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FAQS |
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Home builders in India
help you with these guidelines which has been
prepared for investment properties in India in
order to address various issues relating to
acquisition and transfer of immovable residential
property in India by a person resident outside
India under the provisions of the Foreign Exchange
Management Act, 1999. These FAQs seek to cover the
broad spectrum of issues relating to acquisition
and transfer of immovable property in India by a
non-resident Indian (NRI) or a foreign national of
Indian origin (PIO) or a foreign national of
non-Indian origin as also by a person resident in
India who is not a citizen of India.
These
FAQs cover the following topics:
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Regulations/Directions issued by Reserve
Bank of India |
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- Where can one find regulations/directions
issued by Reserve Bank for acquisition and
transfer of immovable property in India by a
person resident outside India?
Regulations
regarding acquisition and transfer of immovable
property in India by a person resident outside
India have been notified vide RBI Notification
No. FEMA 21/2000-RB dated May 3, 2000 as amended
vide Notification No. FEMA 64/2002-RB dated June
29, 2002 and Notification No. FEMA 65/2002-RB
dated June 29, 2002 and relevant directions
issued in the form of A.P. (DIR Series)
Circulars. These are available on RBI website:
http://www.fema.rbi.org.in/
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Acquisition of
immovable property in India by way of purchase by
a person resident outside India |
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- Under the extant foreign exchange
regulations to whom is general permission
available for purchase immovable property in
India?
General Permission is available to
purchase only a residential/commercial property
in India to a person resident outside India who
is a citizen of India (NRI) and who is a Person
of Indian Origin (PIO).
- Who is a Person of Indian Origin (PIO)?
For the purpose of acquisition and transfer
of immovable property in India, a PIO means an
individual (not being a citizen of Pakistan or
Bangladesh or Sri Lanka or Afghanistan or China
or Iran or Nepal or Bhutan), who (i) at any
time, held Indian passport; or (ii) who or
either of whose father or grandfather was a
citizen of India by virtue of the Constitution
of India or the Citizenship Act, 1955 (57 of
1955).
- Is NRI/PIO who has purchased residential or
commercial property in India under general
permission required to file any documents with
Reserve Bank of India?
- NRI/PIO who has purchased residential or
commercial property under general permission is
not required to file any documents with the
Reserve Bank.
- Is there any restriction on number of
residential or commercial property that NRI/PIO
can purchase under the general permission
available?
There is no restriction on number
of residential or commercial property that
NRI/PIO can purchase under the general
permission available.
- Can a name of a foreign national of
non-Indian origin be added as a second holder to
a residential or commercial property purchased
by NRI/PIO?
No.
- Can a foreign national of non-Indian origin
resident outside India acquire any immovable
property in India by way of purchase?
No.
Under section 2 (ze) of the Foreign Exchange
Management Act, 1999 ‘transfer’ includes among
others, ‘purchase’. Therefore, a foreign
national of non-Indian origin resident outside
India cannot acquire any immovable property in
India by way of purchase.
- Can a foreign national of non-Indian origin
acquire residential property on a lease in
India?
Yes. A Foreign National of non-Indian
origin including a citizen of Pakistan or
Bangladesh or Sri Lanka or Afghanistan or China
or Iran or Nepal or Bhutan may acquire only
residential accommodation on lease, not
exceeding five years for which he/she does not
require prior permission of Reserve Bank of
India.
- Can a person resident outside India (i.e. a
NRI or a PIO or a foreign national of non-Indian
origin) acquire agricultural land/plantation
property/farm house in India by way of purchase?
No. A person resident outside India cannot
acquire by way of purchase agricultural
land/plantation property/farm house in India.
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Acquisition of
immovable property in India by way of gift by a
person resident outside India |
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- Can NRI/PIO acquire residential or
commercial property by way of gift under the
general permission available?
Yes. Under
general permission available NRI/PIO may acquire
residential/commercial property by way of gift
from a person resident in India or a NRI or a
PIO.
- Can a foreign national of non-Indian origin
resident outside India acquire
residential/commercial in India by way of gift?
No. Under section 2 (ze) of the Foreign
Exchange Management Act, 1999 ‘transfer’
includes among others, ‘gift’. Therefore, a
foreign national of non-Indian origin resident
outside India cannot acquire
residential/commercial property in India by way
of gift.
