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I.
Acquisition of Immovable Property in India
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Q 1. |
Who can purchase immovable property in
India? |
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A 1. |
Under the general permission available, the
following categories can freely purchase
immovable property in India : 0.Non-Resident
Indian (NRI)- that is a citizen of India
resident outside India0.Person of Indian
Origin (PIO)- that is an individual (not
being a citizen of Pakistan or Bangladesh or
Sri Lanka or Afghanistan or China or Iran or
Nepal or Bhutan), who 0.at any time, held
Indian passport, or0.who or either of whose
father or grandfather was a citizen of India
by virtue of the Constitution of India or
the Citizenship Act, 1955 (57 of 1955).The
general permission, however, covers only
purchase of residential and commercial
property and not for purchase of
agricultural land / plantation property /
farm house in India. |
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Q 2. |
Whether NRI/PIO can acquire agricultural land/
plantation property / farm house in India? |
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A 2. |
No. Since
general permission is not available to NRI/PIO
to acquire agricultural land/ plantation property / farm
house in India, such proposals will require specific
approval of Reserve Bank and the proposals are
considered in consultation with the Government of India. |
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Q 3. |
Do any documents need to be filed with Reserve Bank
of India after purchase? |
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A 3. |
No. An NRI / PIO who has purchased residential /
commercial property under general permission, is not
required to file any documents with the Reserve Bank. |
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Q 4. |
How many residential / commercial properties
can NRI / PIO purchase under the general permission?
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A 4. |
There are no restrictions on the number of
residential / commercial properties that can
be purchased. |
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Q 5. |
Can a foreign national of non-Indian
origin be a second holder to immovable
property purchased by NRI /
PIO? |
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A 5. |
No. |
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Q 6. |
Can a foreign national of non-Indian origin
resident outside India purchase immovable property in
India? |
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A 6. |
No. A foreign national of non-Indian origin,
resident outside India cannot purchase any
immovable property in India. But, he/she may
take residential accommodation on lease
provided the period of lease does not exceed
five years. In such cases, there is no
requirement of taking any permission of or
reporting to Reserve Bank. |
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Q 7. |
Can a foreign national who is a person
resident in India purchase immovable
property in India? |
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A 7. |
Yes, but the person concerned would have to
obtain the approvals, and fulfil the requirements if any,
prescribed by other authorities, such as the concerned
State Government, etc However, a foreign national
resident in India who is a citizen of Pakistan,
Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal
and Bhutan would require prior approval of Reserve Bank.
Such requests are considered by Reserve Bank in
consultation with the Government of India. |
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Q 8. |
Can an office of a foreign company purchase
immovable property in India? |
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A 8. |
A foreign company which has established a
Branch Office or other place of business in
India, in accordance with FERA / FEMA regulations, can acquire any
immovable property in India, which is necessary for or
incidental to carrying on such activity. The payment for
acquiring such a property should be made by way of
foreign inward remittance through proper banking
channel. A declaration in form IPI should be filed with
Reserve Bank within ninety days from the date of
acquiring the property. Such a property can also be
mortgaged with an Authorised Dealer as a security for
other borrowings. On winding up of the business, the
sale proceeds of such property can be repatriated only
with the prior approval of Reserve Bank. Further,
acquisition of immovable property by entities who had
set up Branch Offices in India and incorporated in
Pakistan, Bangladesh, Sri Lanka, Afghanistan, China,
Iran, Nepal and Bhutan would require prior approval of
Reserve Bank to acquire such immovable property.
However, if the foreign company has established a
Liaison Office, it can not acquire immovable property .
In such cases, Liaison Offices, can take property by way
of lease not exceeding 5 years. |
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Q 9. |
Whether immovable property in India can be acquired
by way of gift ? |
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A 9. |
(a) Yes, NRIs and PIOs can freely acquire immovable
property by way of gift either from 0.a person resident
in India or0.an NRI or0.a PIO.However, the property can
only be commercial or residential. Agricultural land /
plantation property / farm house in India cannot be
acquired by way of gift.
