Legal information

An Indian Citizen who stays abroad for employment/carrying on business or vocation outside India or stays abroad under circumstances indicating an intention for an uncertain duration of stay abroad is a non-resident. (Persons posted in U.N. organizations 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.

Who is a person of Indian Origin?

For the purposes of availing of the facilities of opening and maintenance of bank accounts and investments in shares/securities in India. A foreign citizen (other than a citizen of Pakistan or Bangladesh) is deemed to be of Indian origin, if, - he, at any time, held an Indian passport, or - he or either of his parents or any of his grand parents was citizen of India by virtue of the Constitution of India or Citizenship Act, 1955 (57 of 1955). Note: A spouse (not being a citizen of Pakistan or Bangladesh) of an Indian citizen or of a person of Indian origin is also treated as a person of Indian origin for the above purposes provided the bank accounts are opened or investments in shares/securities in India are made by such persons only jointly with their NRI spouses. For investments in immovable properties. (A foreign citizen (other than a citizen of Pakistan, Bangladesh, Afghanistan, Bhutan, Sri Lanka, or Nepal), is deemed to be of Indian origin if,) - he held an Indian passport at any time, or - he or his father or paternal grand-father was a citizen of India by virtue of the (Constitution of India or the Citizenship Act, 1955 (57 of 1955).

Do non-resident Indian citizens require permission of Reserve Bank to acquire residential/commercial property in India?

No.

Do foreign citizens of Indian origin require permission of Reserve Bank to purchase immovable property in India for their residential use?

Reserve Bank has granted general permission to foreign citizens of Indian origin, whether resident in India or abroad, to purchase immovable property in India for their bona fide residential purpose. They are, therefore, not required to obtain permission of Reserve Bank.

In what manner the purchase consideration for the residential immovable property should be paid by foreign citizens of Indian origin under the general permission?

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

What are the formalities required to be completed by foreign citizens of Indian origin for purchasing residential immovable property in India under the general permission?

They are required to file a declaration in form IPI 7 with the Central Office of Reserve Bank at Mumbai within a period of 90 days from the date of purchase of immovable property or final payment of purchase consideration along with a certified copy of the document evidencing the transaction and bank certificate regarding the consideration paid.

Can such property be sold without the permission of Reserve Bank?

Yes. Reserve Bank has granted general permission for sale of such property. However, where the property is purchased by another foreign citizen of Indian origin, funds towards the purchase consideration should either be remitted to India or paid out of balances in NRE/FCNR accounts.

Can sale proceeds of such property if and when sold be remitted out of India?

In respect of residential properties purchased on or after 26th May 1993, Reserve Bank considers applications for repatriation of sale proceeds up to the consideration amount remitted in foreign exchange for the acquisition of the property for two such properties. The balance amount of sale proceeds if any or sale proceeds in respect of properties purchased prior to 26th May 1993, will have to be credited to the ordinary non-resident rupee account of the owner of the property.

Are any conditions required to be fulfilled if repatriation of sale proceeds is desired?

Applications for repatriation of sale proceeds are considered provided the sale takes place after three years from the date of final purchase deed or from the date of payment of final installment of consideration amount, whichever is later.

What is the procedure for seeking such repatriation?

Applications for necessary permission for remittance of sale proceeds should be made in form IPI 8 to the Central Office of Reserve Bank at Mumbai within 90 days of the sale of the property.

Can foreign citizens of Indian origin acquire or dispose of residential property by way of gift?

Yes. Reserve Bank has granted general permission to foreign citizens of Indian origin to acquire or dispose of properties up to two houses by way of gift from or to a relative who may be an Indian citizen or a person of Indian origin whether resident in India or not, subject to compliance with applicable tax laws.

Can immovable property held in India, be transferred by way of gift to relatives/registered charitable trusts/organizations in India?

Yes. General permission has been granted by Reserve Bank to non-resident persons (foreign citizens) of Indian origin to transfer by way of gift immovable property held by them in India to relatives and charitable trusts/organizations subject to the condition that the provisions of any other law, including Foreign Contribution (Regulation) Act, 1976, as applicable, are duly complied with.

Can foreign citizens of Indian origin acquire commercial properties in India?

