By Legal Cell
We know that a NRI or OCI is eligible to purchase property / Real Estate in India. The NRI need not purchase the real estate in proxy but officially he / she can purchase a real estate and repatriate its proceeds but in a systematic manner.
According to FED Master Direction No. 12/2015-16 updated on April 11, 2018, various provisions and directions were changed by the RBI. We shall now look at the direction for various transaction process in Real Estate.
As per the Master Direction, a Non Resident Indian (NRI) is a person outside India who is a citizen of India and holding Indian Passport. Further a new concept was also introduced in the Master Direction was Overseas Citizen of India (OCI). An OCI is a person resident outside India who is registered as an OCI Cardholder under Section 7(A) of the Citizenship Act. 1955. This definition of OCI has replaced Person of Indian Origin. A new section was inserted by FEM (Acquisition and Transfer of Immovable Property in India) Regulations, 2018 with effect from March 26, 2018 through a master circular FEMA 21®, dated 26th March 2018.
For the purpose of transaction in real estate, the transactions like Sale, Purchase, Mortgage, exchange, pledge, gift, loan or any other from of transfer of right , title possession or lien is included. Hence any purchase and sale which is registered is recognized by the FEMA for transaction purposes.
Now, a NRI or OCI can acquire by way of purchase, any immovable property other than agriculture land in India. For the first time, an OCI is also eligible to purchase immovable property/ real estate in India. For the first time it was allowed that a NRI or OCI can acquire a real estate / immovable property by way of gift from a relative who is resident in India or from a NRI or OCI. A relative is also recognized by the Master Direction as defined in section 2(77) of the companies Act 2013.
A NRI or an OCI can acquire any immovable property in India by way of inheritance from a person resident outside India who had acquired the property according to the rules and regulations according to foreign exchange prevailing at the time of acquisition.
A NRI or an OCI can now acquire any immovable property / real estate in India by way of inheritance from a person resident in India. A NRI or an OCI can purchase immovable property from the funds which are brought in India through banking channels only or debits to their NRE/ NRO/ FCNR(B) accounts. The purchase consideration paid cannot be from traveler’s cheque or any foreign currency.
A joint / co-ownership acquisition by spouse of NRI or OCI possible. A person resident outside India, not being a NRI or an OCI, who is a spouse of a NRI or an OCI may acquire one immovable property (other than agriculture land) jointly with his/her NRI/OCI spouse. The purchase consideration has to be paid through banking channel only or debits from their NRO/NRE accounts and not through traveler’s cheque. The marriage should have been registered and subsisted for a continuous period of not less than two years immediately preceding the acquisition of such property.
A person being the citizen of Afghanistan, Bangaladesh or Pakistan belonging to minority communities in those countries viz. Hindus, Sikhs, Jains, Budhists, Parsis and Christians, who is residing in India and has been granted Long Term Visa (LTV) by the Central Government may purchase only one residential and one commercial property for own use purpose.
A Foreign Embassy/ Diplomat/ Consulate General, may purchase/ sell immovable property (other than agricultural land/ plantation property/ farm house) in India provided – Clearance from the Government of India, Ministry of External Affairs is obtained for such purchase/sale, and The consideration for acquisition of immovable property in India is paid out of funds remitted from abroad through the normal banking channels.
A branch or office or any other place of business in India, other than a liaison office, established by a person resident outside India, may acquire immovable property in India which is necessary for or incidental to the activity carried on in India by such branch or office.