IMMOVABLE PROPERTY - ACQUISITION AND TRANSFER BY NRIs AND PIOs..!

By Dr. Justice A. R. Lakshmanan

There is overall restriction on a person, who is resident outside India as to transfer of

any immovable property in India except when the same is as per the provisions of Foreign

Exchange Management Act, 1999 (FEMA), or as per the “Foreign exchange Management

(Acquisition & Transfer of Immovable Property in India) Regulation 2000”. Regulation 2000 is governed by regulation contained in notification issued by RBI viz. Notification No. FEMA, 21 / 2000-RB (Notification), dated May 3, 2000, as amended from time to time.

Definition of the words used in FEMA is also applicable to Regulation 2000. FEMA

categorises persons into person resident in India and persons resident outside India. Person

includes an individual, a Hindu undivided family, a company, a firm, an association of persons or

a body of individuals, whether incorporated or not in India, an office, branch or agency in India

owned or controlled by a person resident outside India, an office, branch or agency outside India,

owned or controlled by a person resident in India, branch or agency outside India, owned or controlled by a person resident outside India.

PERSONS RESIDENT IN INDIA AND

PERSONS RESIDENT OUTSIDE INDIA..!

Person resident in India means a person residing in India for more than one hundred and

eighty two days during the course of preceding financial year but does not include:

• 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 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;

• 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 uncertain period; Person Resident outside India means a person, who is not resident in India. Such persons are categorized into a person resident outside India, who is a citizen of India, that is, Non-Resident Indians (NRI - A foreign national of Indian origin and a foreign national of non- Indian origin). A person resident in India, who is not a citizen of India, is also covered by the relevant notifications.

Regulation 2000 defines a person of Indian origin to mean an individual (not being a citizen

of Pakistan or Bangladesh or Sri Lanka or Afghanistan or China or Iran or Nepal or Bhutan), who

at any time, held Indian passport or who or either of whose father or whose grandfather was a

citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955.

REGULATIONS FOR PERSONS RESIDENT

OUTSIDE INDIA TOTAL PROHIBITION..!

There is complete prohibition on acquisition of immovable property in India for

citizens of Pakistan Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal and Bhutan without

prior permission of the Reserve Bank, except in a case of lease not exceeding five years.

Citizens of these countries can neither purchase nor sell immovable property without

permission of the Reserve bank, even though they may be residents of India. However,

they may take on lease or grant lease of immovable property in India but that too, not for a

period exceeding five years.

NON-RESIDENT INDIANS AND

PERSONS OF INDIAN ORIGIN

Regulation 2000 permits an NRI or a PIO to acquire immovable property in India other than agricultural land or plantation property, or a farm house.

General Permission is available to purchase only a residential or commercial

property in India to a person resident outside India, who is a citizen of India (NRI) and a person

of Indian Origin (PIO). Since general permission is not available to NRI or PIO

to acquire agriculture land or plantation property or farm house in India, such proposals

require specific approval of Reserve Bank. The proposals are considered in consultations

with the Government of India.

A person, who bought property when he was a resident, can continue to hold residential

or commercial property or agricultural land or plantation property or farm house in

India without the approval of the Reserve Bank, even after becoming an NRI or PIO.

Src: Our Building and Construction, February 2013

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