NRIs represent an important and crucial segment of the Indian Real Estate market. The Real Estate market in India is all set to woo the diaspora even as NRIs show keenness to have a house back home. Apart from NRIs, Persons of Indian Origin (PIOs) also enjoy similar benefits.
The Foreign Exchange Management Act, 1999, (FEMA) is an Act to consolidate and amend the law relating to Foreign Exchange, with the objective of facilitating external trade and payments as well as development and maintenance of the foreign exchange market in India.
Regulations regarding acquisition and transfer of immovable property in India by a person resident outside India have been notified vide RBI Notification No. FEMA 21/2000-RB, as amended by Notification No. FEMA 65/2002-RB and Notification No. FEMA 93/2003-RB, and relevant directions in the form of circulars.
The subject matter includes:
- Acquisition and transfer of property by an NRI:Such
persons are allowed to:
- Acquire any immovable property in India other than agricultural/plantation
/farmhouse property,
- Transfer any immovable property in India to a person
resident in India, and
- Transfer any immovable property other than agricultural
or plantation property or farmhouse to a person resident
outside India who is (i) a citizen of India or (ii) a
person of Indian origin.
- Acquisition/Transfer by Persons of Indian Origin
(PIO):A person of Indian origin resident outside
India may:
- Acquire immovable property by purchasing property other
than agricultural land/farmhouse/plantation,
- Transfer any immovable property in India to a person
resident in India by way of sale,
- Transfer any immovable property other than agricultural
or plantation property or farmhouse, by way of sale or
gift to a person resident in India who is a citizen of
India,
- Transfer residential or commercial property in India
by way of sale or gift to a person resident in India or
to a person resident outside India who is (i) a citizen
of India or (ii) a person of Indian origin.
- Acquisition of Immovable property for carrying on
permissible business activity: A person resident
outside India who has established in India a branch office
or other place of business for carrying on any activity in
India, excluding a liaison office, may acquire any immovable
property in India that he may feel is necessary for or incidental
to carrying on such activity. The following conditions have
to be fulfilled:
- All applicable laws, rules, regulations or directions
for the time being in force are duly complied with; and
- The person files with the RBI a declaration in the form
IPI, within 90 days from the date of such acquisition.
- Repatriation of sale proceeds of immovable property:
General permission is granted by the RBI to a person resident
outside India who is a citizen of India or a person of Indian
Origin to repatriate sale proceeds of immovable property,
provided that:
- The seller acquired the immovable property in accordance
with the provisions of the foreign exchange law or FEMA
regulations in force at the time of acquisition
- The amount to be repatriated does not exceed:
- the amount paid for acquisition of the immovable
property in foreign exchange received through normal
banking channels or funds held in FCNR account.
- the foreign currency equivalent of the amount paid,
where payment was made out of NRE account.
For, residential Property, sale proceeds of only two
properties are allowed.
- Prior permission of the Reserve Bank of India must
be sought by those intending to repatriate the sale
proceeds of immovable property if they are persons
resident outside India or their successors who held,
or acquired immovable property when resident in India
or inherited property from a person resident in India.
- Prohibition on certain citizens to acquire/transfer
property in India: Citizens of Bangladesh or Pakistan,
Sri Lanka, Afghanistan, China, Iran, Nepal and Bhutan are
not permitted to acquire or transfer immovable property in
India, but can take residential accommodation on lease for
up to 5 years.
- Refund of purchase consideration: on account
of non-allotment of flats/plots/cancellation of bookings/deals
in respect of immovable property(both commercial and residential)
purchased by NRIs/PIOs in India. The RBI has allowed permission
in such cases, provided that:
- the original payment was made out of NRE/FCNR account
of the account holder or remittance from outside India
through normal banking channels.
If you as an NRI look forward to acquiring/transferring property in India, it is absolutely essential to have accurate information, so as to operate in a transparent and dependable manner We can assist you with a host of legal services:
- Title Verification: You can get the title
of the property you are interested in transacting, verified
through our lawyers.
- Property Evaluation: You can also seek
our lawyers' help to evaluate the prospective property and
advise you on how to deal with fraud, pseudo hikes and market
speculation.
- Contractual Requirements: We provide you
legal services to help you with NRI legal documents
and complete all legal formalities.
- NRI Representation: We realize that you
cannot be available every time you are required to be present
during the transaction process. Our lawyers can represent
you on certain occasions where it is not possible for you
to be present for buying, selling or leasing transactions.
- Taxation Matters: NRIs are subject to many
taxes in the course of transactions of both residential and
commercial property. Our lawyers can guide you through the
intricate tax details; give you NRI tax rules
updates and tips on how to avail of tax benefits and exemptions.
- Online Legal Advice: You can also access
our legal services online; get advice on a good NRI
investment option in immovable property
for you, latest property information and structured legal
information pertaining to all issues relevant to NRIs and
much more.