Under the
Foreign Exchange
Management
Act (FEMA),
a 'person
resident in
India' includes
a person residing
in India for
more than
182 days during
the course
of the preceding
financial
year but does
not include
a person who
has gone out
of India or
who stays
outside India
(for employment,
business,
vocation,
or for any
other purpose)
or a person
who has come
to or stays
in India (other
than for employment,
business,
vocation in
India, or
for any other
purpose, in
such circumstances
as would indicate
his intention
to stay in
India for
an uncertain
period).
All
other persons
are non-resident
Indians (NRIs).
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Rules
of purchase
NRIs are
permitted
to buy and
sell property
in India but
acquisition
and transfer
of immovable
property by
them should
be in accordance
with the FEMA.
Property should
be purchased
through a
registered
conveyance
deed but can
also be purchased
on Power of
Attorney.
In the latter
case, an agreement
to sell and
a power of
attorney are
executed by
the seller
in favour
of the buyer.
However, the
same is not
formally registered
with the office
of Registrar
and as such
no stamp duty
is to be paid
for the purchase.
NRIs do not
require permission
of the Reserve
Bank of India
(RBI) to acquire
residential/commercial
property in
India, as
RBI has granted
general permission
to foreign
citizens of
Indian origin,
whether resident
in India or
abroad, to
purchase immovable
property in
India for
their bonafide
residential
purpose.
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However, the purchase
consideration should
be met either out
of inward remittances
in foreign exchange
through normal banking
channels or out
of funds from NRE/FCNR
accounts maintained
with banks in India.
Foreign citizens
of Indian origin,
purchasing residential
immovable property
in India under the
general permission,
are required to
file a declaration
in form IPI 7 with
the Central Office
of RBI at Mumbai
within a period
of 90 days from
the date of purchase
of property or final
payment of purchase
consideration along
with a certified
copy of the document
evidencing the transaction
and bank certificate
regarding the consideration
paid.
Sale of
property
RBI has granted
general permission
for sale of such
property. However,
where another foreign
citizen of Indian
origin purchases
the property, funds
towards the purchase
consideration should
either be remitted
to India or paid
out of balances
in NRE/FCNR accounts.
In respect of residential
properties purchased
on or after May
26, 1993, RBI considers
applications for
repatriation of
sale proceeds up
to the consideration
amount remitted
in foreign exchange
for the acquisition
of the property
for two such properties.
The balance amount
of sale proceeds
if any, or sale
proceeds in respect
of properties purchased
prior to May 26,
1993, will have
to be credited to
the ordinary non
resident rupee account
of the owner of
the property. Applications
for repatriation
of sale proceeds
are considered provided
the sale takes place
after three years
from the date of
final purchase deed
or from the date
of payment of final
instalment of consideration
amount, whichever
is later.
Applications for
necessary permission
for remittance of
sale proceeds should
be made in form
IPI 8 to the Central
Office of RBI at
Mumbai within 90
days of the sale
of the property.
RBI has also granted
general permission
to foreign citizens
of Indian origin
to acquire or dispose
of properties up
to two houses by
way of gift from
or to a relative
who may be an Indian
citizen or a person
of Indian origin
whether resident
in India or not,
subject to compliance
with applicable
tax laws.
Moreover, RBI also
permits non-resident
persons (foreign
citizens) of Indian
origin to transfer
by way of gift immovable
property held by
them in India to
relatives and charitable
trusts/organisations
subject to the condition
that the provisions
of any other law,
including Foreign
Contribution (Regulation)
Act, 1976 are complied
with.
In addition to the
above, properties
other than agricultural
land/farm house/plantation
property can be
acquired by foreign
citizens of Indian
origin provided
the purchase consideration
is met either out
of inward remittances
in foreign exchange
through normal banking
channels or out
of funds from the
purchasers' NRE/FCNR
accounts maintained
with banks in India
and a declaration
is submitted to
the Central Office
of RBI in form IPI
7 within a period
of 90 days from
the date of purchase
of the property/final
payment of purchase
consideration. They
can also dispose
of such properties.
Renting
out property
RBI has granted
general permission
for letting out
any immovable property
in India. The rental
income or proceeds
of any investment
of such income are
eligible for repatriation.
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