Purchase and Sale of Immovable Property in India by NRI / OCI

NRIs/OCIs play a very important role in our economy, considering the same in mind, RBI has allowed the investment in immovable property by NRIs/OCIs in India, subject to certain conditions. The law governing the same is outlined in Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations, 2018. The regulations have defined the “Non-Resident Indian (NRI)” as an Indian citizen resident outside India and an “Overseas Citizen of India (OCI)” as a person resident outside India who is registered as an Overseas Citizen of India Cardholder under the Citizenship Act, 1955.

• ACQUISITION OF IMMOVABLE PROPERTY IN INDIA

NRI/OCIs are permitted to invest in both residential and commercial properties. However, there are a few restrictions as to the investment in (a) agricultural land or (b) plantation property or (c) farmhouse property; (hereinafter called “Restricted Property”). The immovable property in India can be acquired by the NRI/OCIs either by direct purchase or a gift or inheritance. The rules governing the acquisition of immovable property in different modes are listed below:                            

• PURCHASE BY NRI/OCI (OF NON-RESTRICTED IMMOVABLE PROPERTY)

The NRIs/OCIs may purchase immovable property other than the Restricted Property i.e. (a) agricultural land or (b) plantation property or (c) farmhouse property by paying consideration out of the funds:

• funds received in India through banking channels by way of inward remittance from any place outside India or
• funds held in any non-resident account permitted under FEMA. 

Care should be taken that no payment can be made including the part payment or down payment by Pay pal, traveller’s cheque, foreign currency or any other mode. 

• PURCHASE BY NRI/OCI JOINTLY WITH THEIR SPOUSES:

The joint acquisition has also been allowed by the spouse of an NRI/OCI of immovable property other than restricted property i.e. (a) agricultural land or (b) plantation property or (c) farmhouse property, subject to the following conditions:

• Consideration: shall be paid from (i) funds received in India through banking channels, or (ii) funds held in any non-resident account maintained in accordance with the provisions of the Act;
• Marriage: the marriage has been registered and subsisted for a continuous period of not less than two years immediately preceding the acquisition of such property;
• Prohibition: The non-resident spouse is not otherwise prohibited from such acquisition.

• GIFT (FOR NON-RESTRICTED IMMOVABLE PROPERTY)

An NRI/OCI can acquire properties other than the Restricted Properties i.e. (a) agricultural land or (b) plantation property or (c) farmhouse property from a Relative, who is either

• a person resident in India; or
• NRI/OCI 

• INHERITANCE (FOR BOTH RESTRICTED AND UNRESTRICTED IMMOVABLE PROPERTY)

NRIs/OCIs may acquire both non-restricted as well as (a) agricultural land or (b) plantation property or (c) farmhouse property 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; or
• from a person resident in India; 

• TRANSFER OF IMMOVABLE PROPERTY

NRI/OCI are permitted to transfer:

• Restricted Properties i.e. (a) agricultural land or (b) plantation property or (c) farmhouse property to a person resident in India;
• Non-Restricted Property to an NRI or OCI or a person resident in India. 

• REPATRIATION OF SALE PROCEEDS

Repatriation of sale proceeds is subject to the following conditions: 

• Repatriation of sale proceeds of immovable property would require the specific permission from RBI if a person has acquired immovable property under section 6(5) of the FEMA when he was resident in India or inherited from a person who was resident in India;

• Further, repatriation of the sale proceeds of immovable property other than restricted properties by NRIs or OCIs are subject to the following conditions:
• the immovable property should have been acquired by the NRI/OCI as per the foreign exchange law in force at the time of his acquisition;
• the amount for acquisition of the immovable property should have been paid in foreign exchange received as per the applicable law;
• in the case of residential property, the repatriation of sale proceeds is restricted to not more than two such properties;

Therefore it is very important that the NRI/OCI consider the above conditions before investing and taking an exit from India.