- Can a person resident outside India (i.e. a
NRI or a PIO or a foreign national of non-Indian
origin) acquire agricultural land/plantation
property/farm house in India by way of gift?
No. A person resident outside India cannot
acquire agricultural land/plantation
property/farm house in India by way of gift.
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Acquisition of
immovable residential property in India by way of
inheritance by a person resident outside
India |
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- Can a person resident outside India (i.e.
NRI or PIO or foreign national of non-Indian
origin) hold any immovable property in India
acquired by way of inheritance from a person
resident in India?
Yes. A person resident
outside India can hold immovable property
acquired by way of inheritance from a person
resident in India as per the provisions of
Section 6(5) of the Foreign Exchange Management
Act, 1999.
- Can a person resident outside India (i.e.
NRI or PIO or foreign national of non-Indian
origin) hold any immovable residential property
in India acquired by way of inheritance from a
person resident outside India?
With the
specific approval of Reserve Bank a person
resident outside India may hold any immovable
property in India acquired by way of inheritance
from a person resident outside India, provided
the bequeath or had acquired such property in
accordance with the provisions of foreign
exchange law in force at the time of acquisition
or under FEMA regulations.
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Transfer of
immovable property in India by way of sale by a
person resident outside India |
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- Under general permission available to whom
can NRI transfer by way of sale his
residential/commercial property?
NRI can
transfer by way of sale residential/commercial
property in India to a person resident in India
or to a NRI or a PIO. Under general permission
available to whom can a PIO transfer his
residential/commercial property by way of sale?
PIO can transfer by way of sale
residential/commercial property in India only to
a person resident in India.
- Can a PIO transfer by way of sale his
residential/commercial property to a NRI or a
PIO?
No. He would need to seek Reserve Bank
prior approval for transfer by way of sale
residential/commercial property in India to a
NRI or a PIO.
- Can a foreign national of non-Indian origin
whether resident in India or outside India
transfer by way of sale residential/property in
India acquired with the specific permission of
Reserve Bank to a person resident in India or
outside India?
No. A foreign national of
non-Indian origin whether resident in India or
outside India would need to seek prior approval
of Reserve Bank for transfer by way of sale
residential/property in India acquired with the
specific permission of Reserve Bank to a person
resident in India or outside India.
- Under general permission available to whom
can NRI/PIO transfer by way of sale his
agricultural land/plantation property/farm house
in India?
Under the general permission
available NRI/PIO may transfer by way of sale
his agricultural land/plantation property/farm
house in India to a person resident in India who
is a citizen of India.
- Can a foreign national of non-Indian origin
resident outside India transfer by way of sale
agricultural land/plantation property/farm house
acquired by him in India?
A foreign national
of non-Indian origin resident outside India
would need to seek prior approval of Reserve
Bank for transfer, by way of sale, agricultural
land/plantation property/farm house acquired in
India.
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Transfer of
immovable residential property in India by way of
gift by a person resident outside India |
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- Under general permission available can
NRI/PIO transfer his residential or commercial
property by way of gift?
Yes. NRI/PIO may
transfer by way of gift residential/commercial
property in India to a person resident in India
or to a NRI or a PIO.
- Under general permission available to whom
can NRI/PIO transfer by way of gift agricultural
land/plantation property/farm house in India?
Under the general permission available
NRI/PIO may transfer by way of gift agricultural
land/plantation property/farm house in India to
a person resident in India who is a citizen of
India.
- Can a foreign national of non-Indian origin
resident outside India transfer by way of gift
agricultural land/plantation property/farm house
acquired by him in India? No. A foreign national
of non-Indian origin resident outside India
would need to seek prior approval of Reserve
Bank for transfer by way of gift agricultural
land/plantation property/farm house acquired by
him in India.
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Transfer of
residential/commercial property in India by way of
mortgage by a person resident outside
India |
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- Can NRI/PIO transfer by way of mortgage his
residential commercial property in India to an
authorized dealer/housing finance institution in
India?
Yes.
- Can NRI/PIO transfer by way of mortgage his
residential or commercial property in India to a
party abroad?
No. He should seek prior
approval of RBI.
- Can a foreign national of non-Indian origin
resident in India or outside India transfer by
way of mortgage his residential/commercial
property in India acquired with the specific
approval of Reserve Bank to a party in India or
abroad?
