Section 6 (3) (i) of Foreign Exchange Management Act, 1999 (FEMA 1999) acquisition or transfer of immovable property in India, other than a lease not exceeding five years, by a person resident outside India.
Reserve Bank of India (RBI) notification No. FEMA 21/2000-RB Dated May 3, 2000 (Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations 2000) as amended from time to time as per the following RBI notifications:
Section 6 (5) of FEMA,1999 A person resident outside India may hold, own, transfer or invest in Indian currency, security or any immovable property situated in India if such currency, security or property was acquired, held or owned by such person when he was resident in India or inherited from a person who was resident in India.
a person residing in India for more than one hundred and eighty-two days during the course of the preceding financial year but does not include-
any person or body corporate registered or incorporated in India,
an office, branch or agency in India owned or controlled by a person resident outside India,
an office, branch or agency outside India owned or controlled by a person resident in India;
The aforesaid definitions are vitally important as far as the application of the Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations 2000 (Regulations 2000) is concerned. We may divide them into following categories:
As such for the purpose of applicability of the Regulations 2000 a person resident outside India may be categorized as follows:
Non-Resident Indians (NRIs) [As per Regulation 2 (vi) of the FEM (Deposit) Regulations 2000 Non-resident Indian (NRI) means A person resident outside India who is either a citizen of India or is a person of Indian origin (PIO).
Person of Indian Origin (PIOs) [ As per Regulation 2 (c) of the FEM (Acquisition and Transfer of Immovable Property in India) Regulations 2000 a person of Indian origin means an individual (not being a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal and Bhutan who at any time held Indian passport or who or either of whose father or mother or whose grandfather or grandmother was a citizen by virtue of Constitution of India or Citizenship Act, 1955.
Foreign National of Non Indian Origin (Foreign Nationals) [a person resident outside India who is neither a citizen of India nor a PIO.
NRIs/PIOs can freely purchase immovable property in India (except agricultural land/plantation property/farm house for which specific approval is required from the RBI in consultation with Government of India (GOI)).
NRIs/PIOs can freely acquire immovable property by way of gift from person resident in India or NRI or PIO except agricultural land/plantation property/farm house.
NRIs/PIOs can inherit immovable property in India.
For acquiring agricultural land/plantation property/farm house specific approval has to be obtained from RBI and the proposals are considered in consultation with GOI.
Foreign companies acquire any immovable property in India in accordance with RBI regulations, necessary for or incidental to carrying out the business activity by making payment by way of foreign inward remittance through normal banking channels. All applicable laws, rules, regulations or directions for the time being in force should be complied with and a declaration should be filed with the RBI in Form IPI within 90 days from the date of acquisition of property.
The property can be transferred by way of mortgage to an authorised dealer as a security for any borrowing.
Repatriation of sale proceeds however can take place only with RBI permission.
Foreign companies establishing liaison offices can only lease immovable property for a period not exceeding 5 years.
Can purchase and sell any immovable property in India other than agricultural land/farmhouse/plantation property with prior clearance from Ministry of External Affairs, Government of India.
RBI permission is not necessary.
Purchase should be made from inward remittance of foreign exchange.
NRIs/PIOs can transfer any immovable property (except agricultural land/plantation property/farm house) to any person resident in India or NRI or PIO (however a PIO has to obtain prior approval of RBI for transfer of immovable property to a PIO)
NRIs/PIO can transfer agricultural land/plantation property/farm house by way of gift or sale to a person resident in India who is a citizen of India.
Foreign nationals and companies can sell immovable property to person resident in India, NRI or PIO with prior approval of RBI.
NRIs/PIOs can gift any immovable property to a person resident in India or NRI or PIO
Foreign nationals can gift immovable property to a person resident in India or NRI or PIO with prior approval of RBI.
An agricultural land/plantation property/farm house may be gifted only to a person resident in India who is a citizen of India. However a foreign national needs prior approval of RBI.
An NRI / PIO can mortgage property to an authorised dealer / housing finance institution in India (without the approval of RBI) and a party abroad (with prior approval of RBI).
A foreign national can mortgage property only with prior approval of RBI;
Foreign Companies have a general permission to mortgage the property with an authorised dealer in India.
Foreign nationals having acquired property earlier under FERA can continue to hold it but can transfer it only with prior approval of RBI.