RBIGuidelines

Acquisition and Transfer of Immovable Property in India by a person resident outside India
(Updated as on April 08, 2011)
Acquisition of immovable property in India by persons resident outside India (foreign national) is
regulated in terms of section 6 (3) (i) of the Foreign Exchange Management Act (FEMA), 1999 as well
as by the regulations contained in the Notification No. FEMA 21/2000-RB dated May 3, 2000, as
amended from time to time. Section 2 (v) and Section 2 (w) of FEMA, 1999 defines `person resident
in India' and a `person resident outside India', respectively. Person resident outside India is
categorized as Non- Resident Indian (NRI) or a foreign national of Indian Origin (PIO) or a foreign
national of non-Indian origin. The Reserve Bank does not determine the residential status. Under
FEMA, residential status is determined by operation of law. The onus is on an individual to prove his /
her residential status, if questioned by any authority.s
A person resident in India who is not a citizen of India is also covered by the relevant Notifications.
In terms of the provisions of Section 6(5) of FEMA 1999, a person resident outside India can hold,
own, transfer or invest in Indian currency, security or any immovable property situated in India if such
currency, security or property was acquired, held or owned by such person when he was a resident in
India or inherited from a person who was a resident in India.
The regulations under Notification No. FEMA 21/2000-RB dated May 3, 2000, as amended from time
to time, permit a NRI or a PIO to acquire immovable property in India, other than agricultural land or,
plantation property or farm house. Further, foreign companies who have been permitted to open a
Branch or Project Office in India are also allowed to acquire any immovable property in India, which is
necessary for or incidental to carrying on such activity. Such dispensation is however not available to
entities which are permitted to open liaison offices in India.
The restrictions on acquiring immovable property in India by a person resident outside India would not
apply where the immovable property is proposed to be acquired by way of a lease for a period not
exceeding 5 years or where a person is deemed to be resident in India.
In order to be deemed to be a person resident in India, from FEMA angle, the person would need to
comply with the provisions of Section 2(v) of FEMA 1999. The Press Release dated February 1, 2009
issued by Government of India in this regard is enclosed as Annex.
Note: Citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan cannot
acquire or transfer immovable property in India, (other than on lease not exceeding five years) without
the prior permission of the Reserve Bank.
NRIs/ PIOs are allowed to repatriate an amount up to USD one million, per financial year (AprilMarch), out of the balances held in the Non-Resident (Ordinary) Rupee (NRO) account, subject to
compliance with applicable tax requirements. This amount includes sale proceeds of assets acquired
by way of inheritance or settlement
While the statutory and regulatory provisions are indicated above, we have been receiving several
queries from individuals on operational procedures regarding acquisition, holding and transferring of
immovable property in India and repatriating / remitting the proceeds arising from sale of such
property. In order to clarify these issues, we have attempted a set of FAQs on various issues relating
to acquisition and transfer of immovable property in India by a person resident outside India and a
person resident in India who is not a citizen of India.
In case there are other issues to be resolved, a reference may be made to the
Chief General Manager-in-Charge,
Foreign Exchange Department,

Foreign Investment Division,

Reserve Bank of India,
Central Office,
Mumbai- 400 001.

The FAQs cover the following topics :

A. Acquisition of Immovable Property in India by a person resident outside India, i.e., by a NRI / PIO /
foreign national of non-Indian origin by way of purchase / gift / inheritance.
B. Transfer of immovable property in India by a person resident outside India by way of
i) sale
ii) gift
iii) mortgage
C. Mode of payment for purchase of immovable property in India.
D. Repatriation of sale proceeds of residential / commercial property, in India, outside India acquired
by NRI / PIO by way of
i) purchased
ii) gift
iii) inheritance
E. Provisions for Foreign Embassies / Diplomats / Consulates General
F. Other Aspects.

