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The Overseas Indian Citizenship (OCI) Scheme was formerly launched in January, 2006 by amending the Citizenship Act, 1955 to facilitate life long visa free travel to India and certain economic education educational and cultural benefits to Persons of Indian Origin (PIOs). As on on 30th June, 2011, a total number of 8,61,726 PIOs have been registered as OCIs.

Voting Rights To NRIs
The Representation of Peoples Amendment Act 2010 has been passed which gives voting rights to overseas Indian passport holders. Notification dated 3rd February 2011 has been issued allowing overseas electors for their names to be included in the roll pertaining to their locality in which his place of residence in India as mentioned in his passport is located. Overseas electors are required to apply in the requisite form alongwith copies of all the documents mentioned in the said form to the concerned registration officer directly or send the application to him by post.
The Rules allow self-attestation of documents by the applicants.

Overseas Workers Resource Centre
To educate the intending emigrants about the risks involved in irregular migration and the precautions to be taken while seeking overseas employment and to provide need based information to overseas emigrants an Overseas Workers Resource Centre (OWRC) – a toll free 24×7 helpline has been set up. The helpline provides information within India at 100 11 1900. It is also accessible for information seekers from UAE at 8000911913. The helpline can also be reached from anywhere in the world at 91-11-40503090.

Indian Council Of Overseas Employment
Indian Council of Overseas Employment is initiating a number of projects in collaboration with IOM. One such mega project is skill development initiative for potential migrants from the North-East States of India. The project will be implemented by the IOM under the existing agreement with the Government in Assam, Arunachal Pradesh, Meghalaya, Manipur, Mizoram, Nagaland, Sikkim and Tripura.

Indian Community Welfare Fund Indian Community Welfare Fund which was originally for all ICE countries has been extended to 48 countries. Since this scheme is found to be very useful by the Indian Missions in mitigating the suffering of Overseas Indian community, particularly workers and women, it has been decided to extend this fund to all the Missions around the world.

Overseas Indian Facilitation Centre
The OIFC, an institution established by the Ministry of Overseas Indian Affairs has compiled ‘Homeward Bound – a regulatory & investment handbook for Overseas Indians’, which was released by the Prime Minister of India, during the 9th Pravasi Bharatiya Divas, held from 7th to 9th January, 2011 in New Delhi. This document would further facilitate Overseas Indian’s economic engagements with India.
The Centre, in its endeavour to strengthen the Diaspora’s economic inter linkages with India, continues to seek to encourage the Overseas Indians to make use of its platform to connect with India.

Indian Development Foundation Of Overseas Indians
Indian Development Foundation of Overseas Indians is a not-for-profit trust registered to provide a credible window for Overseas Indian Philanthropy in India’s social development. The foundation is managed by an eminent Board of Trustees. The mandate of the foundation is to lead Overseas Indians philanthropic capital into Indian’s social sector by forging partnerships between donors and credible non-Government and non-profit voluntary organisations working in the social sector in India.

Global Indian Network Of Knowledge
The enlargement of the Global Indian Network of Knowledge called Global-INK. This electronic platform will enable us to draw upon the reservoir of knowledge, expertise and skills that the Overseas Indian community possesses to catalyze the social development effort in India.

Prime Minister’s Global Advisory Council Of Overseas Indians
The Ministry has constituted the Prime Minister’s Global Advisory Council of People of Indian Origin to draw upon the experience and knowledge of eminent people of Indian origin in diverse fields from across the world.
The meeting of PM’s Global Advisory Council of Overseas Indians was held on 7th January, 2011 at New Delhi. 14 eminent Overseas Indians, who are the member of the Council attended the meeting and made a wide range of suggestions in the area of education, health and development issues underlining the role of Overseas Indians.

E-Migrate Project
The Ministry has proposed implementing a comprehensive e-governance project on migration to make the migration process simple, transparent and humane. The ultimate benefit of the project would be greater convenience, effective protection and better welfare of the emigrant. The subsidiary benefits would include greater levels of efficiency, transparency and accountability in the functioning of the offices of the Protector General of Emigrants (PGE) and the Protectors of Emigrants (POE), real-time updation and quick access to reliable emigrant data, management information system to support decision making, computerized management of recruiting agent system, performance rating of protectors of emigrants, recruiting agents and employers, effective monitoring of emigration offences, interlinking of stakeholders and online validation of information across stakeholders. The project is expected to mitigate individual discretion, harassment of emigrants and corruption. It would also provide useful tools and data for policy functions, periodical publications and grievance redressal.(PIB Features)

*Inputs from the Ministry of Overseas Indian Affairs

After taking a dip following the financial crisis of 2008, property prices have bounced back and how. Despite the high price rise, more and more NRIs are keen to buy properties in India. Who can buy property in India? An NRI who is a citizen of India but residing outside, or a Person of Indian Origin (PIO). A PIO is defined as an individual (not a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan) who has held an Indian passport at any time or whose father or mother or grandfather or grandmother was a citizen of India.

The laws related to immovable property in India are complex and are not uniform from one state to another, said Rajan D. Gupta, a senior lawyer and a qualified accountant with SRGR Law Offices.

A major concern is to determine the clear and marketable title of the land under question and to ensure that the land under question is free from any encumbrances such as litigation, prior mortgages, any third party interest or rights and any governmental actions such as compulsory acquisition proceedings.

In case of properties, especially agricultural properties, which are owned by farming families, there are a number of family law issues which again are myriad as there are a number of religions in India and most of them have their own characteristic legal frameworks.To ward off such issues and be almost certain about the legal status of the property to be acquired, it is advisable that a competent legal professional must be engaged to conduct a title check and due diligence of the property to be acquired. It is also important to engage such a professional who practises within the jurisdiction where the property is situated so that he/she is aware of the local legal compliances and issues.

NRIs face many legal tangles about their properties in India. These relate to the purchase, transfer and ownership of property, power of attorney, management and eviction of tenants, remittance of the sale proceeds, illegal grabbing of their properties and other related issues.

Their legal cases have been pending in the courts for years, indeed decades. If an NRI is fighting a case with a resident Indian, he is at a disadvantage because the Indian is in no hurry while the NRI has limited time to attend to his case during his visit to India or make special trips for court appearances.

Shri Anurag Chaudhary (applicant), a software engineer, was an employee of NIIT Technologies Limited (NIIT – India). NIIT India assigned the applicant to work in its group company NIIT Technologies Inc. (NIIT USA) for a specific period. The applicant left India on 31 March 2008 for the purpose of employment with NIIT USA and returned to India on 29 November 2008. Accordingly, his stay in India was 123 days during the financial year 2008-09 (F.Y. 2008-09).

In order to determine whether the income earned by the applicant by way of salary from his employment with NIIT USA during the F.Y. 2008-09 was liable to tax under section 5(1)(c) or any other provision of the Income Tax Act, 1961 (Act), the applicant sought an advance ruling from the Authority for Advance Ruling (AAR).

AAR Observation and Ruling:

» The AAR has observed that for the income earned by the applicant on account of employment outside India to be taxable in India, the applicant should have been resident of India during the relevant previous year.
» Section 6(1) of the Act, which determines the status of an individual as resident in India, requires that either the applicant should have been in India for 182 days [vide clause (a)] or for 60 days or more, if he was in India for 365 days or more in four preceding years [vide clause (c)]. Further, explanation to Section 6(1) of the Act provides that a citizen of India who leaves India for the purpose of employment outside India can be considered to be resident of India, if he has been in India for 182 days or more even though he may have been in India for more than 365 days in four preceding years.
» If the applicant has spent less than 182 days in India during a previous year and was outside India for the purposes of employment, then regardless of his being in India for 365 days or more during four preceding previous years, the applicant cannot be treated as a resident of India.
» If the applicant was not present in India for more than 365 days in 4 preceding years, then clause (a) of sub-section (1) of section 6 would apply and it requires stay of 182 days or more in India to be treated as resident. On the other hand, if the applicant was present in India for 365 days or more during four preceding years, then clause (c) of sub-section (1) to section 6 read with Explanation (a) would apply and it requires stay of 182 days or more in that previous year for a person who leaves India for employment outside, to be treated as resident of India.
» In the instant case, the applicant neither satisfies the condition of Section 6(1 )(a) nor satisfies the condition of Section (6)(1)(c) of the Act and accordingly he cannot he treated as the resident of India for the previous year under consideration. Thus, the salary earned by the applicant by virtue of t in India under section 5(1)(c) of the Act. Further, the department in its comment dated 28th January 2010 also clarified that the applicant may be treated as Non Resident as he remained in India for a period of 123 days during F.Y. 2008-09.
Courtsey : Taxguru.in

India’s engagement with its overseas community has been mainstreamed with the establishment of a focal Ministry – the Ministry of Overseas Indian Affairs (MOIA) – for all matters relating to overseas Indians. The Ministry’s mandate is to serve as a friend and guide to overseas Indians comprising Persons of Indian Origin (PIO), Non-Resident Indians (NRIs) and Overseas Citizens of India (OCI).

The Ministry envisions to foster sustainable, symbiotic and strategic engagement between India and Overseas Indians across the economic, social and cultural space that will best serve India as an emerging global power and meet the expectations of the overseas Indian community as a significant constituency around the world.

Its mission is to establish a robust and vibrant institutional framework to facilitate and support mutually beneficial networks with and among overseas Indians to maximize the development impact for India and enable overseas Indians to invest in and benefit from the opportunities in India.

India has the second largest Diaspora in the world befitting its own size, variety and depth of civilization. The overseas Indian community is spread across every major region in the world. The overseas Indian community thus constitutes a diverse, heterogeneous and eclectic global community representing different regions, languages, cultures and faiths. The common thread that binds them together is the idea of India and its intrinsic values. In every part of the world the overseas Indian community is recognised and respected for its hard work, discipline, non-interference and for successfully integrating with the local community. Overseas Indians have made significant contributions to the economy of the country of residence and have added in considerable measure to knowledge and innovation.

MoU On Employment Of Workers With Malaysia

An MoU was signed by Minister of Overseas Indian Affairs and the Malaysian Minister of Human Resources at New Delhi on 3rd January, 2009 The MoU inter-alia provides- i) facilitation of employment of workers between the two countries; broad procedure for employment of workers; bilateral co-operation in promoting orderly recruitment; deployment of workers; protection and welfare of all categories of workers etc.

