Procedure

For Indian Citizens wishing to invest in immovable property, there are no restrictions under FERA to purchase any immovable property in India.

Repatriation

If the India Citizen is a non-resident and if he invests after 26^th May, 1993, in either commercial or residential immovable property, either from funds remitted from abroad through normal banking channels or from his NRE/FCNR accounts with banks in India, he can avail of the benefits of repatriation of his original investment in foreign exchange, if he submits within a period of 90days from the date of purchase a declaration about the purchase in Form IPI 7. Thus, even though section 31 of FERA which deals with immovable property is only applicable to foreign citizens, Non-Resident Indians who are Indian Citizens are advised to file the declaration in Form IPI 7 if they are investing their foreign funds in immovable property after 26^th May , 1993 and wish to avail of the repatriation facility at a later date. The terms and conditions on which the repatriation is allowed are similar to those applicable to foreign citizens of Indian origin. These are :

i)   In case of residential properties, repatriation is subject to a maximum of 2 houses.

ii)  The properties should have been purchased on or after 26^th May, 1993.

iv)  The properties have been held by the purchaser for a period of at least three years from the date of final purchase deed or from the date of payment of final instalment of the purchase consideration, if the purchase agreement so provides, whichever is later.

iv) Only the amount of sale proceeds equivalent to the original investment in foreign exchange will be allowed to be repatriated outside India. The balance amount of sale proceeds of the property should be credited to the seller’s  NRO account or to the Resident Rupee Account (in case of resident foreign citizens), with an authorised bank in India. Thus, the balance sale proceeds over and above  the original investment in foreign exchange in not repatriable.

iv) In case the seller intends to repatriate the original investment in the immovable property after 3 years, he should take permission from the RBI prior to approaching his banker to allow him the repatriation. The  application for repatriation must be made within a period of 90 days of sale of the property in the prescribed Form IPI 8

If for any bona fide reasons beyond the control of the seller, the seller is prevented from filing the prescribed application for repatriation, within the above period, he can present the case before the Reserve Bank of India explaining  the reasons for his failure to file  the application for repatriation in time. The Reserve Bank of India, on merit, may permit such repatriation.

vi) The above policy covers both commercial and residential immovable property  but they do no cover acquisition of agricultural  land or farm house or plantation properties.

It is important to note that Reserve Bank of India has specifically excluded investment by NRIs in agricultural land, farm houses or plantations of any kind as in Reserve Bank of Indian view , purchase of these properties may tantamount to carrying on agricultural or plantation activities which are currently not permitted or Non-Resident Indians.