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Liberalised norms for NRI investors
3 Aug 2008
The government has liberalised investment norms for NRIs to invest in real estate in India. At the same time there is a need of adhering to ground realities before plunging into investment. We provide some of the frequently answered questions answered recently by the Reserve Bank of India.
Who can purchase immovable property in India?
Under the general permission available, the following categories can freely purchase immovable property in India:
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Non-Resident Indian (NRI)- that is a citizen of India residing outside India
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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
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at any time, held an Indian passport, or
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either 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 purchase of agricultural land / plantation property / farm houses in India.
Can NRIs/PIOs acquire agricultural land/ plantation property / farm house in India?
No, since general permission is not available to NRIs/PIOs to acquire agricultural land/ plantation property / farm houses in India, such proposals will require specific approval of the Reserve Bank and the proposals are considered in consultation with the Government of India.
Do any documents need to be filed with the Reserve Bank of India after purchase?
No. An NRI / PIO who has purchased residential / commercial property under general permission, is not required to file any documents with the Reserve Bank of India.
How many residential / commercial properties can an NRI / PIO purchase under the general permission?
There are no restrictions on the number of residential / commercial properties that can be purchased under the general permission.
Can a foreign national of non-Indian origin be a second holder to immovable property purchased by NRI / PIO?
No.
Can a foreign national of non-Indian origin residing outside India purchase immovable property in India?
No. A foreign national of non-Indian origin, residing outside India cannot purchase any immovable property in India.
But, he/she may take residential accommodation on lease provided the period of lease does not exceed five years. In such cases, there is no requirement of taking any permission of or reporting to the Reserve Bank.
Can a foreign national who is a person residing in India purchase immovable property in India?
Yes, but the person concerned would have to obtain the approvals, and fulfill the requirements if any, prescribed by authorities, such as the concerned State Government. 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 the Reserve Bank. Such requests are considered by the Reserve Bank in consultation with the Government of India.
Can an office of a foreign company purchase immovable property in India?
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 out 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 the Reserve Bank within ninety days from the date of acquiring the property. Such property can also be mortgaged with an authorized dealer as 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 the Reserve Bank.
Further, acquisition of immovable property by entities who 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 the Reserve Bank.
However, if the foreign company has established a liaison office, it cannot acquire immovable property. In such cases, liaison offices, can take property by way of lease not exceeding five years.
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