Yes. Under the general permission granted by Reserve Bank properties other than agricultural land/farm house/plantation property can be acquired by foreign citizens of Indian origin provided the purchase consideration is met either out of inward remittances in foreign exchange through normal banking channels or out of funds from the purchasers' NRE/FCNR accounts maintained with banks in India and a declaration is submitted to the Central Office of Reserve Bank in form IPI 7 within a period of 90 days from the date of purchase of the property/final payment of purchase consideration.

Can they dispose of such properties?

Yes

Can sale proceeds of such property be remitted out of India?

Yes. Repatriation of original investment in respect of properties purchased by foreign citizens of Indian origin on or after 26th May 1993 will be allowed to be remitted up to the consideration amount originally remitted from abroad provided the property is sold after a period of three years from the date of the final purchase deed or from the date of payment of final installment of consideration amount, whichever is later. Applications for the purpose are required to be made to the Central Office of Reserve Bank within 90 days of the sale of property in form IPI 8.

Can the properties (residential/commercial) be given on rent if not required for immediate use?

Yes. Reserve Bank has granted general permission for letting out any immovable property in India. The rental income or proceeds of any investment of such income are eligible for repatriation.

Can NRIs obtain loans for acquisition of a house/flat for residential purpose from authorized dealers/financial institutions providing housing finance?

Reserve Bank has granted general permission to certain financial institutions providing housing finance e.g. HDFC, LIC Housing Finance Ltd., etc., and authorized dealers to grant housing loans to non-resident Indian nationals for acquisition of a house/flat for self-occupation subject to certain conditions. The purpose of the 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 investors' NRE/FCNR/NRO accounts.

Can Indian companies grant loans to their NRI staff?

Reserve Bank permits Indian firms/companies to grant housing loans to their employees deputed abroad and holding Indian passports subject to certain conditions.

Can authorized dealer grant housing loan to non-residents of Indian nationality where he is a principal borrower with his resident close relative as a co-obligant/guarantor or where the land is owned jointly by such NRI borrower with his resident close re

Yes. However, in such cases the payment of margin money and repayment of the loan installments should be made by the NRI borrower.

Who is a Non-Resident Indian?

A ‘Non-Resident Indian’ (NRI) refers to a person resident outside India who is a citizen of India.

Who is an Overseas Citizen of India (OCI)?

An ‘Overseas Citizen of India’ (OCI) is a person resident outside India who is registered as an Overseas Citizen of India Cardholder under Section 7(A) of the Citizenship Act, 1955.

Can a NRI and an OCI acquire immovable property in India?

Yes. An NRI or an OCI can acquire immovable property in India (other than an agricultural land or farmhouse or plantation property). Refer Rule 24(a) of the NDI Rules.

Can a NRI and an OCI acquire immovable property in India by way of Gift?

An NRI or an OCI can acquire immovable property in India (other than an agricultural land or farmhouse or plantation property) by way of Gift only from a person resident in India or from an NRI or from an OCI, who in any case is a relative as defined in clause (77) of section 2 of the Companies Act, 2013. Refer Rule 24(b) of the NDI Rules.

Can a NRI and an OCI acquire immovable property in India through inheritance?

An NRI or an OCI can acquire any immovable property in India by way of inheritance from: a person resident outside India who had acquired such property in accordance with the foreign exchange law in force at the time of acquisition by him/her; a person resident in India Refer Rule 24(c) of the NDI Rules.

Can a NRI and an OCI transfer immovable property in India?

An NRI or an OCI can transfer: any immovable property in India to a person resident in India; any immovable property in India (other than agricultural land or farm house or plantation property) to an NRI or an OCI. Refer Rules 24(d) and 24(e) of the NDI Rules. Note: The words “Transfer” is defined under (ze) of the Foreign Exchange Management Act, 1999 to include sale, purchase, exchange, mortgage, pledge, gift, loan or any other form of transfer of right, title, possession or lien.

What are the accepted modes of payment for acquisition of immovable property in India?

Payment for immovable property has to be received in India through funds received in India through banking channels by way of inward remittance from any place outside India and is subject to payment of all taxes and other duties/ levies in India. The payment can also be made out of funds held in any non-resident account maintained in accordance with the provisions of the Act, rules or regulations framed thereunder. Payments should not be made either by traveller’s cheque or by foreign currency notes or by any other mode other than those specified above. Refer Proviso to Rule 24(a) of the NDI Rules.

Can Foreign Embassies/ Diplomats/ Consulate Generals acquire or transfer immovable property in India?