(b) A foreign national of non-Indian origin resident
outside India cannot acquire any immovable property in
India through gift. |
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Q 10. |
Whether a non-resident can inherit immovable
property in India? |
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A 10. |
Yes, a person resident outside India i.e.
0.an NRI0.a PIO and0.a foreign national of non-Indian origin can
inherit and hold immovable property in India from a
person who was resident in India. However, a citizen of
Pakistan, Bangladesh, Sri Lanka, Afghanistan, China,
Iran, Nepal and Bhutan should seek specific approval of
Reserve Bank. |
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Q 11. |
From whom can the non-resident inherit immovable
property? |
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A 11. |
A person resident outside India (i.e. NRI or PIO or
foreign national of non-Indian origin) can inherit
immovable property from 0.a person resident in India.0.a
person resident outside IndiaHowever, the person from
whom the property is inherited should have acquired the
same in accordance with the foreign exchange regulations
applicable at that point of time. |
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II. Transfer of immovable property in India
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(i) Transfer by Sale |
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Q 12. |
Can an NRI / PIO / foreign national sell his
residential / commercial property? |
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A 12. |
(a) NRI can sell property in India to- 0.a person
resident in India or0.an NRI or0.a PIO.
(b) PIO can sell
property in India to- 0.a person resident in India.0.an
NRI or0.a PIO - with the prior approval of Reserve
Bank(c) Foreign national of non-Indian origin including
a citizen of Pakistan or Bangaladesh or Sri Lanka or
Afghanistan or China or Iran or Nepal or Bhutan can sell
property in India with prior approval of Reserve Bank
to- 0.a person resident in India0.an NRI0.a PIO |
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(ii) Transfer by gift |
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Q 13. |
Can an agricultural land / plantation
property / farm house in India owned / held
by a non-resident be sold? |
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A 13. |
0.NRI / PIO may sell agricultural land
/plantation property/farm house to a person
resident in India who is a citizen of
India.0.Foreign national of non-Indian
origin resident outside India would need
prior approval of Reserve Bank to sell
agricultural land/plantation property/ farm
house in India |
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Q 14. |
Can a
non-resident gift his residential /
commercial property? |
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A 14. |
NRI / PIO may gift residential / commercial property
to - 0.person resident in India or0.an NRI or0.PIO.(b)
foreign national of non-Indian origin needs prior
approval of Reserve Bank. |
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Q 15. |
Can an NRI / PIO / Foreign national holding an
agricultural land / plantation property / farm house in
India gift the same? |
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A 15. |
(a) NRI / PIO can gift but only to a person resident
in India who is a citizen of India.
(b) foreign national of non-Indian origin needs prior
approval of Reserve Bank |
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(iii) Transfer through mortgage |
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Q 16. |
Can
residential / commercial property be
mortgaged? |
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A 16. |
(i) NRI / PIO can mortgage to : 0.an authorised
dealer / housing finance institution in India - without
the approval of Reserve Bank.0.a party abroad - with
prior approval of Reserve Bank.
(ii) a foreign national
of non-Indian origin can mortgage only with prior
approval of Reserve Bank.
(iii) a foreign company which has established a Branch
Office or other place of business in accordance with
FERA/FEMA regulations has general permission to mortgage
the property with an authorized dealer in India. |
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III. Mode of payment for purchase
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Q 17. |
How can an NRI / PIO make payment for purchase of
residential / commercial property in India ? |
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A 17. |
Payment can be made by NRI / PIO out of 0.funds
remitted to India through normal banking channel
or0.funds held in NRE / FCNR (B) / NRO account
maintained in IndiaNo payment can be made either by
traveller's cheque or by foreign currency notes.
No payment can be made outside India. |
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Q 18. |
What shall
be the option if there is refund of
application money / payment made by the
building agencies / seller because of
non-allotment of flat / plot / cancellation
of bookings / contracts ? |
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A 18. |
The amount of refund, together with interest (net of
income tax) can be credited to NRE account. This is
subject to condition that the original payment was made
by way of inward remittance or by debit to NRE / FCNR
(B) account. (Please refer to A.P. (DIR) Series Circular
No. 46 dated 12.11.2002) |
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Q 19. |
Can NRI / PIO avail of loan from an authorised
dealer for acquiring flat / house in India for his own
residential use against the security of funds held in
his NRE Fixed Deposit account / FCNR (B) account?
