Go AD-Free with CAclubindia Pro and Daily Mobile Updates. Subscribe Now!

Investments in land in India by a foreigner under FEMA

CA Afzal Ghaniwala (Chartered Accountant) (76 Points)

11 January 2011

Can a foreign individual invest in land in India, agriculture or any, by taking loan in foreign currency under the regulations of FEMA.

Reply
Follow
Share

5 Replies

kishore choudhury (article asst.) (114 Points)
Replied 11 January 2011

Hello Sir,

The Information i provided to you is somewhat lengthy,but u can get all the information about your question.

Non-resident Indians can freely purchase and sell residential and commercial properties in India. A foreign citizen of Indian origin does not have to obtain RBI's permission for purchasing and selling residential and commercial properties (other than agricultural/plantation land and farm house) for bonafide purposes provided the purchase is met through foreign exchange. In such cases, a declaration has to be submitted to RBI within 90 days of the purchase.Sale proceeds of not more than two residential properties and any number of commercial properties purchased by NRIs with foreign exchange funds and sold after at least 3 years can he repatriated after obtaining RBI's specific permission for the same up to the purchase amount made with foreign exchange funds. Permission from RBI will have to be sought within 90 days of the sale of the property. Giving and receiving gift of properties are freely permitted for Indian citizens. A foreign citizen of Indian origin does not have to obtain RBI's permission for acquiring or disposing off gifts (up to two residential properties for receiving as gift) from or to a relative. (Charitable trust also for giving gifts).

The NRIs can freely let out their residential or commercial properties in India. The rental income should however be routed through the NRO account. The rental income is freely reparable from 1996-97 and is subjected to production of undertaking/certificate regarding payment of tax from the Income Tax authorities Non-resident Indians can avail housing loans from banks and housing finance institutions for an acquisition of one house/flat which is subjected to prescribed conditions. At least 25% of the cost of acquisition should be met with foreign exchange funds. The purchase consideration should be met either out of inward remittances in foreign exchange through normal banking channels or out of funds from NRE/FCNR accounts maintained with banks in India.

They are required to file a declaration in form IPI 7 with the Central Office of Reserve Bank at Mumbai within a period of 90 days from the date of purchase of immovable property or final payment of purchase consideration along with a certified copy of the document evidencing the transaction and bank certificate regarding the consideration paid.

Govind (Manager HR and Admin) (46 Points)
Replied 02 March 2011

Suppose if a foreigner who is permanently resided in India for 30 years who is illiterate and running own business buy a property in 2002 and he is not aware about such act, what will be the outcome?

How much penalty he need to pay?

Can he declare the property now?

CA. Anuj Gupta (Practices in NRI Int.Tax FEMA TP FD) (7024 Points)
Replied 24 March 2011

Kindly check that whether the foreign national resident in India is not a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal and Bhutan as it would require prior approval of Reserve Bank.

If he is from countries outside the above mentioned then he is permitted and there is no violation of law .

Govind (Manager HR and Admin) (46 Points)
Replied 24 March 2011

Dear Sir

I also know this and I have mentioned nationality too there.. Here, I need a practical response

anyway, I have filled application under RTI to RBI and waiting for their response

CA. Anuj Gupta (Practices in NRI Int.Tax FEMA TP FD) (7024 Points)
Replied 20 April 2011

Mr. Govind,

If you check your query then you will find that you have not mentioned the citizenship .

The practical answer to your query is that whatever your client has done is perfectly legal and you don't need any approval or intimation to RBI for the same.

Do share the information you get from RBI.

Anuj

0-9810106211