NRI Guide
 Home    NRI Guide

An estimated 25 million NRIs living in 125 countries are investing in real estate property across Rajasthan. The rules relating to real estate investment and repatriation have been considerably liberalized and powers have been vested with authorized foreign exchange dealers to deal with the matter of remittance now.

The Reserve Bank has granted general permission to persons resident outside India holding Indian passports and persons of Indian origin to buy residential and commercial properties in India. For the purpose of acquisition and transfer of immovable property, a 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 Indian passport or who or either of whose father or grandfather was a citizen of India by virtue of the constitution of India or the Citizenship Act, 1955.

There is no restriction on the number of residential or commercial property units to be purchased in India. They may even acquire them by way of gift or inheritance or transfer by way of sale. However, specific approval of the Reserve Bank may be necessary when a person resident outside India may hold any immovable property in India acquired by way of inheritance from a person resident outside India. The restriction with regard to certain categories of immovable properties continues and NRIs/PIOs cannot acquire by way of purchase agricultural land, plantation property and farmhouse in India.

A foreign national of non-Indian origin can acquire only residential accommodation on lease for a period not exceeding five years for which no prior permission of the Reserve Bank is necessary. Those acquiring the property need prior approval of the apex bank by submitting IPI 1 and mentioning the details of property and mode of remittance.

NRIs can avail home loan but repayment should be made by way of inward remittance through normal banking channel or by debit to his NRE/FCNR(B)/NRO account or out of rental income derived from renting out such property. The borrower’s close relatives through their account in India can also repay such loan by crediting the borrower’s loan account. Repayment of loan in foreign exchange is treated as equivalent to the foreign exchange received for purchase of residential property.

Similarly, NRIs may transfer by way of gift residential/commercial property in India to a person resident in India or to an NRI or PIO. The sale proceeds of residential/commercial property received by way of gift should be credited to NRO account only. As regards repatriation, an amount not exceeding US$1 million per calendar year is allowed subject to production of documentary evidence in support of inheritance and tax clearance certificate/no objection certificate from the income-tax authority to authorised dealer for remittances.

NRIs who had acquired immovable property while they were resident in India can continue to hold or transfer such immovable property. They may also transfer by way of sale or gift to a person resident in India or to an NRI/PIO. The sale proceeds may be credited to NRO account.

As regards general repatriation rules, while repatriation of residential property is restricted to two units, there is no such limit for repatriation of commercial property. There is no lock-in period for sale of residential/commercial property now.

NRI investment in CAPITAL DREAM HOMES Under the FERA, the regulations concerning buying and selling of real estate property was mainly based on the citizenship of the individuals. Under FEMA, the restrictions involving the acquisition, transfer of immovable property in India are no longer linked to citizenship of a person but are now generally governed by the residential status of a person.

In general, the acquisition and transfer of immovable property by non-resident in India are capital account transactions. The RBI is empowered under the FEMA to frame regulations to prohibit, restrict or regulate the acquisition or transfer of immovable property in India by a person resident outside India. Regulations of immovable property in India are primarily based on the residential status of a person under FEMA. However, under the FERA, the controls were mainly based on the citizenship.

The restrictions are not applicable to a lease of immovable property for a period not exceeding five years. The RBI has framed the regulations the Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations, 2000, which have been notified, vide notification no. FEMA 21-2000 RBI dated May 3, 2000

In a nutshell, the RBI has given only three general permissions to the following categories in connection with immovable property in India
1. A non-resident who is a citizen of India.
2. A non-resident who is a Person of Indian origin.
3. A non-resident who has established in India a branch or other place of business.

Acquisition of a real estate property by an Indian citizen residing outside India
1. No special permission is required for an Indian citizen residing outside India to acquire by way of purchase or gift any immovable property in India other than agricultural land, plantation property or a farmhouse.
2. However, the restriction on acquiring agricultural land, plantation or farmhouse is applicable to all non-residents. The restriction on agricultural properties continues from the time of FERA. The Reserve Bank of India normally does not approve such proposals if applied for the permission.
3. Under FERA, a declaration needs to be filed giving details of the property. Now this process has been dispensed with. However, the bank should be informed about full details of the property and cost incurred in acquiring the property. This can in a way, help at the time of repatriation of the property.
4. It is notable that only non-residents who are Indian citizens, or who are of Indian origin have been permitted to invest in immovable properties in India. In other words foreigners are not allowed to buy immovable property in India.
5. Further, non-residents who are Indian citizens or a person of Indian origin can also acquire any property (including agricultural property etc.) by way of inheritance. This is because to bequeath a property is a natural right. A law cannot give it. As a corollary, the heir can acquire a property as inheritance. However, once having acquired the property, restrictions on use or holding can be imposed under the law. Thus, even if agricultural property is inherited, the agricultural activities cannot be conducted. A person may have natural plants, trees, on the lands. However, he can not grow the same with the intention of earning income.

Transfer of real estate property by an Indian citizen residing outside India
1. For Indian citizen residing outside India, there is no permission required to transfer immovable property in India.
2. However, in case of agricultural properties the same can be sold only if the acquirer is an Indian resident.
3. If the proposed acquirer is a non-resident (whether Indian citizen or a person of Indian origin), the property cannot be sold. This is corollary to the restriction on acquiring the agricultural land.

Acquisition of real estate property by a PIO 1. A person of Indian origin resident outside India does not require any permission from the Reserve Bank of India to acquire any immovable property.
2. However, he cannot acquire the agricultural or plantation property or a farmhouse in India.
3. It is, however, necessary that the purchase should be from out of the following funds:
» Funds received in India by way of inward remittance through the banking channels from any place outside India or
» Funds held in any NR accounts maintained in accordance with the provisions of FEMA and the regulations made by the Reserve Bank.
4. A PIO resident outside India does not require any permission from the Reserve Bank of India to acquire any property in India other than the agricultural land or plantation property or a farmhouse 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.
5. Further a PIO resident outside India does not require any permission from the Reserve Bank of India 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.
6. Thus a PIO can even inherit agricultural land or a farmhouse or a plantation property which he cannot normally acquire by way of purchase or gift.

Transfer of real estate property by PIO
1. A PIO resident outside India does not require any permission from the Reserve Bank of India to transfer any immovable property other than the agricultural land or plantation property or a farmhouse in India by way of sale to a person resident in India.
2. A PIO resident outside India can transfer an immovable property being agricultural land or plantation property or a farmhouse in India by way of a gift or sale to a person resident in India without any permission from the Reserve Bank of India. Such a transaction is permitted by the regulation 4(e) provided that the purchaser is a resident as well as a citizen of India.
3. However, a PIO cannot transfer an immovable property being agricultural land or plantation property or a farmhouse in India by way of a sale to the following categories of persons without permission from the Reserve Bank of India.

 A person resident in India who is not a citizen of India.
A citizen of India who is not a resident in India.
A person of Indian

Our Projects


logo Jan Ghr Yojna Logo Star city logo pinara