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Frequently asked question [FAQ]

What is "FERA" ?
Foreign Exchange Regulation Act (FERA) An act to regulate certain payments dealing in foreign exchange, securities, the import & export of currency and acquisition of immovable property by foreigners. Under Section 31 (1) of the Foreign Exchange Regulation Act (FERA) of 1973, It is mandatory for foreign corporations, which are not incorporated in India to obtain permission from the Reserve Bank Of India (RBI) to acquire, hold, transfer or dispose off in any manner (expect by way of lease for a period not exceeding five years) any immovable property in India.

Clear title ?

A title that is free of liens or legal questions as to ownership of the property

Legal report ?

Varification of property doucments by an advocate

survey ?

A drawing or map showing the precise legal boundaries of a property, the location of improvements, easements, rights of way, encroachments, and other physical features

Can foreign citizens of Indian origin acquire commercial properties in India?

Yes. Under the general permission granted by Reserve Bank properties other than agricultural land/farm house/plantation property can be acquired by foreign citizens of Indian origin provided the purchase consideration is met either out of inward remittances in foreign exchange through normal banking channels or out of funds from the purchaser's NRE/FCNR accounts maintained with banks in India and a declaration is submitted to the Central Office of Reserve Bank in from IPI 7 within period of 90 days from the date of purchase of the property/final payment of purchase consideration

Do foreign citizens of Indian origin require permission of Reserve Bank to purchase immovable property in India for their residential use?

Yes. However, Reserve Bank has granted general permission to foreign citizens of Indian origin whether resident in India or abroad, to purchase immovable property in India for their bona fide residential purpose. They are therefore, not required to obtain separate permission of Reserve Bank.

Who is a Non Resident Indian ?

An Indian Citizen who stays abroad for employment / carrying on business or vocation outside India or stays abroad under circumstances indicating an intention for an uncertain duration of stay abroad is a non-resident. (Persons posted in U.N. organisation and officials deputed abroad by Central/State Governments and Public Sector undertakings on temporary assignments are also treated as non- residents). Non-resident foreign citizens of Indian Origin are treated on par with non-resident Indian citizens (NRIs).

Who is a person of Indian Origin ?

For the purpose of availing of the facilities of opening and maintenance of bank accounts and investments in shares/securities in India : A foreign citizen (other than a citizen of Pakistan or Bangladesh is deemed to be of Indian origin, if, (i) he, At any time, held an Indian passport or

(ii) he or either of his parents or any of his grand parents was a citizen by virtue of the constitution of India or citizenship act, 1995 (57 of 1955).

Note: A spouse (not being a citizen of Pakistan or Bangladesh) of an Indian origin is also treated as a person of Indian origin for the above purposes.
B. For investments in immovable properties:

A foreign citizen other than a citizen of Pakistan, Bangladesh, Sri Lanka or Nepal), Is deemed to be of Indian origin if,

i) he, At any time, held an Indian passport or

(ii) he or either of his parents or any of his grand parents was a citizen by virtue of the constitution of India or citizenship act, 1995 (57 of 1955).

Purchase of Immovable Property in India by Foreign Citizens of Non-Indian origin/Foreign Companies

Foreign citizens of Non-Indian origin (whether resident in India or not) and foreign companies including trusts, societies and associations incorporated/ registered abroad will be permitted by Reserve Bank, on application, to acquire immovable property in India, provided the following conditions are satisfied.

The property to be purchased is for residential use only.

The consideration for purchase of the property is met out of foreign exchange remitted from abroad in any convertible currency through normal banking channels

Income accruing by way of rent from the property purchased, or the sale proceeds of such property/income arising out of investment of such sale proceeds at any future date shall be credited only to the Ordinary Non-resident Rupee (NRO) account of the non-resident purchaser.

Applications for necessary permission for purchase of immovable property in India should be made in form IPI 1 together with the documents indicated therein to the Chief General Manager, Exchange Control Department, (Foreign Investment Division-III), Reserve Bank of India, Central Office, Mumbai 400 001.

 

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