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  Investment in Real Estate by NRIs/Foreigners  
 

 

Immovable Properties:

Under Sec. 31 of FERA act, the NRI , Foreign citizen of Indian origins or non Indian origins can acquire immovable properties in India either from local funds or remitted funds.

Sec 31 from FERA is reproduced below:

Restrictions on acquisitions, holdings, etc. of immovable property in India-

(1) No person who is not a citizen of India and no company (other than a banking company) which is not incorporated under any law in force in India shall except with the previous general or special permission of the RBI , acquire or hold or transfer or dispose of by sale, mortgage, lease, gift, settlement or otherwise an immovable property situate in India :

Provided that nothing in this subsection shall apply to the acquisition or transfer of any such immovable property by way of lease for a period not exceeding five years.

(2) Any person or company referred to in subsection (1) and requiring a special permission under that subsection for acquiring or holding or transferring or disposing by way of sale, lease, gift , settlement or otherwise any immovable property situate in India may make an application to the RBI in such form and containing such particulars as may be specified by the RBI.

(3) On receipt of an application under subsection (2) , the RBI may after making such enquiry as it deems fit , either grant or refuse to grant such permission applied for;

Provided that no permission shall be refused unless the applicant has been given a reasonable opportunity for making a representation in the matter;

Provided further that if before the expiry of a period of ninety days from the date on which the application was received by the RBI , the RBI does not communicate to the applicant that the permission so applied for has been refused, it shall be presumed that the RBI has granted such permission.

Explanation:-In computing such period of ninety days for the purposes of the second proviso , the period , if any taken by the Reserve Bank for giving an opportunity to the applicant for making a representation under the first proviso shall be excluded.

(4) Every person and company referred to in Subsection (1) holding at the commencement of this act any immovable property situate in India shall, before the expiry of a period of ninety days from such commencement or such further period as the Reserve Bank may allow in this behalf , make a declaration in such forms as may be specified by the Reserve Bank regarding the immovable property or properties held by such person or company.

Below is some of FAQ s’ relating to the matter of investment in immovable properties:

Q. Do non resident Indian citizens require permission of RBI to acquire the residential / commercial property in India.

A. No

Q. Do foreign citizens of Indian origins require permission of RBI to acquire the residential / commercial property in India.

Ans. RBI has given the general permission to all the foreign citizens of Indian origins whether Indian resident or not to acquire only the residential property in India for the purpose of bonafide residential purposes. However separate permission is required to obtain the permission for acquiring the commercial property.

Q. How the considerations for acquiring the residential property in India should be paid by the foreign citizens of Indian origins in case of general permission category?

A. The purchase consideration should be met out of the inward remittances sent thru the normal banking channels or out of the funds maintained with the NRE/ FCNR accounts maintained with the banks in India.

Q. What are the formalities to be completed for buying the immovable property of residential nature in India under the general permission category.

A. Filing of Form IPI7 with the Central office of RBI in Mumbai within a period of 90 days of the payment of the final instalment or the purchase of the property alongwith all the documents evidencing the purchase of property.

Q. Whether such property can be sold without the permission of RBI and whether the funds released from such sale can be repatriated outside India .

A. Yes the property can be sold without the permission of RBI . However in case of the repatriation of the funds , the following should be kept in mind:

In case of immovable properties acquired on or after 26/5/93 , RBI considers the applications , RBI considers applications for repatriation of sale proceeds upto the consideration amount remitted in foreign exchange for the acquisition of such immovable properties upto two such properties. The balance amount of sale proceeds shall be credited to the NRO accounts.

In case of properties purchased prior to 26/5/93 sale proceeds shall be credited to the NRO accounts.

Q. Are any conditions required to be fulfilled in case of repatriation of sale proceeds are desired.

A. The repatriation of sale proceeds are considered only if the sale of such property takes place only after the expiry of three years from the date of payment of the final instalment or the date of the final purchase deed which ever is later.

Q. What are the procedures required to be fulfilled seeking the repatriation of sale proceeds .

A. Applications for the necessary permission for the remittance of sale proceeds should be made in Form IPI8 to the Central Office of RBI within 90 days of date of the sale.

Q. Can foreign citizens of Indian origin acquire or dispose off residential properties by way of gift.

A. Yes under the general permission given by the RBI , the gift upto two properties can be made by the foreign citizens of Indian origin.

Q.Can foreign citizens of Indian origin acquire the commercial property in India .

A. Yes, the procedure is same as applicable for the purchase of the residential properties by the foreign citizens of Indian origins except that this general permission is not applicable for the purchase of agricultural land/ farm houses / plantation property .

Q. Is the procedure of selling and the remitting the funds is same in these properties.

A. Yes , the procedure and conditions are the same as explained above in case of residential properties.

Q. Can the properties (residential/ commercial ) be given on rent if not required for immediate use.

A. Yes, though the income from rent shall be credited to the NRO accounts of the person.

Q. Can NRIs’ raise the loans for the acquisition of house/ flat for the residential purposes from the Financial institutions.

A. Yes.

Q. Can authorised dealers grant loans to NRIs’ for acquisitions of flats /house for the residential purposes.

A. Authorised dealers have been permitted to grant loans to the NRIs’ on their return to India. This is subject to certain conditions. Repayments of this loan should be made within a time frame of 15 years from the funds lying in the NROs’ /NRE/FCNR accounts.

 

 

 
 

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