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Any acquisition or transfer of immovable property in India by a Non-resident Indians (NRIs), persons of Indian origin, or foreign nationals of non-Indian origin takes place under the Foreign Exchange Management Act, 1999 (“FEMA”) along with Notification No. FEMA 21(R) /2018-RB/GSR 280(E) dated 26.03.2018. The Reserve Bank of India (RBI) is empowered to frame regulations on the acquisition or transfer of immovable property in India by persons who reside outside India.
Foreign Embassies, Diplomats, or Consulate Generals are also permitted to purchase or sell any immovable property in India except that of agricultural land, plantation property, and farmhouse. However, such purchases and sales are subject to clearance obtained from the Ministry of External Affairs, Government of India and the consideration for the acquisition of Immovable property in India should be paid out of inward remittance through banking channels.
A person whether natural or legal, who is a citizen of or incorporated in Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, Bhutan, Hong Kong, Macau, or Korea cannot acquire or transfer any immovable property in India other than on lease for a term not exceeding 5 (five) years and with the prior permission of the RBI. However, this prohibition does not apply to OCIs.
Unless otherwise provided in the Act or Regulations, a non-resident is not permitted to acquire or transfer any immovable property in India. The exceptions to this are:
Any transaction relating to the acquisition or transfer of immovable property shall be undertaken through banking channels after the payment of applicable taxes and other duties or levies in India.
There has been a rapid increase in the interest of non-residents in the acquisition or transfer of immovable property across the globe. India has seen noticeable growth in the interest in non-resident acquisition or transfer of immovable property in India. Even the Indian government is making attempts to ease the process for the acquisition or transfer of immovable property in India by non-residents by making frequent amendments to laws. Therefore, in order to have a hassle-free acquisition or transfer of immovable property in India, the non-resident Indian should be up to date with the laws and regulations applicable at the time of the acquisition or transfer.
Also Read: Procedure for Transmission and Transfer of shares as per Companies Act, 2013
Ankita is an Advocate and has joined Enterslice as a Legal Researcher. Her work focuses on General Civil and Commercial laws, Corporate Taxation Laws, Labour and Employment Laws and Dispute Resolution. She is a law graduate from School of Law, University of Petroleum and Energy Studies. Prior to joining Enterslice, Ankita has the experience of practicing law in Delhi and Odisha.
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