property situated in India:
A NRI / PIO may gift residential / commercial property to a person resident in India, a NRI or a PIO. Foreign national of non-Indian origin requires prior approval of RBI for gifting the residential / commercial property. Gifting of agricultural land / a plantation property / a farm housesituated in India:
ANRI / PIO can gift the above only to a person resident in India who is a citizen of India. A foreign national would require prior approval of the RBI.
(iii) Transfer by way of mortgage 18. Can NRI / PIO transfer his residential / commercial property in India by way of mortgage to a party abroad?
No. He should seek prior approval of RBI. 19. Can a foreign national of non-Indian origin resident in India or outside India transfer his residential / commercial property in India acquired with the specific approval of Reserve Bank by way of mortgage to a party in India or abroad?
No. He should seek prior approval of RBI. However, general permission is available to a person resident outside India who has established a Branch office or Project office in India to mortgage such a property with a Bank as a security for any borrowing. 20. Repatriation of sale proceeds of residential / commercial property purchased by NRI / PIO Doshi (PIO) has acquired residential / commercial property in India by way of inward remittances through normal banking channel or by debit to NRE /FCNR (B)/ NRO a/c. Can he repatriate the sale proceeds of the same? If yes, is there any limit on the quantum?
Yes, Mr. Doshi may repatriate the sale proceeds of immovable property. The amount to be freely 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) a/c or
(b) the foreign currency equivalent, as on the date of payment, of the amount paid by NRE a/c.
Also, in case of residential property, the repatriation of sale proceeds is restricted to not more than two such properties.
The sale proceeds of residential/ commercial property in India acquired by way of debit to NRO a/c cannot be freely repatriated and should be credited to NRO a/c only. Amount can be transferred from NRO a/c to NRE a/c subject to the limit of USD 1 million per FY. 21. Is there any lock in period for sale of residential / commercial property purchased out of inward remittance / debit to NRE / FCNR (B) a/c?
There is no lock in-period applicable for sale of such properties. 22. Gandhi, NRI, acquired a residential property for Rs. 1 crore, for which he availed a loan of Rs. 80 Lacs from a Bank. The loan amount was repaid through foreign inward remittances. Mr. Gandhi has sold the residential property for a consideration of Rs. 1.50 crore and now he intends to repatriate the sale proceeds. How can he repatriate the total sales proceeds?
Mr. Gandhi can freely repatriate sales proceeds to the extent of Rs. 80 lacs which is equivalent to the amount of foreign exchange utilised for repayment of loan. The balance amount, of Rs. 70 lacs (which includes cost of Rs. 20 lacs paid from NRO a/c and capital gains of Rs. 50 lacs), shall be credited to his NRO a/c only. Mr. Gandhi may repatriate up to USD 1 million per FY(April-March) subject to payment of applicable capital gain taxes from his NRO a/c balances. 23. Deshpande (a NRI) acquired an immovable property by way of gift. Can the funds received on the sale of the said immovable property be repatriate abroad?
The sale proceeds of immovable property acquired by Mr. Deshpande by way of gift should be credited to NRO a/c only. From the balance in the NRO a/c, NRI/PIO may remit up to USD 1 million, per FY, subject to the satisfaction of the Bank and payment of applicable taxes. 24. If the immovable property was received as inheritance by Mr. Deshpande from aperson resident in India, can he repatriate the sale proceeds?
Yes, general permission is available to the NRI/PIO to repatriate the sale proceeds of the immovable property inherited from a person resident in India. The amount of repatriation is restricted to USD 1 million per FY. Documentary evidences in support of the inheritance are required to be submitted along with tax clearance certificate/ no objection certificate from the Income-tax department or a Chartered Accounts’ certificate.
In case of a foreign national, sale proceeds can be repatriated in similar manner if the property is inherited from a person resident outside India with the prior approval of RBI.
Citizen of Pakistan, Bangladesh, Sri Lanka, China, Afghanistan and Iran are required to obtain prior approval of RBI. Repatriation of sale proceeds in foreign exchange to Nepal and Bhutan is not permissible. 25. If the immovable property was received as inheritance by foreign national from aperson resident outside India, can he repatriate the sale proceeds?
Yes, but only with a prior approval from RBI. Documentary evidences in support of the inheritance and tax clearance / no objection certificate from the Income tax department are also required to be submitted. 26. Is repatriation of application money for booking of flat / payment made to the builder by NRI/ PIO allowed when the flat or plot is not allotted or the booking / contract is cancelled?
The Banks can allow NRIs/ PIOs to creditrefund 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, to NRE/FCNR a/c. However, it shall be ensured that the original payment was made out of NRE/FCNR a/c of the account holder or remittance from outside India through normal banking channels and the AD is satisfied about the genuineness of the transaction. Other Aspects 27. Can NRI / PIO rent out the residential / commercial property purchased out of foreign exchange / rupee funds?
Yes, NRI/PIO can rent the property without RBI approval. The rent received can be credited to NRO / NRE a/c or remitted abroad. 28. Can foreign nationals of non-Indian origin resident in India or outside India who had earlier acquired immovable property under FERA with specific approval of RBI continue to hold the same? Can they transfer such property?
Yes, they may continue to hold the immovable property under holding license obtained from RBI. However, they can transfer the property only with the prior approval of RBI.