Reserve Bank of India
Exchange Control Department
Central Office
Mumbai-400 001
A.P. (DIR Series) Circular
No.43
December 8 , 2003
To
All Authorised Dealers in Foreign
Exchange
Madam/ Sirs,
Foreign Investments in India
– Acquisition of Immovable Property
Attention of Authorised Dealers
is invited to the Foreign Exchange Management (Acquisition and transfer
of immovable property in India) Regulations, 2000 notified by the Reserve
Bank of India vide Notification No.FEMA.21/2000-RB dated May 3, 2000 as
amended from time to time giving effect to the provisions of the Foreign
Exchange Management Act (FEMA), 1999 relating to acquisition and transfer
of immovable property by foreign companies/persons resident outside India.
2. The Reserve Bank has issued
Notification No.FEMA.93/2003-RB dated June 9, 2003 covering
further modifications and measures for liberalisation with regard to acquisition
of immovable property (copy enclosed). The updated instructions are summarised
in the Annexure for ready reference.
3. Authorised Dealers may bring
the contents of this circular to the notice of their constituents concerned.
4. The directions contained
in this circular have been issued under Sections 10(4) and 11(1) of the
Foreign Exchange Management Act, 1999 (42 of 1999)
Yours faithfully,
Grace Koshie
Chief General Manager
Annexure
[A.P.(DIR Series) Circular No.43
dated December 8, 2003]
Foreign Investments in India
– A summary of updated
instructions regarding acquisition of immovable property
1 Acquisition and Transfer
of Immovable Property in India
(i) Acquisition by a person
resident outside India
A person resident outside India
who is a citizen of India can acquire any immovable property in India other
than agricultural/ plantation /farm house.
(ii) Acquisition by way
of transfer
A person resident outside India
may transfer any immovable property other than agricultural or plantation
property or farm house to a person resident outside India who is a citizen
of India or to a person of Indian origin (PIO) resident outside India or
a person resident in India . He may however transfer agricultural land/
plantation property/ farm house only to Indian citizens permanently residing
in India. A PIO can transfer any immovable property in India other than
agricultural land/ farm house/ plantation property by way of sale to a person
resident in India and agricultural land/plantation/farm house by way of
gift or sale to only an Indian citizen permanently residing in India. He
may also transfer residential or commercial property in India by way of
gift to a person resident in India or to a person resident outside India
who is a citizen of India or to a person of Indian origin resident outside
India.
(iii) Acquisition by way
of Gift
A PIO resident outside India
can acquire any immovable property other than agricultural land/ farm house/
plantation property in India by purchase or by way of gift and any immovable
property by way of inheritance. For acquiring the property, the funds should
come from abroad or by debit to any non-resident account, viz., NRE/FCNR/NRO
account of the investor. The gift can be received from a person resident
in India or from a person resident outside India who is a citizen of India
or from a PIO resident outside India.
(iv) Acquisition by way
of inheritance
The immovable property can
be acquired by PIO by way of inheritance from a person resident in India
or a person resident outside India provided he has in turn acquired such
property in accordance with Foreign Exchange Law/Regulations in force at
the time of acquisition.
2 Purchase/ Sale of immovable Property by
Foreign Embassies/Diplomats/ Consulate Generals
Foreign Embassy/Diplomat/Consulate
General has been allowed to purchase/ sell immovable property in India other
than agricultural land/ plantation property / farm house provided (i) clearance
from Government of India, Ministry of External Affairs is 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 banking
channel.
3. Acquisition of Immovable
Property for carrying on a permitted activity
A person resident outside India
who has a branch, office or other place of business (excluding a liaison
office) for carrying on his business activity with requisite approvals in
India may acquire an immovable property in India which is necessary for
or incidental to carrying on such activity provided that all applicable
laws, rules, regulations or directions for the time being in force are duly
complied with. The entity/concerned person would have to file a declaration
in form IPI with the Reserve Bank, within ninety days from the date of such
acquisition. The non-resident is eligible to transfer by way of mortgage
the said immovable property to an Authorised Dealer as a security for any
borrowing.
4. Repatriation of sale
proceeds.
In the event of sale of immovable
property other than agricultural land/ farm house/ plantation property in
India, Authorised Dealer may allow repatriation of sale proceeds outside
India provided;
-
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 FEMA Regulations;
-
the amount to be repatriated
does not exceed (a) the amount paid for acquisition of the immovable
property in foreign exchange received through normal banking channels
or out of funds held in Foreign Currency Non-Resident Account or (b)
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.
-
In the case of residential
property, the repatriation of sale proceeds is restricted to not more
than two such properties.
-
Authorised Dealers may
allow to NRIs/PIOs the facility of repatriation of funds out of balances
held in their Non-resident Rupee( NRO) Accounts upto USD one million
per calendar year, including sale proceeds of immovable property, subject
to production of an undertaking by the remitter and a certificate by
a Chartered Accountant in the formats prescribed by the Central Board
of Direct Taxes (CBDT) (enclosed to A.P. (DIR Series) Circular No.56
dated November 26, 2002).
5. Prohibition on acquisition
or transfer of immovable property in India by citizens of certain countries.
No person being a citizen of
Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan
shall acquire or transfer immovable property in India, other than on lease,
not exceeding five years, without prior permission of the Reserve Bank.
Reserve Bank of India
Exchange Control Department
Central Office
Mumbai 400 001
Notification
No.FEMA. 93 /2003-RB
dated June 9, 2003
Foreign Exchange Management
(Acquisition and Transfer of Immovable Property in India)
(Amendment) Regulations, 2003
In exercise of the powers conferred
by clause (i) of sub-section (3) of Section 6, sub-section (2) of Section
47 of the Foreign Exchange Management Act, 1999 (42 of 1999) and in partial
modification of its Notification No.FEMA 21/2000-RB dated May 3, 2000, the
Reserve Bank of India makes the following amendments in the Foreign Exchange
Management (Acquisition and Transfer of Immovable Property in India) Regulations
2000, namely :-
-
Short title and Commencement
:
-
These Regulations may
be called the Foreign Exchange Management (Acquisition and Transfer
of Immovable Property in India) (Amendment) Regulations, 2003.
-
They shall come into
force on the date of their publication in the Official Gazette.
-
Amendment of the Regulations
In the Foreign Exchange
Management (Acquisition and Transfer of Immovable Property in India) Regulations
2000, after Regulation 5, the following Regulation shall be inserted namely
:
'5A. Purchase / sale of Immovable
Property by Foreign
Embassies / Diplomats / Consulate Generals
A Foreign Embassy / Diplomat
/ Consulate General may purchase / sell immovable property in India other
than agricultural land / plantation property / farm house provided (i)
clearance from Government of India, Ministry of External Affairs is 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 banking channel'.
Sd/-
(K.J. Udeshi )
Executive Director