FAQ's :
What is "FERA" ?
Foreign Exchange Regulation Act (FERA) An act to regulate certain payments dealing
in foreign exchange, securities, the import & export of currency and acquisition
of immovable property by foreigners. Under Section 31 (1) of the Foreign Exchange
Regulation Act (FERA) of 1973, It is mandatory for foreign corporations, which are
not incorporated in India to obtain permission from the Reserve Bank Of India (RBI)
to acquire, hold, transfer or dispose off in any manner (expect by way of lease
for a period not exceeding five years) any immovable property in India.
Clear title ?
A title that is free of liens or legal questions as to ownership of the property.
Legal report ?
Varification of property doucments by an advocate
survey?
A drawing or map showing the precise legal boundaries of a property, the location
of improvements, easements, rights of way, encroachments, and other physical features
Can foreign citizens
of Indian origin acquire commercial properties in India?
Yes. Under the general permission granted by Reserve Bank properties other than
agricultural land/farm house/plantation property can be acquired by foreign citizens
of Indian origin provided the purchase consideration is met either out of inward
remittances in foreign exchange through normal banking channels or out of funds
from the purchaser's NRE/FCNR accounts maintained with banks in India and a declaration
is submitted to the Central Office of Reserve Bank in from IPI 7 within period of
90 days from the date of purchase of the property/final payment of purchase consideration.
Do foreign citizens of
Indian origin require permission of Reserve Bank to purchase immovable property
in India for their residential use?
Yes. However, Reserve Bank has granted general permission to foreign citizens of
Indian origin whether resident in India or abroad, to purchase immovable property
in India for their bona fide residential purpose. They are therefore, not required
to obtain separate permission of Reserve Bank.
Who is a Non Resident
Indian ?
An Indian Citizen who stays
abroad for employment / carrying on business or vocation outside India or stays
abroad under circumstances indicating an intention for an uncertain duration of
stay abroad is a non-resident. (Persons posted in U.N. organisation and officials
deputed abroad by Central/State Governments and Public Sector undertakings on temporary
assignments are also treated as non- residents). Non-resident foreign citizens of
Indian Origin are treated on par with non-resident Indian citizens (NRIs).
Who is a person of Indian Origin ?
For the purpose of availing
of the facilities of opening and maintenance of bank accounts and investments in
shares/securities in India : A foreign citizen (other than a citizen of Pakistan
or Bangladesh is deemed to be of Indian origin, if, (i) he, At any time, held an
Indian passport.
or
he or either of his
parents or any of his grand parents was a citizen by virtue of the constitution
of India or citizenship act, 1995 (57 of 1955).
Note: A spouse (not being
a citizen of Pakistan or Bangladesh) of an Indian origin is also treated as a person
of Indian origin for the above purposes.
A foreign citizen other
than a citizen of Pakistan, Bangladesh, Sri Lanka or Nepal), Is deemed to be of
Indian origin if,
- he, At any time, held
an Indian passport or
- he or either of his
parents or any of his grand parents was a citizen by virtue of the constitution
of India or citizenship act, 1995 (57 of 1955).
Purchase of Immovable
Property in India by Foreign Citizens of Non-Indian origin/Foreign Companies.
Foreign citizens of Non-Indian
origin (whether resident in India or not) and foreign companies including trusts,
societies and associations incorporated/ registered abroad will be permitted by
Reserve Bank, on application, to acquire immovable property in India, provided the
following conditions are satisfied.
The property to be purchased
is for residential use only.
The consideration for purchase of the property is met out of foreign exchange remitted
from abroad in any convertible currency through normal banking channels
Income accruing by way of rent from the property purchased, or the sale proceeds
of such property/income arising out of investment of such sale proceeds at any future
date shall be credited only to the Ordinary Non-resident Rupee (NRO) account of
the non-resident purchaser.
Applications for necessary permission for purchase of immovable property in India
should be made in form IPI 1 together with the documents indicated therein to the
Chief General Manager, Exchange Control Department, (Foreign Investment Division-III),
Reserve Bank of India, Central Office, Mumbai 400 001.