INFORMATION FOR NRIs
How NRIs, PIOs can buy land in India
The law has come a long way since the days of the Fera (Foreign Exchange Regulation Act) regime, when buying or selling of immovable property was governed by the citizenship of a person. Under Fema (Foreign Exchange Management Act), the thrust is on residential status. But before we go into the details of the law, let's get the definitions straight. An NRI is an Indian citizen residing outside India. A citizen of another country is a PIO (person of Indian origin) if he has held an Indian passport at any time or if he, his father or his grandfather has been a citizen of India. A citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan is not regarded as a PIO.
With the emphasis on residential status, a foreign citizen who is a resident of India can buy and sell properties without prior approval from the Reserve Bank of India, subject to a general ban on citizens of the eight countries mentioned above and restrictions on buying certain properties.
A foreign citizen of non-Indian origin cannot acquire agriculture land/farm house/plantation property in India without the prior approval of the RBI, whereas a foreign citizen of Indian origin can acquire such properties without the prior approval of the RBI but only by way of inheritance. Leasing of immovable property for a period of five years or less is freely permitted. The RBI does not determine the residential status of a person for the purpose of acquisition of immovable property in India. Under Fema regulations, residential status is determined by operation of law. The onus is on the individual to prove his residential status, if questioned by any other authority.
Acquisition by way of purchase
A general permission is available to NRIs or PIOs to purchase only residential/ commercial property in India. There is no restriction on the number of residential/commercial properties that an NRI or a PIO can buy. The name of a foreign national of non-Indian origin cannot be added as a second holder of a residential/commercial property purchased by an NRI or a PIO. A foreign national of non-Indian origin, resident outside India, cannot acquire any immovable property in India by way of purchase without the RBI's nod. However, a foreign national of non-Indian origin, including a citizen of the eight countries mentioned above, may acquire only residential accommodation on lease, for not more than five years. He does not require the RBI's permission for this. A person resident outside India (that is, an NRI, a PIO or a foreign national of non-Indian origin) cannot acquire agricultural land/plantation/farm house in India by way of purchase.
Acquisition by way of gift
An NRI or a PIO may acquire residential/commercial property by way of gift from a resident of India, an NRI or a PIO. However, a foreign national of non-Indian origin resident outside India cannot acquire residential/commercial property in India by way of gift. A person resident outside India cannot acquire agricultural land/plantation/farm house in India by way of gift.
Acquisition by way of inheritance
A person resident outside India can hold immovable property in India acquired by way of inheritance from a person resident in India. Further, with the approval of the RBI, he may hold immovable property in India acquired through inheritance from a person resident outside India, provided the bequeathor had acquired the property in accordance with Fema or the foreign exchange law in force at the time of acquisition.
Sale of immovable property
An NRI can sell residential/commercial property in India to a person resident in India, an NRI or a PIO. However, a PIO can sell residential/commercial property in India only to a resident of India. He would need prior approval of the RBI for sale of residential/commercial property in India to an NRI or a PIO. A foreign national of non-Indian origin whether resident in India or outside India would require prior approval of the RBI for sale of residential property in India acquired with the specific permission of the RBI to a person resident in India or outside India. An NRI or a PIO may sell his agricultural land/plantation/ farm house in India to an Indian citizen resident in India. However, a foreign national of non-Indian origin, resident outside India, would require prior approval of the RBI to sell agricultural land/plantation/farm house acquired in India.
Gift of immovable property in India
An NRI or a PIO may gift residential/commercial property in India to a person resident in India, an NRI or a PIO. Further, an NRI or a PIO may gift agricultural land/plantation/farm house in India to an Indian citizen resident in India. However, a foreign national of non-Indian origin resident outside India would need prior approval of the RBI to gift agricultural land/plantation/ farm house acquired by him in India.
Acquisition of immovable property for carrying on a permitted activity in India
A person resident outside India who has established a liaison office in India in accordance with Fera/Fema regulations cannot purchase immovable property in India. Practically, all liaison offices in India acquire premises on lease for not more than five years for which no permission is required from the RBI. However, a person resident outside India who has established a branch office or other place of business in India in accordance with Fera/Fema regulations can purchase immovable property in India provided it is necessary for, or incidental to, carrying on the activity he is engaged in and all applicable laws have been complied with. For details on other related issues, you may approach the chief general manager, RBI, Foreign Investment Division, Central Office, Mumbai.
Who is a NRI under the provisions of Foreign Exchange Management Act?
Generally, an Indian Citizen who stays abroad for employment/carrying on business or vocation outside India or stays abroad under circumstances indicating an intention for an uncertain duration of stay abroad or a person who is not resident in India for a period over 182 days is a non-resident Indian. Persons posted in U.N. organisations and officials deputed abroad by Central/State Governments and Public Sector undertakings on temporary assignments are also treated as non-residents.
Who is a person of Indian Origin?
Generally, under the provisions of Foreign Exchange Management Act a person of Indian Origin is an individual (other than a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, Bhutan) who:
At any time held an Indian passport, or
He or his father or his grandfather was a citizen of India by virtue of the Constitution of India or Citizenship Act, 1955 (57 of 1955)
Non-resident foreign citizens of Indian Origin are treated on par with non-resident Indian citizens for the purpose of certain facilities.
Do NRIs and PIOs require permission of Reserve Bank to acquire residential/commercial property in India?
NRIs and POIs do not require permission from RBI to acquire residential / commercial premises in India (other than agricultural land/farm house/plantation property). A person resident outside India acquiring property to carry on business from India has to file with the Reserve Bank a declaration in Form IPI within ninety days from the date of acquisition of immovable property. A citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan cannot acquire immovable property without prior permission of Reserve Bank. However, he can take on lease an immovable property for not more than 5 years.
Can NRIs and PIOs sell residential / commercial premises in India without the permission of Reserve Bank?
A person resident outside India who is a citizen of India is permitted to sell immovable property in India other than agricultural/plantation/farm house to a person resident in India or to an NRI or to a PIO resident outside India. He can also gift residential or commercial property in India to a person resident in India, NRI or to a PIO resident outside India. However, he can gift or sale any agricultural land/farmhouse/plantation property only to a person resident in India who is a citizen in India. A PIO resident outside India is permitted to sell the immovable property other than agricultural land/farmhouse/plantation property to a person resident in India.