The first meeting of the Joint Working Group (JWG) constituted under the provisions of MOU on employment of workers between Indian and Malaysia was held on 3rd March, 2009 at New Delhi.

Indian Community Welfare Fund (ICWF)

The Ministry has set up the Indian Community Welfare Fund (ICWF) in the Indian Missions in all the Emigration Clearance Required(ECR) countries to provide on site welfare support to overseas Indian workers in distress in the host countries. The Fund will, inter-alia, provide for – i) Boarding and lodging for distressed OIs in Household/domestic sectors and unskilled workers; ii) expenditure on incidental to and Airlifting of mortal remains to Indian or local cremation/burial of the deceased iii) Emergency medical care/air passage to the OIs in need) to the emigrants on a means tested basis

Bilateral Social Security Cooperation

Bilateral social security agreements protect the interests of expatriate workers on a reciprocal basis by providing for exemption from social security contribution in case of short-term contracts (provided the worker is covered under the home country’s social security system), exportability of pension in case of relocation to the home country or any third country and totalization of the contribution periods pertaining to both countries. The Ministry has already signed a bilateral social security agreement (SSA) with Belgium, France and Germany.

After successful completion of the negotiations, the Social Security Agreement (SSA) with Switzerland was signed on 3rd September, 2009; with Luxembourg on 30th September, 2009 and with Netherlands on 22nd October, 2009;

The agreement with Belgium has come into effect from 1st September, 2009. The agreement on Social Insurance signed with Germany came into force with effect from 1.10.2009.

Pravasi Bhartiya Divas (PBD) Convention

The 8th PBD Convention was held at the Vigyan Bhawan from 7-9th January, 2010. The Convention was inaugurated by the Prime Minister on 8th January, 2010 and the valedictory address was delivered by the President on 9.1.2010. The President also conferred Pravasi Bhartiya Samman Award (PBSA), on 14 distinguished PIOs/ NRIs. Lord Khalid Hameed CBE DL Hampstead was the Chief Guest.

**Media & Communications Officer, PIB, New Delhi.

Q.9 Can a person resident outside India (i.e,. a NRI or a PIO or a foreign national of non-Indian origin) acquire agricultural land / plantation property / farm house in India by way of purchase ?
A.9 No. A person resident outside India cannot acquire by way of purchase agricultural land / plantation property / farm house in India.

III. Acquisition of immovable property in India by way of gift by a person resident outside India.

Q.10 Can NRI / PIO acquire residential / commercial property by way of gift under the general permission available ?
A.10 Yes. Under the general permission available NRI / PIO may acquire residential / commercial property by way of gift from a person resident in India or a NRI or a PIO. However Agricultural Land / Plantation Property in India cannot be acquired by way of gift.
Q.11 Can a foreign national of non-Indian origin resident outside India acquire residential / commercial property in India by way of gift ?
A.11 No. Under section 2(ze) of the Foreign Exchange Management Act, 1999 `transfer’ includes among others, `gift’. Therefore, a foreign national of non-Indian origin resident outside India cannot acquire residential / commercial property in India by way of gift.
.Q.12 Can a person resident outside India (i.e. a NRI or a PIO , or a foreign national of non-Indian origin) acquire agricultural land / plantation property / farm house in India by way of gift ?
A.12 No. A person resident outside India cannot acquire agricultural land / plantation property / farm house in India by way of gift. IV. Acquisition of immovable property in India by way of inheritance by a person resident outside India.
Q.13 Can a person resident outside India (i.e. NRI or PIO or foreign national of non-Indian origin) hold any immovable property in India acquired by way of inheritance from a person resident in India?
A.13 Yes. A person resident outside India can hold immovable property acquired by way of inheritance from a person resident in India as per the provisions of Section 6(5) of the Foreign Exchange Management Act, 1999.
Q.14 Can a person resident outside India (i.e. NRI or PIO or foreign national of non-Indian origin) hold any immovable property in India acquired by way of inheritance from a person resident outside India?
A.14 With the specific approval of Reserve Bank a person resident outside India may hold any immovable property in India acquired by way of inheritance from a person resident outside India, provided the bequeathor had acquired such property in accordance with the provisions of foreign exchange law in force at the time of acquisition or under FEMA regulations. V. Transfer of immovable property in India by way of sale by a person resident outside India.
Q.15 Under general permission available to whom can NRI transfer by way of sale his residential / commercial property ?
A.15 NRI can transfer by way of sale residential / commercial property in India to a person resident in India or to a NRI or a PIO.
Q.16 Under the general permission available to whom can a PIO transfer his residential / commercial property by way of sale ?
A.16 PIO can transfer by way of sale residential / commercial property in India only to a person resident in India.
Q.17 Can a PIO transfer by way of sale his residential / commercial property to a NIR or a PIO ?
A.17 No. He would need to seek Reserve Bank prior approval for transfer by way of sale residential / commercial property in India to a NRI or a PIO.
Q.18 Can a foreign national of non-Indian origin whether resident in India or outside India transfer by way of sale residential property in India acquired with the specific permission of Reserve Bank to a person resident in India or outside India ?
A.18 No. A foreign national or non-Indian origin whether resident in India or outside India would need to seek prior approval of Reserve Bank for transfer by way of sale residential property in India acquire with the specific permission of Reserve Bank to a person resident in India or outside India.
Q.19 Under the general permission available to whom can NRI / PIO transfer by way of sale his agricultural land / plantation property / farm house in India?
A.19 Under the general permission available NRI / PIO may transfer by way of sale his agricultural land / plantation / farm house in India to a person resident in India who is a citizen of India.
Q.20 Can a foreign national of non-Indian origin resident outside India transfer by way of sale agricultural land / plantation property / farm house acquired by him in India ?
A.20 A foreign national of non-Indian origin resident outside India would need to seek prior approval of Reserve Bank for transfer share, by way of sale, agricultural land / plantation property / farm house acquired in India. VI. Transfer of immovable property in India by way of gift by a person resident outside India.
Q.21 Under general permission available can NRI / PIO transfer his residential / commercial property way of gift ?
A.21 Yes. NRI / PIO may transfer by way of gift residential / commercial property in India to a person resident in India or to a NRI or a PIO.
Q.22. Under the general permission available to whom can NRI / PIO transfer by way of gift agricultural land / plantation property / farm house in India ?
A.22. Under the general permission available NRI / PIO may transfer by way of gift agricultural land / plantation property / farm house in India to a person resident in India who is a citizen of India.
Q.23 Can a foreign national of non-Indian origin resident outside India transfer by way of gift agricultural land / plantation property / farm house acquired by him in India ?
A.23 No. A foreign national of non-Indian origin resident outside India would need to seek prior approval of Reserve Bank for transfer by way of gift agricultural land / plantation property / farm house acquired by him in India. VII. Transfer of residential / commercial property in India by way of mortgage by a person resident outside India.
Q.24 Can NRI / PIO transfer by way of mortgage his residential / commercial property to an authorised dealer / housing finance institution in India ?
A.24 Yes.
Q.25 Can NRI / PIO transfer by way of mortgage his residential / commercial property in India to a party abroad ?
A.25 No. He should seek prior approval of RBI.
Q.26 Can a foreign national of non-Indian origin resident in India or outside India transfer by way of mortgage his residential / commercial property in India acquired with the specific approval of Reserve Bank to a party in India or abroad ?
A.26 No. He should seek prior approval of RBI. However, immovable property purchased by a person resident outside India who has established a Branch Office or other place of business for carrying on in India any activity in accordance with FERA / FEMA regulations, may under general permission available, mortgage such a property with an authorised dealer as a security for any borrowing. VIII. Mode of payment for purchase of residential / commercial property in India by NRI / PIO
Q.27 Under the general permission available what is the mode of payment for purchase of residential / commercial property in India by NRI / PIO ?
A.27 Under the general permission available NRI / PIO may purchase residential / commercial property in India out of funds remitted to India through normal banking channel or funds held in his NRE / FCNR (B) / NRO account. No consideration shall be paid outside India. No Payment can be made either by travelers chwque or by foreign currency notes.

