RBI/2015-16/79
Master Circular No. 4/2015-16
July 1, 2015
To,
All Category - I Authorised Dealer banks
Madam / Sir
Master Circular on Acquisition and Transfer of Immovable Property in
India by NRIs/PIOs/Foreign Nationals of Non-Indian Origin
Acquisition and transfer of immovable property in India by NRIs / PIOs /
Foreign Nationals of Non-Indian Origin is regulated in terms of Sub-sections
(3), (4) and (5) of Section 6 of the Foreign Exchange Management Act, 1999 read
with
Notification No.FEMA 21/2000-RB dated May 3, 2000. The regulatory framework
and instructions issued by the Reserve Bank in this regard have been compiled in
this Master Circular. The list of underlying circulars/notifications is
furnished in Appendix.
- This Master Circular may be referred to for general guidance. The Authorised
Dealer Category – I banks and Authorised banks may refer to respective circulars
/ notifications for detailed information, if so needed.
- This Master Circular is being updated from time to time as and when fresh
instructions are issued. The date up to which the Master Circular has been
updated is suitably indicated.
Yours faithfully
(A K Pandey)
Chief General Manager
- Introduction
The Foreign Exchange Management Act, 1999 (FEMA) empowers the Reserve Bank to
frame regulations to prohibit, restrict or regulate the acquisition or transfer
of immovable property in India by persons residents outside India. The
regulations governing acquisition and transfer of immovable property in India
are notified under Notification FEMA No.21/2000-RB of May 3, 2000, as amended
from time to time.
- Acquisition and Transfer of Immovable Property in India
A. Non- Resident Indian (NRI)1
(i) Purchase of immovable property
A NRI can acquire by way of purchase any immovable property (other than
agricultural land/ plantation property / farm house) in India.
(ii) Transfer of immovable property
A NRI may transfer any immovable property in India to a person resident in
India. He may transfer any immovable property (other than agricultural land or
plantation property or farm house) to an Indian Citizen resident outside India
or a PIO resident outside India.
Funds received in India through normal banking channels by way of inward
remittance from any place outside India or by debit to his NRE / FCNR (B) / NRO
account.
Such payments cannot be made either by traveller’s cheque or by foreign currency
notes or by other mode except those specifically mentioned above.
(iv) An NRI who has purchased residential / commercial property under general
permission is not required to file any documents with the Reserve Bank.
B. Person of Indian Origin (PIO)2
(i) Purchase of immovable property
A PIO can acquire by way of purchase any immovable property (other than
agricultural land/ plantation property / farm house) in India.
(ii) Gift/ Inheritance of immovable property
(a) A PIO may acquire any immovable property (other than agricultural land/
plantation property / farm house) in India by way of gift from a person resident
in India or a NRI or a PIO.
(b) A PIO may acquire any immovable property in India by way of inheritance from
a person resident in India or a person resident outside India who had acquired
such property in accordance with the provisions of the foreign exchange law in
force or FEMA regulations, at the time of acquisition of the property.
(iii) Transfer of immovable property
A PIO can transfer any immovable property in India (other than agricultural land
/ farm house / plantation property) by way of sale to a person resident in
India. He may transfer agricultural land / farm house / plantation property in
India, by way of gift or sale to a person resident in India, who is a citizen of
India. He may also transfer residential or commercial property in India by way
of gift to a person resident in India or to a person resident outside India, who
is a citizen of India or to a Person of Indian Origin resident outside India.
(iv) Payment for Acquisition of Immovable Property in India
A PIO can make payment for acquisition of immovable property in India (other
than agricultural land / farm house / plantation property):
By way of purchase out of funds received by inward remittance through normal
banking channels or by debit to his NRE / FCNR (B) / NRO account.
Such payments cannot be made either by traveller’s cheque or by foreign currency
notes or by other mode other than those specifically mentioned above.
(v) A PIO who has purchased residential / commercial property under the general
permission, is not required to file any documents with the Reserve Bank.