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A 19. |
Yes, such
loans are subject to the terms and
conditions as laid down in Schedules 1 and 2
to Notification No. FEMA 5/2000-RB dated May 3, 2000 as
amended from time to time. However, banks cannot grant
fresh loans or renew existing loans in excess of Rupees
20 lakh against NRE and FCNR(B) deposits either to the
depositors or to third parties [cf. A.P. (DIR Series)
Circular No. 29 dated January 31, 2007].
Such loans can be repaid 0.by way of inward remittance
through normal banking channel or0.by debit to his NRE /
FCNR (B) / NRO account or0.out of rental income from
such property.0.by the borrower's close relatives, as
defined in section 6 of the Companies Act, 1956, through
their account in India by crediting the borrower's loan
account.Repatriation : 0.In case the amount has been
received from inward remittance or debit to NRE/FCNR(B)/NRO
account for acquiring the property or for repayment of
the loan, the principal amount can be repatriated
outside India.
For this purpose, repatriation outside India means the
buying or drawing of foreign exchange from an authorised
dealer in India and remitting it outside India through
normal banking channels or crediting it to an account
denominated in foreign currency or to an account in
Indian currency maintained with an authorised dealer
from which it can be converted in foreign currency0.in
case the property is acquired out of Rupee resources
and/or the loan is repaid by close relatives in India (
as defined in Section 6 of the Companies Act, 1956), the
amount can be credited to the NRO account of the NRI/PIO.
The amount of capital gains, if any, arising out of sale
of the property can also be credited to the NRO account.
NRI/PIO are also allowed by the Authorised Dealers to
repatriate an amount up to USD 1 million per financial
year out of the balance in the NRO account for all
bonafide purposes to the satisfaction of the authorised
dealers, subject to tax compliance. |
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Q 20. |
Can NRI / PIO, avail of housing loan in rupees
from an authorised dealer or housing finance institution
in India approved by the National Housing Bank for
purchase of residential accommodation or for the purpose
of repairs / renovation / improvement of residential
accommodation ? How can such loan be repaid? |
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A 20. |
Yes, NRI/PIO can avail of housing loan in rupees from
an Authorised Dealer or housing finance institution
subject to certain terms and conditions. (Please refer
to Regulation 8 of Notification No. FEMA 4/2000-RB dated
3.5.2000 and A.P. (DIR) Series Circular No. 95 dated
April 26, 2003).
Such a loan can be repaid 0.by way of inward remittance
through normal banking channel or0.by debit to his NRE /
FCNR (B) / NRO account or0.out of rental income from
such property.0.by the borrower's close relatives, as
defined in section 6 of the Companies Act, 1956, through
their account in India by crediting the borrower's loan
account. |
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Q 21. |
Can NRI / PIO avail of housing loan in rupees from
his employer in India? |
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A 21. |
Yes, subject to certain terms and conditions (Please
refer to Regulation 8A of Notification No. FEMA
4/2000-RB dated May 3, 2000 and A.P. (DIR Series)
Circular No.27 dated October 10, 2003). |
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IV. Repatriation of sale proceeds of residential /
commercial property purchased by NRI / PIO
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Q 22. |
Can NRI / PIO repatriate the sale proceeds of
immovable property? If so, what are the terms?
