FAQ’s on acquisition of residential / commercial premises in India by Non-Resident Indians (‘NRI’) & Person of Indian Origin (‘PIO’) 

(Click titles to see the answers)

1. Who is a NRI under the provisions of Foreign Exchange Management Act?

Generally an Indian Citizen who stays abroad for employment/carrying on business or vocation outside India or stays abroad under circumstances indicating an intention for an uncertain duration of stay abroad or a person who is not resident in India for a period over 182 days is a non-resident Indian. Persons posted in U.N. organisations and officials deputed abroad by Central/State Governments and Public Sector undertakings on temporary assignments are also treated as Non-Resident.

2. Who is a person of Indian Origin?

Generally, under the provisions of Foreign Exchange Management Act a person of Indian Origin is an individual (other than a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, Bhutan) who At any time held an Indian passport, or He or his father or his grandfather was a citizen of India by virtue of the Constitution of India or Citizenship Act, 1955 (57 of 1955). Non-resident foreign citizens of Indian Origin are treated on par with non-resident Indian citizens for the purpose of certain facilities.

3. Do NRIs and PIOs require permission of Reserve Bank to acquire residential/commercial property in India?

NRIs and POIs do not require permission from RBI to acquire residential / commercial premises in India (other than agricultural land/farm house/plantation property). A person resident outside India acquiring property to carry on business from India has to file with the Reserve Bank a declaration in Form IPI within ninety days from the date of acquisition of immovable property. A citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan cannot acquire immovable property without prior permission of Reserve Bank. However, he can take on lease an immovable property for not more than 5 years.

4. Can NRIs and PIOs sell residential/commercial premises in India without the permission of Reserve Bank?

A person resident outside India who is a citizen of India is permitted to sell immovable property in India other than agricultural/plantation/farm house to a person resident in India or to an NRI or to a PIO resident outside India. He can also gift Residential or Commercial property in India to a person resident in India, NRI or to a PIO resident outside India. However, he can gift or sale any agricultural land/farmhouse/plantation property only to a person resident in India who is a citizen in India. A PIO resident outside India is permitted to sell the immovable property other than agricultural land/farmhouse/plantation property to a person resident in India.

FAQ’s for acquisition of Immovable Properties in India by Foreign nationals.

Q.1 Who can purchase immovable property in India?

Ans:  Under the general permission available, the following categories can freely purchase immovable property in India:

i) Non-Resident Indian (NRI)- that is a citizen of India resident outside India

ii) Person of Indian Origin (PIO)- that is an individual (not being a citizen of Pakistan or Bangladesh or Sri Lanka or Afghanistan or China or Iran or Nepal or Bhutan), who –

1. at any time, held Indian passport, or

2. 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 (57 of 1955).

The general permission, however, covers only purchase of residential and commercial property and not for purchase of agricultural land / plantation property / farm house in India.

Q.2. Can a foreign national of non-Indian origin be a second holder to immovable property purchased by NRI / PIO?

Ans  :  No.

Q.3. Can a foreign national of non-Indian origin resident outside India purchase immovable property in India?

Ans:   A foreign national of non-Indian origin, resident outside India cannot purchase any immovable property in India. But, he/she may take residential accommodation on lease provided the period of lease does not exceed five years. In such cases, there is no requirement of taking any permission of or reporting to Reserve Bank.

Q.4 Can a foreign national who is a person resident in India purchase immovable property in India?

Ans:  Yes, but the person concerned would have to obtain the approvals, and fulfill the requirements if any, prescribed by other authorities, such as the concerned State Government, etc However, a foreign national resident in India who is a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal and Bhutan would require prior approval of Reserve Bank. Such requests are considered by Reserve Bank in consultation with the Government of India.

Q.5 Can an office of a foreign company purchase immovable property in India?

Ans:   A foreign company which has established a Branch Office or other place of business in India, in accordance with FERA / FEMA regulations, can acquire any immovable property in India, which is necessary for or incidental to carrying on such activity. The payment for acquiring such a property should be made by way of foreign inward remittance through proper banking channel. A declaration in form IPI should be filed with Reserve Bank within ninety days from the date of acquiring the property. Such a property can also be mortgaged with an Authorised Dealer as a security for other borrowings. On winding up of the business, the sale proceeds of such property can be repatriated only with the prior approval of Reserve Bank. Further, acquisition of immovable property by entities who had set up Branch Offices in India and incorporated in Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal and Bhutan would require prior approval of Reserve Bank to acquire such immovable property. However, if the foreign company has established a Liaison Office, it can not acquire immovable property . In such cases, Liaison Offices, can take property by way of lease not exceeding 5 years.

Q.6. Whether a non-resident can inherit immovable property in India?

Ans: Yes, a person resident outside India i.e.

i) an NRI

ii) a PIO and

iii) a foreign national of non-Indian origin can inherit and hold immovable property in India from a person who was resident in India. However, a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal and Bhutan should seek specific approval of Reserve Bank.

Q.7. From whom can the non-resident inherit immovable property?

A person resident outside India (i.e. NRI or PIO or foreign national of non-Indian origin) can inherit immovable property from

(a) a person resident in India.

(b) a person resident outside India

However, the person from whom the property is inherited should have acquired the same in accordance with the foreign exchange regulations applicable at that point of time.

Q.8 Can foreign national sell his residential / commercial property?

Ans:Foreign national of non-Indian origin including a citizen of Pakistan or Bangaladesh or Sri Lanka or Afghanistan or China or Iran or Nepal or Bhutan can sell property in India with prior approval of Reserve Bank to

i) a person resident in India

ii) an NRI

iii) a PIO

Q.9. Can residential / commercial property be mortgaged?

Ans: i) a foreign national of non-Indian origin can mortgage only with prior approval of Reserve Bank

ii) a foreign company which has established a Branch Office or other place of business in accordance with FERA/FEMA regulations has general permission to mortgage the property with an authorized dealer in India.

Q.10. Can Foreign Embassies / Diplomats / Consulate General purchase / sell immovable property in India?

Ans: Yes, Foreign Embassies / Diplomats / Consulate Generals can purchase and sell any immovable property other than agricultural land / plantation property / farm house in India with prior clearance from the Government of India, Ministry of External Affairs. The payment should be made by foreign inward remittance through normal banking channel.

Q.11. 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 Reserve Bank continue to hold the same? Can they transfer such property?

Ans: Yes, they may continue to hold the immovable property. However, they can transfer the property only with the prior approval of Reserve Bank.

Q.12. What is meant by a person resident in India ?

Ans:   To be treated as `a person resident in India’ under FEMA, a person has not only to satisfy the condition of the period of stay (being more than 182 days during the course of the preceding financial year) but has also to comply with the condition of the purpose / intention of stay.

Q.13. Who can determine whether a person is resident in India or not?

Ans:  Reserve Bank does not determine the residential status. Under FEMA, residential status is determined by operation of law. The onus is on an individual to prove his / her residential status, if questioned by any authority.

Q.14. If a foreign national is a person resident in India as per the provisions of Section 2(v) (i)B of the FEMA, 1999, does he require approval of Reserve Bank to purchase any immovable property in India ?

Ans:  A foreign national resident in India does not require approval from Reserve Bank from FEMA angle, but approvals if any required in terms of regulations prescribed by other authorities such as the concerned State Government etc. will have to be obtained by him / her. However, a foreign national resident in India who is a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal and Bhutan requires specific prior approval of RBI.