NRI Sale of Property in India: Guidelines and Procedures
FEMA, 1999 and FEM (Non-Debt Instrument), 2019 lay down the procedure and guidelines for transfer of commercial or residential property in India by NRIs/OCIs. The present article explores the provisions as below:
1. Transfer of self-acquired/inherited property:
A person resident outside India can transfer any immoveable property acquired or owned him when he was resident in India or inherited from a person resident in India.
In case of transferor being PIO or foreign national of non-Indian origin, prior approval of RBI is required for transfer.
2. Transferee: A person resident in India or another NRI or OCI can be a transferee.
It may be noted that a non-resident can sell agricultural land/plantation property/farm house only to resident citizen of India. Otherwise, the prior approval of RBI is required for transferee being foreign national of non-Indian origin resident outside India.
3. Repatriation of Sale Proceeds of self-acquired/inherited property:
The Authorised Dealer (Bank) can allow repatriation of the sale proceeds outside India subject to following conditions:
a. The property must have been acquired as per foreign exchange law in India;
b. Amount to be repatriated does not exceed the foreign exchange paid for acquisition or amount paid out of FCNR Account or out of NRE Account for acquisition of the property.
c. Sale proceeds of not more than 2 residential properties.
d. In case of acquisition of the property was from rupee account or through loan repaid by the relative, the amount of sale proceeds are credited to NRO Account. The upper cap of the repatriation is USD 1 million per financial year.
4. Repatriation of sale proceeds of inherited property:
There is general permission for repatriation of sale proceeds of inherited immovable property. However, the following conditions are need to be complied:
a) Upper limit of repatriation amount is USD 1 million per year
b) Documentary evidence of inheritance along with a CA certificate
c) Deed of settlement along with NOC from Income Tax Department
d) Part remittances upto the upper limit to be processed through same bank.
e) Foreign national needs prior approval of RBI along with CA Certificate and inheritance documents.
5. Transfer by Gift: An NRI/PIO may gift residential/commercial property to
1. Person resident in India or
2. An NRI or
Please note that gifting of the residential/commercial property to a foreign national of non-Indian origin will require prior approval of RBI.
6. Creation of Charge on immovable property:
Authorised Dealer (bank) may issue no-objection for creation of charge on immovable property in India in favour of ECB lender or security trustee with following conditions:
a) No-objection can be granted only to resident ECB holder
b) Period to be co-terminus with maturity of ECB.
c) In case of enforcement/invocation of the charge, sale can happen only to a person resident in India and sale proceeds can be repatriated to liquidate the outstanding ECB.
7. Mortgage on immovable property of an NRI or OCI:
Mortgage can be effected by Indian correspondent of an overseas lender for the property owned by NRI or OCI director of a company outside India subject to further conditions:
a. Funds can be used for core business of overseas company and
b. Authorised dealer while invoking the charge will sell the immovable property only to the eligible acquirer and remit the sale proceeds to the overseas lender.
8. Sale of property by Long-Term Visa Holder:
A Long-Term Visa Holder can sell the immovable property only after acquiring Indian citizenship. Otherwise, he must obtain approval of the concerned DCP/FRO/FRRO.
9. General prohibition: There is general prohibition of transfer of immovable property in India by citizens of neighbouring countries, without prior approval of RBI.
The applicable tax and other duties/levies in India shall be applicable on sale of immovable property in India.
In case you have any concern or need any clarity/support regarding the transfer of residential/commercial property or FEMA, you may like to contact us.
Abhinarayan Mishra, FCA, FCS, LL.B, IP, RV ; Managing Partner, KPAM & Associates, Chartered Accountants +9910744992, firstname.lastname@example.org