No. He should seek prior approval of
RBI. However, immovable property purchased by a
person resident outside India who has
established a Branch Office or other place of
business for carrying on in India any activity
in accordance with FERA/FEMA regulations, may
under general permission available, mortgage
such a property with an authorized dealer as a
security for any borrowing.
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Remittance of
sale proceeds of immovable property inherited by a
person resident outside India |
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- Can sale proceeds of any immovable property
inherited by NRI/PIO from a person resident in
India be remitted abroad?
Yes. Amount not
exceeding USD one million, per calendar year
subject to production of documentary evidence in
support of inheritance and Tax clearance
certificate/no objection certificate from Income
Tax authority to authorized dealer for
remittances. However, if a PIO is a citizen of
Pakistan or Bangladesh or Sri Lanka or
Afghanistan or China or Iran he should seek
prior approval of Reserve Bank with documentary
evidence in support of inheritance and tax
clearance/no objection certificate from Income
Tax authority. This remittance facility is not
available to a citizen of Nepal or Bhutan.
(Please refer to Regulation 4 (3) to
Notification No. FEMA 13/RB-2000 dated 3rd May
2000)
- Can sale proceeds of any immovable property
in India inherited, by a foreign national of
non-Indian origin resident outside India, from a
person resident in India be repatriated by him?
Yes. Amount not exceeding USD one million,
per calendar year subject to production of
documentary evidence in support of inheritance
and Tax clearance certificate/no objection
certificate from Income Tax authority to
authorized dealer for remittances. However, a
citizen of Pakistan or Bangladesh or Sri Lanka
or Afghanistan or China or Iran shall seek prior
approval of Reserve Bank with documentary
evidence in support of inheritance and tax
clearance/no objection certificate from Income
Tax authority. This remittance facility is not
available to a citizen of Nepal or Bhutan.
(Please refer to Regulation 4 (2) (ii) to
Notification No. FEMA 13/RB-2000 dated 3rd May
2000)
- Can sale proceeds of any immovable property
in India inherited, by a person resident outside
India (i.e. NRI or PIO or foreign national of
non-Indian origin resident outside India), from
a person resident outside India be repatriated
by him or his successor?
No. He needs to
seek prior approval of Reserve Bank with
documentary evidence in support of inheritance
and tax clearance/no objection certificate from
Income Tax authority.
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Acquisition of
immovable property for carrying on a permitted
activity in India |
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- Can a person resident outside India who has
established a Liaison Office in India in
accordance with FERA/FEMA regulations purchase
immovable property?
No.
- Can a person resident outside India who has
established a Branch Office or other place of
business for carrying on in India any activity
in accordance with FERA/FEMA regulations
purchase commercial/residential property?
Yes, provided it is necessary for or
incidental to carrying on such activity and all
applicable laws, rules, regulations or
directions are duly complied with. The purchase
price should be paid by way of inward remittance
through proper banking channel. A declaration in
form IPI should be filed with Reserve Bank
within ninety days from the date of acquisition
of commercial/residential property.
- Can such a property referred to in Q. No.41
be mortgaged with an authorized dealer as a
security for any borrowing?
Yes, RBI has
granted general permission for such a mortgage.
- On winding up of the business can the sale
proceeds of such property be repatriated?
Yes, with prior approval of Reserve Bank.
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Acquisition/Transfer of immovable
property in India by Foreign
Embassies/Diplomats/Counsel Generals |
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Can Foreign Embassies/Diplomats/Counsel
General purchase/sell immovable property in
India?
Yes. Under general permission
available Foreign Embassies/Diplomats/Counsel
General may acquire any immovable property other
than agricultural land/plantation property/farm
house in India. Such property may be
purchased/sold provided prior clearance from the
Government of India, Ministry of External
Affairs has been obtained for such
purchase/sale. The consideration for purchase of
such property should be paid by way of inward
remittance through normal banking channel.
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Other
issues |
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- Can NRI/PIO rent out the
residential/commercial property purchased out of
foreign exchange/rupee funds, if not required
for immediate use?
Yes. Rent received, being
current income may be credited to NRO/NRE
account or remitted abroad.
- Can NRI who had acquired immovable property
viz., residential/commercial
property/agricultural land/plantation
property/farm house in India while he was a
person resident in India continue to hold or
transfer such immovable property? In which
account the sale proceeds may be credited?
