India Investment Property

There are some queries regarding property dealing with NRI, which always create confusion. The most confusing matter is that when Reserve Bank’s permission is mandatory and when there is no need of all that stuff. Non-resident Indian do not require permission from the Reserve Bank to acquire residential or commercial property. The Reserve Bank has granted general permission to foreign citizens of Indian origin, whether resident in India or abroad, to purchase immovable property in India for their bona fide residential purpose. That’s why permission from the Reserve Bank is not required.

The purchase consideration for residential immovable property should be met either out of inward remittances in foreign exchange through normal banking channels or out of funds from NRE or FCNR accounts maintained with banks in India.

Foreign citizens of Indian origin needed to file a declaration in Form IPI 7 with the Central Office of Reserve Bank, Mumbai within 90 days from the date of purchase of immovable property, or final payment of purchase consideration. They will also need a certified copy of the document for the proof of transaction and a bank certificate regarding the consideration paid. Such property can be sold without the permission of Reserve Bank. If foreign citizen of Indian origin purchases the property, funds towards the purchase consideration should either be remitted to India or paid out of balances in NRE or FCNR accounts. Reserve Bank considers applications for repatriation of sale proceeds up to the consideration amount remitted in foreign exchange for the acquisition of the property for two such properties, purchased on or after 26^th May 1993. The balance amount of sale proceeds or sale proceeds in respect of properties purchased prior to 26th May 1993 will have to be credited to the ordinary non-resident rupee account of the owner of the property.

As far as the matter of repatriation is concerned, applications for repatriation of sale proceeds are considered provided the sale takes place after three years from the date of final purchase deed or from the date of payment of final installment of consideration amount, whichever is later. Applications for necessary permission for remittance of sale proceeds should be made in Form IPI 8 to the Central Office of Reserve Bank at Mumbai within 90 days of the sale of the property.

Reserve Bank has granted general permission to foreign citizens of Indian origin to attain or dispose of properties up to two houses by way of gift from a relative or to a relative, who may be an Indian citizen or a person of Indian origin whether resident in India or not, subject to compliance with applicable tax laws. Immovable property held in India can also be transferred by way of gift to registered charitable trusts or organizations in India. General permission has been granted by Reserve Bank to non-resident persons of Indian origin regarding this. Foreign citizens of Indian origin can acquire commercial properties in India. Under the general permission granted by the Reserve Bank, properties other than agricultural land, farm house, plantation property can be acquired by foreign citizens of Indian origin provided the purchase consideration is met either out of inward transfer of funds in foreign exchange through normal banking channels or out of funds from the purchasers’ NRE or FCNR accounts maintained with banks in India. A declaration is submitted to the Central Office of Reserve Bank in Form IPI 7 within a period of 90 days from the date of purchase of the property or final payment of purchase consideration.