India has witnessed growth in several sectors for the past few decades, real estate is one of them. It has also come to light that people inside and outside India have been interested in buying several types of properties in India. To understand who can purchase a property in India, it is important to know the various categories of persons as per the law of India, these are Indian citizen, Non-resident Indian (NRI), Person of Indian Origin (PIO), Overseas Citizen of India (OCI). Other than this there is one more category called foreign nationals.
An NRI or a PIO are not allowed to acquire agricultural land or property on which plantation has been done, a farmhouse, which resident citizens can. If RBI gives special approval to an NRI or a PIO then they can buy these lands with the permission of the Government of India. An NRI can purchase and hence acquire (with specified payment methods), any immovable property in India but not agricultural land or a farmhouse. If the property is desired to be transferred under this category there are few restrictions. The people to whom such properties can be transferred are:
A citizen of India who resided in some foreign country
A person of Indian origin not residing in India
An Indian resident
Though NRIs cannot own agricultural lands and farmhouses they surely can inherit this property in the future from citizens of India who permanently reside in India. In the same way, a PIO can also not buy agricultural land or farmhouse but can inherit them. A PIO can also inherit the real estate from an NRI or a PIO in India, subject to a few conditions. RBI’s permission must be taken in case the inherited property goes to a foreign citizen who does not reside in India.
A person from whom the property is inherited by the NRI must have acquired the property in accordance with the provisions of the law of foreign exchange, prevalent at that time. Purchase of any residential or commercial property is included under general permissions and as such a PIO is not required to file any documents specified with RBI. The same goes with regard to an NRI. Any real estate other than the agricultural land requires the documents to be submitted as mentioned below:
OCI cad
Passport
Passport size photographs
Address proof
PAN card
There is no limit of numbers specified by law for NRIs or PIOs to acquire residential or commercial properties. However, the only limitation is that they can repatriate sales proceeds of the property dealings and convert the money in the currency of the country they are residing in, of any two residential properties outside India.
Foreign Exchange Management Act (FEMA) provides for a foreign national resident in India to acquire an Indian immovable property. This applies to citizens of all countries except Pakistan, Bangladesh, Nepal, Bhutan, Sri Lanka, Afghanistan, China, Iran, Macau, Hong Kong or the Democratic People’s Republic of Korea (DPRK), for whom prior approval must be taken from RBI to do so.
Any branch in India of a foreign company introduced with all the permissions from FEMA or FERA can buy any immovable property in India. This property must be used for business-related activities and must be complied with all the laws and regulations applicable to the said business. An authorised person of the company must submit a declaration called the International Payment Instruction form (IPI) to the RBI within 90 days of acquiring the property. In this case, a person residing outside India can mortgage his property for this purpose.
Persons from the above-mentioned countries need to take special permission from RBI to hold on to the property for more than 5 years, irrespective of their residential status. Businesses incorporated in these countries can also not acquire immovable properties in India to open a branch in India.
An NRI or PIO can acquire residential or commercial property in India by way of gift from a resident Indian or NRI or a PIO but a foreign national or a person who is not of an Indian origin cannot acquire the property by way of gift. As per Companies Act 2013, section 2(77), an NRI or OCI can give residential or commercial property to NRIs or OCIs by way of gift in case they are related to them. An NRI or OCI can gift agricultural land or a farmhouse to an Indian resident citizen. An NRI can also transfer residential or commercial properties as a gift.
A foreign national who is not of an Indian origin, who resides outside India is not allowed to purchase real estate in India but they can acquire immovable property on a lease not exceeding for 5 years. They can acquire any immovable property other than agricultural land or a farmhouse jointly with their spouse if the spouse is an NRI or OCI and must not be prohibited from acquiring from such properties.
Persons of Indian Origin (PIOs) are allowed to inherit any property including agricultural property from a person who acquired the said property with the foreign exchange law or FEMA, in effect at the time of acquisition. A PIO can gift the residential or commercial property to resident Indians, NRIs and PIOs.
Real estate in India can be purchased and sold by the Foreign Embassies, Diplomats, Consulate Generals (not in the capital), other than the agricultural land and farmhouse with the clearance from the Ministry of External Affairs, Government of India.