A. Acquisition of Immovable Property in India through purchase / gift/ inheritance

Q.1. Who can purchase immovable property in India?
Ans. Under the general permission available, the following categories can purchase
immovable property in India:
i) Non-Resident Indian (NRI)1
ii) Person of Indian Origin (PIO)2
The general permission, however, covers only purchase of residential and commercial
property and is not available for purchase of agricultural land / plantation property / farm
house in India.
Q.2. Can NRI/PIO acquire agricultural land/ plantation property / farm house in India?
Ans. No.
Q.3. Are any documents required to be filed with the Reserve Bank after the purchase?
Ans. No. An NRI / PIO who has purchased residential / commercial property under general
permission, is not required to file any documents/reports with the Reserve Bank.
Q.4. How many residential / commercial properties can NRI / PIO purchase under the
general permission?
Ans. There are no restrictions on the number of residential / commercial properties that can
be purchased.

Q.5. Can a foreign national of non-Indian origin be a second holder to immovable

property purchased by NRI / PIO?
Ans. No.
Q.6. Can a foreign national of non-Indian origin resident outside India purchase
immovable property in India?
Ans. No. A foreign national of non-Indian origin, resident outside India cannot purchase any
immovable property in India unless such property is acquired by way of inheritance from a
person who was resident in India. However, he / she can acquire or transfer immovable
property in India, on lease, not exceeding five years. In such cases, there is no requirement of
taking any permission of /or reporting to the Reserve Bank.
Q.7. Can a foreign national who is a person resident in India purchase immovable
property in India?
Ans. Yes, a foreign national who is a person resident in India within the meaning of Section
2(v) of FEMA, 1999 can purchaseimmovable property in India,but the person concerned
would have to obtain the approvals and fulfil the requirements, if any, prescribed by other
authorities, such as, the State Government concerned, etc. The onus to prove his/her
residential status is on the individual as per the extant FEMA provisions, if required by any
authority. However, a foreign national resident in India who is a citizen of Pakistan,
Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal and Bhutan would require prior
approval of the Reserve Bank.
Q.8. Can the branch / liaison office of a foreign company purchase immovable property
in India?
Ans. A foreign company which has established a Branch Office or other place of business in
India, in accordance with the Foreign Exchange Management (Establishment in India of
Branch or Office or other Place of Business) Regulations, 2000, can acquire any immovable
property in India, which is necessary for or incidental to carrying on such activity. The
payment for acquiring such a property should be made by way of foreign inward remittance
through the proper banking channels. A declaration in form IPI should be filed with the
Reserve Bank within ninety days from the date of acquiring the property. Such a property can
also be mortgaged with an Authorised Dealer as a security for the purpose of borrowings. On
winding up of the business, the sale proceeds of such property can be repatriated
only with the prior approval of the Reserve Bank. Further, acquisition of immovable property
by entities incorporated in Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal
and Bhutan and who have set up Branch Offices in India and would require prior approval of
the Reserve Bank.
However, if the foreign company has established a Liaison Office in India, it cannot acquire
immovable property. In such cases, Liaison Offices can acquire property by way of lease not
exceeding 5 years.
Q.9. Can a NRI/PIO acquire immovable property in India by way of gift? Can a foreign
national acquire immovable property in India by way of gift?
Ans. (a) Yes, NRIs and PIOs can freely acquire immovable property by way of gift
either from
i) a person resident in India; or
ii) an NRI; or
iii) a PIO.

However, the property can only be commercial or residential in nature. Agricultural land /
plantation property / farm house in Indiacannot be acquired by way of gift.
(b) A foreign national of non-Indian origin resident outside India cannot acquire any
immovable property in India by way of gift.
Q.10. Can a non-resident inherit immovable property in India?
Ans. Yes, a person resident outside India i.e. i) an NRI; ii) a PIO; and iii) a foreign national of
non-Indian origin can inherit and hold immovable property in India from a person who was
resident in India. However, a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China,
Iran, Nepal and Bhutan should seek prior approval of the Reserve Bank for inheriting
immovable property in India.
Q.11. From whom can a non-resident person inherit immovable property?
Ans. A person resident outside India (i.e. NRI or PIO or foreign national of non-Indian origin)
can inherit immovable property from
(a) a person resident in India
(b) a person resident outside India
However, the person from whom the property is inherited should have acquired the same in
accordance with the foreign exchange law in force or FEMA regulations, applicable at the
time of acquisition of the property.