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A 22. |
NRI / PIO may repatriate the sale proceeds of
immovable property in India 0.If the property was
acquired out of foreign exchange sources i.e. remitted
through normal banking channels / by debit to NRE / FCNR
(B) account
The amount to be repatriated should not exceed the
amount paid for the property: 0.in foreign exchange
received through normal banking channel or0.by debit to
NRE account(foreign currency equivalent, as on the date
of payment) or debit to FCNR (B) account.Repatriation of
sale proceeds of residential property purchased by NRI /
PIO out of foreign exchange is restricted to not more
than two such properties. Capital gains, if any, may be
credited to the NRO account from where the NRI/PIO may
repatriate an amount up to USD one million, per
financial year, as discussed below. 0.If the property
was acquired out of Rupee sources, NRI or PIO may remit
an amount up to USD one million, per financial year, out
of the balances held in the NRO account (inclusive of
sale proceeds of assets acquired by way of inheritance
or settlement), for all the bonafide purposes to the
satisfaction of the Authorized Dealer bank and subject
to tax compliance. |
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Q 23. |
Can an NRI/PIO repatriate the proceeds in case the
sale proceed was deposited in NRO account? |
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A 23. |
From the NRO account, NRI/PIO may repatriate up to
USD one million per financial year (April-March), which
would also include the sale proceeds of immovable
property. |
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Q 24. |
If a Rupee loan was taken by NRI/PIO from
Authorised Dealer or housing finance institution for
purchase of residential property can an NRI / PIO
repatriate the sale proceeds of such property?
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A 24. |
Yes, provided the loan has been subsequently
repaid by remitting funds from abroad or by
debit to NRE/FCNR(B)
accounts (Please see A.P. (DIR) Series Circular No. 101
dated 5.5.2003) |
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Q 25. |
If the property was purchased from foreign
inward remittance or from NRE / FCNR (B) account, can the sale
proceeds of property be repatriated immediately?
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A 25. |
Yes. |
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Q 26. |
Is there any restriction on number of
residential properties in respect of which
sale proceeds can be repatriated by NRI / PIO?
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A 26. |
Yes, sale proceeds of not more than two
residential properties can be repatriated. |
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Q 27. |
If the immovable property was acquired by
way of gift by the NRI/PIO, can he repatriate abroad the funds
from sale? |
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A 27. |
The sale proceeds of immovable property
acquired by way of gift should be credited
to NRO account only. From
the balance in the NRO account, NRI/PIO may remit up to
USD one million, per financial year, subject to the
satisfaction of Authorised Dealer and payment of
applicable taxes. |
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Q 28. |
If the immovable property was received as
inheritance by the NRI/PIO can he repatriate the sale
proceeds? |
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A 28. |
Yes, general permission is available to the NRIs/PIO
to repatriate the sale proceeds of the immovable
property inherited from a person resident in India. NRIs/PIO
may repatriate an amount not exceeding USD one million,
per financial year, on production of documentary
evidence in support of acquisition / inheritance of
assets, an undertaking by the remitter and certificate
by a Chartered Accountant in the formats prescribed by
the Central Board of Direct Taxes vide their Circular
No.10/2002 dated October 9, 2002. [cf. A. P. (DIR
Series) Circular No.56 dated November 26, 2002].
In case of a foreign national, sale proceeds can also be
repatriated even if the property is inherited from a
person resident outside India. But this is allowed only
with prior approval of Reserve Bank. The foreign
national has to approach Reserve Bank with documentary
evidence in support of inheritance of the immovable
property and the undertaking and the C.A. Certificate as
mentioned above.
The general permission for repatriation of sale proceeds
of immovable property is not available to a citizen of
Pakistan, Bangladesh, Sri Lanka, China, Afghanistan and
Iran and he has to seek specific approval of Reserve
Bank.
As FEMA specifically permits transactions only in Indian
Rupees with citizens of Nepal and Bhutan, the question
of repatriation of the sale proceeds in foreign exchange
to Nepal and Bhutan would not arise. |
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V. Provisions for Foreign Embassies / Diplomats /
Consulate Generals
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Q 29. |
Can Foreign Embassies / Diplomats /
Consulate General purchase / sell immovable
property in India ? |
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A 29. |
Yes, Foreign Embassies / Diplomats /
Consulate Generals can purchase and sell any
immovable property other than agricultural
land / plantation property / farm house in
India with prior clearance from the
Government of India, Ministry of External
Affairs. The payment should be made by
foreign inward remittance through normal
banking channel. |
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VI. Other Issues
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Q 30. |
Can NRI / PIO rent out the residential /
commercial property purchased out of foreign exchange /
rupee funds? |
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A 30. |
Yes, NRI/PIO can rent out the property without the
approval of the Reserve Bank. Rent received can be
credited to NRO / NRE account or remitted abroad. Powers
have been delegated to the Authorised Dealers to allow
repatriation of current income like rent, dividend,
pension, interest, etc. of NRIs/PIO who do not maintain
an NRO account in India based on an appropriate
certification by a Chartered Accountant, certifying that
the amount proposed to be remitted is eligible for
remittance and that applicable taxes have been
paid/provided for.[cf. A.P. (DIR Series) Circular No. 45
dated May 14, 2002]. |
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Q 31. |
Can a person who had bought immovable
property when he was a resident, continue to
hold such property even after becoming an NRI/PIO?