- Acquisition of immovable Property by Foreign Embassies/ Diplomats/ Consulate
Generals
In terms of Regulation 5A of the Foreign Exchange Management (Acquisition and
Transfer of Immovable Property in India) Regulations 2000, Foreign Embassy/
Diplomat/ Consulate General, may purchase/ sell immovable property (other than
agricultural land/ plantation property/ farm house) in India provided–
Clearance from the Government of India, Ministry of External Affairs is obtained
for such purchase/sale, and
The consideration for acquisition of immovable property in India is paid out of
funds remitted from abroad through the normal banking channels.
- Acquisition of immovable property by person resident outside India for
carrying on a permitted activity
A person resident outside India who has established a Branch, Office or other
place of business, excluding a Liaison Office, for carrying on in India any
activity in accordance with the Foreign Exchange Management (Establishment in
India of Branch or Office or other Place of Business) Regulations, 2000 may–
acquire any immovable property in India, which is necessary for or incidental to
carrying on such activity, provided that all applicable laws, rules, regulations
or directions for the time being in force are duly complied with; and the person
files with the Reserve Bank a declaration in the form IPI (Annex-2), not later
than ninety days from the date of such acquisition; and
transfer by way of mortgage to an Authorised Dealer as a security for any
borrowing, the immovable property acquired in pursuance of clause (a) above.
- Repatriation of sale proceeds of immovable property
(A) Immovable property acquired by way of purchase
(a) A person referred to in sub-section (5) of Section 6 of the Foreign Exchange
Management Act3, or his successor shall not, except with the prior permission of
the Reserve Bank, repatriate outside India the sale proceeds of any immovable
property referred to in that sub-section.
(b) In the event of sale of immovable property other than agricultural land /
farm house / plantation property in India by a person resident outside India who
is a citizen of India or a person of Indian origin, the Authorised Dealer may
allow repatriation of the sale proceeds outside India, provided the following
conditions are satisfied, namely:
(i) the immovable property was acquired by the seller in accordance with the
provisions of the foreign exchange law in force at the time of acquisition by
him or the provisions of these Regulations;
(ii) the amount to be repatriated does not exceed:
the amount paid for acquisition of the immovable property in foreign exchange
received through normal banking channels, or
the amount paid out of funds held in Foreign Currency Non-Resident Account, or
the foreign currency equivalent (as on the date of payment) of the amount paid
where such payment was made from the funds held in Non-Resident External account
for acquisition of the property; and
(iii) in the case of residential property, the repatriation of sale proceeds is
restricted to maximum two such properties.
(B) Immovable property acquired by way of inheritance/ legacy/ out of Rupee
funds
A Non-Resident Indian (NRI) / Person of Indian Origin (PIO) may remit an amount,
not exceeding US $ 1,000,000 (US Dollar One million only) per financial year out
of the balances held in NRO accounts / sale proceeds of assets by way of
purchase / the assets in India acquired by him by way of inheritance / legacy /
out of Rupee funds. This is subject to production of documentary evidence in
support of acquisition, inheritance or legacy of assets by the remitter, and
payment of applicable taxes in India. Remittances exceeding US $ 1,000,000 (US
Dollar One million only) in any financial year requires prior permission of the
Reserve Bank.
In cases of deed of settlement made by either of his parents or a close relative
(as defined in Section 6 of the Companies Act, 1956) and the settlement taking
effect on the death of the settler, the original deed of settlement should be
produced for the remittance. All remittances will be subject to payment of
applicable taxes in India.
Where the remittance as above is made in more than one instalment, the
remittance of all such instalments shall be made through the same Authorised
Dealer.
- Refund of purchase consideration
Refund of application / earnest money / purchase consideration made by the house
building agencies / seller on account of non-allotment of flat / plot /
cancellation of bookings / deals for purchase of residential / commercial
property, together with interest, if any (net of income tax payable thereon) may
be allowed by the Authorised Dealers by way of credit to NRE/FCNR (B) account,
provided the original payment was made out of NRE / FCNR (B) account of the
account holder or remittance from outside India through normal banking channels
and the Authorised Dealer is satisfied about the bona fides of the transaction.
- Prohibition on acquisition or transfer of immovable property in India by
citizens of certain countries
Citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal,
Bhutan, Macau or Hong Kong cannot, without prior permission of the Reserve Bank,
acquire or transfer immovable property in India, other than lease, not exceeding
five years.
