For NRIs, owning property in India is a dream and for such persons, who have permanently settled abroad, sale of property they own here in India may be more significant. In recently held Pravasi Bharathiys Divas, from 07/01/10 to 09/01/10, Property Issues of NRIs was the main topic of discussion.
Being an NRI, a person should be aware of the Foreign Exchange Management Act (FEMA) and its application to forex transactions in India. The purchase and transfer of immovable property has financial repercussions, which falls within the domain of FEMA. The Legal formalities in this regard can be accessed from RBI guidelines under FEMA, which allows the NRIs and PIOs to do property transactions.
According to FEMA, a person becomes a non-resident by leaving India for employment or for any other purpose that would show his intention to stay abroad for an indefinite period. And it defines a PIO as an individual who, at any time, has held an Indian passport or who, or either his father or grandfather, was a citizen of India as per the provisions of the Constitution or Citizenship Act, 1955.
POSSESSION OF PROPERTY:
NRIs or PIOs are free to purchase any number of properties in India as per the general permission granted by the RBI. And a gift from resident Indians, other NRIs or PIOs, is also possible under present laws.
However, the laws in India are more careful about inheritance. Inheritance of property in India from a resident abroad requires approval from the RBI and the permission will be granted only if the testator obtained such property with respect to the provisions of foreign exchange law at the time of acquisition, or under FEMA regulations.
TRANSFER OF OWNERSHIP OF A PROPERTY:
NRIs or PIOs may transfer the property by sale or gift. A property can be gifted to any person, which includes a resident, non-resident or a PIO. However, a PIO requires prior permission from the RBI to sell it to other NRIs or PIOs and if the sale is to a resident, prior permission is not required. And in the case of NRIs, prior approval is not required for the sale of the property to other NRIs or PIOs.
NRIs or PIOs can purchase residential or commercial properties. However, according to Indian Laws, agricultural land, plantation property and farmhouse in India cannot be purchased or obtained as a gift by NRIs or PIOs. It can only be inherited and these inherited properties can be gifted or transferred, only to a citizen, who stays in India.