Monday, October 15, 2012

Regulations pertaining to the NRI Acquisition of Real Estate in India

Questions of whether the NRIs are allowed to invest in India or not and, if yes, then what are rules and regulations of the same, often crop up in the mind. There are various regulatory measures which can facilitate as well as prohibit NRI investments in realty sector in India. To understand about NRI investments in Indian realty sector such as at Shiv Sai Ozone Park, it is important to determine the residential status and citizenship of the individual as well as whether the person is of Indian origin (PIO) or not. This article examines only the acquisitions aspects of real estate by NRIs.

Under FEMA, a person is considered to be resident in India if he or she stays a period of more than one hundred and eighty two days in preceding financial year and the purpose of stay is such that an indefinite period of stay might be required, such as for doing business or vocation or for doing some employment. Both period of stay and purpose of stay are important. The people who are not residents in India are residents outside India.
Now, the foreign nationals who are residents in India do not need the approval from RBI for purchasing immovable property in India unless they are nationals of Pakistan, Bangladesh, Sri Lanka, China, Iran, Nepal, Bhutan and Afghanistan. But, if the approvals are required by other authorities, then these shall be met.

A person who is a citizen of India but is resident outside India (NRI) or a PIO has the general permission to buy commercial and residential property only. He or she is prohibited from buying other properties. There is no need to file any documents with the RBI in this case. Further, there is no limitation or restriction on the number of properties which can be bought under this general permission. It shall also be made clear that any foreign national on non-Indian origin and resident outside India can not be sold the property acquired in this way. So, a foreign national of non-Indian origin resident outside India can not purchase immovable property such as at Shiv Sai Ozone Park Faridabad.

Let us now examine the regulations pertaining to the gift of property. At first, the NRI or PIO can acquire residential and commercial property as a gift from a person resident in India or a NRI or a PIO. But, a foreign national of non-Indian origin resident outside India cannot acquire residential or commercial property as gift.

In matters of acquisition of property by way of inheritance, person resident outside India ( be it NRI, PIO or foreign national of non-Indian origin) is permitted to hold property if it comes to him or her in inheritance from a person who is resident in India. However, if the property is to be acquired from a person who is resident outside India, then the RBI approval is required. RBI approval is given on the condition that the person has acquired such property in accordance with the foreign exchange law or FEMA regulations.

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