- Purchase of Immovable Property in India by a Foreign National of Non-Indian
Origin resident outside India
i. 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 lease, not
exceeding five years without the prior permission of the Reserve Bank.
ii. Foreign Nationals of non-Indian origin, other than a citizen 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 Foreign Exchange Management Act, 1999. In this
connection, he has to satisfy the condition of period of stay. The type of visa
granted should clearly indicate the intention to stay in India for an uncertain
period to determine his residential status in terms of section 2(v) FEMA, 1999.
(Press Release dated February 1, 2009 issued by Government of India is enclosed
as Annex-1).
iii. Foreign nationals of non-Indian origin who have acquired immovable property
in India by way of inheritance with the specific approval of the Reserve Bank or
have purchased the immovable property with the specific approval of the Reserve
Bank cannot transfer such property without the prior permission of the Reserve
Bank.
- Payment of taxes – Any transaction involving acquisition of immovable
property under these regulations shall be subject to applicable tax laws in
India.
Annex-2
Form IPI
(See Regulation 4)
Declaration of immovable property acquired in India by a person
resident outside
India who has established in India a branch, office or other place of business,
excluding a liaison office
Instructions:
1. The declaration should be completed in duplicate and submitted directly to
the Chief General Manager, Foreign Exchange Department, (Foreign Investment
Division), Reserve Bank of India , Central Office, Mumbai – 400001 within 90
days from the date of acquisition of the immovable property.
2. This form is not to be submitted by a person resident outside India who is a
citizen of India or a Person of Indian Origin (PIO) acquiring immovable property
in India under General Permission in accordance with Regulations 3 and 4 of
Notification No. FEMA 21/2000-RB dated May 3, 2000.
Documentation:
Certified copies of letter of approval from Reserve Bank obtained under section
6(6) of FEMA, 1999 (42 of 1999).
1. |
|
Full name and address of the acquirer who has acquired the immovable property
|
|
|
2. |
(a) |
Description of immovable property |
(a) |
|
|
(b) |
Details of its exact location stating the name of the state, town and
municipal/survey number, etc |
(b) |
|
3. |
(a) |
Purpose for which the immovable property has been acquired
|
(a) |
|
|
(b) |
Number and date of Reserve Bank’s permission, if any
|
(b) |
|
4. |
|
Bank’s permission, if any Bank’s permission, if any
|
|
|
5. |
(a) |
How the immovable property was acquired i.e. whether by way of purchase
or lease |
(a) |
|
|
(b) |
Name, citizenship and address of the seller/lessor
|
(b) |
|
|
(c) |
Amount of purchase price and sources of funds |
(c) |
|
I/ We hereby declare that-
(a) the particulars given above are true and correct to the best of my/our
knowledge and belief;
(b) no portion of the said property has been leased /rented to, or is otherwise
being allowed to be used by, any other party
Encls:
Place: -------
Date:--------
------------------------
(Signature of Authorised official)
Stamp
Name:-----------------
Designation:------------
APPENDIX
List of notifications / A.P.(DIR Series) circulars
which have been consolidated in this Master Circular
Sl. No. |
Notification / Circular |
Date |
1 |
FEMA 21/2000-RB |
May 3, 2000 |
2 |
FEMA 62/2002-RB |
May 13, 2002 |
3 |
FEMA 65/2002-RB |
June 29, 2002 |
4 |
FEMA
64/2002-RB |
June 29, 2002 |
5 |
FEMA 93/2003-RB |
June 9, 2003 |
6 |
FEMA 146/2006-RB |
February 10, 2006 |
7 |
FEMA 200/2009-RB |
October 5, 2009 |
8 |
FEMA 321/2014-RB |
September 26, 2014 |
9 |
FEMA 335/2015-RB |
February 4, 2015 |
1 |
A.P.(DIR Series) |
Circular No.1 July 2, 2002 |
2 |
A.P.(DIR Series) |
Circular No.5 July 15, 2002 |
3 |
A.P.(DIR Series) |
Circular No.19 September 12, 2002 |
4 |
A.P.(DIR Series) |
Circular No.35 November 1, 2002 |
5 |
A.P.(DIR Series) |
Circular No.46 November 12, 2002 |
6 |
A.P.(DIR Series) |
Circular No.27 September 28, 2002 |
7 |
A.P.(DIR Series) |
Circular No.56 November 26, 2002 |
8 |
A.P.(DIR Series) |
Circular No.67 January 13, 2003 |
9 |
A.P.(DIR Series) |
Circular No.19 September 23, 2003 |
10 |
A.P.(DIR Series) |
Circular No. 5 August 16, 2006 |
11 |
A.P.(DIR Series) |
Circular No.25 January 13, 2010 |
12 |
A.P. (DIR Series) |
Circular No. 79 February 15, 2012 |
13 |
A.P (DIR Series) |
Circular No. 151 June 30, 2014 |
14 |
A.P (DIR Series) |
Circular No. 38 November 20, 2014 |
15 |
A.P (DIR Series) |
Circular No. 83 March 11, 2015 |
1Non-Resident Indian (NRI) is a citizen of India resident outside India.
