Acquisition And Transfer Of Immovable Property In India By NRI/ PIO/ Foreign Nationals

INTRODUCTION:

The acquisition and transfer of property are very important in every country since everyone dreams are that at least he should own a house or a piece of land for his living. Man has three major essential and necessary things in his life: food, water, and shelter. So we can see that shelter is one of the major essential things but now man has extended his desire to another one i.e. ‘the land’. The land is playing an important role from ancient India till now because this was the first tax imposed by the king to his people as Land Tax. The greatest war was for the acquisition of lands where we can infer from Britishers because they came to India as traders, but after the time seeing India’s resources they all started to get our resources for their purposes and one of the resources is the land. So the land was taxed, we have seen wars for acquisition, etc and this shows how important land is! 

The above part is history and from history, until now the land has acquired more value. Even now we continue to tax land and property. So now the modern extension of desire is taken another form is the land to properties. Both properties and land are important and in this era the major crime revolves around this since cheating happening against the buyer or the seller. Hence most of our Indian statutes as well as other countries are considering this as a major civil crime and for this many civil courts are constituted to hear all the matters relating to land and property.

Thus the author in this article mainly discusses the modes of acquisition and transfer of immovable property in India by Non-resident Indians (NRI) / persons of Indian origin (PIO) / foreign nationals of non-Indian origin who are regulated in terms of the Foreign Exchange Management Act, 1999 (‘FEMA‘). FEMA empowers the Reserve Bank of India (‘RBI‘) to frame regulations to prohibit, restrict or regulate the acquisition or transfer of immovable property in India by person’s residents outside India.

The author also tries to elaborate on the topics- who can purchase or transfer immovable property? How he can make the payments? And any exceptions if there and other conditions related to the transfer/ purchase of immovable property in India.

WHO CAN ACQUIRE OR TRANSFER THE IMMOVABLE PROPERTY?

  • A person resident outside India but who is a citizen of India (NRI):
  • He is a person who can acquire by way of purchase, any immovable property in India other than agricultural land/ plantation property/ farmhouse.
  • He can also transfer any immovable property other than agricultural or plantation property or farmhouse to NRI/ PIO / Person resident in India.
  • How can he pay for the acquisition of property?
  • Funds received in India through normal banking channels by way of inward remittance from any place outside India or by debit to his Non-Resident External account NRE / Foreign Currency Non-Repatriable FCNR (B) / Non-Resident Ordinary NRO account.
  • Only the above mentioned modes can be used to make the payments and it cannot be made either by traveller’s cheque or by foreign currency notes or by other modes.
  • An NRI who has purchased residential/ commercial property under general permission is not required to file any documents with the Reserve Bank.
  • Acquisition and transfer of immovable property in India by Person of Indian Origin (PIO):
  • A PIO can acquire or purchase or transfer any immovable property in India other than the agricultural land/ farmhouse/ plantation.
  • A PIO may get any immovable property in India by way of a gift (except the agricultural land/ farmhouse/ plantation) from PIO/ NRI/ person resident in India.
  • A PIO may acquire immovable property by way of inheritance from:
  • A person resident in India; or
  • A person resident outside India who had acquired such property under the provisions of the foreign exchange law in force or FEMA regulations, at the time of acquisition of the property.
  • How can he transfer his immovable property?
  • Either by way of sale to a person resident in India or
  • By way of gift or
  • Can also transfer residential/ commercial property in India by way of gift to a person resident in India/ to an NRI/ to a PIO.
  • How can he make the payment for the acquisition of immovable property in India?
  • By way of purchase out of funds received by inward remittance through normal banking channels or by debit to his Non-Resident Rupee NRE / Foreign Currency Non-Repatriable FCNR (B) / NRO account.
  • Only the above mentioned modes can be used to make the payments and it cannot be made either by traveller’s cheque or by foreign currency notes or by other modes.
  • A same as the NRI, a PIO, who has purchased residential/ commercial property under the general permission, is not required to file any documents with the Reserve Bank.
  • Purchase of Immovable Property in India by a Foreign National of Non-Indian Origin resident outside India
  • Foreign Embassies, Diplomats, Consulate Generals may purchase the immovable property (other than agricultural land/ plantation property/ farm house) in India with the clearance from the Government of India, Ministry of External Affairs shall be obtained for such purchase, and the consideration for the acquisition of immovable property in India shall be paid out of funds remitted from abroad through the normal banking channels. The property so acquired shall be mortgaged with an authorized dealer as a security for any borrowing.
  • Foreign nationals of non-Indian origin resident outside India are not permitted to acquire any immovable property in India unless such property is acquired by way of inheritance from a person who was resident in India. However, they can acquire or transfer immovable property in India, on a lease, not exceeding five years without the prior permission of the RBI.
  • Foreign Nationals of non-Indian origin i.e. foreigners/ diplomats, other than citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, Bhutan, Macau or Hong Kong can acquire immovable property in India on becoming resident in India in terms of Section 2(v) of the FEMA[1] and subject to certain conditions. Still, if the citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, Bhutan, Macau or Hong Kong cannot, want to acquire or transfer immovable property in India, other than lease, not exceeding five years they have to get prior permission from RBI. If RBI permits these citizens can also acquire the land by following certain conditions and procedures.

[1] Section 2 (V) of FEMA ACT, 1999- “person resident in India” means—

(i) a person residing in India for more than one hundred and eighty-two days during the course of the preceding financial year but does not include—

(A) a person who has gone out of India or who stays outside India, in either case—

(a) for or on taking up employment outside India, or

(b) for carrying on outside India a business or vocation outside India, or

(c) for any other purpose, in such circumstances as would indicate his intention to stay outside India for an uncertain period;

(B) a person who has come to or stays in India, in either case, otherwise than—

(a) for or on taking up employment in India, or

(b) for carrying on in India a business or vocation in India, or

(c) for any other purpose, in such circumstances as would indicate his intention to stay in India for an uncertain period;

(ii) any person or body corporate registered or incorporated in India,

(iii) an office, branch or agency in India owned or controlled by a person resident outside India,

(iv) an office, branch or agency outside India owned or controlled by a person resident in India;