Executive Summary:
This notification, issued by the Reserve Bank of India, outlines the regulations concerning the acquisition and transfer of immovable property in India by Non-Resident Indians (NRIs), Overseas Citizens of India (OCIs), and other persons resident outside India. It supersedes Notification No. FEMA 21/2000-RB dated May 3, 2000, and took effect on March 26, 2018. It details permissible acquisitions, transfers, and related conditions, including repatriation of sale proceeds.
Key Points / Main Content:
* **Definitions:** Defines key terms such as "Act," "Authorised Dealer," "Non-Resident Indian (NRI)," "Overseas Citizen of India (OCI)," and "Repatriation outside India."
* **Acquisition and Transfer by NRIs/OCIs:**
* NRIs/OCIs can acquire immovable property (excluding agricultural land, farmhouses, plantation property) with funds remitted through banking channels or held in non-resident accounts.
* Property can be acquired via gift from a resident Indian, NRI, or OCI relative.
* Property can be acquired through inheritance from a person resident outside India who acquired it in accordance with foreign exchange law at the time of acquisition, or from a person resident in India.
* NRIs/OCIs can transfer property to residents, NRIs, or OCIs (excluding agricultural land, farmhouses, and plantation property).
* **Acquisition for Permitted Activities:**
* Persons resident outside India with a branch/office (excluding liaison offices) can acquire property necessary for their activities, subject to compliance with applicable laws and filing Form IPI with the Reserve Bank within 90 days of acquisition.
* Mortgages to authorized dealers are permitted as security for borrowings.
* Citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Hong Kong, Macau, Nepal, Bhutan, or DPRK require prior RBI approval for property acquisition (except leases under five years).
* **Foreign Embassies/Diplomats/Consulates:**
* May purchase/sell property (excluding agricultural land, plantation property, and farmhouses) with Government of India (Ministry of External Affairs) clearance and remittance of funds through banking channels.
* **Joint Acquisition by Spouse:**
* Spouse of NRI/OCI (not being an NRI/OCI) may jointly acquire one property (excluding agricultural land, farmhouses, plantation property) with their NRI/OCI spouse, with consideration from inward remittances or non-resident accounts. The marriage must have been registered and subsisted for at least two years.
* **Acquisition by Long-Term Visa (LTV) Holders:**
* Citizens of Afghanistan, Bangladesh, or Pakistan (minority communities) with an LTV may purchase one residential property for self-occupation and one for self-employment, subject to conditions (location, declaration of funds, registration details, potential confiscation for anti-India activities, reporting to authorities), and can sell only after acquiring Indian citizenship (or with prior DCP/FRO/FRRO approval).
* **Repatriation of Sale Proceeds:**
* Repatriation of sale proceeds is allowed subject to conditions: property acquired per existing foreign exchange laws, funds for acquisition paid in foreign exchange through banking channels or from specific non-resident accounts, and limited to two residential properties.
* In case of ECB default, authorized dealer banks can allow overseas lender to sell secured immovable property to a resident Indian and repatriate sale proceeds towards the outstanding loan.
* **Prohibition on Acquisition/Transfer by Citizens of Certain Countries:**
* Citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, Bhutan, Hong Kong, Macau, or DPRK require prior RBI permission for property acquisition/transfer (except leases under five years). This prohibition does not apply to OCIs.
* **Prohibition on Transfer:**
* Persons resident outside India cannot transfer property unless otherwise provided in the Act or Regulations, or with RBI permission.
* Authorised Dealer banks can permit creation of charge on immovable property in favour of overseas lender or security trustee for external commercial borrowing availed.
* **Miscellaneous:**
* All transactions must be through banking channels and subject to applicable taxes/duties.
* **Saving:**
* Existing property holdings by persons resident outside India, acquired in accordance with previous policies, do not require modification.
Impact Analysis:
* **Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs):**
* *Impact:* Defines their rights and restrictions related to property acquisition, transfer, and repatriation of sale proceeds in India.
* *Action Required:* Ensure all property transactions comply with the specified funding sources, reporting requirements, and restrictions on property types.
* **Persons Resident Outside India (excluding NRIs/OCIs):**
* *Impact:* Specifies conditions under which they can acquire property for business activities and the limitations on transfers, particularly for citizens of specified countries.