2As per Regulation 2(c) of
Notification No. FEMA 21/2000-RB dated May 3, 2000, a
‘Person of Indian Origin' means an individual (not being a citizen of Pakistan
or Bangladesh or Sir Lanka or Afghanistan or China or Iran or Nepal or Bhutan)
who
at any time, held an Indian Passport or
who or either of whose father or mother or whose grandfather or grandmother was
a citizen of India by virtue of the Constitution of India or the Citizenship
Act, 1955 (57 of 1955).
3A person resident outside India may hold, own transfer or invest in Indian
currency, security or immovable property situated in India if such currency,
security or property was acquired, held or owned by such person when he was
resident in India or inherited from a person who was resident in India.
Annex-1
Press Release of Government of India
Ministry of Finance
February 1, 2009
Government’s advice on acquiring land by persons residing outside India 15:8 IST
Government of India has advised State Governments to be extra vigilant in matters of acquisition and transfer of immovable property in India by a person residentoutside India and satisfy themselves about the eligibility under FEMA before registering a sale or purchase of immovable property in India. The enquiries may
include both the intending buyers and sellers. The relevant travel documents and the nature of visa may also be verified before registering such sale / purchase. Government has further advised all including concerned authorities in the State Governments that wherever appropriate, the authorities may consider reviewing registration of sale / purchase already made to determine their compliance with legal requirements. Further, persons acquiring immovable property have to fulfil
the requirements, if any, prescribed by the State authorities.
A foreign company which has established a Branch Office or other place of business in India under the provisions of Foreign Exchange Management (Establishment in India of Branch or Office or Other Place of Business) Regulations, 2000 (FEMA 22/2000-RB dated the 3rd May, 2000) can acquire immovable property in India which is necessary for or incidental to carrying on such activity, subject to the conditions stipulated in Regulation 5 of Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations, 2000 (Notification No. 21/2000-RBdated the 3rd May, 2000).
Apart from above, a foreign national who is residing in India for more than 182 days during the course of the preceding financial year for taking up employment or carrying on business / vocation or for any other purpose indicating his
intention to stay for an uncertain period can acquire immovable property in India as he would be a ‘person resident in India’ as per section 2(v) of FEMA, 1999. To be treated as a person resident in India under FEMA, a person has not only to satisfy the condition of the period of stay (being more than 182 days during the course of preceding financial year) but also his purpose of stay as well as the type of
Indian visa granted to him to clearly indicate the intention to stay in India for an uncertain period. In this regard, to be eligible, the intention to stay has to be unambiguously established with supporting documentation including visa.
As per the provisions contained in Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulation 21/2000 (Notification No. 21/2000-RB dated the 3rd May, 2000), an Indian citizen resident outside
India and a Person of Indian Origin resident outside India may acquire immovable property in India other than agricultural land, plantation or a farm house.
It has come to the notice of the Central Government that foreign nationals are buying immovable property illegally in some parts of the country, particularly
in Goa, which has raised concerns. Many organisations and social groups have also
made representations to the Central Government expressing their serious concerns in this regard. It has also been observed that foreign nationals coming to India
and staying beyond 182 days on a tourist or other visa meant for a certain period
are illegally acquiring immovable property in India in violation of the extant rules and regulations under FEMA.
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BSC/BY/GN-1/09
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