B. Transfer of immovable property in India

(i) Transfer by way of sale
Q.12. Can an NRI/ PIO/foreign national sell his residential / commercial property?
Ans. (a) NRI can sell property in India to
i) a person resident in India; or
ii) an NRI; or
iii) a PIO.
(b) PIO can sell property in India to
i) a person resident in India; or
ii) an NRI; or
iii) a PIO with the prior approval of the Reserve Bank
(c) Foreign national of non-Indian origin including a citizen of Pakistan or Bangladesh or Sri Lanka or
Afghanistan or China or Iran or Nepal or Bhutan can sell property in India with prior approval of the
Reserve Bank to
i) a person resident in India
ii) an NRI
iii) a PIO
Q.13. Can a non-resident owning / holding an agricultural land / a plantation property / a farm
house in India sell the said property?

Ans. (a) NRI / PIO may sell agricultural land /plantation property/farm house to a person resident in
India who is a citizen of India.
(b) Foreign national of non-Indian origin resident outside India would need prior approval of the
Reserve Bank to sell agricultural land/plantation property/ farm house in India.
(ii) Transfer by way of gift
Q.14. Can a non-resident gift his residential / commercial property?
Ans. Yes.
(a) NRI / PIO may gift residential / commercial property to
(i) person resident in India or
(ii) an NRI or
(iii) PIO.
(b) A foreign national of non-Indian origin requires the prior approval of the Reserve Bank for gifting
the residential / commercial property.
Q.15. Can an NRI / PIO / foreign national holding an agricultural land / a plantation property / a
farm house in India, gift the same?
Ans. (a) NRI / PIO can gift an agricultural land / a plantation property / a farm house in
India only to a person resident in India who is a citizen of India.
(b) A foreign national of non-Indian origin would require the prior approval of the Reserve Bank to
gift an agricultural land / a plantation property / a farm house in India.
(iii) Transfer through mortgage
Q.16. Can residential / commercial property be mortgaged by NRI/ PIO?
Ans. i) NRI / PIO can mortgage a residential / commercial property to:
(a) an Authorised Dealer / the housing finance institution in India without the approval of Reserve
Bank
(b) a bank abroad, with the prior approval of the Reserve Bank.
ii) A foreign national of non-Indian origin can mortgage a residential / commercial property only with
prior approval of the Reserve Bank.
iii) A foreign company which has established a Branch Office or other place of business in accordance
with FERA/FEMA regulations has general permission to mortgage the property with an Authorised
Dealer in India.
B. Mode of payment for purchase of immovable property in India.
Q.17. How can an NRI / PIO make payment for purchase of residential / commercial
property in India?
Ans. Payment can be made by NRI / PIO out of:
(a) funds remitted to India through normal banking channels or
(b) funds held in NRE / FCNR (B) / NRO account maintained in India