Yes, under the provisions of Section 6 (5)
of the Foreign Exchange Management Act, 1999 NRI
who had acquired immovable property in India
while he was a person resident in India may
continue to hold such property. Under the
general permission available he may transfer by
way of sale or gift agricultural land/plantation
property/farm house in India to a person
resident in India who is a citizen of India and
may transfer by way of sale or gift
residential/commercial property in India to a
person resident in India or to a NRI/PIO. The
sale proceeds may be credited to NRO account.
- Can a PIO who had acquired immovable
property viz., residential/commercial
property/agricultural land/plantation
property/farm house in India while he was a
person resident in India continue to hold or
transfer such immovable property? In which
account the sale proceeds may be credited?
Yes, under the provisions of Section 6 (5)
of the Foreign Exchange Management Act, 1999,
PIO who had acquired immovable property in India
while he was a person resident in India may
continue to hold such property. Under the
general permission available he may transfer
agricultural land/plantation property/farm house
in India by way of sale or gift to a person
resident in India who is a citizen of India and
residential/commercial property in India by way
of sale to a person resident in India and way of
gift residential/commercial property in India to
to a person resident in India or to a NRI/PIO.
However, if a PIO is a citizen of Pakistan or
Bangladesh or Sri Lanka or Afghanistan or China
or Iran or Nepal or Bhutan he should seek prior
approval of Reserve Bank for transfer of such
immovable property in India. The sale proceeds
may be credited to NRO account.
- Can the sale proceeds of the immovable
property referred to in Q. Nos. 46 and
47credited to NRO account of NRI/PIO, be
remitted abroad?
Yes, provided the immovable
property was held for a period not less than ten
years.
What if such an immovable property was
held for less than ten years?
If such a
property acquired out of rupee funds is sold
after being held for less than ten years,
remittance can be made, if the sale proceeds
were held for the balance period in NRO account
(Savings/Term Deposit) or in any other eligible
investment, provided such investment is traced
to the sale proceeds of the immovable property.
- Under erstwhile FERA, foreign nationals of
non-Indian origin resident in India or outside
India had with the specific approval of Reserve
Bank acquired residential property in India.
While they can continue to hold the same under
the provisions of Section 6 (5) of the FEMA,
1999 can they transfer such property?
Yes.
only with the prior approval of Reserve Bank.
- Is a person resident in India governed by
the provisions of Foreign Exchange Management
(Acquisition and transfer of immovable property
in India) Regulations, 2000?
A person
resident in India who is a citizen of Pakistan
or Bangladesh or Sri Lanka or Afghanistan or
China or Iran or Nepal or Bhutan is governed by
the provisions of Foreign Exchange Management
(Acquisition and transfer of immovable property
in India) Regulations, 2000.
- Where are the terms a ‘person resident in
India’ and a ‘person resident outside India’
defined?
Section 2 (v) and section 2 (w) of
the Foreign Exchange Management Act, 1999
defines a 'person resident in India' and a
'person resident outside India' respectively.
- What is meant by a person resident in India?
From FEMA angle, a person resident in India
means a person residing in India for more than
one hundred and eighty-two days during the
course of the preceding financial year
(April-March) and who has come to or stays in
India either for taking up employment, carrying
on business or vocation in India or for any
other purpose, that would indicate his intention
to stay in India for an uncertain period. In
other words, to be treated as ‘a person resident
in India’, under FEMA a person has not only to
satisfy the condition of the period of stay
(being more than 182 days during the course of
the preceding financial year) but has also to
comply with the condition of the
purpose/intention of stay.
- Does Reserve Bank determine the residential
status of a person for the purpose of
acquisition of immovable property in
India?
No. Under FEMA residential status is
determined by operation of law. The onus is on
an individual to prove his/her residential
status if questioned by any other authority.
- If a foreign national (except a citizen of
Pakistan, Bangladesh, Sri Lanka, Afghanistan,
China, Iran, Nepal and Bhutan) is a person
resident in India as per the provisions of
Section 2 (v) (i) B of the Foreign Exchange
Management Act, 1999 does he require approval of
RBI to purchase any immovable property in India?
No, he does not require approval from
Reserve Bank from FEMA angle. However, approvals
if any, required in terms of regulations
prescribed by other authorities such as the
concerned State Government etc., will have to be
obtained by him/her.
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What should be
the method of payment for purchasing residential
immovable property in India by foreign nationals
of Indian origin under the general
permission? |
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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
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Do non-resident
Indian nationals require permission of Reserve
Bank to acquire residential / commercial property
in India? |
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No permission is required
by non-resident Indian nationals to acquire
immovable Property in India.
