A foreign nationals cannot acquire property in India
The foreign nationals residing outside India are not eligible to buy properties in India whereas the foreign citizen who is residing in India can buy a property in India without a need for approval from Reserve Bank of India (RBI).
Foreign nationals of non-Indian origin resident in India (except those from Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, Bhutan, Macau, Hong Kong or Democratic People’s Republic of Korea (DPRK) can acquire immovable property in India.
The foreigner considered resident in India
The foreigner to be considered as a resident of India and buy Indian property, should reside in India either for more than 182 days during the financial year, or for a period of 60 days or more and has also been in India within the preceding four years for a period or periods of 365 days or more.
A person of Indian origin is the one if he, or either of his parents or any of his grandparents, was born in undivided India. The residential status of an individual depends on his physical presence or period of stay in India and not on his nationality or domicile.
Foreign national resident outside can inherit from an Indian
Foreign nationals of non-Indian origin resident outside India can acquire/ transfer immovable property in India, on lease not exceeding five years and can acquire immovable property in India by way of inheritance from a resident.
Some foreigners can buy property with RBI permission
With prior permission of the Reserve Bank of India (RBI), Citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, Bhutan, Macau, Hong Kong or Democratic People’s Republic of Korea (DPRK), can acquire or transfer immovable property in India, other than on lease, not exceeding five years, irrespective of their residential status.
A NRI can inherit or acquire property in India
A person resident outside India can hold, own, transfer or invest in any immovable property situated in India if such property was acquired, held or owned by him/ her when he/ she was resident in India or inherited from a person resident in India, as per section 6 (5) of Foreign Exchange Management Act (FEMA). The term transfer used here includes sale, purchase, mortgage, exchange, pledge, gift, loan or any other form of transfer of right, title, possession or lien.
A Non-Resident Indian (NRI) is a person resident outside India who is a citizen of India. An Overseas Citizen of India (OCI) is a person resident outside India who is registered as an Overseas Citizen of India Cardholder, under Section 7(A) of the Citizenship Act, 1955.
NRI or OCI can buy or receive as gift a property in India
An NRI or an OCI can acquire by way of purchase any immovable property (other than agricultural land/ plantation property/ farm house) in India.
An NRI or an OCI can acquire by way of gift any immovable property (other than agricultural land/ plantation property/ farm house) in India from person resident in India or from an NRI or an OCI who is a relative as defined in section 2(77) of the Companies Act, 2013.
An NRI or an OCI can acquire any immovable property in India by way of inheritance from a person resident outside India who had acquired the property in accordance with the provisions of the foreign exchange law in force at the time of acquisition.
An NRI or an OCI can acquire any immovable property in India by way of inheritance from a person resident in India
Transfer of immoveable property
An NRI or an OCI may transfer any immovable property in India to a person resident in India.
An NRI or an OCI may transfer any immovable property (other than agricultural land or plantation property or farmhouse) to an NRI or an OCI.
In case the transfer is by way of gift, the transferee should be a relative as defined in section 2(77) of the Companies Act, 2013.
Joint acquisition by the spouse of an NRI or an OCI
A person resident outside India, not being a Non-Resident Indian or an Overseas Citizen of India, who is a spouse of a Non-Resident Indian or an Overseas Citizen of India may acquire one immovable property (other than agricultural land/ farm house/ plantation property), jointly with his/ her NRI/ OCI spouse.
Consideration for transfers made for the above purpose should be out of funds received in India through banking channels by way of inward remittance from any place outside India or by debit to non-resident account of the person concerned maintained in accordance with the Act or the rules framed thereunder. Payments cannot be made either by traveller’s cheque or by foreign currency notes or by other mode except those specifically mentioned.
For the above purpose the marriage should have been registered and subsisted for a continuous period of not less than two years immediately preceding the acquisition of such property.
The non-resident spouse should not otherwise be prohibited from such acquisition.
Acquisition by a Long-Term Visa holder
A person being a citizen of Afghanistan, Bangladesh or Pakistan belonging to minority communities in those countries viz., Hindus, Sikhs, Jains, Buddhists, Parsis and Christians, who is residing in India and has been granted a Long-Term Visa (LTV) by the Central Government may purchase only one residential immovable property in India as dwelling unit for self-occupation and only one immovable property for self-employment. The property should not be located in and around restricted/ protected areas so notified by the Central Government and cantonment areas.
