Laws for Possession of Immovable Property in India by a Person Resident Outside India

Under the law, the following categories can freely purchase immovable property in India:
i) Non-Resident Indian (NRI) – that is a citizen of India resident outside India.
ii) 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 held Indian passport or 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 law covers only purchase of residential and commercial property and not for purchase of land for agriculture or plantation or for farm house in India. NRI/PIO can not acquire agricultural land or plantation property or farm house in India. Since rules are not available to an NRI/PIO to acquire agricultural land or plantation property or 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. However, an NRI / PIO who has acquired residential or commercial property under law are not needed to file any documents with the Reserve Bank and there are no restrictions on the number of residential or commercial properties that can be purchased.

A foreign national of non-Indian origin can not be a second holder and can not acquire to immovable property purchased by NRI or PIO. But, he or 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 from Reserve Bank. Foreign national who is resident in India can purchase immovable property in India. But the person concerned would have to obtain the approvals, and fulfill 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.

A foreign company which has owned a Branch Office or other business place in India, in accordance with FERA / FEMA regulations, can acquire any immovable property in India, which is compulsory for or subsidiary 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 a certified Dealer as a security for other borrowings. On winding up of the business, the sale proceeds of such property can be sent back only with the prior approval of Reserve Bank. Further, possession of immovable property by entities that 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.Immovable property in India can be acquired by way of gift. NRIs and PIOs can easily acquire immovable property by way of gift from resident of India or from NRI or from PIO. However, the property can only be commercial or residential. Agricultural land or plantation property or farm house in India cannot be acquired by way of gift. A foreign national of non-Indian origin resident outside India cannot acquire any immovable property in India through gift.

A non-resident 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. A person resident outside can inherit immovable property from resident of India or outside India. However, the person from whom the property is inherited should have acquired the same in accordance with the foreign exchange policy appropriate at that time.

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