* *Action Required:* Adhere to regulations for establishing businesses in India and comply with reporting requirements for property acquisitions. Citizens of specified countries must seek prior RBI approval.
* **Foreign Embassies, Diplomats, and Consulate Generals:**
* *Impact:* Provides guidelines for property purchase/sale, requiring clearance from the Ministry of External Affairs and funding through banking channels.
* *Action Required:* Obtain necessary clearances from the Ministry of External Affairs and ensure all transactions are conducted through proper banking channels.
* **Authorised Dealers (Banks):**
* *Impact:* Outlines their role in facilitating property transactions, including repatriation of funds and creation of charges on immovable properties.
* *Action Required:* Ensure compliance with RBI directions for processing property transactions, allowing repatriation, and creating mortgages for external commercial borrowings.
* **Long-Term Visa (LTV) Holders (from specific countries/communities):**
* *Impact:* Grants limited rights to purchase property under specific conditions, subject to government oversight and potential confiscation.
* *Action Required:* Comply with all conditions related to property location, declaration of funds, registration details, and reporting to relevant authorities.
* **Overseas Lenders/Security Trustees:**
* *Impact:* Specifies the conditions under which they can enforce security on immovable property in India related to External Commercial Borrowings (ECBs).
* *Action Required:* Ensure compliance with regulations related to ECBs and security enforcement, particularly the sale of property to resident Indians and repatriation of sale proceeds.
Key Entities Referenced
Reserve Bank of India: The central bank of India, responsible for regulating the foreign exchange market and issuing these regulations.
Foreign Exchange Management Act, 1999: The primary legislation governing foreign exchange transactions in India. Referenced as the 'Act' in the document.
Foreign Exchange Management Acquisition and Transfer of Immovable Property in India Regulations, 2018: The name of the regulations being issued by the Reserve Bank of India. These regulations govern the acquisition and transfer of immovable property in India by non-residents.
Non-Resident Indian (NRI): A person resident outside India who is a citizen of India. Defined within the regulations.
Overseas Citizen of India (OCI): A person resident outside India who is registered as an Overseas Citizen of India Cardholder under Section 7A of the Citizenship Act, 1955. Defined within the regulations.
Citizenship Act, 1955: An act of the Parliament of India that consolidates and amends the law relating to Indian citizenship.
Foreign Exchange Management Establishment in India of a branch office or a liaison office or a project office Regulations, 2016: Regulations pertaining to the establishment of foreign entities' offices in India. This is relevant to acquisition of immovable property for business purposes.
Afghanistan, Bangladesh, Sri Lanka, China, Iran, Nepal, Bhutan, Hong Kong, Macau, Democratic Peoples Republic of Korea: A list of countries whose citizens face restrictions on property acquisition in India, requiring prior approval from the Reserve Bank.
Reserve Bank of India
Foreign Exchange Department
Central Office
Mumbai – 400 001
Notification No. FEMA 21(R)/2018-RB March 26, 2018
Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India)
Regulations, 2018
In exercise of the powers conferred by clause (i) of sub-section (3) of Section 6, sub-section (2) of Section 47
of the Foreign Exchange Management Act, 1999 (42 of 1999), and in supersession of Notification No.
FEMA 21/2000-RB dated May 3, 2000, as amended from time to time, the Reserve Bank of India makes the
following regulations, namely: -
1. Short title and commencement:-
i) These Regulations may be called the Foreign Exchange Management (Acquisition and Transfer of
Immovable Property in India) Regulations, 2018.
ii) They shall come into force from the date of their publication in the Official Gazette.
2. Definitions:-
In these Regulations, unless the context otherwise requires -
(a) 'Act' means the Foreign Exchange Management Act, 1999 (42 of 1999);
(b) An ‘Authorised Dealer' means a person authorised as an authorised dealer under sub- section (1) of
section 10 of the Act;
(c) ‘Non-Resident Indian (NRI)’ means a person resident outside India who is a citizen of India;
(d) ‘Overseas Citizen of India (OCI)’ means a person resident outside India who is registered as an Overseas
Citizen of India Cardholder under Section 7(A) of the Citizenship Act, 1955;
(e) 'Repatriation outside India' means the buying or drawing of foreign exchange from an authorised dealer in
India and remitting it outside India through banking channels or crediting it to an account denominated in
foreign currency or to an account in Indian currency maintained with an authorised dealer from which it can
be converted in foreign currency;
(f) The words and expressions used but not defined in these Regulations shall have the same meanings
respectively assigned to them in the Act.
