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MONTH'S SPECIAL FEATURE:


Guidelines for Acquisition of Property in India by NRIs, PIOs, Foreigners

Non Resident Indians (NRIs), Persons of Indian Origin (PIOs), and Foreign Nationals of non-Indian Origin (Foreigners) can acquire Immovable Property as per the laws and legislations laid down by the Central Government.

Immovable Property Acquisition by NRIs and PIOs

NRIs and PIOs can acquire Immovable Property (either Residential or Commercial) in India by way of purchase, gift, inheritance, or share of joint property received upon partition of family/property, etc. as per the guidelines laid by the Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations, 2000.

Acquisition by way of Purchase

The Reserve Bank of India (RBI) has permitted the following categories of NRIs/PIOs to acquire Immovable Property (other than agricultural land, plantation or farm-house property) by way of purchase, provided the payment is made out of Foreign Exchange Inward Remittance or any Non Resident Bank Account in India, i.e., (Non Resident External (NR(E)), Foreign Currency Non Resident Account (FCNR(B)) or Ordinary Non Resident Rupee Account a/c (NRO) in connection with acquisition of Immovable Property in India:

• A Non Resident who is a citizen of India
• A Non Resident who is a Person of Indian Origin (PIO)
• A Non Resident who has established in India a branch office or other place of business (excluding a liaison) office

There are no restrictions on the number of residential/commercial properties that can be purchased.


Acquisition by way of Gift

General permission is granted to acquire any Immovable Property (other than agricultural land, plantation or farmhouse property) by way of gift from a person (donor) who is:

• A Person Resident in India, or
• A Person Resident outside India (NRI) who is an Indian citizen or foreign citizen of Indian origin.

Provided that applicable Gift Tax if any has been paid at the time the immovable property is being gifted.

Acquisition by way of Inheritance

General permission is granted for inheritance of Immovable Property including agricultural land, plantation or farm-house property from:


• A Person Resident in India, or
• A Person Resident outside India who may be an Indian citizen or Foreign Citizen of Indian Origin provided such person had acquired the said property in accordance with the provisions of Foreign Exchange Law in force at the time of acquisition, i.e., FERA, 1973 or FEMA 1999.

Hence, agricultural land, plantation or farmhouse property can be acquired by way of inheritance only.

Immovable Property Acquisition by Foreign Nationals of Non-Indian Origin

The residential status of a foreign national of non-Indian origin determines the ability to acquire immovable property in India. Thus, Foreign Nationals of non-Indian origin can be further divided into

• Foreign Nationals of Non-Indian Origin, Resident Outside India
• Foreign Nationals of Non-Indian Origin, Resident In India


Foreign Nationals of Non-Indian Origin Resident Outside India Resident in India
Residential Status They do not meet the criterion of having resided in India for 182 days or more. They meet the criterion of having stayed in India for a period of 182 days of more. They may also be referred to as Persons Not Permanently Residents.
Acquisition of property in India Cannot purchase any Immovable Property in India. Cannot be added as a second holder to a property purchased by an NRI/PIO. Can purchase Immovable Property after obtaining the necessary approvals and fulfillment of requirements, if any, prescribed by the concerned State Governments.
Reserve Bank of India (RBI) Conditions Can take up residential accommodation on lease, provided the period of the lease does not exceed five years. In such cases, there is no requirement of taking any approval from the Reserve Bank of India. Prior approval of RBI necessary for citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal and Bhutan, in addition to State-specific approvals. Such requests are considered by the Reserve Bank of India in consultation with the Central Government. Prior approval of RBI not necessary for citizens of countries other than those mentioned above.

Formalities for Acquisition of Immovable Property in India

There is no ceiling on the number of immovable properties acquired or sold in India by NRIs and PIOs. However, NRIs/PIOs belonging to Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal and Bhutan require a prior approval of the Reserve Bank of India for acquiring Immovable Property in India.

It is mandatory to file a declaration of the acquired property with the Reserve Bank of India within 90 days of acquisition of property, on the prescribed Form - IPI 7.

IPI Forms

The Reserve Bank of India has issued IPI Forms for fresh acquisition and holding of Immovable Property in India by residents and Non Residents. The table below gives a brief applicability of IPI Forms.

IPI Forms Applicable for
IPI Form 1 Fresh acquisition or holding of immovable property in India (other than those covered under the general permission granted by RBI)
IPI Form 2 Sale/transfer of property (other than tea, coffee, rubber, etc., plantations or those covered by general permissions granted by RBI)
IPI Form 3 Sale/transfer of tea, coffee, rubber, etc. plantation
IPI Form 4 Particulars of productivity, income, etc.
IPI Form 5 General permission to companies other than banking companies to acquire or hold immovable property which is necessary for or incidental to any activity permitted by RBI.
IPI Form 6 Properties held prior to commencement of Foreign Exchange Regulations Act, 1973 required to declare property to RBI
IPI Form 7 General permission for acquisition/disposal of residential/commercial properties by Foreign Citizens of Indian Origin
IPI Form 8 Repatriation of sale proceeds of property or properties credited with NRI/PIO accounts

Apart from the declaration of property, there are many other tax and legal formalities related to the acquisition of Immovable Property in India which NRIs and PIOs need to adhere to. Formalities of transfer of funds for purchase/sale through accounts facilities available, applicable charges and processes for registration of property documents and applicable stamp duties for all transactions, etc., are procedures that should be complied with. NRIs and PIOs are also eligible for home loans in India and need to comply with the guidelines for repayment. Along with the official guidelines, NRIs and PIOs also need to follow general dos and don'ts while acquiring property in India.