The person should submit a declaration to the Revenue Authority of the district where the property is located specifying the source of funds and that he/ she is residing in India on a LTV.
The registration documents of the property should mention the nationality and the fact that such person is on a LTV.
The property of such person may be attached/ confiscated in the event of his/ her indulgence in anti-India activities.
A copy of the documents of the purchased property shall be submitted to the Deputy Commissioner of Police (DCP)/ Foreigners Registration Office (FRO)/ Foreigners Regional Registration Office (FRRO) concerned and to the Ministry of Home Affairs (Foreigners Division).
Sale of the immovable property so acquired is permissible only after such person has acquired Indian citizenship.
However, transfer of such immovable property before acquiring Indian citizenship requires the prior approval of the Deputy Commissioner of Police (DCP)/ Foreigners Registration Office (FRO)/ Foreigners Regional Registration Office (FRRO) concerned.
Acquisition of property by resident outside India for a permitted activity
A branch or office or any other place of business in India, other than a liaison office, established by a person resident outside India, may acquire immovable property in India which is necessary for or incidental to the activity carried on in India by such branch or office.
Such a person is required to file with the Reserve Bank of India ( RBI) a declaration in the form IPI (as given in the Master Direction on Reporting), not later than ninety days from the date of such acquisition.
The immovable property so acquired can be mortgaged to an Authorised Dealer as a security for any borrowing.
However, acquisition of immovable property in India by a branch, office or other place of business of persons of Pakistan or Bangladesh or Sri Lanka or Afghanistan or China or Iran or Hong Kong or Macau or Nepal or Bhutan or Democratic People’s Republic of Korea origin/ nationality/ ownership requires the prior approval of the RBI.
Repatriation of sale proceeds of immovable property
A person acquiring property in accordance with section 6(5) of FEMA or his successor cannot repatriate outside India the sale proceeds of such immovable property without the prior permission of the Reserve Bank. However, if such a person is resident outside India, he/ she can utilise the remittance facilities available under the Foreign Exchange Management (Remittance of Assets) Regulations, 2016, as amended from time to time.
In the event of sale of immovable property other than agricultural land/ farm house/ plantation property in India by PIO resident outside India [who held property in India in terms of the erstwhile FEM (Acquisition and transfer of Immovable Property in India) Regulations, 2000] or an NRI or an OCI, the Authorised Dealer may allow repatriation of the sale proceeds outside India, provided the following conditions are satisfied, namely:
(a) the immovable property was acquired by the seller in accordance with the provisions of the foreign exchange law in force at the time of acquisition by him;
(b) the amount for acquisition of the immovable property was paid in foreign exchange received through banking channels or out of funds held in FCNR(B) account or NRE account. In case an immovable property in India has been purchased by a PIO resident outside India [who held property in India in terms of the erstwhile FEM (Acquisition and transfer of Immovable Property in India) Regulations, 2000] or an NRI or a OCI out of housing loans availed in terms of Foreign Exchange Management (Borrowing and lending in rupees) Regulations, 2000, as amended from time to time, and the repayments for such loans are made out of remittances received from abroad through banking channels or by debit to the NRE/ FCNR(B) account of such person. Such repayments may be treated as equivalent to foreign exchange received.
(c) in the case of residential property, the repatriation of sale proceeds is restricted to not more than two such properties.
In the event of failure in repayment of external commercial borrowing availed by a person resident in India under the provisions of the Foreign Exchange Management (Borrowing or Lending in Foreign Exchange) Regulations, 2000, a bank which is an authorised dealer may permit the overseas lender or the security trustee (in whose favour the charge on immovable property has been created to secure the ECB) to sell the immovable property on which the said loan has been secured only to a (by the) person resident in India and to repatriate the sale proceeds towards outstanding dues in respect of the said loan and not any other loan.
Prohibition on acquisition of property by some citizens
Citizens (including natural persons and legal entities) of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, Bhutan, Macau, Hong Kong and Democratic People’s Republic of Korea cannot, without prior permission of the Reserve Bank, acquire or transfer immovable property in India, other than on lease, not exceeding five years. The prohibition shall not apply to an OCI.
Foreign embassies or Diplomats can buy property
Foreign embassies, Diplomats or Consulate Generals in India can purchase a immoveable property in India (excluding agricultural land, plantation property and farmhouse) once the individual obtains clearance from the Government of India and The Ministry of External Affairs and the payment for buying the property in India must be made via funds remitted from abroad through a banking channel.
Further reading
