|Acquisition and sale of Immovable property in India by NRI,PIO,foreigners
The Foreign Exchange Management Act, 1999 (FEMA) came into force with effect from June 1, 2000. With the introduction of the new Act in place of FERA, certain structural changes were brought in. The Act consolidates and amends the law relating to foreign exchange to facilitate external trade and payments, and to promote the orderly development and maintenance of foreign exchange in India.
From the NRI perspective, FEMA broadly covers all matters related to foreign exchange, investment avenues for NRIs such as immovable property, bank deposits, government bonds, investment in shares, units and other securities, and foreign direct investment in India.
FEMA vests with the Reserve Bank of India, the sole authority to grant general or special permission for all foreign exchange related activities mentioned above.
Section 2 - The Act here provides clarity on several definitions and terms used in the context of foreign exchange. Starting with the identification of the Non-resident Indian and Persons of Indian origin, it defines "foreign exchange" and "foreign security" in sections 2(n) and 2(o) respectively of the Act. It describes at length the foreign exchange facilities and where one can buy foreign exchange in India. FEMA defines an authorised dealer, and addresses the permissible exchange allowed for a business trip, for studies and medical treatment abroad, forex for foreign travel, the use of an international credit card, and remittance facility.
Acquisition of immovable property for carrying on a permitted activity in India
A person resident outside India who has established a liaison office in India in accordance with FEMA regulations cannot purchase immovable property in India Practically; all liaison offices in India acquire premises on lease for not more than five years for which no permission is required from the RBI.
However, a person resident outside India who has established a branch office or other place of business in India in accordance with FEMA regulations can purchase immovable property in India provided it is necessary for, or incidental to, carrying on the activity he is engaged in and all applicable laws have been complied with.
Sale of immovable propertyin India
An NRI can sell residential/commercial property in India to a person resident in India an NRI or a PIO. However, a PIO can sell residential/commercial property in India only to a resident of India. He would need prior approval of the RBI for sale of residential/commercial property in India to an NRI or a PIO.
A foreign national of non-Indian origin whether resident in India or outside India would require prior approval of the RBI for sale of residential property in India acquired with the specific permission of the RBI to a person resident in India or outside India .
An NRI or a PIO may sell his agricultural land/plantation/ farm house in India to an Indian citizen resident in India. However, a foreign national of non-Indian origin, resident outside India, would require prior approval of the RBI to sell agricultural land/plantation/farm house acquired in India.
Gift of immovable property in India.
An NRI or a PIO may gift residential/commercial property in India to a person resident in India, an NRI or a PIO. Further, an NRI or a PIO may gift agricultural land/plantation/farm house in India to an Indian citizen resident in India.
However, a foreign national of non-Indian origin resident outside India would need prior approval of the RBI to gift agricultural land/plantation/ farm house acquired by him in India.
Acquisition by way of inheritance.
A person resident outside India can hold immovable property in India acquired by way of inheritance from a person resident in India. Further, with the approval of the RBI, he may hold immovable property in India acquired through inheritance from a person resident outside India, provided the bequeathor had acquired the property in accordance with FEMA or the foreign exchange law in force at the time of acquisition.