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Master Direction – Acquisition and Transfer of Immovable Property under Foreign Exchange Management Act, 1999(Updated as on February 4, 2016)

FEMA - 12/2015-16 - Dated:- 1-1-2016 - RBI/FED/2015-16/7 FED Master Direction No. 12/2015-16 January 1, 2016 To, All Category - I Authorised Dealer banks and Authorised Banks Madam/ Sir Master Direction - Acquisition and Transfer of Immovable Property under Foreign Exchange Management Act, 1999 Acquisition and transfer of immovable property by Indian residents outside India and Non-residents in India is regulated in terms of sub-sections (3), (4) and (5) of section 6 of the Foreign Exchange Mana .....

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lay down the modalities as to how the foreign exchange business has to be conducted by the Authorised Persons with their customers/constituents with a view to implementing the regulations framed. 3. Instructions issued on acquisition of immovable property have been compiled in this Master Direction. The list of underlying circulars/ notifications which form the basis of this Master Direction is furnished in the Appendix. Reporting instructions can be found in Master Directions on reporting (Mas .....

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n - Acquisition and Transfer of Immovable Property under Foreign Exchange Management Act, 1999 Part I - Acquisition and Transfer of Immovable Property outside India by a person resident in India 1. Introduction 1.1 The Foreign Exchange Management Act, 1999 (FEMA) empowers the Reserve Bank to frame regulations to prohibit, restrict or regulate the acquisition or transfer of immovable property outside India by persons residents in India. The regulations governing acquisition and transfer of immova .....

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a person resident in India on or before July 8, 1947 and continued to be held by him with the permission of the Reserve Bank. The restrictions also do not apply to acquisition of property outside India by a person resident in India on a lease not exceeding five years. 2. Definitions Some key terms used in the regulations are given below: 2.1 'Relative' in relation to an individual means husband, wife, brother or sister or any lineal ascendant or descendant of that individual. 2.2 Libera .....

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ide India or inherited from a person resident outside India. 3.2 A resident can acquire immovable property outside India by way of gift or inheritance from: a person referred to at 3.1 above; or a person resident in India who had acquired such property on or before July 8, 1947 and continued to be held by him with the permission of the Reserve Bank. 3.3 A resident can purchase immovable property outside India out of foreign exchange held in Resident Foreign Currency (RFC) account. 3.4 If a perso .....

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immovable property outside India for its business and for residential purposes of its staff, in accordance with the direction issued by the Reserve Bank of India from time to time. Part II - Acquisition and Transfer of Immovable Property in India 1. Introduction 1.1 The Foreign Exchange Management Act, 1999 (FEMA) empowers the Reserve Bank to frame regulations to prohibit, restrict or regulate the acquisition or transfer of immovable property in India by persons resident outside India. The regu .....

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acquired, held or owned by him/ her when he/ she was resident in India or inherited from a person resident in India. 2. Definitions Some key terms used in the regulations are given below: 2.1 A Non-Resident Indian (NRI) is a citizen of India resident outside India. 2.2 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 at any time, held an Indian Passport or who or either of whose .....

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reign currency. 2.4 Transfer includes sale, purchase, mortgage, exchange, pledge, gift, loan or any other form of transfer of right, title, possession or lien. 3. Acquisition/ transfer by a Non- Resident Indian (NRI) 3.1 Purchase of immovable property An NRI can acquire by way of purchase any immovable property (other than agricultural land/ plantation property/ farm house) in India. 3.2 Transfer of immovable property An NRI may transfer any immovable property in India to a person resident in In .....

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Such payments cannot be made either by traveller s cheque or by foreign currency notes or by other mode except those specifically mentioned above. 4. Acquisition/ transfer by a Person of Indian Origin (PIO) 4.1 Purchase of immovable property A PIO resident outside India can acquire by way of purchase any immovable property (other than agricultural land/ plantation property / farm house) in India. 4.2 Gift/ Inheritance of immovable property A PIO resident outside India may acquire any immovable p .....

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PIO resident outside India can transfer by way of sale, any immovable property in India (other than agricultural land/ farm house/ plantation property), to a person resident in India; by way of gift or sale, agricultural land/ farm house/ plantation property in India, to a person resident in India who is a citizen of India; by way of gift, residential or commercial property in India, to a person resident in India or to an NRI or to a PIO resident outside India. 4.4 Payment for Acquisition of Im .....

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ble Property by Foreign Embassies/ Diplomats/ Consulate Generals 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. 6. Acquisition .....

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y days from the date of such acquisition. 6.3 The immovable property so acquired can be mortgaged to an Authorised Dealer as a security for any borrowing. 6.4 However, acquisition of immovable property in India by a branch, office or other place of business, of entities of Pakistan or Bangladesh or Sri Lanka or Afghanistan or China or Iran or Hong Kong or Macau or Nepal or Bhutan origin/ nationality/ ownership requires the prior approval of the Reserve Bank. 7. Repatriation of sale proceeds of i .....

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7.2 In the event of sale of immovable property other than agricultural land/ farm house/ plantation property in India by a NRI/ PIO resident outside India, the Authorised Dealer may allow repatriation of the sale proceeds outside India, provided the following conditions are satisfied, namely: 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 Foreign Exchange Management ( .....

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and the repayments for such loans are made out of remittances received from abroad through banking channels or by debit to the NRE/ FCNR(B) account of the NRI, such repayments may be treated as equivalent to foreign exchange received. in the case of residential property, the repatriation of sale proceeds is restricted to not more than two such properties 8. Prohibition on acquisition or transfer of immovable property in India by citizens of certain countries Citizens of Pakistan, Bangladesh, Sri .....

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o objection shall be granted only to a resident ECB borrower; The period of such charge on immovable assets has to be co-terminus with the maturity of the underlying ECB; Such no objection should not be construed as a permission to acquire immovable asset (property) in India, by the overseas lender/ security trustee; In the event of enforcement/ invocation of the charge, the immovable asset (property) will have to be sold only to a person resident in India and the sale proceeds shall be repatria .....

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n visa granted to him should clearly indicate the intention to stay in India for an uncertain period. In this regard, to be eligible, the intention to stay has to be unambiguously established with supporting documentation including visa. 10. Payment of taxes - Any transaction involving acquisition of immovable property under these regulations shall be subject to applicable tax laws in India. APPENDIX List of notifications / A.P.(DIR Series) circulars which have been consolidated in this Master C .....

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cular No. 1 July 11, 2008 A.P.(DIR Series) Circular No. 25 January 13, 2010 A.P (DIR Series) Circular No. 38 November 20, 2014 A.P (DIR Series) Circular No. 83 March 11, 2015 A.P (DIR Series) Circular No. 43 February 4, 2016 Annex Press Release of Government of India Ministry of Finance February 1, 2009 Government s advice on acquiring land by persons residing outside India 15:8 IST Government of India has advised State Governments to be extra vigilant in matters of acquisition and transfer of i .....

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es may consider reviewing registration of sale / purchase already made to determine their compliance with legal requirements. Further, persons acquiring immovable property have to fulfil the requirements, if any, prescribed by the State authorities. A foreign company which has established a Branch Office or other place of business in India under the provisions of Foreign Exchange Management (Establishment in India of Branch or Office or Other Place of Business) Regulations, 2000 (FEMA 22/2000-RB .....

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