Under Sec. 31 of FERA act, the
NRI , Foreign citizen of Indian origins or non Indian origins can acquire immovable
properties in India either from local funds or remitted funds.
Sec 31 from FERA is reproduced
on acquisitions, holdings, etc. of immovable property in India-
(1) No person who is not a citizen of India and no company (other
than a banking company) which is not incorporated under any law in force in India shall
except with the previous general or special permission of the RBI , acquire or hold or
transfer or dispose of by sale, mortgage, lease, gift, settlement or otherwise an
immovable property situate in India :
nothing in this subsection shall apply to the acquisition or transfer of any such
immovable property by way of lease for a period not exceeding five years.
(2) Any person or company referred to in subsection (1) and
requiring a special permission under that subsection for acquiring or holding or
transferring or disposing by way of sale, lease, gift , settlement or otherwise any
immovable property situate in India may make an application to the RBI in such form and
containing such particulars as may be specified by the RBI.
(3) On receipt of an application under subsection (2) , the RBI may
after making such enquiry as it deems fit , either grant or refuse to grant such
permission applied for;
Provided that no
permission shall be refused unless the applicant has been given a reasonable opportunity
for making a representation in the matter;
that if before the expiry of a period of ninety days from the date on which the
application was received by the RBI , the RBI does not communicate to the applicant that
the permission so applied for has been refused, it shall be presumed that the RBI has
granted such permission.
computing such period of ninety days for the purposes of the second proviso , the period ,
if any taken by the Reserve Bank for giving an opportunity to the applicant for making a
representation under the first proviso shall be excluded.
(4) Every person and company referred to in Subsection (1) holding
at the commencement of this act any immovable property situate in India shall, before the
expiry of a period of ninety days from such commencement or such further period as the
Reserve Bank may allow in this behalf , make a declaration in such forms as may be
specified by the Reserve Bank regarding the immovable property or properties held by such
person or company.
Below is some of FAQ s
relating to the matter of investment in immovable properties:
Do non resident Indian citizens require permission of RBI to acquire
the residential / commercial property in India.
Q. Do foreign citizens of
Indian origins require permission of RBI to acquire the residential / commercial property
RBI has given the general permission to all the foreign citizens of Indian origins whether
Indian resident or not to acquire only the residential property in India for the purpose
of bonafide residential purposes. However separate permission is required to obtain the
permission for acquiring the commercial property.
How the considerations for acquiring the residential property in
India should be paid by the foreign citizens of Indian origins in case of general
The purchase consideration should be met out of the inward remittances sent thru the
normal banking channels or out of the funds maintained with the NRE/ FCNR accounts
maintained with the banks in India.
Q. What are the formalities
to be completed for buying the immovable property of residential nature in India under the
general permission category.
A. Filing of Form IPI7 with the Central office of RBI in
Mumbai within a period of 90 days of the payment of the final instalment or the purchase
of the property alongwith all the documents evidencing the purchase of property.
Q. Whether such property can
be sold without the permission of RBI and whether the funds released from such sale can be
repatriated outside India .
A. Yes the property can be sold without the
permission of RBI . However in case of the repatriation of the funds , the following
should be kept in mind:
In case of
immovable properties acquired on or after 26/5/93 , RBI considers the applications , RBI
considers applications for repatriation of sale proceeds upto the consideration amount
remitted in foreign exchange for the acquisition of such immovable properties upto two
such properties. The balance amount of sale proceeds shall be credited to the NRO
In case of
properties purchased prior to 26/5/93 sale proceeds shall be credited to the NRO accounts.
Q. Are any conditions
required to be fulfilled in case of repatriation of sale proceeds are desired.
A. The repatriation of sale proceeds are
considered only if the sale of such property takes place only after the expiry of three
years from the date of payment of the final instalment or the date of the final purchase
deed which ever is later.
Q. What are the procedures
required to be fulfilled seeking the repatriation of sale proceeds .
A. Applications for the necessary permission for
the remittance of sale proceeds should be made in Form IPI8 to the Central Office of RBI
within 90 days of date of the sale.
Q. Can foreign citizens of
Indian origin acquire or dispose off residential properties by way of gift.
A. Yes under the general permission given by the RBI , the
gift upto two properties can be made by the foreign citizens of Indian origin.
Q.Can foreign citizens of
Indian origin acquire the commercial property in India .
A. Yes, the procedure is same as applicable for
the purchase of the residential properties by the foreign citizens of Indian origins
except that this general permission is not applicable for the purchase of agricultural
land/ farm houses / plantation property .
Q. Is the procedure of
selling and the remitting the funds is same in these properties.
A. Yes , the procedure and conditions are the same
as explained above in case of residential properties.
Q. Can the properties
(residential/ commercial ) be given on rent if not required for immediate use.
A. Yes, though the income from rent shall be
credited to the NRO accounts of the person.
Q. Can NRIs raise the
loans for the acquisition of house/ flat for the residential purposes from the Financial
Q. Can authorised dealers
grant loans to NRIs for acquisitions of flats /house for the residential purposes.
A. Authorised dealers have been permitted to grant
loans to the NRIs on their return to India. This is subject to certain conditions.
Repayments of this loan should be made within a time frame of 15 years from the funds
lying in the NROs /NRE/FCNR accounts.