FAQs…

1. Question: Are foreign nationals of Indian origin allowed to purchase immovable property in India?
 Answer: Yes, foreign nationals of Indian origin, whether resident in India or abroad, have been granted general permission to purchase immovable property in India.
   
2. Question: Do non-resident Indian nationals require permission of Reserve Bank to acquire residential/ commercial property in India?
  Answer:No permission is required by non-resident Indians to acquire immovable Property in India.
   
3. Question: What should be the method of payment for purchasing residential immovable property in India by foreign nationals of Indian origin under the general permission?
  Answer: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.
   
4. Question: In what way the Non-resident Indian can finance the flat?
 Answer: The purchase of the flats can be financed from the fresh remittance through the normal banking channels or from payment from original non-resident account or from Non-resident (External) Accounts. Non-resident Indians who are citizens of India (India Passport holders) are eligible for housing finance for the acquisition of an immovable property or construction of a new house, or a flat for their occupation or for that of their family in India. But the HDFC also considers granting of loans to non-resident Indians even if they are abroad, provided a family member of his or her in India is made a co-borrower and a power of attorney is given to his representative in India.
   
5. Question: Non-resident Indians are staying abroad can the property be purchased through the agent or through the Power of Attorney?
  Answer: The non-resident Indians who are staying abroad may enter into an agreement through their relatives and/or by executing the Power of Attorney in their favor as it is not possible for them to be present for completing the formalities of purchase (negotiating with the builder or Developer, drafting and signing of agreements, taking possession, etc.) These formalities can be completed through some known person who can be given the Power of Attorney for this purpose. Power of Attorney should be executed on the stamp paper before the proper authorities in foreign countries. Power of Attorney cannot be drafted on the stamp paper bought in India.
   
6. Question: Can the rental income from such property be remitted outside India?
  Answer: No. Such income cannot be remitted abroad and will have to be credited to the ordinary non-resident rupee account of the owner of the property.
   
7. Question: What is the approved method of sending remittances into India?
  Answer: The approved method of sending remittances into India is through normal banking channels.
   
8. Question:Can such residential property be given on rent if not needed for immediate residential use?
  Answer: YES

Queries related to Acquisition of Immovable Property in India

9. Question: Who can purchase immovable property in India?
  Answer: Under the general permission available, the following categories can freely purchase immovable property in India…

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

B. 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.

   
10. Question:Whether NRI/PIO can acquire agricultural land/ plantation property / farm house in India?
  Answer: No. Since general permission is not available to NRI/PIO to acquire agricultural land/ plantation property / farm house in India, such proposals will require specific approval of Reserve Bank and the proposals are considered in consultation with the Government of India.
   
11. Question: How many residential/commercial properties can NRI/PIO purchase?
  Answer: There are no restrictions on the number of residential/commercial properties that can be purchased.
   
12. Question: Can a foreign national who is resident in India purchase immovable property in India?
  Answer: 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.
   
13. Question: Can an office of a foreign company purchase immovable property in India?
  Answer: 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 Authorized 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 that 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.
   
14. Question: Can NRIs/PIOs freely acquire immovable property in India?
 

Answer: Yes, NRIs and PIOs can freely acquire immovable property by way of gift either from

A. A person resident in India or

B. An NRI (Non-resident Indian) or

C. A PIO (Person of India origin)

However, the property can only be commercial or residential. Agricultural land / plantation property / farm house in India cannot be acquired by way of gift. On the other hand, a foreign national of non-Indian origin resident outside India cannot acquire any immovable property in India through gift.

Queries related to Acquisition of Immovable Property in India

TRANSFER BY SALE

   
15.Question: Can an NRI / PIO / foreign national sell his residential / commercial property?
 

Answer: Yes,

(A) NRI can sell property in India to…

1) A person resident in India or

2) An NRI or

3) A PIO

(B) PIO can sell property in India to…

1) A person resident in India.

2) An NRI or

3) A PIO - with the prior approval of Reserve Bank

(C) Foreign national of non-Indian origin including a citizen of Pakistan or Bangladesh or Sri Lanka or Afghanistan or China or Iran or Nepal or Bhutan can sell property in India with prior approval of RBI to…

1) A person resident in India

2) An NRI

3) A PIO

TRANSFER BY GIFT

16. Question: Can a non-resident gift his residential / commercial property?
 

Answer: Yes,

(A) NRI / PIO may gift residential / commercial property to…

1) A person resident in India or

2) An NRI or

3) A PIO

(B) Foreign national of non-Indian origin needs prior approval of Reserve Bank.