Q.28 Can refund of application / earnest money / purchase consideration made by the house building agencies / seller on account of non-allotment of flat / plot / cancellation of bookings / deals for purchase of residential / commercial property together with interest, if any (net of income tax payable thereon) be credited to NRE account ?
A.28 Yes, provided original payment was made by way of inward remittance or by debit to NRE / FCNR (B) account. For this purpose no permission of Reserve Bank is required and they may approach the authorised dealer directly in the matter. (Please refer to A.P. (DIR Series) Circular No.46 dated November 12, 2002.
Q.29 Can NRI / PIO for the purpose of acquisition of flat / house in India for his own residential use avail of loan from an authorised dealer against the security of funds held in his NRE Fixed Deposit account / FCNR (B) account?
A.29 Yes, subject to certain terms and conditions (Please refer to Schedules 1 and Schedules 2 to Notification No.FEMA 5/2000-RBI dated May 3, 2000). as amended from time to time. However, banks cannot grant fresh loans or renew exisiting 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.)
Q.30 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 ?
A.30 Yes, subject to certain terms and conditions. Such loans can be repaid by the borrower by way of inward remittance through normal banking channel or by debit to his NRE / FCNR (B) / NRO account or out of rental income derived from renting out such property. Such loan can also be repaid by the borrower’s close relatives through their account in India by crediting the borrower’s loan account (Please refer to Regulation 8 of Notification No.FEMA 4/2000-RB dated May 3, 2000 and A.P. (DIR. Series) Circular No.95 dated April 20, 2003 and A.P. (DIR Series) Circular No.94 dated May 25, 2003).
Q.31 Can NRI avail of housing loan in rupees from his employer in India ?
A.31 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).IX Repatriation of sale proceeds of residential / commercial property purchased by NRI / PIO
Q.32 Can NRI / PIO repatriate the sale proceeds of residential / commercial property in India acquired by way of inward remittance through normal banking channel or by debit to NRE / FCNR (B) account ? If so, what is the quantum ?
A.32 NRI / PIO may repatriate the sale proceeds of residential / commercial property in India acquired by way of inward remittance through normal banking channel or by debit to NRE /FCNR (B) account. The amount to be repatriated should not exceed the amount paid for acquisition of residential / commercial property (a) in foreign exchange received through normal banking channel or by debit to FCNR (B) account or (b) the foreign currency equivalent, as on the date of payment, of the amount paid by debit to NRE account. From out of balances in NRO A/c. he may remit upto USD one million per calendar year, eligible balances including the sale proceeds of immovable property if such property has been sold after being held for 10 years. If such a property was held for less than 10 years, remittance can be made if the sale proceeds were held for the balance period in NRO A/c. (Savings / Term Deposit) or any other eligible investment, provided, such investment is traced to the sale proceeds of the immovable property. (For details please refer Reg.4(3) of FEMA 13 dated May 3, 2000 as amended)
Q.33 The rupee loan availed by NRI for purchase of residential accommodation was repaid either by inward remittance or by debit to NRE / FCNR (B) account can the sale proceeds of such property be repatriated ?
A.33 Yes. Repayment of loan in foreign exchange is treated as equivalent to the foreign exchange received for purchase of residential accommodation.
Q.34 Is there any lock in period for sale of residential / commercial property purchased out of inward remittance / debit to NRE / FCNR (B) account ?
A.34 No lock in period is applicable for sale of such property.
Q.35 Is there any restriction on number of residential properties in respect of which sale proceeds can be repatriated by NRI / PIO ?
A.35 Yes. Repatriation of sale proceeds is restricted to not more than two residential properties. X. Remittance of sale proceeds of residential / commercial property received by way of gift by NRI / PIO
Q.36 Into which account the sale proceeds of residential / commercial property received by way of gift by NRI / PIO can be credited ?
A.36 The sale proceeds of residential / commercial property received by way of gift by NRI / PIO should be credited to NRO account only. XI. Remittance of sale proceeds of immovable property inherited by a person resident outside India.
Q.37 Can sale proceeds of any immovable property inherited by NRI / PIO from a person resident in India be remitted abroad ?
A.37 Yes. Amount not exceeding USD one million, per calendar year subject to production of documentary evidence in support of inheritance and Tax clearance certificate / no objection certificate from the Income Tax authority to the authorised dealer for remittances. However, if a PIO is a citizen of Pakistan or Bangaladesh or Sri Lanka or Afghanistan or China or Iran he should seek prior approval of Reserve Bank with documentary evidence in support of inheritance and tax clearance / no objection certificate from the Income Tax authority. This remittance facility is not available to a citizen of Nepal or Bhutan. (Please refer to Regulation 4(3) to Notification No.FEMA 13/RB-2000 dated May 3, 2000).

Q.38 Can sale proceeds of any immovable property in India inherited, by a foreign national of non-Indian origin resident outside India, from a person resident in India be repatriated by him ?
A.38 Yes. Amount not exceeding USD one million, per calendar year subject to production of documentary evidence in support of inheritance and Tax clearance certificate / no objection certificate from the Income Tax authority to the authorised dealer for remittances. However, if a PIO is a citizen of Pakistan or Bangaladesh or Sri Lanka or Afghanistan or China or Iran he should seek prior approval of Reserve Bank with documentary evidence in support of inheritance and tax clearance / no objection certificate from the Income Tax authority. This remittance facility is not available to a citizen of Nepal or Bhutan. (Please refer to Regulation 4(2) (ii) of Notification No.FEMA 13/RB-2000 dated May 3, 2000).
Q.39 Can sale proceeds of any immovable property in India inherited, by a person resident outside India (i.e. NRI or PIO or foreign national of non-Indian origin resident outside India), from a person resident outside India be repatriated by him or his successor ?
A.39 No. He needs to seek prior approval of Reserve Bank with documentary evidence in support of inheritance and tax clearance / no objection certificate from the Income Tax authority. XII. Acquisition of immovable property for carrying on a permitted activity in India.
Q.40 Can a person resident outside India who has established a Liaison Office in India in accordance with FERA / FEMA regulations purchase immovable property ?
A.40 No.
Q.41 Can a person resident outside India who has established a Branch Office or other place of Business in India in accordance with FERA / FEMA regulations purchase immovable property ?
A.41 Yes, provided it is necessary for or incidental to carrying on such activity and all applicable laws, rules, regulations or directions are duly complied with. The purchase price should be paid by way of inward remittance through proper banking channel. A declaration in form IPI should be filled with Reserve Bank within ninety days from the date of acquisition of commercial / residential property.
Q.42 Can such a property referred to in Q.No.41 be mortgaged with an Authorised dealer as a security for any borrowing ?
A.42 Yes. RBI has granted general permission for such a mortgage.
Q.43 On winding up of the business can the sale proceeds of such property be repatriated ?
A.43 Yes. With prior approval of Reserve Bank. XIII. Acquisition / Transfer of immovable property in India by Foreign Embassies / Diplomats / Consulate Generals
Q.44 Can Foreign Embassies / Diplomats / Consulate General purchase / sell immovable property in India ?
A.44 Yes. Under general permission available Foreign Embassies / Diplomats / Consulate Generals may acquire any immovable property other than agricultural land / plantation property / farm house in India. Such property may be purchased / sold provided prior clearance from the Government of India, Ministry of External Affairs has been obtained for such purchase / sale. The consideration for purchase of such property should be paid by way of inward remittance through normal banking channel. XIV Other issues
Q.45 Can NRI / PIO rent out the residential / commercial property purchased out of foreign exchange / rupee funds, if not required for immediate use ?
A.45 Yes. Rent received, being current income may be credited to NRO / NRE account or remitted abroad.
Q.46 Can NRI who had acquired immovable property viz., residential / commercial property / agricultural land / plantation property / farm house in India while he was a person resident in India continue to hold or transfer such immovable property ? In which account the sale proceeds may be credited ?
A.46 Yes, under the provisions of Section 6 (5) of the Foreign Exchange Management Act, 1999 NRI who had acquired immovable property in India while he was a person resident in India may continue to hold such property. Under the general permission available he may transfer by way of sale or gift agricultural land / plantation property / farm house in India to a person resident in India who is a citizen of India and may transfer by way of sale or gift residential / commercial property in India to a person resident in India or to a NRI / PIO. The sale proceeds may be credited to NRO account.
Q.47 Can PIO who had acquired immovable property viz., residential / commercial property / agricultural land / plantation property / farm house in India while he was a person resident in India continue to hold or transfer such immovable property ? In which account the sale proceeds may be credited ?
A.47 Yes, under the provisions of Section 6 (5) of the Foreign Exchange Management Act, 1999 PIO who had acquired immovable property in India while he was a person resident in India may continue to hold such property. Under the general permission available he may transfer by way of sale or gift agricultural land / plantation property / farm house in India to a person resident in India who is a citizen of India and may transfer by way of sale or gift residential / commercial property in India to a person resident in India or to a NRI / PIO. However, if a PIO is a citizen of Pakistan or Bangaladesh or Sri Lanka or Afghanistan or China or Iran or Nepal or Bhutan he should seek prior approval of Reserve Bank for transfer of such immovable property in India. The sale proceeds may be credited to NRO account.
Q.48 Can the sale proceeds of the immovable property referred to in Q.Nos.46 and 47 credited to NRO account of NRI / PIO, be remitted abroad ?
A.48 Yes, provided the immovable property was held for a period not less than ten years.
Q.49 What if such an immovable property was held for less than ten years ?
A.49 If such a property acquired out of rupee funds is sold after being held for less than ten years, remittance can be made, if the sale proceeds were held for the balance period in NRO account (Savings / Term Deposit) or in any other eligible investment, provided such investment is traced to the sale proceeds of the immovable property.

Q.50 Under erstwhile FERA, foreign nationals of non-Indian origin resident in India or outside India had with the specific approval of Reserve Bank acquired residential property in India. While they can continue to hold the same under the provisions of Section 6(5) of FEMA, 1999 can they transfer such property ?
A.50 Yes, only with the prior approval of Reserve Bank.
Q.51 Is a person resident in India governed by the provisions of Foreign Exchange Management (Acquisition and transfer of immovable property in India) Regulations, 2000 ?
A.51 A person resident in India who is a citizen of Pakistan or Bangaladesh 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.
Q.52 Where are the terms a `person resident in India’ and a `person resident outside India’ defined ?
A.52 Section 2 (v) and Section 2 (w) of the FEMA, 1999 defines `person resident in India’ and a `person resident outside India’ respectively.
Q.53 What is meant by a person resident in India ?
A.53 From FEMA angle, a person resident in India means 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.
Q.54 Does Reserve Bank determine the residential status of a person for the purpose of acquisition of immovable property in India ?
A.54 No. Under FEMA residential status is determined by operation of law. The onus is on an individual to prove his / her residential status if question by any other authority.
Q.55 If a foreign national (except a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal and Bhutan) is a person resident in India as per the provisions of Section (v) (i)B of the FEMA, 1999 does he require approval of RBI to purchase any immovable property in India ?
A.55 No, he does not require approval from Reserve Bank from FEMA angle. However, 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.

