Who all can invest in Indian Real Estate?

 WHO CAN INVEST IN REAL ESTATE?

ü  Any person who is Indian Citizen residing in India can invest/acquire/ transfer real estate without any permission from the Reserve Bank of India.

ü  All persons, whether resident in India or outside India, who are citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan require prior permission of the Reserve Bank for acquiring or transferring any immovable property in India.

ü  A person resident outside India, who has been permitted by the Reserve Bank to establish a branch or office or place of business in India (excluding a Liaison Office) in order to acquire immovable property in India which is necessary for or incidental to the activity. However, in such cases a declaration, in prescribed form is required to be filed with the Reserve Bank, within 90 days of the acquisition of immovable property.

ü  An Indian citizen resident outside India does not require any permission to transfer any immovable property, to a citizen of India who is resident in India.

ü  An Indian citizen resident outside India does not require any permission to transfer any immovable property:

o   is a citizen of India resident outside India;

o   is a person of Indian origin resident outside India.

ü  A person of Indian origin resident outside India does not require any permission to acquire any immovable property other than agricultural land/farm house/plantation property in India by purchase, from out of funds:

o   Received in India by way of inward remittance through banking channel from any place outside India.

o   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.

ü  A person of Indian origin resident outside India does not require any permission to 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.

ü  A person of Indian origin resident outside India does not require any permission to 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.

ü  A person of Indian origin resident outside India does not require any permission to transfer any immovable property in India other than agricultural land/farm house/plantation property, by way of sale to a person resident in India.

ü  A person of Indian origin resident outside India does not require any permission to 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.

ü  A person of Indian origin resident outside India does not require any permission to transfer residential or commercial property in India by way of gift to a person resident in India or to person resident outside India who is a citizen of India or to a person of India origin resident outside India.

ü  Repatriation outside India, including credit to RFC, NRE or FCNR account, of sale proceeds of any immovable property situated in India, requires prior permission of the Reserve Bank except in circumstances stated in paragraph below.

ü  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 authorized dealer may allow repatriation of the sale proceeds outside India, provided all the following conditions are satisfied.

ü  The immovable property was acquired by the seller in accordance with the provisions of the Exchange Control Rules/Regulations/Law in force at the time of acquisition, or the provisions of the Regulations framed under the Foreign Exchange Management Act, 1999.

ü  The sale takes place after three years from the date of acquisition of such immovable property or from the date of payment of final installment of consideration for its acquisition, whichever is later.

ü  The amount to be repatriated does not exceed:

o   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.

o   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.

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

ü   All requests for acquisition of agricultural land/plantation/ property/farm house by any person resident outside India or foreign nationals may be made to the Chief General Manager, Reserve Bank of India, Central Office, Exchange Control, Department, Foreign Investment Division (III), Mumbai.

ü  The NRIs/PIOs can freely rent out their immovable property in India without seeking any permission from the Reserve Bank. The rental income being a current account transaction is freely reportable outside India.

Prohibition on Direct Investment outside India

No Indian party shall make any direct investment in a foreign entity engaged in "real estate business" or banking business except after taking prior permission from RBI.

‘Real estate business’ means buying and selling of real estate or trading in Transferable Development Rights (TDRs) but does not include development of townships, construction of residential/commercial premises, roads or bridges.

(Notification No. FEMA 120/ RB-2004 dated: July 7, 2004)