TRANSFER THROUGH MORTGAGE

17. Question:Can residential / commercial property be mortgaged?
 

Answer: Under the following conditions…

(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.

Queries related to Mode of Payment for Purchase of PROPERTY

18. Question:How can an NRI/PIO make payment for purchase of residential/commercial property in India?
 

Answer:Payment can be made by NRI / PIO out of

(A) Funds remitted to India through normal banking channel or

(B) Funds held in NRE / FCNR (B) / NRO account maintained in India

No payment can be made either by traveler’s cheque or by foreign currency notes.

No payment can be made outside India.

   
19. Question:What shall be the option if there is refund of application money / payment made by the building agencies / seller because of non-allotment of flat / plot / cancellation of bookings / contracts?
 

The amount of refund, together with interest (net of income tax) can be credited to NRE account. This is subject to condition that the original payment was made by way of inward remittance or by debit to NRE / FCNR (B) account. (Please refer to A.P. (DIR) Series Circular No. 46, dated 12.11.2002)

Such loans can be repaid…

a. By way of inward remittance through normal banking channel or

b. By debit to his NRE / FCNR (B) / NRO account or

c. Out of rental income from such property.

d. By the borrower's close relatives, as defined in section 6 of the Companies Act, 1956, through their account in India by crediting the borrower's loan account.

Repatriation is another option…

a. In case the amount has been received from inward remittance or debit to NRE/FCNR(B)/NRO account for acquiring the property or for repayment of the loan, the principal amount can be repatriated outside India. For this purpose, repatriation outside India means the buying or drawing of foreign exchange from an authorized dealer in India and remitting it outside India through normal banking channels or crediting it to an account denominated in foreign currency or to an account in Indian currency maintained with an authorized dealer from which it can be converted in foreign currency

b. In case the property is acquired out of Rupee resources and/or the loan is repaid by close relatives in India (as defined in Section 6 of the Companies Act, 1956), the amount can be credited to the NRO account of the NRI/PIO. The amount of capital gains, if any, arising out of sale of the property can also be credited to the NRO account. NRI/PIO are also allowed by the Authorized Dealers to repatriate an amount up to USD 1 million per financial year out of the balance in the NRO account for all bona-fide purposes to the satisfaction of the authorized dealers, subject to tax compliance.

Queries related to ...........

Repatriation of sale proceeds of residential/ commercial property purchased by NRI/PIO & Provisions for Foreign Embassies/Diplomats/Consulate Generals
20. Question:Can Foreign Embassies/Diplomats/Consulate General purchase/sell immovable property in India?
  Answer: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.
   
21. Question:Can NRI / PIO rent out the residential / commercial property purchased out of foreign exchange / rupee funds?
  Answer:Yes, NRI/PIO can rent out the property without the approval of the Reserve Bank. Rent received can be credited to NRO / NRE account or remitted abroad. Powers have been delegated to the Authorized Dealers to allow repatriation of current income like rent, dividend, pension, interest, etc. of NRIs/PIO who do not maintain an NRO account in India based on an appropriate certification by a Chartered Accountant, certifying that the amount proposed to be remitted is eligible for remittance and that applicable taxes have been paid/provided for. [cf. A.P. (DIR Series) Circular No. 45 dated May 14, 2002].
   
22. Question:Can a person who had bought immovable property when he was a resident, continue to hold such property even after becoming an NRI/PIO?
  Answer:Yes, he can continue to hold the residential / commercial property / agricultural land/ plantation property / farm house in India without the approval of the Reserve Bank.
   
23. Question:In which account can the sale proceeds of such immovable property be credited?
  Answer:The sale proceeds may be credited to NRO account.
   
24. Question: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?
  Answer:Yes, they may continue to hold the immovable property. However, they can transfer the property only with the prior approval of Reserve Bank.

 
 
   
Parker Builders Pvt. Ltd.
Phone : +91-11-42459986 / 47804747 Email : info@theparkergroup.in
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