BackDid you know? | Devesh Chandra Srivastava
Did you know? | Devesh Chandra Srivastava
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Any person of Indian origin living in another country, non-resident Indian (NRIs) and spouse of an Indian can buy property, including those under construction, in India. Such acquisition is regulated by section 6(3) (i) of the Foreign Exchange Management Act (Fema), 1999, as well as by a notification issued by the Reserve Bank of India (RBI) in 2000.
The sale and purchase process for persons specified above is no different from the normal procedure required for Indian citizens. Here, too, the deal will require a sale deed and consideration amount. However, the payment will have to be done through special accounts.
How will the payment happen?
A person, who meets the criteria, can make payments for this acquisition through normal banking channels by way of inward remittance from any place outside India or funds held in a non-resident account maintained in accordance with the provisions of the Fema. Non-resident accounts are of three types—foreign currency non-resident (FCNR) account, non-resident ordinary (NRO) account and non-resident external account (NRE). While money can be deposited in any of the three accounts, property buying can happen only through a FCNR or NRE account.
NRE account is a rupee account from which funds can be freely remitted. It can be opened with either funds remitted from abroad or local funds maintained in another NRE/FCNR account, which can be remitted abroad. The deposits in these accounts can be used for all legitimate purposes. An FCNR account consists of funds deposited in foreign currency and can be held up to five years.
NRO account is a rupee account and can be opened with funds either remitted from abroad or generated in India. The amounts in this account are generally non-repatriable and that is why these accounts are not used at the time of buying a property.
The restrictions
Persons of Indian origin living abroad, non-resident Indians and spouse of an Indian can acquire residential properties, but not agricultural land, farmland or any plantation land.
However, citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan cannot acquire or transfer immovable property in India without prior permission from RBI. They can only acquire property on lease and the duration should not exceed five years. If a particular property is inherited by a resident of the above mentioned countries, he cannot sell the property to another Indian resident or transfer to someone who is permanently residing in India without the permission of RBI.
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