Following are the broad exchange control regulations for the purpose of Acquisition of Immovable Property in India.
Acquisition of Immovable Property in India by a Non Resident in India (NRI)/ Person of India Origin
Under the Exchange Control Regulations, NRIs/PIOs, have been given general permission to acquire immovable property (other than agricultural/plantation/farmhouse) in India in their individual capacity.
An NRI is a person resident outside India, who is a citizen of India.
A PIO refers to individual resident outside India (not being a citizen of Pakistan/Bangladesh/SriLanka/Afghanistan/China/Nepal/Iran/Bhutan), who
at any time, held an Indian passport, or,
who or either of whose father or whose grand father was a citizen of India by virtue of the Constitution of India or the Citizenship Act,1955.
Citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Nepal, Iran, Bhutan are prohibited from acquiring immovable property in India, without prior permission of Reserve Bank of India (RBI).
Purchase of immovable property by other Non-Residents
Generally, other non-residents are not allowed to acquire any immovable property in India, with0out prior approval of RBI.
Source of acquisition of property in India by a NRI/PIO
An NRI/PIO can acquire any immovable property (other than agricultural/plantation/farmhouse) in India from out of:
Funds received in India by way of inward remittance from any place outside India, or
Funds held in any non-resident account in India such as NRE/FCNR/NRO account.
Sale/Gift of immovable property to whom permitted
1. NRIs are allowed to transfer by way of sale or gift the immovable property acquired in India to any resident or to resident outside India who is NRI/PIO, without any approval.
A PIO, on other hand, can sell the immovable property only to a person resident in India. Sale by a PIO to NRI or PIO would require prior approval of the RBI. PIO can however, transfer the immovable property to a person resident in India by way of sale.
Note: Abovementioned modes ofather or whose grand father was a citizen of India by virtue of the Constitution of India or the Citizenship Act,1955.
Citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Nepal, Iran, Bhutan are prohibited from acquiring immovable prope
f transfer are always subject to RBI approval, if required, and guidelines issued by RBI from time to time and/or amendment under Foreign Exchange Laws.
Repartition of Sale Proceeds
Repartition of Sale Proceeds depends upon the source of acquisition of the property
When the property has been acquired out of foreign funds (i.e. remittance from outside India or from out of FCNR/ NRE/ NRO account)
In such a situation, there is no restriction as regard to minimum lock in period for holding the property before sale. However, the repartition is subject to the following conditions:
The amount to be repatriated does not exceed the cost of acquisition of the property (i.e. the foreign currency equivalent) and
Repartition is restricted up to two properties in case of residential properties
When the property has been acquired out of rupee source/debit to NRO account
Sale proceeds are to be credited to NRO account and repartition there from is possible in the following manner:
An NRI/PIO may repatriate up to USD 1 million per calendar year out of NRO account balance may have or include sale proceeds of immovable property acquired by the NRI/PIO out of his or her resources in India or sale proceeds of the immovable property received by way of inheritance or gift.
NRI/PIO has to submit documentary evidence in support of inheritance or legacy of assets.
An undertaking by the remitter
Certificate of Chartered Accountant in the prescribed formats.
Repatriation of refund and interest
Repatriation of amounts representing the refund of application/purchase consideration made on account of non allotment of house(s)/ unit(s), together with the interest, if any is permitted provided:
The original payment was made out of NRE/FCNR/NRO account or remittance from outside India through normal banking channels; and
The authorized dealer is satisfied about the genuineness of the transaction.
Alternatively, such amount can be credited to the NRE/FCNR/NRO accounts.
Hence, repartition of refund and interest may not be possible in case where the property has been acquired out of rupee sources/debit to NRO account.