Property laws for NRIs and OCIs buying a home in India

 Property laws for NRIs and OCIs buying a home in India

You might be surprised Y to learn that there are three distinct types of Non-resident Indians (NRIs). Moreover, there are different laws for each of these categories when it comes to buying property in India. Take a look.

Role of RBI in property purchase

The Foreign Exchange Man- agement Act, 1999 (FEMA) empowers the Reserve Bank of India (RBI) to frame rules to regulate the flow of payments to and from persons based outside India including the acquisition or transfer of immovable property in India.

Section 6 (5) of FEMA states that a person residing outside India may hold, own, transfer or invest in any immovable property situated in India if such property was acquired, held or owned by such person when she/he was a resident in India or inherited from a person who was a resident in India.

All financial transactions concerning foreign securities or exchange have to be executed through authorised.

persons and cannot be carried out without the approval of FEMA.

What is your residential status?

Before you set your property purchase plans in motion as an NRI, you need to understand your residential status. This is because it is defined differently for various categories and different laws are applicable for each category. While NRI is a broad term to describe an Indian citizen living abroad for a certain period of time in a year, it is defined clearly under the FEMA, 1999, and the Income Tax Act, 1961.

NRI under FEMA

Persons going outside India for employment, on business or vocation, or for any other purpose for an uncertain period of time are considered as NRIs irrespective of their period of stay abroad;

Persons coming to India for employment, on business or vocation, or for any other purpose for an uncertain period of time are considered as residents in India, irrespective of the period of stay in India.

NRI under the Income Tax Act

Is a person who is not a resident in India. An individual is considered to be a resident in India if:"The person is in India for a period of 182 days or more during the previous financial year;

The person is in India for a period of 60 days or more during the previous financial year and 365 days or more for four years immediately preceding the previous year.

Overseas Citizen of India (OCI)

If you are not a citizen of India presently, but were in the past or at least one of your parents /grandparents /great grandparents was an Indian citizen, or you are married to TY

an Indian citizen /OCI, you can register as an OCI card holder under Section 7 (A) of the Citizenship Act 1995.

Under this Act, you are eligible for certain privileges in India such as a lifelong multiple-entry visa.

Property purchase and ownership in India

FEMA lays down the rules and restrictions for NRIs and OCIS to buy and own certain types of property in India. Both, NRIs and OCIS are permitted to buy, acquire and own immovable property in India. The restrictions are on purchase of agricultural land, farmhouse and plantation property. However, specific proposals for the purchase of these types of land can be made to the RBI, which in turn consults the government of India to issue the specific approval.

Citizens of Afghanistan, Bangladesh, Bhutan, Nepal, Iran, Pakistan, and such other countries as may be notified from time to time, need prior permission from the RBI to acquire property in India.

Assess your residential status as an NRI under any of these categories for a simplified property purchase.