Akshey Kumar*

15:11 IST

The 4th Pravasi Bhartiya Diwas at Hyderabad will make a history when the first Overseas Indian Citizenship Certificate will be handed over by the Prime Minister, Dr. Manmohan Singh at its inaugural ceremony on 7th January, 2006. This will also mark the fulfillment of a commitment, which was made by him at the inaugural ceremony of the 3rd Pravasi Bhartiya Diwas 2005 at Mumbai in January last year. The Prime Minister had said, “I am happy to announce that we have decided to extend the facility of dual citizenship to all overseas Indians who migrated from India after 26th January, 1950, as long as their home countries allow dual citizenship under their local laws. I do hope that a day will come when every single overseas Indian who wishes to secure Indian citizenship will actually be able to do so.”
The promulgation of the Citizenship (Amendment) Ordinance, 2005 on 28th June this year was a significant step in this direction. Later, the Parliament passed the Citizenship (Amendment) Act, which replaced this Ordinance. It has now been duly notified and is being implemented. According to this Act, all the people of Indian origin in various countries, except Pakistan and Bangladesh, whose parents/grandparents migrated from India after 26th January 1950 or were eligible to become Indian citizen on 26th January 1950, or belonged to a territory that became part of India after 15th August 1947, will become eligible to be registered as the Overseas Citizens of India (OCI). Now, all legal steps in this direction have been completed. All Indian Missions in the foreign countries have been notified about the Act and its various provisions. The facility is all set to formally roll out in January, 2006.
Benefits
The persons getting themselves registered as the Overseas Citizens of India will enjoy a number of benefits. They will be entitled to a new type of Visa called U visa which will be a multipurpose, multiple entry life long visa. This means that an OCI cardholder will be entitled to visit India at any time, for any length of time and for any purpose. There will not be any need for them to report to police as the OCI cardholders have been exempted from police reporting for any length of stay in the country. Such persona have also been granted all rights in the economic, financial and education fields in parity with NRIs except, however, the right to acquisition of agricultural or plantation properties.
Background
With the policies of economic liberalization followed during the last 10-15 years, India has emerged in the community of nations as a country, which is capable of playing a significant role in various developmental sectors particularly the knowledge, based industries. India’s expertise in the field of IT has been acknowledged the world over. It is also now emerging as a major destination in sectors like health, education and of course tourism. This has given a new sense of purpose and identity to millions of persons of Indian origin, living in various countries, to trace their roots and participate in this process without compromising their obligation to the country of their adoption. On the other hand, India also needs the benefit of their experience and expertise as Indian emigrants have made remarkable contributions to their host countries and have come to occupy the pride of place there. They have emerged as entrepreneurs, workers, teachers, researchers, inventors, doctors, lawyers, engineers, managers and administrators. Their success can rightly be attributed to India’s traditional ethos, its cultural values and heritage, its educational aptitude and qualifications and its capacity to harmonize and adapt. By playing a leading role in the global technological revolution, they have transformed India’s image abroad.
To fulfill these aspirations, the Overseas Indians have been demanding for the dual citizenship for a long time. The Government too has been very sympathetic to this demand. The scheme of PIO cards with a validity of 15 years was initiated in 2002. Later, in 2003 a legislation for providing the facility of dual citizenship to People of Indian Origin in 16 specified countries, viz. Australia, Canada, Finland, France, Greece, Ireland, Israel, Italy, Netherlands, New Zealand, Portugal, Republic of Cyprus, Sweden, Switzerland, U.K. and USA; was also passed by the Parliament. But the latest Ordinance as a follow up of the PM’s announcement is significant as it has not only widened the scope and eligibility criteria for registration as Overseas citizen of India for People of Indian origin of all countries but has also come out with a much simplified procedure and a format that has removed various existing hassles and allows the applicants feel at home, the moment they decide to opt for the OCI card.
A Single Application Form For The Family
In the earlier dispensation, each member of the family was to apply on a separate form. It also required an oath of allegiance to be sworn in before the Indian consular staff and declaration of immovable properties and the list of family members living outside India. In comparison, the new application form has provision for the whole family i.e. the spouse and up to two minor children to apply together. Various requirements, not needed in deciding the OCI registration have also been done away with. The overall form, it itself, has been greatly simplified bringing in clarity and transparency. Earlier, applications could be made in the respective country of citizenship only, whereas now Overseas Indians can also apply in country where they are ordinarily residing. The condition of oath of allegiance has been done away with. Within India, however, only FRRO and the Ministry of Home Affairs have been authorized to receive applications for OCI. The required fees of US $ 275 for grant of OCI can be deposited in equivalent local currency. A provision has also been made that the existing PIO cardholders can also apply for OCI, if so eligible, on payment of nominal fees of US$ 25 only. The Ministry of Overseas Indian Affairs has been asked to further examine and work out the modalities of issuing a ‘Smart-card’ to registered OCIs.
Simple Timebound Procedure
Indian Missions have been authorized to grant OCI with 15 days to such cases wherein there is no involvement in serious offences like drug trafficking, moral turpitude, terrorist activities or anything leading to imprisonment of more than a year. For such cases the Mission can send the matter to MHA for post verification after granting OCI. But in cases, where there is some involvement and crime record is declared, the Ministry of Home Affairs will clear the cases within three months after prior inquiry in to the antecedents of the individual. If someone is found to have acquired OCI certificate on false information, the certificate will be cancelled forthwith

*Director (PR), PIB, New Delhi.

And

BUYING AND SELLING OF IMMOVABLE PROPERTY IN INDIA

1. Foreign Exchange Management Act, 1999 has come into force from 1st June, 2000 replacing the earlier Act of Foreign Exchange Regulation Act, 1973. The Reserve Bank of India had made regulation under clause (1) of sub section (3) of Section 6, sub section (2) of Section 47 of FEMA with regard to “Foreign Exchange Management (Acquisition & Transfer of Immovable Property in India) Regulation 2000. Before we deal with the said Foreign Exchange Management Acquisition and Transfer of Immovable Property in India) Regulation 2000, it is necessary to know certain definition under FEMA. Section 2 of FEMA gives various definitions of the words used in the said Act which are also applicable to the said Regulation. Some of them which are relevant for this Article are as under :-

Section 2(v) – Person resident in India means –

(i) a person residing in India for more than one hundred and eighty two days during the course of the preceding financial year but does not include –

(A) a person who has gone out of India or who stays outside India, in either case –

(a) for or on taking up employment outside India, or

(b) for carrying on outside India business or vocation outside India, or

(c) for any other purpose, in such circumstances as would indicate his intention to stay outside India for an uncertain period;

(B) a person who has come to or stays in India, in either case, otherwise than –

(a) for or on taking up employment in India, or

(b) for carrying on in India a business or vocation in India, or

(c) for any other purpose, in such circumstances as would indicate his intention to stay in India for an uncertain period;

(i) any person or body corporate registered or incorporated in India;

(ii) an office, branch or agency in India owned or controlled by a person resident outside India,

(iii) an office, branch or agency outside India owned or controlled by a person resident outside India,

(iv) an office, branch or agency outside India owned or controlled by a person resident in India.

Section 2(w) – person resident outside India means a person who is not resident in India.

Under the said Regulation 2000, Regulation 2(c) defines a person of Indian origin which reads as under :

“a person of Indian origin’ means an individual (not being a citizen of Pakistan or Bangladesh or Sri Lanka or Afghanistan or China or Iran or Nepal or Bhutan), who

(i) at any time, held Indian passport;

or

(ii) who or either of whose father or whose grandfather was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955).

The aforesaid 3 definitions are vitally important as far as the application of the said Regulation 2000 is concerned.

2. We shall divide them into following categories :

(a) A person who is a citizen of India and resident of India,

(b) A person who is citizen of India but resides outside India,

(c) A person who is of Indian origin but resides outside India.

(a) A person who is a citizen of India and also resident of India does not need any permission for the purpose of acquiring or selling any immovable property. There is no provision or restriction made with regard to Indian citizens who are residents of India as far as the transactions of immovable properties are concerned.

(b) A person who is a citizen of India but resident outside India – He

(i) may acquire any immovable property in India other than agricultural/plantation/farm house.

(ii) transfer any immovable property in India to a person resident in India, and

(iii) transfer any immovable property other than agriculture or plantation property or farm house to a person resident outside India who is a citizen of India or a person of Indian origin resident outside India. Such a person can acquire any immovable property in India except agriculture/plantation/farm house. He can also sell any immovable property to the residents in India. This will include agriculture/plantation/farm house, if it belongs to him. There is no restriction on transfer of agriculture/plantation/farm house so far as he does so in favour of residents in India. Such a person can also transfer immovable property other than agricultural/plantation/farm house to any person who is a citizen of India but resident outside India or to a person of Indian original resident outside India. In other words if the purchaser is citizen of India or of Indian origin, even though he is resident outside India, such a person can transfer immovable property other than agriculture/plantation/farm house to such an Indian citizen or person of Indian origin. Such a person cannot transfer any immovable property to a person who is neither a citizen of India nor of Indian origin if he resides outside India. A person who reside in India even though he may not be a citizen or of Indian origin can be transferee of property from such a person.

(c) A person of Indian origin who is a resident outside India –

(i) He may acquire immovable property other than agricultural land/farm house/plantation property in India by purchase from, out of (a) funds received in India by way of inward remittance in any place outside India or (b) funds held in any non-resident account maintained in accordance with the provisions of the Act and the Regulation made by the Reserve Bank under the Act. In other words, such a person can acquire any immovable property other than agricultural land, etc. provided funds are inward remittance from out of India or fund held in non-resident account. Except the aforesaid two funds, such a person cannot use any other fund for acquiring immovable property in India.

(ii) He may acquire any immovable property in India other than agricultural land/farm house/plantation property by way of gift from a person resident in India or from a person resident outside India who is a citizen of India or from a person of Indian original resident outside India. Such a person can receive immovable property as a gift from the following categories : (i) a person resident in India, (ii) a person resident outside India but a citizen of India, and (iii) a person resident outside India but of Indian origin. Therefore, such a gift of immovable property cannot be accepted by such a person from a person who is neither a citizen of India nor of Indian origin if he is resident outside India.

(iii) He may acquire any immovable property in India by way of inheritance from a person resident outside India who has acquired such property in accordance with the provisions of Foreign Exchange Law in force at the time of acquisition by him or the provisions of this Regulation or from a person resident in India. One more way of acquiring such property by such a person is by way of inheritance. But he can get the property by inheritence provided the deceased was (i) a person resident in India (it does not matter whether he is a citizen or not or whether he is of the Indian origin or not), (ii) the deceased had acquired the property as per the regulation than prescribed at the time of acquisition by him or present Regulation 2000. Here there is no exception of agricultural land/farm house/plantation property. Such property can also be inherited provided the aforesaid conditions are fulfilled.

(iv) Such a person can transfer any immovable property other than agricultural land/plantation property/farm house by way of sale to a person resident in India. Such a person cannot sell agricultural land, farm house or plantation property to any person. However, in case of other immovable property, he can only sell the said property to a person who is resident in India. A person who is not of resident of India cannot purchase from such a person any immovable property.

