By Cushman & Wakefield Research
Potential buyers who are not Indian citizens but are resident in India may still have the legal right to purchase property in India in India. The Foreign Exchange Management Act, 1999 (FEMA) regulates the purchase of properties by Non-Resident Indians (NRI), Persons of Indian Origin (PIO), and foreign citizens.
The buyer must ensure that the land on which the purchase property is built is not agricultural land or plantation property, as these types of land can only be purchased by an agriculturist who is an Indian citizen.
NRI and PIO
The general requirements to obtain a PIO card include holding an Indian passport at any time, one’s parents, grandparents or great grandparents being born in India or permanent residents of India, or spouse being a citizen of India or PIO card holder. Citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan may not hold PIO cards. For more information and a detailed list of requirements, please visit http://www.immigrationindia.nic.in/pio_card.htm.
An Indian citizen resident outside India or a PIO does not require any special permission to buy immovable property in India.
However, no payment of the purchase price can be made in foreign currency. The buyer make the purchase in rupees through funds received in India through normal banking channels, or funds maintained in any non-resident account under FEMA and RBI regulations.
There are also no restrictions on the number of immovable properties an NRI or a PIO may purchase for either residential or commercial purposes.
A foreign national resident outside India cannot buy immovable property in India.
However, foreign nationals who are resident in India (and who are not citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, or Bhutan) can purchase immovable property in India without any special approval from the RBI. However such buyers should check with their lawyers before buying any property as they might require approvals from other authorities such as the State Government, etc.
To be considered a resident of India under FEMA, a foreign national would have to satisfy two conditions:
He/she must be residing in India for more than 182 days during the preceding financial year, and
His/her continued presence in India in the current financial year must be for the purpose of taking up employment, carrying on business or vocation in India or for any other purpose that would indicate your intention to stay in India for an uncertain period
Both conditions must necessarily be fulfilled for a foreign national to be considered a resident of India under FEMA.
Citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, or Bhutan who are resident in India can only purchase immovable property in India with the prior permission of the RBI, who will consider the request in consultation with the Government of India.
For more information, please visit http://www.rbi.org.in
An NRI or PIO may repatriate the proceeds from the sale of immovable property in India on the following conditions:
The property was purchased by the NRI/PIO in accordance with the provisions of FEMA in force at the time of the purchase
The amount repatriated should not exceed the amount paid for the property if the property was acquired in foreign exchange remitted through normal banking channels or out of funds held in an FCNR (B) account
In the following circumstances, the NRI/PIO may repatriate a maximum of USD one million per financial year:
Out of the balances held in the NRO account if the property was purchased out of rupee sources
If the property was acquired by way of gift, the sale proceeds must be credited to an NRO account, and thereafter may be repatriated
If the property was inherited from a person resident in India, it may be repatriated on production of documentary evidence proving inheritance, an undertaking by the NRI/PIO, and a certificate by a Chartered Accountant in the formats prescribed by the Central Board of Direct Taxes
In the case of residential property, repatriation of sale proceeds is restricted to not more than two such properties.
A foreign national may repatriate sale proceeds even if the property was inherited from a person outside India. However, prior approval of the RBI must be obtained.
A citizen of Pakistan, Bangladesh, Sri Lanka, China, Afghanistan and Iran must seek specific approval from the RBI for repatriation of sale proceeds.
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