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A 31. |
Yes, he can continue to hold the residential
/ commercial property / agricultural land/
plantation property / farm house in India
without the approval of the Reserve Bank. |
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Q 32. |
In which account can the sale proceeds of
such immovable property be credited ? |
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A 32. |
The sale proceeds may be credited to NRO account. |
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Q 33. |
Can the sale proceeds of the immovable
property referred to in Q.No. 31 be remitted abroad ? |
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A 33. |
Yes, provided the amount to be remitted does
not exceed USD one million per financial year, for all
bonafide purposes to the satisfaction of Authorised
Dealers and subject to tax compliance. |
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Q 34. |
Can foreign nationals of non-Indian origin
resident in India or outside India who had
earlier acquired immovable property under FERA with specific
approval of Reserve Bank continue to hold the same? Can
they transfer such property? |
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A 34. |
Yes, they may continue to hold the immovable
property. However, they can transfer the
property only with the prior approval of
Reserve Bank. |
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Q 35. |
Is a resident in India governed by the
provisions of Foreign Exchange Management
(Acquisition and transfer of immovable
property in India) Regulations, 2000? |
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A 35. |
A person resident in India who is a citizen
of Pakistan or Bangladesh or Sri Lanka or
Afghanistan or China or Iran or Nepal or
Bhutan is governed by the provisions of
Foreign Exchange Management (Acquisition and
Transfer of Immovable Property in India)
Regulations, 2000 ie. he would require prior approval of
Reserve Bank for acquisition and transfer of immovable
property in India even though he is resident in India.
Such requests are considered by Reserve Bank in
consultation with the Government in India. |
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Definitions
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Q 36. |
Where are the terms a `person resident in
India' and a `person resident outside India'
defined ? |
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A 36. |
Section 2 (v) and Section 2 (w) of the FEMA, 1999
defines `person resident in India' and a `person
resident outside India' respectively. |
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Q 37. |
What is meant by a person resident in India
? |
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A 37. |
Under FEMA, a person resident in India is defined as
a person residing in India for more than one hundred and
eighty-two days during the course of the preceding
financial year (April-March) and who has come to or
stays in India either for taking up employment, carrying
on business or vocation in India or for any other
purpose, that would indicate his intention to stay in
India for an uncertain period. In other words, 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 the preceding financial year) but has also to
comply with the condition of the purpose / intention of
stay. |
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Q 38. |
What is meant by a person resident outside
India ? |
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A 38. |
The Act defines a 'a person resident outside
India' as a person who is not a person
resident in India' (As defined in Q. above) |
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Q 39. |
Who can determine whether a person is
resident in India or not? |
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A 39. |
Reserve Bank does not determine the
residential status. Under FEMA, residential status is determined by
operation of law. The onus is on an individual to prove
his / her residential status, if questioned by any
authority. |
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Q 40. |
If a foreign national is a person resident
in India as per the provisions of Section
2(v) (i)B of the
FEMA, 1999, does he require approval of Reserve Bank to
purchase any immovable property in India ? |
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A 40. |
A foreign national resident in India does
not require approval from Reserve Bank from
FEMA angle, but approvals if any required in
terms of regulations prescribed by other
authorities such as the concerned State
Government etc. will have to be obtained by
him / her. However, a foreign national
resident in India who is a citizen of
Pakistan, Bangladesh, Sri Lanka,
Afghanistan, China, Iran, Nepal and Bhutan
requires specific prior approval of Reserve
Bank. |
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