(v) He can transfer agricultural land/farm house/plantation property in India by way of gift or sale to a person resident in India who is a citizen of India. Such a person can sell or gift even the agricultural land/farm house/plantation property provided the purchaser or donee is Indian citizen who is resident in India. A person who is resident outside India or a person who is not a citizen of India cannot be a purchaser or donee from such a person. Both the conditions are required to be complied with, i.e. he has to be a citizen of India and he is to be resident of India. In short, the purchaser or donee of agricultural land, etc. from such a person has to be Indian citizen who is resident of India.

(vi) He can transfer residential or commercial property in India by way of gift to a person resident in India or to a person resident outside India who is a citizen of India or to a person of Indian origin but resident outside India. Such a person can gift immovable property as well as agricultural land, etc. to a person (i) who is a resident in India, or (ii) to a person resident outside India but who is a citizen of India, or (iii) to a person of Indian origin resident outside India. In short, if one is a citizen of India or of Indian origin or resident in India, then he can be a donee of a gift of immovable property from such a person.

3. There is a specific provision meant for acquisition of immovable property for carrying on a permitted activity. A person resident outside India who has established in India in accordance with the Foreign Exchange Management (has established in India of branch or office or other place of business) Regulation 2000, a branch office or other place of business for carrying on in India any activity, excluding liaison office , may, acquire any immovable property in India, if it is necessary or incidental to carrying on such activity provided all applicable rules, regulations or directions for the time being in force are duly complied with and the person/s files with the Reserve Bank a declaration in Form IPI not later than 90 days from the date of such acquisition. In other words a person may not be a citizen of India, may not be of Indian origin, but he has opened a branch or office or other place of business for carrying on in India any activity (excluding liaison office) even though he is a person resident outside India, can acquire any immovable property which is necessary for or incidental to carrying on such activity. It will be, however, subject to two conditions (i) it must comply with applicable law, rules, regulations and directions, and (ii) filling a declaration in prescribed form not later than 90 days from the date of such acquisition. Such a person can also transfer to an authorised dealer by way of mortgage as a security for any borrowing the immovable property acquired which was necessary for or incidental to carrying on such activity.

4. However, there is complete prohibition on acquisition of immovable property in India by citizens of Pakistan Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal and Bhutan without prior permission of the Reserve Bank except in a case of lease not exceeding five years. Citizens of these countries can neither purchase nor sell immovable property without permission of the Reserve Bank even though they may be residents of India. They may take on lease or grand lease of immovable property in India but not exceeding a period of five years.

5. There is overall restriction on a person who is resident outside India as to transfer of any immovable property in India except when the same is as per the provisions of FEMA or as per the Regulation, 2000.

