created by Rajesh Dhruva

Representation to Finance Ministry & Financial Institutions  » Anomalies in Times of India / Economic Times article regarding : "NRIs and PIOs can invest in real Estate in India - 01.12.2008

Encl: Relevant Provisions of Regulations/Notifications.

 

Annexure - 1.

 

Foreign Exchange Management (Acquisition and transfer of immovable property in India) Regulations, 2000

 

7.  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 or Bhutan without prior permission of the Reserve Bank shall acquire or transfer immovable property in India, other than lease, not exceeding five years.

 

Annexure - 2.

 

Foreign Exchange Management (Acquisition and transfer of immovable property in India) Regulations, 2000

 

3.  Acquisition and Transfer of Property in India by an Indian Citizen resident outside India.

                   

A person resident outside India who is a citizen of India may -

a)acquire immovable property in India other than an agricultural property, plantation, or a farm house:

Provided that in case of acquisition of immovable property, payment of purchase price, if any, shall be made out of

  (i) funds received in India through normal 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.

Provided further that no payment of purchase price for acquisition of immovable property shall be made either by  traveller's cheque or by foreign currency notes or by other mode other than those specifically permitted by this clause.

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

c)transfer any immovable property other than agricultural or plantation property or farm house to a person resident outside India who is a citizen of India or to a person of Indian origin resident outside India.

 

4.  Acquisition and Transfer of Property in India by a Person of Indian origin.

A person of Indian origin resident outside India may -

(a)acquire immovable property in India other than an agricultural property , plantation, or a farm house :

Provided that in case of acquisition of immovable property, payment of purchase price, if any, shall be made out of

  (i) funds received in India through normal 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.

Provided further that no payment of purchase price for acquisition of immovable property shall be made either by traveller's cheque or currency notes of any foreign country or any mode other than those specifically permitted by 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 a person resident outside India who is a citizen of India or from a person of Indian origin resident outside India;

(c)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 provisions of the foreign exchange law in force at the time of acquisition by him or the provisions of these Regulations or from a person resident in India;

(d)transfer any immovable property in India other than agricultural land/farm house/plantation property, by way of sale to a person resident in India;

(e)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;

(f)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 resident outside India.

 

Annexure - 3.

RBI/2008- 2009/16
Master Circular No. 03 /2008- 09

July 1, 2008

Master Circular on Non-Resident Ordinary Rupee (NRO) Account

6.1 Remittance Of Assets By A Foreign National Of Non-Indian Origin

A citizen of a foreign state, not being a citizen of Nepal or Bhutan or a Person of Indian Origin (PIO), who has retired from an employment in India, or has inherited the assets from a person referred to in sub-section (5) of Section 6 of the FEMA; or is a widow resident outside India and has inherited assets of her deceased husband who was an Indian citizen resident in India, may remit an amount, not exceeding USD 1 million per financial year out of the balances in the account, on production of documentary evidence in support of acquisition, inheritance or legacy of assets by the remitter and an undertaking by the remitter and certificate by a Chartered Accountant in the formats prescribed by the Central Board of Direct Taxes vide their circular no.10/2002 dated October 9, 2002.

 

6.2 Remittance of assets by an NRI/PIO

(a) NRI/PIO may remit an amount, not exceeding USD 1 million per financial year, out of the balances held in NRO accounts / sale proceeds of assets / the assets in India acquired by him by way of inheritance / legacy, on production of documentary evidence in support of acquisition, inheritance or legacy of assets by the remitter, and an undertaking by the remitter and certificate by a Chartered Accountant in the formats prescribed by the Central Board of Direct Taxes vide their circular no.10/2002 dated October 9, 2002.

 

(b) NRI/PIO may, within the overall limit of USD 1 million. As stated above, remit sale proceeds of assets acquired under a deed of settlement made by either of his parents or a close relative (as defined in Section 6 of the Companies Act, 1956) and the settlement taking effect on the death of the settler, on production of the original deed of settlement and an undertaking by the remitter and a certificate by a Chartered Accountant in the formats prescribed by the Central Board of Direct Taxes vide their circular no.10/2002 dated October 9, 2002.

 

6.3 Assets acquired in India out of rupee funds

NRI/PIO may remit sale proceeds of immovable property purchased by him as a resident or out of rupee funds as NRI/PIO, without any lock-in-period, subject to the above limit of USD 1 million, per financial year.

 

6.4 Restrictions

(a) The remittance facility in respect of sale proceeds of immovable property is not available to citizens of Pakistan, Bangladesh, Sri Lanka, China, Afghanistan, Iran, Nepal and Bhutan.

(b) The facility of remittance of sale proceeds of other financial assets is not available to citizens of Pakistan, Bangladesh, Nepal And Bhutan.

 

Annexure - 4.

 

 

Foreign Exchange Management Act 

RESERVE BANK OF INDIA
FOREIGN EXCHANGE DEPARTMENT
CENTRAL OFFICE
MUMBAI - 400 001

 

RBI/2006-07/180
A.P. (DIR Series) Circular No. 12

November 16, 2006

 

To

 

All Category - I Authorised Dealer Banks

 

Madam/Sir,

Facilities to NRIs/PIO and Foreign Nationals - Liberalisation

Attention of Authorised Dealer Category - I (AD Category - I) banks is invited to Regulation 4 of Foreign Exchange Management (Remittance of Assets) Regulations, 2000 notified vide Notification No. FEMA.13/2000-RB dated 3rd May 2000 and as amended from time to time, and A. P. (DIR Series) Circular No. 67 dated January 13, 2003.