Foreign Embassy/ Diplomat/ Consulate General, can purchase/ sell immovable property (other than agricultural land/ plantation property/ farmhouse) in India provided: Clearance from the Government of India, Ministry of External Affairs is obtained for such purchase/sale; and The consideration for acquisition of immovable property in India is paid out of funds remitted from abroad through banking channels. Refer Rule 27 of the NDI Rules.

How can a Long-Term Visa (LTV) holder acquire property in India?

Citizen of Pakistan, Bangladesh or Afghanistan belonging to minority community (Hindu, Christian, Sikh, Parsi, Buddhist, Jain) in that country and residing in India who has been granted an LTV by the Central government can purchase only one residential immovable property in India as dwelling unit for self-occupation and only one immovable property for carrying out self-employment. However, such acquisition is subject to the following conditions: the property shall not be located in and around restricted or protected areas so notified by the Central Government and cantonment areas; the person submits a declaration to the Revenue Authority of the district where the property is located, specifying the source of funds and that he or she is residing in India on LTV; the registration documents of the property shall mention the nationality and the fact that such person is on LTV; the property of such person may be attached or confiscated in the event of his or her indulgence in anti-India activities; a copy of the documents of the purchased property shall be submitted to the Deputy Commissioner of Police (DCP) or Foreigners Registration Office (FRO) or Foreigners Regional Registration Office (FRRO) concerned and to the Ministry of Home Affairs (Foreigners Division); such person shall be eligible to sell the property only after acquiring Indian citizenship, however, transfer of the property before acquiring Indian citizenship shall require prior approval of DCP or FRO or FRRO concerned. Refer Rule 28 of the NDI Rules.

Can a spouse of an NRI/ OCI who is not a NRI/ OCI acquire property in India?

A person resident outside India, not being a Non-Resident Indian or an Overseas Citizen of India, who is a spouse of a Non-Resident Indian or an Overseas Citizen of India may acquire one immovable property (other than agricultural land/ farmhouse/ plantation property), jointly with his/ her NRI/ OCI spouse subject to the following conditions: consideration for transfer, shall be made out of funds received in India through banking channels by way of inward remittance from any place outside India; funds held in any non-resident account maintained in accordance with the provisions of the Act and the regulations made by the Reserve Bank. no payment for any transfer of immovable property shall be made either by traveller’s cheque or by foreign currency notes or by any other mode other than those specified above. the marriage has been registered and subsisted for a continuous period of not less than two years immediately preceding the acquisition of such property; the non-resident spouse is not otherwise prohibited from such acquisition Refer Rules 25 of the NDI Rules.

Can a non-resident repatriate the sale proceeds of immovable property in India?

A person resident outside India who holds, owns, transfers or invests in any immovable property situated in India which was acquired, held or owned by such person when he was resident in India or inherited from a person who was resident in India or his successor cannot except with the general or specific permission of the Reserve Bank, repatriate outside India the sale proceeds of any such immovable property; an NRI or an OCI may repatriate outside Indian sale proceeds of immovable property (other than agricultural land or farm house or plantation property in India), subject to satisfaction of below conditions: the immovable property was acquired by the seller in accordance with the foreign exchange law in force at the time of acquisition by him/her; the amount for acquisition of the immovable property was paid in foreign exchange received through banking channels or out of funds held in FCNR Account or out of funds held in NRE Account; in the case of residential property, the repatriation of sale proceeds is restricted to not more than two such properties.

Important Disclaimer:

This information is intended to acquaint you to the legal framework of foreign exchange laws in India. However, Tata Housing Development Company Limited or its affiliates (“Tata Housing”) does not provide legal advise. You should consult an attorney regarding your specific legal questions. This guide should not serve as a substitute for professional legal advise. Laws and regulations change frequently and this information may not be current or accurate. To the maximum extent permitted by Law, Tata Housing provides this material on an “As-is” basis. Tata Housing disclaims and makes no representation or warranty of any kind with respect to this material, express or implied or statutory, including representations, guarantees or warranties of merchantability, fitness for a particular purpose, title, non-infringement or accuracy. Tata Housing will not be liable to anyone for any direct, special, indirect, moral, consequential, incidental, punitive or exemplary damages arising from the use of this material, including loss of profits, reputation, use or revenue or interruption of business regardless of the form or source of the claim or loss, including negligence, whether the claim or loss was foreseeable and whether you have been advised of the possibility of the claim or loss.