Investing in immovable properties in India is not a Herculean task for the NRIs anymore. We have come a long way from the days of FERA (Foreign Exchange Regulation Act) regime, when buying or selling of immovable property was governed by the citizenship of a person. According to an estimate, about 25 million NRIs are looking at home country for potential investment opportunities in real estate. The FDI under automatic route in real estate development has also augmented the confidence of overseas Indians to forge strategic alliances with global realty giants for testing select markets across the country. Before we go into the details of the law governing NRI investment in real estate, let us first understand the basic definitions.
Who is an NRI?
Section 2 of the Foreign Exchange Management Act, 1999 (FEMA) deals with various definitions. It defines a person resident in India and a person resident outside India. However, it does not define the term non-resident nor it does define the term Non Resident Indian (NRI).
However, Notification No. 5/2000-RB (dealing with various kinds of Bank Accounts) defines the term Non Resident Indian (NRI) to mean a person resident outside India who is either a citizen of India or is a person of Indian origin. In short, the definition of the term NRI is contextual and can have slightly different connotations for FEMA/Income Tax/Acquisition of Immovable Property etc.
A Non-Resident Indian is termed as a “person resident outside India”. The non-resident Indians are classified into three categories
(1) Non-resident Indian Nationals. (2) Non-resident Indians of Indian Origin/Persons of Indian Origin And (3) Overseas Corporate Bodies (OCB)
Non-Resident Indian National (NRI)
An Indian Citizen who stays abroad for employment/carrying on business, to pursue a vocation outside India or under circumstances indicating an intention for an uncertain duration of stay abroad is a non-resident. (Persons posted in U.N. organisations and officials deputed abroad by Central/State Governments and Public Sector undertakings on temporary assignments are also treated as non-residents). Non-resident foreign citizens of Indian Origin are treated on par with non-resident Indian citizens (NRIs) for the purpose of certain facilities.
Person of Indian Origin (PIO)
For the purposes of availing of the facilities of opening and maintenance of bank accounts and investments in shares/securities in India, Person of Indian Origin means a citizen of any country other than Pakistan or Bangladesh if,
(i) he at any time, held an Indian passport
(ii) he or either of his parents or any of his grand parents was a citizen of India by virtue of the Constitution of India or Citizenship Act, 1955 (57 of 1995)
(iii) the person is a spouse of an Indian citizen
For investments in immovable properties, Person of Indian Origin means an individual (not being a citizen of Pakistan or Bangladesh or Afghanistan or Bhutan or Sri Lanka or Nepal or China or Iran)
(i) who at any time, held an Indian passport
(ii) who or either of whose father or whose grandfather was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955)
A person who is a non-resident can belong to the following categories:
Overseas Corporate Bodies (OCB)
Overseas Corporate Bodies (OCBs) are bodies predominantly owned by individuals of Indian nationality or origin resident outside India and include overseas companies, partnership firms, societies and other corporate bodies which are owned, directly or indirectly, to the extent of at least 60% by individuals of Indian nationality or origin resident outside India, as also overseas trusts in which at least 60% of the beneficial interest is irrevocably held by such persons. Such ownership interest should be actually held by them and not in the capacity as nominees. The various facilities granted to NRIs are also available with certain exceptions to OCBs as long as the ownership/beneficial interest held in them by NRIs continue to be at least 60%.
Key Acts Governing Acquisition of Immovable Property in India by NRIs
(i) The Foreign Exchange Management Act, 1999 is the one that regulates foreign investment in India. Under this umbrella Act, Foreign Exchange Management (Acquisition and Transfer of Immovable Properties) Regulations, 2000 has been enacted vide Notification No. FEMA 21/2000-RB dated 3rd May 2000. FERA vs. FEMA
There is a major transformation in the protocol as far as regulation concerning immovable property situated in India is concerned. Under FERA acquisition of immovable property in India was governed by “citizenship criteria”, whereas under FEMA the same is governed by “residential status” criteria. It means a foreign citizen who is resident in India (not being a citizen of any of the eight countries listed above) can purchase immovable property in India without any approval from RBI. He is also not required to file any declaration at the time of purchase of such immovable property.
Prohibition on citizens of certain countries
Citizens of eight countries, (namely, Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal. or Bhutan (whether resident in India or not) are debarred from acquiring or transferring any immovable property in India without prior approval of the RBI. However, such a prohibition is not applicable to immovable property acquired on lease for a period not exceeding five years.
General Prohibition
Investment in agricultural property, plantation and farmhouse is prohibited for all classes of persons resident outside India, be it NRIs/OCBs/ foreign citizens or other foreign entities.
Acquisition of immovable property
Acquisition of immovable property by an NRI can be by way purchase, gift or inheritance
Acquisition by way of purchase
A general permission is available to NRIs or PIO to purchase only residential/ commercial property in India. There is no restriction on the number of residential/commercial properties that an NRI or a PIO can buy. The name of a foreign national of non-Indian origin cannot be added as a second holder of a residential/commercial property purchased by an NRI or a PIO.
A foreign national of non-Indian origin, resident outside India, cannot acquire any immovable property in India by way of purchase without RBI’s approval. However, a foreign national of non-Indian origin, including a citizen of the eight countries mentioned above, may acquire only residential accommodation on lease, for not more than five years.
He does not require the RBI’s permission for this. A person resident outside India (that is, an NRI, a PIO or a foreign national of non-Indian origin) cannot acquire agricultural land/plantation/farm house in India by way of purchase.
Acquisition by way of gift
An NRI or a PIO may acquire residential/commercial property by way of gift from a resident of India, an NRI or a PIO. However, a foreign national of non-Indian origin resident outside India cannot acquire residential/commercial property in India by way of gift. A person resident outside India cannot acquire agricultural land/plantation/farm house in India by way of gift.
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.
Sale of immovable property
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.
Purchase/ Sale of immovable Property by Foreign Embassies/Diplomats/Consulate Generals
Foreign Embassy/Diplomat/Consulate General has been allowed to purchase/ sell immovable property in India other than agricultural land/ plantation property / farm house provided
(i) clearance from Government of India, Ministry of External Affairs is obtained for such purchase/ sale, and
(ii) the consideration for acquisition of immovable property in India is paid out of funds remitted from abroad through banking channel.
Acquisition of immovable property for carrying on a permitted activity in India (Regulation 5)
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.
Such an entity/concerned person would have to file a declaration in form IPI with the Reserve Bank, within ninety days from the date of such acquisition. The non-resident is eligible to transfer by way of mortgage the said immovable property to an Authorised Dealer as a security for any borrowing.
Sale proceeds
As far as repatriation of sale proceeds is concerned, such repatriation in respect of properties acquired by the person while being a resident of India or acquired by inheritance from a person who is resident of India, can only be effected with the prior permission of the Reserve Bank of India.
In the event of sale of properties other than agricultural land / farm house / plantation property in India by a person resident outside India who is a citizen of India or a person of Indian origin, the authorised dealer may allow repatriation of sale proceeds outside India subject to the condition that the immovable property was acquired by the seller in accordance with the provisions of foreign exchange law in force at the time of acquisition or the provisions of FEMA and the Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations 2000 and the amount to be repatriated does not exceed the amount paid for acquisition of the immovable property in foreign exchange received through normal banking channels or out of funds held in Foreign Currency Non- Resident Account or the foreign currency equivalent as on the date of payment, of the amount paid where such payment was made from the funds held is Non- Resident External Account for the acquisition of the property concerned. Repatriation can be made for a maximum of two residential properties.
The repatriation of sale proceeds has been restricted to US $ 1 Million per calendar year if properties are acquired from rupee sources by way of inheritance or legacy. This repatriation can be done out of the sale proceeds received from sale of property acquired from rupee sources subject to the condition that the property should have been cumulatively held for a minimum period of 10 years. Further the repatriation is restricted to the amount of foreign exchange remitted by way of inward remittances/NR/FCNR account. However, there is no lock-in period in respect of immovable property acquired by way of inheritance/legacy.
The only significant restriction that exists is with respect to PIOs who are citizens of Pakistan, Bangladesh or Sri Lanka, China, Afghanistan or Iran. These PIOs need to obtain prior approval of the Reserve Bank of India with documentary evidence in support of inheritance and tax clearance/no objection certificate from the Income-tax authorities.
Yet another rule exists with respect to the number of residential properties that can be repatriated. In case of residential units, the restriction is two and for commercial properties, there is no limit. However, rental income is freely repatriable since it is a current account transaction.
Interest or share in a Co-operative Housing Society or Apartment Owners Association
Though the word “immovable property” has been widely used in FEMA, no where does it define the term. Further, even the definition of “immovable property” given in the Transfer of Property Act, 1982, the General Clauses Act, the Sale of Goods Act and the Indian Registration Act, taken together, do not clarify what “immovable property” is. They only suggest what is either included or not included in “immovable property”. In fact, in the above Acts, shares in the co-operative society are not so included in the definition of the term “immovable property”.
However, the Supreme Court of India has made its definition clear in the case of Hanuman Vitamin Foods Pvt. Ltd. v/s State of Maharashtra (2000) 6 see 345, confirming the Bombay High Court decision in Hanuman Vitamin Foods Pvt. Ltd. & Ors v/s. State of Maharashtra & Superintendent of Stamps, Bombay (Writ Petition Number 1820 of 1986, dated 17th February, 1989). The matter of contention in this case was whether the instrument of transfer of shares in a co-operative society was an instrument for transfer of an immovable property, for purposes of levy of stamp duty thereon. The Supreme Court held, by referring to another decision in Veena Hasmukh Jain v/s. State of Maharashtra (1999) 5 SCC 725, that the agreement to sell shares in a Co-operative Society is, in effect, the agreement to sell immovable property.
Accordingly, any interest or share in a Co-operative Housing Society or Apartment Owners Association (also known as Condominium abroad) is an immovable property for the purposes of these Regulations.
Repatriation of Rental Income
NRI/PIOs can freely rent out their immovable property, whether purchase through application of forex or otherwise, without seeking any permission from the RBI. The rental income being a current account transaction is repatriable outside India, only if proper tax is paid or provided for.
Where the house is purchased through housing finance and if the house is rented out, the entire rental income, even if it is more than the prescribed installment, should be adjusted towards repayment of the loan. If the rental income is less then the prescribed installment, the borrower should remit the amount of the extent of the shortfall from abroad or pay it out of his NRE, FCNR or NRO account in India.
Refund of Purchase consideration on account of non­-allotment of flats/plots/cancellation of booking/deals in respect of immovable property purchased by NRIs/PIOs in India
Authorised Dealers are permitted to credit refund of application/earnest money/purchase consideration made by the housing building agencies/seller on account of non-allotment of flat/plot cancellation of bookings/deals for purchases of residential, commercial property, together with interest, if any (net of income tax payable thereon), to NRE/FCNR account, of Non-­Resident Indian/Persons of Indian Origin provided, the original payment was made out of NRE/FCNR account of the account holder or remittance from outside India through normal banking channels and the authorised dealer is satisfied about the genuineness of the transactions (refer to A.P. (DIR Series) Circular No.46 dated November 12, 2002).
Loans for acquisition of immovable property
Reserve Bank has granted general permission to certain financial institutions providing housing finance e.g. HDFC, LIC Housing Finance Ltd., etc., to grant housing loans to NRIs for acquisition of a house/flat for self occupation subject to certain conditions. The purpose of loan margin money and the quantum of loan will be at par with those applicable to housing loans to residents. Repayment of loan should be made within a period not exceeding 15 years out of inward remittances or out of funds held in the investor’s NRE / FCNR / NRO Accounts.
Apart from housing finance institutions, authorised dealers have also been granted permission to grant housing loans to NRIs for acquisition of a house/flat for self occupation subject to the same conditions as housing finance institutions.
Authorized dealers can also grant housing loan to NRIs where he is a principal borrower with his resident close relative as a co-applicant / guarantor or where the land is owned jointly by such NRI borrower with his resident close relative. Such housing loans availed in rupees can also be repaid by the close relatives of the borrower in India (Please refer to Regulation 8 of Notification No.FEMA 4/2000-RB dated May 3, 2000 and A.P. (DIR. Series) Circular No.95 dated April 20, 2003 and A.P. (DIR Series) Circular No.94 dated May 25, 2003).
Loan against the security of immovable property
An NRI can borrow against the security of immovable property from Authorised Dealer subject to following conditions:
i) The loan should be used for meeting the personal requirements or for borrower’s own business purposes; and
ii) Loan should not be used for prohibited activities, namely;
(a) Business of chit fund, or
(b) Nidhi Company, or
(c) Agriculture or plantation activities or in real estate business, or construction of farm houses, or
(d) Trading in Transferable Development Rights (TDRs),
iii) The loan amount cannot be remitted outside India,
iv) Repayment of loan shall be made from out of remittances from abroad or by debit to NRE/FCNR/NRO account or out of the sale proceeds of shares or securities or immovable property against which such loan was granted. (Please refer to Schedules 1 and Schedules 2 to Notification No.FEMA 5/2000-RBI dated May 3, 2000)
Availing housing loan in rupees from the employer
A NRI can avail housing loan in rupees from his employer subject to the terms and conditions mentioned in 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.
Investment in Housing and Real Estate Development (10C. 13 of Exchange Control Manual)
RBI has given permission to NRIs/OCBs to invest on repatriable basis upto 100% in the new issues of equity shares/convertible debentures by an existing or new company engaged or proposing to engage in the following activities:
§ Development of service plots and construction of built- up residential premises;
§ Real estate covering construction of residential and commercial premises including business centres and offices;
§ Development of townships; City and regional level urban infrastructure facilities, including roads and bridges;
§ Manufacturing of building materials; and Financing of housing development.
Repatriation of original investment will be permitted after a lock in period of three years from the date of issue of the equity shares/convertible debentures. Annual dividend on equity shares/interest on debentures can, however, be freely repatriated, subject to payment of applicable taxes. In case of OCBs, net profit (upto 16%) arising from the sale of such investment after the lock-in period of three years can also be repatriated.
The RBI permission is not required for acquiring/ holding or transfer/disposal of immovable properties by Indian citizens’ resident outside India. Indian citizens holding immovable property in India but who acquire foreign citizenship at a later date are required to take permission from the RBI for continuing to hold the immovable properties.
The facilities are granted to OCBs so long as the ownership/beneficial interest held in them by persons of Indian nationality/origin resident outside India continues to be at least 60 per cent. To ensure this, the OCBs have to furnish a certificate from an overseas auditor/chartered accountant/certified public accountant in form OAC/OAC-1, at the time of applying for the facility for the first time and thereafter as and when required by Reserve Bank/authorised dealers. The overseas auditor/chartered account/certified public accountant has to certify that the ownership interest in the OCBs is held by NRIs. The documentation accompanying Form OAC/OAC-1 have to clarify that the interest held by persons of Indian nationality/origin in the OCB is actually held by such persons and is not held by them in the capacity as nominees.
Provisions regarding PAN
As per Rule 114B(a) of the Indian Income Tax Rules 1962, a person has to quote his PAN in all documents for the sale or purchase of any immovable property valued at Rs 5,00,000 or more. But as per Rule 114C of the rules, an NRI need not apply for and obtain PAN for any transaction regarding the sale or purchase of immovable property.
The non-residents who are filing the Return of Income may be allotted PAN by the Assessing Officer under section 139A (2) of the Income-tax Act. However, if PAN is not allotted he should apply to obtain P.A.N.
The non-residents are exempt from obtaining the PAN under section 139 A (8) (d) of the Income-tax Act. It is advisable to obtain PAN by non-residents who are filing the Return of Income. For others, they may apply for it for the sake of convenience.
Also, procedurally the Income-tax department is not accepting the Returns of Income from any person who has not obtained or applied for PAN. Hence, one may submit PAN application along with his Return of Income.
Wealth Tax Planning
Wealth tax is payable only on non-productive assets, like motor cars, farmhouses, vacant land, jewellery, etc., over and above the minimum exemption limit of Rs. 15 lakh. Thus, it is possible to not pay any wealth tax at all even after possessing assets of crores of rupees; as long as one’s non-productive assets do not surpass Rs. 15 lakh. Other than that, a taxpayer may own unrestrained value of shares, bank deposits, units, commercial property, industrial property, etc. without paying any wealth tax.
No wealth tax is payable on his foreign assets and the tax is payable on net taxable wealth which is arrived at after deducting the debts and liabilities related to the taxable assets. The items of wealth which are either totally exempt from wealth tax and or which are so exempt from wealth tax up to a particular limit are deducted from the gross wealth to arrive at the taxable wealth on the valuation date. Generally speaking, the value of assets on the valuation date as per PART B III Schedule to the Wealth Tax Act is taken for the purpose of computation of wealth tax payable by a non-resident individual. Hence, a non-resident should so plan his investments in India that he secures the maximum deductions and exemptions in a manner that he is liable to least possible wealth tax.
Broadly speaking the exemption in respect of wealth tax could be classified under two headings, namely:
(i) Items which are excluded from the definition of ‘‘Assets’’ [as per the definition of "assets" given in Section 2 (e a) of the Wealth Tax Act, 1957].
(ii) Specific exemptions regarding certain other assets [Section 5 of the Wealth Tax Act, 1957]
Wealth Tax Exemptions
In case of NRIs having any of the following assets, the same are not taxable in the hands of NRI under Section 5 of the Wealth Tax Act, 1957
(i) One house property or
(ii) One plot of land provided area is less than 500 square meters or less.
In addition to the above, OVERSEAS ASSETS held by NRI is also exempt Under Section 6 of Wealth Tax Act, 1957.
Specific exemption for an NRI returning India
Where an NRI/PIO returns to India for permanent residence, the money and the value of assets brought by him into India and the value of assets acquired by him out of such money within one year immediately preceding the date of his return and at any time thereafter are totally exempt from wealth tax for a period of seven years after return to India.
The liability of a non-resident Indian to wealth tax in India is explained by way of the following two examples:
Example 1
Amit, a non-resident Indian, has bought urban land and jewellery worth Rs. 20 lakh. He has Rs. 40 lakh in bank deposit and other bank accounts, as on 31 March 2006. The wealth tax payable by Amit on the net wealth as on the valuation date of 31 March 2006 relevant to the assessment year 2006-2007 will be computed only on Rs. 20 lakh – Rs. 15 lakh (exempted), i.e. on Rs. 5 lakh as the amount of Rs. 40 lakh, being deposits in bank is exempt. The wealth tax is computed @ 1% on Rs. 5 lakh = Rs. 5,000.
Wealth Tax Rates
In case of NRIs, Wealth Tax is leviable at par with resident.
The Tax rate is 1% of net wealth subject to basic exemption of Rs. 15,00,000/- (Rupees Fifteen Lakhs).
Capital Gains on Transfer of Immovable Property
The profit on sale of capital asset is treated as capital gains. The capital assets (which are not held as stock-in-trade) are Shares, Debentures, Government securities, Bonds, Units of UTI and Mutual Funds, Immovable property etc.
The capital gains are segregated into long-term capital gains and short- term capital gains in following manner: -
Capital Asset Short-term Long-term
Equity shares, and listed securities ,Units of Unit Trust of India or Mutual Funds.If held for a period not exceeding 12 months from the date of acquisition. Capital asset which is not a short-term capital assets is long-term capital asset
All other investments and immovable property. If held for a period not exceeding 36 months from the date of acquisition. Capital asset which is not a short-term capital assets is long-term capital asset
Cost of acquisition:
Cost of acquisition in case of long term capital assets other than Specified Assets means Indexed Cost of Acquisition.
Indexed Cost of Acquisition:
For long term capital assets other than Debentures and Bonds (except capital index bonds issued by the Government), the Cost of acquisition means Indexed Cost of Acquisition The system helps you to claim higher cost than actual cost of acquisition. The term “indexed cost of acquisition” is the amount which bears, to the cost of acquisition, the same proportion as cost inflation index for the year in which the asset is transferred bears to the cost inflation index for the first year in which the asset was held by the assessee or for the year beginning on April 1, 1981, whichever is later.
(i) Long Term Capital Gains – Immovable Property held for more than 3 years
This section deals with
1. Long Term Capital Gain i.e., assets held for more than 36 months and in case of shares and securities more than 12 months.
2. It applies to all Immoveable properties and other assets.
3. Capital Gain will arise at the time of transfer i.e., sale, exchange, relinquishment etc.
4. Long Term Capital Gain shall be computed by considering Indexed cost of acquisition and Indexed cost of Improvement.
(ii) Short term Capital Gains-Immovable Property held for less than 3 years
This section deals with
1. Short Term Capital Gain i.e., gain arises from assets held for not more than 3 years.
2. It applies to all short term assets except shares and debentures of Indian Company. For shares and debentures holding period is not more than 12 months.
3. Capital Gain will arise at the time of transfer i.e., sale, exchange, relinquishment etc.
4. In this case, benefit of Indexation is not available.
Exemptions available on re-investment
NRIs are entitled to claim exemption from capital gains tax if they reinvests (within 6 months of sale) long-term capital gains into following assets:

