Immovable Property in India
ACQUISITION AND TRANSFER OF IMMOVABLE PROPERTY IN INDIA
BY NON-RESIDENT INDIANS/ PERSONS OF INDIAN ORIGIN
The Foreign Exchange Management Act, 199 (FEMA), came in force with effect from June 1, 2000. Section 6(3)(i) of the Act empowers the Reserve Bank to frame regulations to prohibit, restrict or regulate the acquisition or transfer of immovable property in India by certain persons mainly residents outside India. The restrictions under this clause are not applicable to a lease of immovable property for a period not exceeding five years. The regulations made by the Reserve Bank are called Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations, 2000, and have notified vide Notification FEMA No.21/2000-RB of May 2, 2000 as amended from time to time.
Non-Resident Indians or Persons of Indian Origin are not allowed to make investment in India, in any form, in any company or partnership firm or proprietary concern or any entity, whether incorporated or not which is engaged or proposes to engage –
- in the business of chit fund, or
- as Nidhi Company, or
- in agricultural or plantation activities or
- in real estate business, or construction of farm houses or
- in trading in Transferable Development Rights (TDRs). Transferable Development Rights means certificates issued in respect of category of land acquired for public purpose either by Central or State Government in consideration of surrender of land by the owner without monetary compensation, which are transferable in part or whole.
Explanation : - "Real Estate Business" shall not include development of townships, construction of residential/ commercial premises, roads or bridges.
Purchase of immovable property in India by Non-Resident Indians and Persons of Indian Origin – Mode of Payment – Clarification
Presently, Indian citizen resident outside India and Person of Indian Origin can acquire immovable property in India other than agricultural property, shall be made 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 Foreign Exchange Management Act, 1999 and the regulations made by Reserve Bank of India from time to time. It is further clarified 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 under FEMA Regulations.