Foreign Exchange Management (Acquisition and transfer of immovable property in India) Regulations, 2000

Notification No.FEMA 21 /2000-RB dated 3rd May 2000

RESERVE BANK OF INDIA

(EXCHANGE CONTROL DEPARTMENT)

CENTRAL OFFICE

MUMBAI 400 001

In exercise of the powers conferred by clause (i) of sub-section (3) of Section 6, subsection (2) of Section 47 of the Foreign Exchange Management Act, 1999 (42 of 1999), the Reserve Bank of India makes the following regulations, namely: -

1.

Short title and commencement :-

i)

These Regulations may be called the Foreign Exchange Management (Acquisition and transfer of immovable property in India) Regulations, 2000.

ii)

They shall come into force on 1^st day of June 2000.

2.

Definitions :-

In these Regulations, unless the context otherwise requires -

a)

'Act' means the Foreign Exchange Management Act, 1999 (42 of 1999);

b)

'An authorised dealer' means a person authorised as an authorised dealer under sub-section (1) of section 10 of the Act;

c)

'a person of Indian origin' means an individual (not being a citizen of Pakistan or Bangladesh or Sri Lanka or Afghanistan or China or Iran or Nepal or Bhutan), who

(i)

at any time, held Indian passport;

or

(ii)

who or either of whose father or whose grandfather was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955);

d)

'repatriation outside India' means the buying or drawing of foreign exchange from an authorised dealer in India and remitting it outside India through normal banking channels or crediting it to an account denominated in foreign currency or to an account in Indian currency maintained with an authorised dealer from which it can be converted in foreign currency;

e)

the words and expressions used but not defined in these Regulations shall have the same meanings respectively assigned to them in the Act.

3.

Acquisition and Transfer of Property in India by an Indian Citizen resident outside India:-

A person resident outside India who is a citizen of India may -

a)

acquire any immovable property in India other than agricultural/plantation/farm house, and

b)

transfer any immovable property in India to a person resident in India.

c)

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 resident outside India.

4.

Acquisition and Transfer of Property in India by a Person of Indian origin

A person of Indian origin resident outside India may -

(a)

acquire any immovable property other than agricultural land/farm house/ plantation property in India by purchase, from out of (i) funds received in India by way of inward remittance from any place outside India or (ii) funds held in any non-resident account maintained in accordance with the provisions of the Act and the regulations made by the Reserve Bank under the Act;

(b)

acquire any immovable property in India other than agricultural land / farm house / plantation property by way of gift from a person resident in India or from a person resident outside India who is a citizen of India or from a person of Indian origin resident outside India;

(c)

acquire any immovable property in India by way of inheritance from a person resident outside India who had acquired such property in accordance with the provisions of the foreign exchange law in force at the time of acquisition by him or the provisions of these Regulations or from a person resident in India;

(d)

transfer any immovable property in India other than agricultural land/farm house/plantation property, by way of sale to a person resident in India;

(e)

transfer agricultural land/farm house/ plantation property in India, by way of gift or sale to a person resident in India who is a citizen of India;

(f)

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.

5.

Acquisition of Immovable Property for carrying on a permitted activity:-

A person resident outside India who has established in India in accordance with the Foreign Exchange Management (Establishment in India of Branch or Office or other Place of Business) Regulations, 2000, a branch, office or other place of business for carrying on in India any activity, excluding a liaison office, may -

a)

acquire any immovable property in India, which is necessary for or incidental to carrying on such activity;

Provided that

i)

all applicable laws, rules, regulations or directions for the time being in force are duly complied with; and

ii)

the person files with the Reserve Bank a declaration in the form IPI annexed to these regulations, not later than ninety days from the date of such acquisition;

b)

transfer by way of mortgage to an authorised dealer as a security for any borrowing, the immovable property acquired in pursuance of clause (a).

6.

Repatriation of sale proceeds:-

(a)

A person referred to in sub-section (5) of Section 6 of the Act, or his successor shall not, except with the prior permission of the Reserve Bank, repatriate outside India the sale proceeds of any immovable property referred to in that sub-section;

(b)

In the event of sale of immovable property other than agricultural land/farm house /plantation property in India by a person resident outside India who is a citizen of India or a person of Indian origin, the authorised dealer may allow repatriation of the sale proceeds outside India, provided the following conditions are satisfied, namely:

(i)

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 these Regulations;

(ii)

the sale takes place after three years from the date of acquisition of such immovable property or from the date of payment of final instalment of consideration for its acquisition, whichever is later; and ;

(iii)

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;

(iv)

in the case of residential property, the repatriation of sale proceeds is restricted to not more than two such properties.

7.

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 without prior permission of the Reserve Bank shall acquire or transfer immovable property in India, other than lease, not exceeding five years.

8.

Prohibition on transfer of immovable property in India :-

Save as otherwise provided in the Act or Regulations, no person resident outside India shall transfer any immovable property in India:-

Provided that the Reserve Bank may, for sufficient reasons, permit the transfer, subject to such conditions as may be considered necessary.

( P.R. GOPALA RAO)

Executive Director