Q.9 Can a person resident outside India (i.e,. a NRI or a PIO or a foreign national of non-Indian origin) acquire agricultural land / plantation property / farm house in India by way of purchase ?
A.9 No. A person resident outside India cannot acquire by way of purchase agricultural land / plantation property / farm house in India.

III. Acquisition of immovable property in India by way of gift by a person resident outside India.

Q.10 Can NRI / PIO acquire residential / commercial property by way of gift under the general permission available ?
A.10 Yes. Under the general permission available NRI / PIO may acquire residential / commercial property by way of gift from a person resident in India or a NRI or a PIO. However Agricultural Land / Plantation Property in India cannot be acquired by way of gift.
Q.11 Can a foreign national of non-Indian origin resident outside India acquire residential / commercial property in India by way of gift ?
A.11 No. Under section 2(ze) of the Foreign Exchange Management Act, 1999 `transfer’ includes among others, `gift’. Therefore, a foreign national of non-Indian origin resident outside India cannot acquire residential / commercial property in India by way of gift.
.Q.12 Can a person resident outside India (i.e. a NRI or a PIO , or a foreign national of non-Indian origin) acquire agricultural land / plantation property / farm house in India by way of gift ?
A.12 No. A person resident outside India cannot acquire agricultural land / plantation property / farm house in India by way of gift. IV. Acquisition of immovable property in India by way of inheritance by a person resident outside India.
Q.13 Can a person resident outside India (i.e. NRI or PIO or foreign national of non-Indian origin) hold any immovable property in India acquired by way of inheritance from a person resident in India?
A.13 Yes. A person resident outside India can hold immovable property acquired by way of inheritance from a person resident in India as per the provisions of Section 6(5) of the Foreign Exchange Management Act, 1999.
Q.14 Can a person resident outside India (i.e. NRI or PIO or foreign national of non-Indian origin) hold any immovable property in India acquired by way of inheritance from a person resident outside India?
A.14 With the specific approval of Reserve Bank a person resident outside India may hold any immovable property in India acquired by way of inheritance from a person resident outside India, provided the bequeathor had acquired such property in accordance with the provisions of foreign exchange law in force at the time of acquisition or under FEMA regulations. V. Transfer of immovable property in India by way of sale by a person resident outside India.
Q.15 Under general permission available to whom can NRI transfer by way of sale his residential / commercial property ?
A.15 NRI can transfer by way of sale residential / commercial property in India to a person resident in India or to a NRI or a PIO.
Q.16 Under the general permission available to whom can a PIO transfer his residential / commercial property by way of sale ?
A.16 PIO can transfer by way of sale residential / commercial property in India only to a person resident in India.
Q.17 Can a PIO transfer by way of sale his residential / commercial property to a NIR or a PIO ?
A.17 No. He would need to seek Reserve Bank prior approval for transfer by way of sale residential / commercial property in India to a NRI or a PIO.
Q.18 Can a foreign national of non-Indian origin whether resident in India or outside India transfer by way of sale residential property in India acquired with the specific permission of Reserve Bank to a person resident in India or outside India ?
A.18 No. A foreign national or non-Indian origin whether resident in India or outside India would need to seek prior approval of Reserve Bank for transfer by way of sale residential property in India acquire with the specific permission of Reserve Bank to a person resident in India or outside India.
Q.19 Under the general permission available to whom can NRI / PIO transfer by way of sale his agricultural land / plantation property / farm house in India?
A.19 Under the general permission available NRI / PIO may transfer by way of sale his agricultural land / plantation / farm house in India to a person resident in India who is a citizen of India.
Q.20 Can a foreign national of non-Indian origin resident outside India transfer by way of sale agricultural land / plantation property / farm house acquired by him in India ?
A.20 A foreign national of non-Indian origin resident outside India would need to seek prior approval of Reserve Bank for transfer share, by way of sale, agricultural land / plantation property / farm house acquired in India. VI. Transfer of immovable property in India by way of gift by a person resident outside India.
Q.21 Under general permission available can NRI / PIO transfer his residential / commercial property way of gift ?
A.21 Yes. NRI / PIO may transfer by way of gift residential / commercial property in India to a person resident in India or to a NRI or a PIO.
Q.22. Under the general permission available to whom can NRI / PIO transfer by way of gift agricultural land / plantation property / farm house in India ?
A.22. Under the general permission available NRI / PIO may transfer by way of gift agricultural land / plantation property / farm house in India to a person resident in India who is a citizen of India.
Q.23 Can a foreign national of non-Indian origin resident outside India transfer by way of gift agricultural land / plantation property / farm house acquired by him in India ?
A.23 No. A foreign national of non-Indian origin resident outside India would need to seek prior approval of Reserve Bank for transfer by way of gift agricultural land / plantation property / farm house acquired by him in India. VII. Transfer of residential / commercial property in India by way of mortgage by a person resident outside India.
Q.24 Can NRI / PIO transfer by way of mortgage his residential / commercial property to an authorised dealer / housing finance institution in India ?
A.24 Yes.
Q.25 Can NRI / PIO transfer by way of mortgage his residential / commercial property in India to a party abroad ?
A.25 No. He should seek prior approval of RBI.
Q.26 Can a foreign national of non-Indian origin resident in India or outside India transfer by way of mortgage his residential / commercial property in India acquired with the specific approval of Reserve Bank to a party in India or abroad ?
A.26 No. He should seek prior approval of RBI. However, immovable property purchased by a person resident outside India who has established a Branch Office or other place of business for carrying on in India any activity in accordance with FERA / FEMA regulations, may under general permission available, mortgage such a property with an authorised dealer as a security for any borrowing. VIII. Mode of payment for purchase of residential / commercial property in India by NRI / PIO
Q.27 Under the general permission available what is the mode of payment for purchase of residential / commercial property in India by NRI / PIO ?
A.27 Under the general permission available NRI / PIO may purchase residential / commercial property in India out of funds remitted to India through normal banking channel or funds held in his NRE / FCNR (B) / NRO account. No consideration shall be paid outside India. No Payment can be made either by travelers chwque or by foreign currency notes.