3. Acquisition and Transfer of Property in India by a Non-Resident Indian or an Overseas Citizen of
India:-
An NRI or an OCI may
(a) acquire immovable property in India other than agricultural land/ farm house/ plantation property:
Provided that the consideration, if any, for transfer, shall be made out of (i) funds received in India through
banking channels by way of inward remittance from any place outside India or (ii) funds held in any non-resident account maintained in accordance with the provisions of the Act, rules or regulations framed
thereunder.
Provided further that no payment for any transfer of immovable property shall be made either by traveler’s
cheque or by foreign currency notes or by any other mode other than those specifically permitted under this
clause.
(b) 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 an NRI or from an OCI, who in any case is a relative as
defined in section 2(77) of the Companies Act, 2013;
(c) acquire any immovable property in India by way of inheritance from a person resident outside India who
had acquired such property (a) in accordance with the provisions of the foreign exchange law in force at the
time of acquisition by him or the provisions of these Regulations or (b) from a person resident in India;
(d) transfer any immovable property in India to a person resident in India;
(e) transfer any immovable property other than agricultural land/ farm house/ plantation property to an NRI
or an OCI.
4. 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 (Establishment in India of a branch office or a liaison office or a project office or any other
place of business) Regulations, 2016, as amended from time to time, a branch, office or other place of
business for carrying on in India any activity, excluding a liaison office, may -
(a) acquire any immovable property in India, which is necessary for or incidental to carrying on
such activity;
Provided that
(i) all applicable laws, rules, regulations or directions for the time being in force are duly
complied with; and
(ii) the person files with the Reserve Bank a declaration in the form IPI as prescribed by
Reserve Bank from time to time, not later than ninety days from the date of such acquisition.
(b) transfer by way of mortgage to an authorised dealer as a security for any borrowing, the
immovable property acquired in pursuance of clause (a).
Provided no person of Pakistan or Bangladesh or Sri Lanka or Afghanistan or China or Iran or Hong Kong or
Macau or Nepal or Bhutan or Democratic People’s Republic of Korea (DPRK) shall acquire immovable
property, other than on lease not exceeding five years, without prior approval of the Reserve Bank.
5. Purchase/ sale of Immovable Property by Foreign Embassies/ Diplomats/ Consulate Generals:-
A Foreign Embassy/ Diplomat/ Consulate General may 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 channels.6. Joint acquisition by the spouse of an NRI or an OCI:-
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/ farm house/ plantation property), jointly with his/ her NRI/ OCI spouse.
Provided that
(i) The consideration for transfer, shall be made out of (i) funds received in India through
banking channels by way of inward remittance from any place outside India or (ii) funds
held in any non-resident account maintained in accordance with the provisions of the Act
and the regulations made by the Reserve Bank;
(ii) No payment for any transfer of immovable property shall be made either by traveler’s
cheque or by foreign currency notes or by any other mode other than those specifically
permitted under this clause;
(iii) Provided that the marriage has been registered and subsisted for a continuous period of not
less than two years immediately preceding the acquisition of such property;
(iv) Provided further that the non-resident spouse is not otherwise prohibited from such
acquisition.
7. Acquisition by a Long-Term Visa holder:-
A person being a citizen of Afghanistan, Bangladesh or Pakistan belonging to minority communities in those
countries, namely, Hindus, Sikhs, Buddhists, Jains, Parsis and Christians who is residing in India and has
been granted a Long Term Visa (LTV) by the Central Government may purchase only one residential
immovable property in India as dwelling unit for self-occupation and only one immovable property for
carrying out self-employment subject to the following conditions:
(a) the property should not be located in and around restricted/ protected areas so notified by the
Central Government and cantonment areas;
(b) 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/ she is residing in India on LTV;
(c) the registration documents of the property should mention the nationality and the fact that such
person is on LTV;
(d) the property of such person may be attached/ confiscated in the event of his/ her indulgence in
anti-India activities;
(e) a copy of the documents of the purchased property shall be submitted to the Deputy
Commissioner of Police (DCP)/ Foreigners Registration Office (FRO)/ Foreigners Regional
Registration Office (FRRO) concerned and to the Ministry of Home Affairs (Foreigners Division);
(f) 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/FRO/FRRO concerned.
