About Immovable Property aspects of NRI in India

An NRI residing outside India has permission to purchase the property in India.He can establish his office and business in any area. However, in such a case a declaration is required to be filed with the Reserve Bank, within 90 days of the acquisition of immovable property.

An Indian citizen residing outside India does not need any permission for buying property in India, but in cases of plantation, agricultural, farm house property there are some conditions which are supposed to be followed properly.

An NRI do not need any permission to transfer commercial,residential property legally acquired by him in India by way of gift to a person resident in India or to person resident outside India who is a citizen of India or to an NRI.

A person of Indian origin residing outside India or An NRI does not need any permission to acquire any immovable property in India by way of inheritance from a person resident outside India who had acquired such property 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 or from a person resident in India.

In the event of sale of immovable property, not including Plantation property, Agricultural land, Farm house in India by a person resident outside India, who is a person of Indian origin or citizen of India, the authorized dealer may allow repatriation of the sale proceeds outside India, provided All the following conditions are satisfied.

The immovable property was acquired by the seller in accordance with the provisions of the Exchange Control Rules/Regulations/Law in force at the time of acquisition, or the provisions of the Regulations framed under the Foreign Exchange Management Act, 1999.

After three years from the date of acquisition the sale takes place of such immovable property or from the date of payment of final installment of consideration for its acquisition, whichever is later

Some FAQ’S which are important to know with respect to NRI account are:

Q) Do NRI citizens need permission of Reserve Bank to acquire commercial / residential properly in India?
A) No.

Q) Do foreign citizens of Indian origin need any permission from Reserve Bank to purchase unbending property in India for their residential purpose?
A) Yes. However, to the foreign citizen of Indian origin, Reserve Bank has granted general permission whether resident in India or abroad, to purchase immovable property in India for their bona fide residential purpose. They are, no need to obtain separate permission of Reserve Bank.

Q) In what manner the purchase consideration for the residential immovable property should be paid by foreign citizens of Indian origin under the general permission?
A) The purchase consideration should be met either out of inward remittances in foreign exchange through normal banking channels or out of funds from NTE/FCNR accounts maintained with banks in India.

Q) What are the formalities required to be completed by foreign citizens of Indian origin for purchasing residential immovable property in India under the general permission?
A) Within a period of 90 days from the date of purchase of immovable property or final payment of purchasing, they are need to file a declaration in form IPI 7 with the Central Office of Reserve Bank at Mumbai, along with a certified copy of the document evidencing the transaction and bank certificate regarding the consideration paid.

Q) Can such property be sold without the permission of Reserve Bank?
A) Yes. property can be sold without permission of RB, because Reserve Bank has granted general permission for sale of such property. However, where the property is purchased by another foreign citizen of Indian origin, funds towards the purchase consideration should either be remitted to India or paid out of balances in FCNR / NRE / accounts.

Q) Can sale proceeds of such property if and when sold be remitted out of India?
A) In respect of residential properties purchased on or after 26th May,1993, Reserve Bank considers applications for repatriation of sale proceeds up to the consideration amount remitted in foreign exchange for the acquisition of the property for two such properties. The balance amount of sale proceeds if any or sale proceeds in respect of properties purchased prior to 26th May, 1993, will have to be credited to the ordinary non-resident rupee account of the owner of the property.

Q) Are any conditions required to be fulfilled if repatriation of sale proceeds is desired?
A) Applications for repatriation of sale proceeds are considered provided the sale takes place after three years from the date of final purchase deed or from the date of payment of final installment of consideration amount, whichever is later.

Q) What is the procedure for seeking such repatriation?
A) Applications for necessary permission for remittance of sale proceeds should be made in form IPI 8 to the Central Office of Reserve Bank at Mumbai within 90 days of the sale of the property.

Q) Can foreign citizens of Indian origin acquire or dispose of residential property by way of gift?
A) Yes. Reserve Bank has granted general permission to foreign citizens of Indian origin to acquire or dispose of properties up to two houses by way of gift from or to a relative who may be an Indian citizen or a person of Indian origin whether resident in India or not,provided gift tax has been paid.

Q) Can foreign citizens of Indian origin acquire commercial properties in India?
A) Yes. Under the general permission given by Reserve Bank properties other than agricultural land/farm house/plantation property can be acquired by foreign citizens of Indian origin provided the purchase consideration is met either out of inward remittances in foreign exchange through normal banking channels or out of funds from the purchasers' NRE/FCNR accounts maintained with banks in India and a declaration is submitted to the Central Office of Reserve Bank in form IPI 7 within a period of 90 days from the date of purchase of the property/final payment of purchase consideration.

Q) Can sale proceeds of such property be remitted out of India?
A) Yes. Repatriation of original investment in respect of properties purchased by foreign citizens of Indian origin on or after 26th May 1993 will be allowed to be remitted up to the consideration amount originally remitted from abroad provided the property is sold after a period of three years from the date of the final purchase deed or from the date of payment of final installment of consideration amount, whichever is later. Applications for the purpose are required to be made to the Central Office of Reserve Bank within 90 days of the sale of property in form IPI 8.

Q) Most developers demand a Power of Attorney in their favor while purchasing real estate , is there a way to avoid it?
A) One can choose not to grant the Power of Attorney (POA) to the developers. They can take a time as they need to mailing the documentation to your foreign resedence. A good compromise is to grant the POA to the builder only for specific necessary items.

Q) While applying for a HDFC/LIC loan, what are the options available for obtaining guarantors?
A) One will need a guarantor for a loan collateral security. The guarantor will have to demonstrate appropriate net worth to cover for the loan. Where the loan issueer OR branch of loan their are need of guarantor usually. Talk to loan issuers they will work something out for NRIs and foreign banks.

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