Source: Reserve Bank of India








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NEWS UPDATE*

Government of Maharashtra to construct 32-lakh Houses for BPL Families

The Government of Maharashtra is drawing up a plan to construct houses for 32- lakh families, including 10 lakhs currently living in slums. Most of these slum dwellers are in Mumbai. The remaining 22 lakh families have no houses. They can opt for affordable housing or a 20m x 20m plot for community housing. The government intends to raise these 32 lakh families above the poverty line with this initiative. Currently, as many as 70 lakh families in the state are below the poverty line. All 32 departments of the state government have been instructed to help prepare the vision document in time for a launch during the state’s golden jubilee celebrations in May. The water resources ministry, for instance, aims to increase the percentage of land under irrigation from 16 to 22 over the next five years. This would bring 85 lakh hectares under irrigation. The Mumbai Metropolitan Region Development Authority (MMRDA) is being directed to complete infrastructure work worth Rs1.13-crore over the next five years.
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Nirmal Lifestyle’s Project for Healthy Living

Mumbai- based real estate developer, Nirmal Lifestyle has collaborated with US Open management to kick start it’s most ambitious property venture - ‘US Open Apartments’. The project offers residents a very niche and holistic package for healthy residential living. Slated to be the country’s first sports and lifestyle residential space, the US Open Apartments are themed to combine the dynamism of the various sport endeavors and includes facilities such as championship styled tennis courts, basketball courts, badminton courts and an extensive swimming pool. The project comprises of a state-of-the-art fitness center – Fitness 46 - which is located on the top of the 46 storey tower. The fitness center will offer residents a diverse range of amenities from a work-out center, complete with its own health spa to a jogging and cycling garden. The main highlight of Fitness 46 is that the entire area is sheltered within a transparent glass dome. The aim of this being that during the summer and monsoon seasons residents may continue with their exercise regimes undisturbed. As a part of the lifestyle amenities customers will be provided with a children’s play area, high-speed elevators and a stretcher lift, DG Back-up for elevators and common areas, three level podium parking and unique sculptured fountain space located on the lower garden area.
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DB Realty IPO Oversubscribed by Two Times

Mumbai-based real estate company DB Realty, has obtained substantial response with its initial public offering getting subscribed 2.08 times as of the second day of the offer. The Rs 1,500-crore IPO, with a price band of Rs 468- Rs486, has already received a good response from anchor investors. The majority of reserved portion was subscribed at lower end of the price band by foreign institutional funds such as Janus Capital, which picked up close to 43 per cent of the allocated portion and India Capital Fund (5.14%). None of the private equity investors who have a stake in the company are exiting through this IPO, which gives further confidence to investors. The IPO, has garnered 5,52,19,024 bids in response to total issue size of 2,64,95,984 shares with 1,63,114 bids at cutoff price. The majority of the IPO proceeds (Rs 1,388 crore) would be used to meet construction and development-related expenses.
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Prestige Group Wins CNBC Awaaz Award

Bangalore based developer; Prestige Group bagged the CNBC AWAAZ CRISIL-CREDAI Real Estate Awards. The real estate company bagged awards in categories as best commercial property for the Southern region – Cessna Business Park; and best residential property (more than 5 lakh sqft) – Prestige Kensington Gardens. The company has completed more than 184 projects with over 20 million sq ft area and has another 13 million sq ft under development currently. The Prestige Group is the only developer to get a reaffirmation of the CRISIL DA1 rating and become an ISO 9001:2000 certified company. It's also the only one in Bangalore whose software and residential facilities have won the reputed FIABCI award.
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Cheaper Loans Increase HDFC Profits

The profits of Housing Development Finance Corporation (HDFC) rose to 23 per cent in Q3 as loans increased because of lower borrowing costs and a revival in growth. Net profit rose to Rs 671-crore in the three months ended December 31 from Rs547-crore a year earlier. The company is hopeful that demand for low-cost housing in the country, with an estimated shortage of 2.65-crore homes will bolster growth for HDFC, whose average loans are Rs16-lakh each. Loan disbursals in the nine months to December 31 climbed 23 per cent from a year earlier to Rs33,527-crore. Loan approvals during the April- December period totaled Rs 41,110-crore, a year-on–year rise of 22 per cent.

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