Q.28 Can refund of application / earnest money / purchase consideration made by the house building agencies / seller on account of non-allotment of flat / plot / cancellation of bookings / deals for purchase of residential / commercial property together with interest, if any (net of income tax payable thereon) be credited to NRE account ?
A.28 Yes, provided original payment was made by way of inward remittance or by debit to NRE / FCNR (B) account. For this purpose no permission of Reserve Bank is required and they may approach the authorised dealer directly in the matter. (Please refer to A.P. (DIR Series) Circular No.46 dated November 12, 2002.
Q.29 Can NRI / PIO for the purpose of acquisition of flat / house in India for his own residential use avail of loan from an authorised dealer against the security of funds held in his NRE Fixed Deposit account / FCNR (B) account?
A.29 Yes, subject to certain terms and conditions (Please refer to Schedules 1 and Schedules 2 to Notification No.FEMA 5/2000-RBI dated May 3, 2000). as amended from time to time. However, banks cannot grant fresh loans or renew exisiting 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.)
Q.30 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 ?
A.30 Yes, subject to certain terms and conditions. Such loans can be repaid by the borrower by way of inward remittance through normal banking channel or by debit to his NRE / FCNR (B) / NRO account or out of rental income derived from renting out such property. Such loan can also be repaid by the borrower’s close relatives through their account in India by crediting the borrower’s loan account (Please refer to Regulation 8 of Notification No.FEMA 4/2000-RB dated May 3, 2000 and A.P. (DIR. Series) Circular No.95 dated April 20, 2003 and A.P. (DIR Series) Circular No.94 dated May 25, 2003).
Q.31 Can NRI avail of housing loan in rupees from his employer in India ?
A.31 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).IX Repatriation of sale proceeds of residential / commercial property purchased by NRI / PIO
Q.32 Can NRI / PIO repatriate the sale proceeds of residential / commercial property in India acquired by way of inward remittance through normal banking channel or by debit to NRE / FCNR (B) account ? If so, what is the quantum ?
A.32 NRI / PIO may repatriate the sale proceeds of residential / commercial property in India acquired by way of inward remittance through normal banking channel or by debit to NRE /FCNR (B) account. The amount to be repatriated should not exceed the amount paid for acquisition of residential / commercial property (a) in foreign exchange received through normal banking channel or by debit to FCNR (B) account or (b) the foreign currency equivalent, as on the date of payment, of the amount paid by debit to NRE account. From out of balances in NRO A/c. he may remit upto USD one million per calendar year, eligible balances including the sale proceeds of immovable property if such property has been sold after being held for 10 years. If such a property was held for less than 10 years, remittance can be made if the sale proceeds were held for the balance period in NRO A/c. (Savings / Term Deposit) or any other eligible investment, provided, such investment is traced to the sale proceeds of the immovable property. (For details please refer Reg.4(3) of FEMA 13 dated May 3, 2000 as amended)
Q.33 The rupee loan availed by NRI for purchase of residential accommodation was repaid either by inward remittance or by debit to NRE / FCNR (B) account can the sale proceeds of such property be repatriated ?
A.33 Yes. Repayment of loan in foreign exchange is treated as equivalent to the foreign exchange received for purchase of residential accommodation.
Q.34 Is there any lock in period for sale of residential / commercial property purchased out of inward remittance / debit to NRE / FCNR (B) account ?
A.34 No lock in period is applicable for sale of such property.
Q.35 Is there any restriction on number of residential properties in respect of which sale proceeds can be repatriated by NRI / PIO ?
A.35 Yes. Repatriation of sale proceeds is restricted to not more than two residential properties. X. Remittance of sale proceeds of residential / commercial property received by way of gift by NRI / PIO
Q.36 Into which account the sale proceeds of residential / commercial property received by way of gift by NRI / PIO can be credited ?
A.36 The sale proceeds of residential / commercial property received by way of gift by NRI / PIO should be credited to NRO account only. XI. Remittance of sale proceeds of immovable property inherited by a person resident outside India.
Q.37 Can sale proceeds of any immovable property inherited by NRI / PIO from a person resident in India be remitted abroad ?
A.37 Yes. Amount not exceeding USD one million, per calendar year subject to production of documentary evidence in support of inheritance and Tax clearance certificate / no objection certificate from the Income Tax authority to the authorised dealer for remittances. However, if a PIO is a citizen of Pakistan or Bangaladesh or Sri Lanka or Afghanistan or China or Iran he should seek prior approval of Reserve Bank with documentary evidence in support of inheritance and tax clearance / no objection certificate from the Income Tax authority. This remittance facility is not available to a citizen of Nepal or Bhutan. (Please refer to Regulation 4(3) to Notification No.FEMA 13/RB-2000 dated May 3, 2000).

Q.38 Can sale proceeds of any immovable property in India inherited, by a foreign national of non-Indian origin resident outside India, from a person resident in India be repatriated by him ?
A.38 Yes. Amount not exceeding USD one million, per calendar year subject to production of documentary evidence in support of inheritance and Tax clearance certificate / no objection certificate from the Income Tax authority to the authorised dealer for remittances. However, if a PIO is a citizen of Pakistan or Bangaladesh or Sri Lanka or Afghanistan or China or Iran he should seek prior approval of Reserve Bank with documentary evidence in support of inheritance and tax clearance / no objection certificate from the Income Tax authority. This remittance facility is not available to a citizen of Nepal or Bhutan. (Please refer to Regulation 4(2) (ii) of Notification No.FEMA 13/RB-2000 dated May 3, 2000).
Q.39 Can sale proceeds of any immovable property in India inherited, by a person resident outside India (i.e. NRI or PIO or foreign national of non-Indian origin resident outside India), from a person resident outside India be repatriated by him or his successor ?
A.39 No. He needs to seek prior approval of Reserve Bank with documentary evidence in support of inheritance and tax clearance / no objection certificate from the Income Tax authority. XII. Acquisition of immovable property for carrying on a permitted activity in India.
Q.40 Can a person resident outside India who has established a Liaison Office in India in accordance with FERA / FEMA regulations purchase immovable property ?
A.40 No.
Q.41 Can a person resident outside India who has established a Branch Office or other place of Business in India in accordance with FERA / FEMA regulations purchase immovable property ?
A.41 Yes, provided it is necessary for or incidental to carrying on such activity and all applicable laws, rules, regulations or directions are duly complied with. The purchase price should be paid by way of inward remittance through proper banking channel. A declaration in form IPI should be filled with Reserve Bank within ninety days from the date of acquisition of commercial / residential property.
Q.42 Can such a property referred to in Q.No.41 be mortgaged with an Authorised dealer as a security for any borrowing ?
A.42 Yes. RBI has granted general permission for such a mortgage.
Q.43 On winding up of the business can the sale proceeds of such property be repatriated ?
A.43 Yes. With prior approval of Reserve Bank. XIII. Acquisition / Transfer of immovable property in India by Foreign Embassies / Diplomats / Consulate Generals
Q.44 Can Foreign Embassies / Diplomats / Consulate General purchase / sell immovable property in India ?
A.44 Yes. Under general permission available Foreign Embassies / Diplomats / Consulate Generals may acquire any immovable property other than agricultural land / plantation property / farm house in India. Such property may be purchased / sold provided prior clearance from the Government of India, Ministry of External Affairs has been obtained for such purchase / sale. The consideration for purchase of such property should be paid by way of inward remittance through normal banking channel. XIV Other issues
Q.45 Can NRI / PIO rent out the residential / commercial property purchased out of foreign exchange / rupee funds, if not required for immediate use ?
A.45 Yes. Rent received, being current income may be credited to NRO / NRE account or remitted abroad.
Q.46 Can NRI who had acquired immovable property viz., residential / commercial property / agricultural land / plantation property / farm house in India while he was a person resident in India continue to hold or transfer such immovable property ? In which account the sale proceeds may be credited ?
A.46 Yes, under the provisions of Section 6 (5) of the Foreign Exchange Management Act, 1999 NRI who had acquired immovable property in India while he was a person resident in India may continue to hold such property. Under the general permission available he may transfer by way of sale or gift agricultural land / plantation property / farm house in India to a person resident in India who is a citizen of India and may transfer by way of sale or gift residential / commercial property in India to a person resident in India or to a NRI / PIO. The sale proceeds may be credited to NRO account.
Q.47 Can PIO who had acquired immovable property viz., residential / commercial property / agricultural land / plantation property / farm house in India while he was a person resident in India continue to hold or transfer such immovable property ? In which account the sale proceeds may be credited ?
A.47 Yes, under the provisions of Section 6 (5) of the Foreign Exchange Management Act, 1999 PIO who had acquired immovable property in India while he was a person resident in India may continue to hold such property. Under the general permission available he may transfer by way of sale or gift agricultural land / plantation property / farm house in India to a person resident in India who is a citizen of India and may transfer by way of sale or gift residential / commercial property in India to a person resident in India or to a NRI / PIO. However, if a PIO is a citizen of Pakistan or Bangaladesh or Sri Lanka or Afghanistan or China or Iran or Nepal or Bhutan he should seek prior approval of Reserve Bank for transfer of such immovable property in India. The sale proceeds may be credited to NRO account.
Q.48 Can the sale proceeds of the immovable property referred to in Q.Nos.46 and 47 credited to NRO account of NRI / PIO, be remitted abroad ?
A.48 Yes, provided the immovable property was held for a period not less than ten years.
Q.49 What if such an immovable property was held for less than ten years ?
A.49 If such a property acquired out of rupee funds is sold after being held for less than ten years, remittance can be made, if the sale proceeds were held for the balance period in NRO account (Savings / Term Deposit) or in any other eligible investment, provided such investment is traced to the sale proceeds of the immovable property.

Q.50 Under erstwhile FERA, foreign nationals of non-Indian origin resident in India or outside India had with the specific approval of Reserve Bank acquired residential property in India. While they can continue to hold the same under the provisions of Section 6(5) of FEMA, 1999 can they transfer such property ?
A.50 Yes, only with the prior approval of Reserve Bank.
Q.51 Is a person resident in India governed by the provisions of Foreign Exchange Management (Acquisition and transfer of immovable property in India) Regulations, 2000 ?
A.51 A person resident in India who is a citizen of Pakistan or Bangaladesh 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.
Q.52 Where are the terms a `person resident in India’ and a `person resident outside India’ defined ?
A.52 Section 2 (v) and Section 2 (w) of the FEMA, 1999 defines `person resident in India’ and a `person resident outside India’ respectively.
Q.53 What is meant by a person resident in India ?
A.53 From FEMA angle, a person resident in India means 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.
Q.54 Does Reserve Bank determine the residential status of a person for the purpose of acquisition of immovable property in India ?
A.54 No. Under FEMA residential status is determined by operation of law. The onus is on an individual to prove his / her residential status if question by any other authority.
Q.55 If a foreign national (except a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal and Bhutan) is a person resident in India as per the provisions of Section (v) (i)B of the FEMA, 1999 does he require approval of RBI to purchase any immovable property in India ?
A.55 No, he does not require approval from Reserve Bank from FEMA angle. However, 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.