No payment can be made either by travellers cheque or by foreign currency notes or by other
mode except those specifically mentioned above.
Q.18 Is repatriation of application money for booking of flat / payment made to the
builder by NRI/ PIO allowed when the flat or plot is not allotted or the booking /
contract is cancelled?
Ans. The Authorised Dealers can allow NRIs / PIOs to creditrefund of application/ earnest
money/ purchase consideration made by the house building agencies/ seller on account of
non-allotment of flat/ plot/ cancellation of bookings/ deals for purchase of residential,
commercial property, together with interest, if any, net of income tax payable thereon, to
NRE/FCNR account, provided, the original payment was made out of NRE/FCNR account of
the account holder or remittance from outside India through normal banking channels and the
Authorised Dealer is satisfied about the genuineness of the transaction.
Q.19. Can NRI / PIO avail of loan from an authorised dealer for acquiring flat / house in
India for his own residential use against the security of funds held in his NRE Fixed
Deposit account / FCNR (B) account? How the loan can be repaid?
Ans. Yes, such loans are permitted subject to the terms and conditions laid down in
Schedules 1 and 2 to the Notification No. FEMA 5/2000-RB dated May 3, 2000 viz. Foreign
Exchange Management (Deposit) Regulations, 2000, as amended from time to time. Banks
cannot grant fresh loans or renew existing loans in excess of Rs. 100 lakhs against NRE and
FCNR (B) deposits, either to the depositors or to third parties. The banks should also not
undertake artificial slicing of the loan amount to circumvent the ceiling of Rs. 100 lakh.
Such loans can be repaid in the following manner :
(a) by way of inward remittance through normal banking channel or
(b) by debit to the NRE / FCNR (B) / NRO account of the NRI/ PIO or
(c) out of rental income from such property
(d) by the borrower's close relatives, as defined in section 6 of the Companies Act, 1956,
through their account in India by crediting the borrower's loan account.
Q.20. Can NRI / PIO, avail of housing loan in Rupees from an Authorised Dealer or a
Housing Finance Institution in India approved by the National Housing Bank for
purchase of residential accommodation or for the purpose of repairs / renovation /
improvement of residential accommodation ? How can such loan be repaid?
Ans. Yes, NRI/PIO can avail of housing loan in Rupees from an Authorised Dealer or a
Housing Finance Institution subject to certain terms and conditions laid down in Regulation 8
of Notification No. FEMA 4/2000-RB dated May 3, 2000 viz. Foreign Exchange Management
(Borrowing and lending in rupees) Regulations, 2000, as amended from time to time.
Authorised Dealers/ Housing Finance Institutions can also lend to the NRIs/ PIOs for the
purpose of repairs/renovation/ improvement of residential accommodation owned by them in
India. Such a loan can be repaid (a) by way of inward remittance through normal banking
channel or (b) by debit to the NRE / FCNR (B) / NRO account of the NRI / PIO or (c) out of
rental income from such property; or (d) by the borrower's close relatives, as defined in
section 6 of the Companies Act, 1956, through their account in India by crediting
the borrower's loan account.
Q.21. Can NRI/PIO avail of housing loan in Rupees from his employer in India?
Ans. Yes, subject to certain terms and conditions given in Regulation 8A of Notification No.
FEMA 4/2000-RB dated May 3, 2000 and A.P. (DIR Series) Circular No.27 dated October 10,
2003, i.e.,

(i) The loan shall be granted only for personal purposes including purchase of housing
property in India;
(ii) The loan shall be granted in accordance with the lenders Staff Welfare Scheme/Staff
Housing Loan Scheme and subject to other terms and conditions applicable to its staff
resident in India;
(iii) The lender shall ensure that the loan amount is not used for the purposes specified in
sub-clauses (i) to (iv) of clause (1) and in clause (2) of Regulation 6 of Notification
No.FEMA.4/2000-RB dated May 3, 2000.
(iv) The lender shall credit the loan amount to the borrowers NRO account in India or shall
ensure credit to such account by specific indication on the payment instrument;
(v) The loan agreement shall specify that the repayment of loan shall be by way of remittance
from outside India or by debit to NRE/NRO/FCNR Account of the borrower and the lender
shall not accept repayment by any other means.

D. Repatriation of sale proceeds of residential / commercial property purchased by NRI /

PIO
Q.22. Can NRI / PIO repatriate outside India the sale proceeds of immovable property
held in India?
Ans.
(a) In the event of sale of immovable property other than agricultural land / farm house /
plantation property in India by a NRI / PIO, 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:

the amount paid for acquisition of the immovable property in foreign exchange received
through normal banking channels, or
the amount paid out of funds held in Foreign Currency Non-Resident Account, or
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.
For this purpose, repatriation outside India means the buying or drawing of foreign
exchange from an authorised dealer in India and remitting it outside India through normal
banking channels or crediting it to an account denominated in foreign currency or to an
account in Indian currency maintained with an authorised dealer from which it can be
converted in foreign currency.
(b) in case the property is acquired out of Rupee resources and/or the loan is repaid by close
relatives in India (as defined in Section 6 of the Companies Act, 1956), the amount can be
credited to the NRO account of the NRI/PIO. The amount of capital gains, if any, arising out of
sale of the property can also be credited to the NRO account.

