Acquisition or sale of property
Acquisition of immovable property in India by persons resident outside India (foreign national) is regulated in terms of section 6 (3) (i) of the Foreign Exchange Management Act (FEMA), 1999 as well as by the regulations contained in the Notification No. FEMA 21/2000-RB dated May 3, 2000, as amended from time to time. Section 2 (v) and Section 2 (w) of FEMA, 1999 defines `person resident in India’ and a `person resident outside India’, respectively. Person resident outside India is categorized as Non- Resident Indian (NRI) or a foreign national of Indian Origin (PIO) or a foreign national of non-Indian origin. In terms of the provisions of Section 6(5) of FEMA 1999, a person resident outside India can 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 a resident in India or inherited from a person who was a resident in India.The regulations under Notification No FEMA 21/2000-RB dated May 3, 2000, as amended from time to time, permit a NRI or a PIO to acquire immovable property in India, other than agricultural land and plantation property or farm house
- Property is acquired by way of purchase for the person’s bona fide residential use and transferred by way of sale.
- Consideration for the property purchased is met out of foreign exchange remitted from abroad through normal banking channels or funds withdrawn from the purchaser’s NRE/FCNR account maintained with a bank in India.
- Property purchased is not let out except where it is not immediately required for the purchaser’s own residential use.
- A declaration is submitted to Reserve Bank (Central Office) about such acquisition in form IPI-7 within a period of 90 days from such acquisition/final payment of purchase consideration along with a certified copy of the document evidencing the transaction and bank certificate regarding the consideration paid.
- Income accruing by way of rent or sale proceeds of the property or income arising out of investment of such proceeds is credited to the person’s NRO account (if the property is held by a non-resident foreign citizen of Indian origin) or to the Resident Rupee Account i.e. Q.A.22 Account (if the property is held by a foreign citizen of Indian origin resident in India) with a bank in India.
- In respect of residential properties purchased on or after 26th May 1993, Reserve Bank would consider applications for the repatriation of sale proceeds up to the consideration amount remitted in foreign exchange for the acquisition of the property(only up to two such properties) provided the sale takes place after three years from the date of final purchase deed or from the date of payment of final installment of consideration amount, whichever is later. Applications for the purpose should be made to Reserve Bank (Central Office) in form IPI 8 within 90 days of the sale of the property.
BIZ & LEGIS’s dedicated real estate legal service wing shall be happy to provide any answers to your questions pertaining to the investment regulations in India. Please feel free to ask us if you have any questions on acquisition and transfer of immovable property in India.