 

2. The existing regulations permit Non-Resident Indians (NRIs) and Persons of Indian Origin (PIO) to remit up to USD one million per calendar year for any bonafide purpose out of the balances in their Non-Resident Ordinary (NRO) accounts. The balance in the NRO accounts may also include the sale proceeds of immoveable property acquired by the non-resident out of her/his resources in India, or sale proceeds of property received by way of inheritance or gift. The remittance of sale proceeds of the immoveable property is at present subject to a lock-in period of 10 years.

 

3. With a view to further liberalise the procedure and provide greater flexibility, the lock-in period of 10 years for remittance of sale proceeds of immovable property has been dispensed with. Accordingly, AD Category - I banks may, now allow remittances out of balances in NRO accounts including sale proceeds of immovable property provided the amount does not exceed USD one million per financial year (April-March). Other terms and conditions will remain unchanged.

4. AD - Category I banks may furnish, on a quarterly basis, a statement on the number of applicants and total amount remitted, as per proforma annexed, to the Chief General Manager-in-Charge, Foreign Exchange Department, Foreign Investments Division (NRFAD), Reserve Bank of India, Central Office, Mumbai-400001 within 10 days of the reporting quarter. Click here to send the soft copy of the statement by e-mail.

 

5. Necessary amendments to the Foreign Exchange Management (Remittance of Assets) Regulations, 2000 are being notified separately.

 

6. AD Category- I banks may bring the contents of the circular to the notice of their constituents concerned.

 

7. The directions contained in this circular have been issued under Sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and is without prejudice to permissions / approvals, if any, required under any other law.

Yours faithfully,

(Salim Gangadharan)
Chief General Manager-in-Charge

 

 

Annexure - 5.

Foreign Exchange Management (Remittance of Assets) Regulations, 2000

 

4. Permission for remittance of assets in certain cases.
A Non-Resident Indian (NRI)/Person of Indian Origin (PIO) may remit an amount, not exceeding US $ 1,000,000 (US Dollar One million only) per financial year,
Out of the balances held in NRO accounts/sale proceeds of assets/the assets in India acquired by him by way of inheritance/legacy on production of :
(a) documentary evidence in support of acquisition, inheritance or legacy of assets by the remitter, and
(b) an undertaking by the remitter and certificate from a Chartered Accountant in the format prescribed by the Central Board of Direct Taxes, Ministry of Finance, Government of India in their Circular No. 10/2002, dated October 9, 2002.

Under a deed of settlement made by either of his parents or a close relative (as defined in section 6 of the Companies Act, 1956) and the settlement taking effect on the death of the settler, on production of:

(a)the original deed of settlement; and;
(b)an undertaking by the remitter and certificate from a Chartered Accountant in the format prescribed by the Central Board of Direct Taxes, Ministry of Finance, Government of India in their Circular No. 10/2002, dated October 9, 2002.

Provided that where the remittance under clauses (i) and (ii) is made in more than one instalment, the remittance of all instalments made through the same Authorised Dealer.

 

Annexure - 6.

 

 6.  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 prior 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 a person resident outside India who is a citizen of India or a person of Indian origin, 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 acquisition by him or the provisions of these Regulations;


(ii)the amount to be repatriated does not exceed (a) 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 (b) the foreign currency equivalent ,as on the date of payment, of the amount paid where such payment was made from the funds held in Non-Resident External account for acquisition of the property; and

 

(iii)in the case of residential property, the repatriation of sale proceeds is restricted to not more than two such properties.

 

Annexure - 7.

 

 

Foreign Exchange Management (Borrowing and Lending in Rupees) Regulations, 2000.

8.  Providing housing loan in rupees to a non-resident.

An authorised dealer or a housing finance institution in India approved by the National Housing Bank may provide housing loan to a non-resident Indian or a person of Indian origin resident outside India, for acquisition of a residential accommodation in India, subject to the following conditions, namely:

a) the quantum of loans, margin money and the period of repayment shall be at par with those applicable to housing finance provided to a person resident in India;

b) the loan amount shall not be credited to Non-resident External (NRE) / Foreign Currency Non-resident (FCNR)/Non-resident Non-repatriable (NRNR) account of the borrower;

c) the loan shall be fully secured by equitable mortgage of the property proposed to be acquired, and if necessary, also by lien on the borrower's other assets in India;

d) the installment of loan, interest and other charges, if any, shall be paid by the borrower by remittances from outside India through normal banking channels or out of funds in his Non-resident External (NRE)/Foreign Currency Non-resident (FCNR) account in India, or out of rental income derived from renting out the property acquired by utilisation of the loan; or by any relative of the borrower in India by crediting the borrower’s loan account through the bank account of such relative.

Explanation - The word ‘relative’ means ‘relative’ as defined in section 6 of the Companies Act, 1956

e) the rate of interest on the loan shall conform to the directives issued by the Reserve Bank or, as the case may be, by the National Housing Bank.