NRI/PIO are also allowed by the Authorised Dealers to repatriate an amount up to USD 1
million per financial year out of the balance in the NRO account / sale proceeds of assets by
way of purchase / the assets in India acquired by him by way of inheritance / legacy. This is
subject to production of documentary evidence in support of acquisition, inheritance or legacy
of assets by the remitter, and a tax clearance / no objection certificate from the Income Tax
Authority for the remittance. Remittances exceeding US $ 1,000,000 (US Dollar One million
only) in any financial year requires prior permission of the Reserve Bank.
(c) A person referred to in sub-section (5) of Section 6 of the Foreign Exchange Management
Act3 , 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 subsection.
Q.23. Can an NRI/PIO repatriate the proceeds in case the sale proceeds were deposited
in the NRO account?
Ans. Please refer to the answer at Q.22 above. NRI/PIO may repatriate up to USD one
million per financial year (April-March) from their NRO account which would also include the
sale proceeds of immovable property. There is no lock in period for sale of immovable
property and repatriation of sale proceeds outside India.
Q.24. If a Rupee loan was taken by the NRI/ PIO from an Authorised Dealer or a
Housing Finance Institution for purchase of residential property can the NRI / PIO
repatriate the sale proceeds of such property?
Ans. Yes, Authorised Dealers have been authorised to allow repatriation of sale proceeds of
residential accommodation purchased by NRIs/ PIOs out of funds raised by them by way of
loans from the authorised dealers/ housing finance institutions to the extent such loan/s
repaid by them are out of the foreign inward remittances received through normal banking
channel or by debit to their NRE/FCNR accounts. The balance amount, if any, can be credited
to their NRO account and the NRI/PIO may repatriate up to USD one million per financial year
(April-March) subject to payment of applicable taxes from their NRO account balances which
would also include the sale proceeds of the immovable property.
Q.25. If the immovable property was acquired by way of gift by the NRI/PIO, can he
repatriate abroad the funds from sale of such property?
Ans. The sale proceeds of immovable property acquired by way of gift should be credited to
NRO account only. From the balance in the NRO account, NRI/PIO may remit up to USD one
million, per financial year, subject to the satisfaction of Authorised Dealer and payment of
applicable taxes.
Q.26. If the immovable property was received as inheritance by the NRI/PIO can he
repatriate the sale proceeds?
Ans. Yes, general permission is available to the NRIs/PIO to repatriate the sale proceeds of
the immovable property inherited from a person resident in India subject to the following
conditions:
(i) The amount should not exceed USD one million, per financial year (ii) This is subject to
production of documentary evidence in support of acquisition / inheritance of assets 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.4/2009 dated June 29,
2009 (iii) In cases of 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 (iv) the original deed of settlement and a tax clearance / No Objection
Certificate from the Income-Tax Authority should be produced for the remittance (v) Where
the remittance as above is made in more than one installment, the remittance of all such

installments shall be made through the same Authorised Dealer (vi) In case of a foreign
national, sale proceeds can be repatriated if the property is inherited from a person resident
outside India with the prior approval of the Reserve Bank. The foreign national has to
approach the Reserve Bank with documentary evidence in support of inheritance of the
immovable property and the undertaking and the C.A. Certificate mentioned above.
The general permission for repatriation of sale proceeds of immovable property is not
available to a citizen of Pakistan, Bangladesh, Sri Lanka, China, Afghanistan and Iran and he
has to seek specific approval of the Reserve Bank.
As FEMA, 1999 specifically permits transactions only in Indian Rupees with citizens of Nepal
and Bhutan. Therefore, the question of repatriation of the sale proceeds in foreign exchange
to Nepal and Bhutan would not arise.
E. Provisions for Foreign Embassies / Diplomats / Consulates General
Q.27. Can Foreign Embassies / Diplomats / Consulates General purchase / sell
immovable property in India?
Ans. In terms of Regulation 5A of the Foreign Exchange Management (Acquisition and
Transfer of Immovable Property in India) Regulations 2000, Foreign Embassies/ Diplomats/
Consulates General, may purchase/ sell immovable property (other than agricultural land/
plantation property/ farm house) in India provided
(i) Clearance from the Government of India, Ministry of External Affairs has been obtained for
such purchase/sale; and
(ii) The consideration for acquisition of immovable property in India is paid out of funds
remitted from abroad through the normal banking channels.