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Are foreign
nationals of Indian origin allowed to purchase
immovable property in India? |
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Yes, foreign nationals of
Indian origin, whether resident in India or
abroad, have been granted general permission to
purchase immovable property in India
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What way the
Non-resident Indian can finance the
flat? |
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The purchase of the flats
can be financed from the fresh remittance through
the normal banking channels or from payment from
original non-resident account or from Non-resident
(External) Accounts. When the flat is under
construction, it may be possible to get installment
facilities from the builder. Loan may also be
available in India for purchase of flats, for
example from Housing Development Finance
Corporation, ANZ Grind lays Bank, City Bank etc.
Non-resident Indians who are citizens of India
(India Passport holders) are eligible for housing
finance for the acquisition of an immovable
property or construction of a new house, or a flat
for their occupation or for that of their family
in India. But the HDFC also considers granting of
loans to non-resident Indians even if they are
abroad, provided a family member of his or her in
India is made a co-borrower and a power of
attorney is given to his representative in
India.
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Non-resident
Indians are staying abroad can the property be
purchased through the agent or through the Power
of Attorney? |
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The non-resident Indians
who are staying abroad may enter into an agreement
through their relatives and/or by executing the
Power of Attorney in their favor as it is not
possible for them to be present for completing the
formalities of purchase (negotiating with the
builder or Developer, drafting and signing of
agreements, taking possession, etc.) These
formalities can be completed through some known
person who can be given the Power of Attorney for
this purpose. Power of Attorney should be executed
on the stamp paper before the proper authorities
in foreign countries. Power of Attorney cannot be
drafted on the stamp paper bought in India.
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Can such
residential property be given on rent if not
required for immediate residential use? |
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YES
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Can the rental
income from such property be remitted outside
India? |
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No. Such income cannot be
remitted abroad and will have to be credited to
the ordinary non-resident rupee account of the
owner of the property
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Can such
property be sold without the permission of Reserve
Bank? |
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Yes. However, such
property can be sold to another foreign national
of Indian origin provided funds towards the
purchase consideration are either remitted
to
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Do non-resident
Indian nationals require permission of Reserve
Bank to acquire residential / commercial property
in India? |
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No permission is required
by non-resident Indian nationals to acquire
immovable Property in India.
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Are foreign
nationals of Indian origin allowed to purchase
immovable property in India? |
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Yes, foreign nationals of
Indian origin, whether resident in India or
abroad, have been granted general permission to
purchase immovable property in India
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What way the
Non-resident Indian can finance the
flat? |
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The purchase of the flats
can be financed from the fresh remittance through
the normal banking channels or from payment from
original non-resident account or from Non-resident
(External) Accounts. When the flat is under
construction, it may be possible to get installment
facilities from the builder. Loan may also be
available in India for purchase of flats, for
example from Housing Development Finance
Corporation, ANZ Grind lays Bank, City Bank etc.
Non-resident Indians who are citizens of India
(India Passport holders) are eligible for housing
finance for the acquisition of an immovable
property or construction of a new house, or a flat
for their occupation or for that of their family
in India. But the HDFC also considers granting of
loans to non-resident Indians even if they are
abroad, provided a family member of his or her in
India is made a co-borrower and a power of
attorney is given to his representative in
India
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Non-resident
Indians are staying abroad can the property be
purchased through the agent or through the Power
of Attorney? |
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The non-resident Indians
who are staying abroad may enter into an agreement
through their relatives and/or by executing the
Power of Attorney in their favour as it is not
possible for them to be present for completing the
formalities of purchase (negotiating with the
builder or Developer, drafting and signing of
agreements, taking possession, etc.) These
formalities can be completed through some known
person who can be given the Power of Attorney for
this purpose. Power of Attorney should be executed
on the stamp paper before the proper authorities
in foreign countries. Power of Attorney cannot be
drafted on the stamp paper bought in India.
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Can such
residential property be given on rent if not
required for immediate residential use? |
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YES
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Can the rental
income from such property be remitted outside
India? |
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No. Such income cannot be
remitted abroad and will have to be credited to
the ordinary non-resident rupee account of the
owner of the property.
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Can such
property be sold without the permission of Reserve
Bank? |
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Yes. However, such
property can be sold to another foreign national
of Indian origin provided funds towards the
purchase consideration are either remitted
to
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