8. Repatriation of sale proceeds:-
(a) A person referred to in sub-section (5) of Section 6 of the Act, or his successor shall not, except with the
general or specific permission of the Reserve Bank, repatriate outside India the sale proceeds of any
immovable property referred to in that sub-section;(b) In the event of sale of immovable property other than agricultural land/ farm house/ plantation property in
India by an NRI or an OCI, the authorised dealer may allow repatriation of the sale proceeds outside India,
provided the following conditions are satisfied, namely:
(i) the immovable property was acquired by the seller in accordance with the provisions of the foreign
exchange law in force at the time of his acquisition or the provisions of these Regulations;
(ii) the amount for acquisition of the immovable property was paid in foreign exchange received
through banking channels or out of funds held in Foreign Currency Non-Resident Account or out of
funds held in Non-Resident External account;
(iii) in the case of residential property, the repatriation of sale proceeds is restricted to not more than
two such properties.
(c) In the event of failure in repayment of external commercial borrowing availed by a person resident in
India under the provisions of the Foreign Exchange Management (Borrowing or Lending in Foreign
Exchange) Regulations, 2000, as amended from time to time, a bank which is an authorised dealer may
permit the overseas lender or the security trustee (in whose favour the charge on immovable property has
been created to secure the ECB) to sell the immovable property on which the said loan has been secured
only to a (by the) person resident in India and to repatriate the sale proceeds towards outstanding dues in
respect of the said loan and not any other loan.
9. Prohibition on acquisition or transfer of immovable property in India by citizens of certain
countries:-
No person being a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, Bhutan,
Hong Kong or Macau or Democratic People’s Republic of Korea (DPRK) without prior permission of the
Reserve Bank shall acquire or transfer immovable property in India, other than lease, not exceeding five
years.
Provided this prohibition shall not apply to an OCI.
Explanation: For the purpose of this regulation the term “citizen” shall include natural persons and legal
entities.
10. Prohibition on transfer of immovable property in India:-
Save as otherwise provided in the Act or Regulations, no person resident outside India shall transfer any
immovable property in India:-
Provided that
(i) The Reserve Bank may, for sufficient reasons, permit the transfer, subject to such conditions as may
be considered necessary.
(ii) A bank which is an authorised dealer may, subject to the directions issued by the Reserve Bank in
this behalf, permit a person resident in India or on behalf of such person to create charge on his
immovable property in India in favour an overseas lender or security trustee, to secure an external
commercial borrowing availed under the provisions of the Foreign Exchange Management
(Borrowing or Lending in Foreign Exchange) Regulations, 2000, as amended from time to time.
(iii) An Authorized Dealer in India being the Indian correspondent of an overseas lender may, subject to
the directions issued by the Reserve Bank in this regard, create a mortgage on an immovable
property in India owned by an NRI or an OCI, being a director of a company outside India, for a loan
to be availed by the company from the said overseas lender.Provided
(a) the funds shall be used by the borrowing company only for its core business purposes overseas;
(b) in case of invocation of charge, the Indian bank shall sell the immovable property to an eligible
acquirer and remit the sale proceeds to the overseas lender.
(iv) A person resident outside India who has acquired any immovable property in India in accordance
with foreign exchange laws in force at the time of such acquisition or with the general or specific
permission of the Reserve Bank may transfer such property to a person resident in India provided the
transaction takes place through banking channels in India and provided that the resident is not
otherwise prohibited from such acquisition.
11. Miscellaneous:-
Any transaction involving acquisition or transfer of immovable property under these regulations shall be
undertaken:
(a) through banking channels in India;
(b) subject to payment of applicable taxes and other duties/ levies in India.
12. Saving:-
Any existing holding of immovable property in India by a person resident outside India made in accordance
with the policy in existence at the time of such acquisition would not require any modifications to confirm to
these regulations.
(Jyoti Kumar Pandey)
Chief General Manager
Foot Note:-
Published in the Official Gazette of Government of India – Extraordinary – Part-II, Section 3, Sub-
Section (i) dated 26.3.2018- G.S.R.No. 280 (E)