F. Other Aspects
Q.28. Can NRI / PIO rent out the residential / commercial property purchased out of
foreign exchange / rupee funds?
Ans. Yes, NRI/PIO can rent out the property without the approval of the Reserve Bank. The
rent received can be credited to NRO / NRE account or remitted abroad. Powers have been
delegated to the Authorised Dealers to allow repatriation of current income like rent, dividend,
pension, interest, etc. of NRIs/PIO who do not maintain an NRO account in India based on an
appropriate certification by a Chartered Accountant, certifying that the amount proposed to be
remitted is eligible for remittance and that applicable taxes have been paid/provided for.
Q.29. Can a person who had bought immovable property, when he was a resident,
continue to hold such property even after becoming an NRI/PIO?
Ans. Yes, a person who had bought the residential / commercial property / agricultural land/
plantation property / farm house in India when he was a resident, continue to hold the
immovable property without the approval of the Reserve Bank even after becoming an
NRI/PIO.
Q. 30. In which account can the sale proceeds of such immovable property be credited
?
Ans. The sale proceeds may be credited to NRO account of the NRI /PIO.
Q.31. Can the sale proceeds of the immovable property referred to in Q.No. 29 be
remitted abroad ?
Ans. Yes, From the balance in the NRO account, NRI/PIO may remit up to USD one million,
per financial year, subject to the satisfaction of Authorised Dealer and payment of applicable
taxes.
Q.32. Can foreign nationals of non-Indian origin resident in India or outside India who
had earlier acquired immovable property under FERA with specific approval of the
Reserve Bank continue to hold the same? Can they transfer such property?
Ans. Yes, they may continue to hold the immovable property under holding license obtained
from the Reserve Bank. However, they can transfer the property only with the prior approval of
the Reserve Bank.
Q.33. Is a resident in India governed by the provisions of the Foreign Exchange
Management (Acquisition and transfer of immovable property in India) Regulations,
2000?
Ans. A person resident in India who is a citizen of Pakistan or Bangladesh or Sri Lanka or
Afghanistan or China or Iran or Nepal or Bhutan is governed by the provisions of Foreign
Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations,
2000, as amended from time to time, i.e. she/he would require prior approval of the Reserve
Bank for acquisition and transfer of immovable property in India even though she/he is resident
in India. Such requests are considered by the Reserve Bank in consultation with the
Government in India.
The citizens of countries other than those listed above can be PIOs who are covered under the
general permission (please refer to Q.No.1). The provisions relating to foreign national of nonIndian origin are covered in detail in Q Nos. 6 and 7.

Note:
The relevant regulations covering the transactions in immovable property have been notified
vide RBI Notification No. FEMA 21/2000-RB dated May 3, 2000 and this basic notification has
been subsequently amended by the notifications detailed below:
i) Notification No.FEMA 64/2002-RB dated June 29, 2002;
ii) Notification No.FEMA 65/2002-RB dated June 29, 2002;
iii) Notification No.FEMA 93/2003-RB dated June 9, 2003;
iv) Notification No. FEMA 146/2006-RB dated February 10, 2006 read with A.P.(DIR Series)
Circular No. 5 dated 16.8.2006; and
v) Notification No. FEMA 200/2009-RB dated October 5, 2009
All the above notifications and A.P. (DIR Series) Circulars are available on the RBI
website: www.fema.rbi.org.in.
The Master Circular on Acquisition and Transfer of Immovable Property in India by
NRIs/PIOs/Foreign Nationals of Non-Indian Origin is also available on the website under the
link www.rbi.org.in Sitemap Master Circulars.