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Regulations regarding Purchase and Sale of Properties by NRIs (Non_Resident Indians)

Foreign Exchange Regulation Act, 1973 and the Income-Tax Act, 1961 regulates the purchase and sale of immovable properties in India by Non-Resident Indians (NRIs). The Union government of India is encouraging NRIs to come forward and invest in properties in India. There has been much liberalization in policies and procedures carried out by the government. Some of such important liberalized policies are listed down for information.

Non-Residents of Indian citizens do not require any permission for acquisition, transfer or disposal by way of gift of immovable property which is not a farmhouse or agricultural land or plantations property. Declaration of form IPI-7 for acquisition of commercial property for carrying on any industrial, commercial or trading activity by their proprietary partnership firm in India is required to be filed with RBI within 90 days from the date of purchase.

There is no prior permission needed from Reserve Bank of India for Non-Resident Indians holding Indian passport to buy a residential or commercial immovable property in India. The transaction amount may be paid either by remittance of funds from countries outside India or through Non-resident accounts in banks.

Non-Resident Indians holding foreign passport also have schemes to buy properties in India. The Reserve Bank of India has allowed them to acquire, hold, transfer or dispose of by way of sale or inheritance, immovable properties situated in India. The general permission is granted under certain conditions. Few important conditions are stated below:

The property should be used for purchaser’s bonafide residential use. The purchase transaction amount should be paid either by remittance of funds from countries outside India or through Non-resident accounts in banks. Income accruing from rental from the properties purchased or acquired by inheritance will not be allowed to be repatriated abroad. This is still valid even if the purchase transaction happened through NRE bank account.

The Reserve Bank of India has granted general permission to non-residents holding Indian passports and foreign citizens of Indian origin, whether resident in India or not, to dispose of by sale or inheritance immovable properties situated in India subject to certain conditions. But such properties can be sold to another foreign national of Indian origin, provided, purchase transaction amount may be paid either by remittance of funds from countries outside India or through Non-resident accounts in banks.

There is another requirement to be met: non-residents holding Indian passports and foreign citizens of Indian origin should submit a declaration in form IPI-7 to chief General Manager, Exchange Control Department, Foreign Investment Division, Central Office, Reserve Bank of India, Bombay. This should be done within a period of 90 days from the date of purchase.

Welcome NRIs, to KeralaDreamProperties.com. We have great listings of projects and properties and projects in Kerala to pick your buy. We can assist you in supporting the purchase of your favorite property in India - about legal terms, NRI requirements and purchase procedure.