Acquisition of property by person resident outside India

In the recent past, foreigners mainly from Britain, Italy, Russia and Israel were on a property buying spree without observing mandatory legal requirements under Foreign Exchange Management Act (FEMA). Properties included flats, apartments, houses, bungalows and agricultural land in the coastal belt of Candolim, Baga, Morjim, Arambol and Palolem. In this, they were misguided by unscrupulous builders and real estate agents, misinformed by specialist advocates and encouraged by laid back attitude of government authorities towards these transgressions.

Taking advantage of RBI’s Guidelines to permit Foreign Direct Investment (FDI) in Hotel and Tourism sector under Automatic Rule with 100% share holdings without requiring RBI’s permission, many dubious foreigners coming to India under Tourist Visa, illegally formed Private Limited Companies to acquire properties along coastal beaches for ostensible purpose of tourism related activities.

It is only when large tracks of agriculture properties in coastal belt at Morjim and other places were acquired and excesses were perpetuated by Russian Mafia in preventing locals to enter these properties that Government authorities woke up in the face of violent local agitation and public outcry. Enforcement Directorate sprang into action to confiscate acquisition of properties by foreign nationals for violating provisions of FEMA.

In the process many senior citizens who had made genuine investments out of their saving in apartments and houses to stay during winter season to escape severe cold in their counties, suffered most. Only if government authorities had issued timely advisory about legal requirements for acquisition of properties by foreign nationals soon after infringement came to their notice, such an ugly turn could have been avoided.

Government of India being party to WTO cannot put blatant ban on acquisition of properties by foreign nationals. Government has regulated dealing in immovable properties by Person Resident Outside India through FEMA.

A foreign national of non Indian origin like any other Indian citizen can acquire any immovable property in India without restriction provided he fulfills the conditions of residence in India as provided in FEMA.

Under FEMA, a person is considered as Resident in India if he is residing in India for more than 182 days during the course of preceding financial year and who has come to or stays in India either for taking up employment or carrying out business or vocation in India or for any purpose to indicate his intention to stay in India for an uncertain period. To support this he requires a valid business or employment visa. Onus is on individual to prove the residential status, if questioned by any authority.

A person resident outside of India can be: 

a) NRI 

b) OCI (POI) or 

c) Foreign National 

A foreign national of non-Indian origin, residing outside India can neither purchase or acquire by way of gift any immovable property in India, nor can such person be joint holder of any immovable property purchased by an NRI or OCI. However, he can inherit property from person resident in India. He is permitted to take on lease residential accommodation without RBI’s permission provided the lease is for less than a 5-year period.

NRI’s can acquire any immovable property other than agriculture land, plantation or farm. He can also transfer or sell immovable property including agricultural land to Indian national resident in India and immovable property other than agricultural land to an OCI, NRI or person Resident in India.

An OCI (PIO) can acquire any immovable property other than agricultural land, plantation or farm out of foreign currency fund or by way of gift and can inherit any immovable property. He can sell any immovable property other than agricultural and plantation or farm to a person resident in India. However, he can sell or gift any agricultural land, etc to Indian national resident in India only.

Large numbers of Goans have migrated to different countries all over the world. They are either NRI’s as India Passport holders or OCI (PIO) as foreign country’s passport holders and have strong connections with their home land. Before dealing with property transaction either of buying or selling, they should carefully observe provisions of FEMA, so as not to get into wrong side of law.

Non Resident Indian (NRI)

An Indian citizen residing outside India for work, residence or any other purpose, for a combined total of at least 183 days in a financial year (from April 1 to March 31).

Overseas Citizen of India (OCI)

An OCI is a foreign citizen of Indian origin. A person is considered as OCI if person at any time held India passport or at least one parent or grandparent or great grand parent of the person is/was an Indian citizen or a person married to an Indian citizen or to any existing OCI for at least 2 continuous years.

Person of Indian Origin (PIO)

PIO status is removed as on September 1, 2015 and is merged with OCI. PIO cardholders will be treated as OCI cardholders.