Can Foreigners Purchase Property In India? Everything You Need To Know
Foreigners Purchase Property In India- Property investing is widely considered to be a wise financial move. Foreign investors are becoming more interested in the nation’s real estate market as it continues on a healthy growth trajectory. Does property ownership allow foreigners in India? Read this article to learn about the Foreign Exchange Management Act’s (FEMA) regulations and related rulings from the Supreme Court.
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The Indian real estate market is predicted to grow to USD 1.04 trillion by 2029, per a joint analysis by KPMG and NAREDCO. Foreign interest in buying real estate in this country is growing as a result. Allow us to briefly review the concept of a foreigner before getting to the topic of the day: Can foreigners purchase property in India?
Who qualifies as a foreigner in India?
A person who is not an Indian citizen is considered a foreigner under the Foreigners Act of 1946. Sometimes, the term “foreign national” is used to refer to a foreigner. The Foreign Exchange Management Act (FEMA) of 1999 and the Foreigners Act of 1946 are two country-specific legislation. That specify the rules and limitations that apply to these individuals in India. The fact that an Overseas Citizen of India (OCI) is regarded as a foreigner in India is notable in this context. According to Section 7A of the Citizenship Act of 1955, an individual with an OCI status is one who is registered as an OCI Cardholder, is of Indian heritage, and holds foreign nationality.
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An overview of FEMA
One important piece of law that controls foreign exchange (forex) transactions in India is the Foreign Exchange Management Act (FEMA) of 1999. Foreign investments, foreigners purchasing real estate in India, external commercial borrowing, managing foreign exchange reserves, and dealings with foreign cash and securities are all under the purview of FEMA regulation. The Act gives the RBI the authority to supervise and implement its rules, guaranteeing adherence throughout all facets of the Indian economy.
Guidelines for foreigners purchasing real estate in India
When purchasing real estate in India, there are two important factors to consider. The first has to do with owning property, while the second has to do with buying property. Let’s examine each of them individually.
According to Section 6(5) of the FEMA, a person who does not live in India may be in possession of, own, transfer, or invest in any immovable property situated in India if it was acquired, held, or possessed by the person during their time there or inherited from an Indian resident. This leads us to our next query: Is it possible for foreigners to purchase real estate in India? What are the FEMA guidelines, if any?
In India, foreigners are allowed to purchase real estate, however there are restrictions. The following are the main specifications that FEMA has listed:
- During a fiscal year, the foreign national must remain in India for a duration longer than 182 days.
- During this time, they are free to live in India for any reason. That reflects their intention to stay there, including employment, travel, business, or leisure.
Specifically, foreign nationals residing in the Democratic People’s Republic of Korea (DPRK), China, Iran, Nepal, Bhutan, Macau, Hong Kong, Pakistan, Bangladesh, Sri Lanka, Afghanistan, or China must obtain prior RBI approval before purchasing real estate in India.
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Can OCI cardholders purchase property in India?
You can purchase both residential & commercial properties in India if you have an Overseas Citizens of India (OCI) card. They may inherit plantation property or agricultural land from their Indian-residing ancestors. But they are not permitted to buy agricultural land.
The Supreme Court rules on foreigners buying property in India
In 2023, the Supreme Court of India rendered a decision emphasizing how crucial RBI approval is for foreign nationals buying property. According to the verdict of the top court, individuals from the aforementioned nations. Whether they are residents of India or not, must obtain prior authorization from RBI. In order to purchase or transfer an immovable asset within the country.
In summary, there are a number of laws and limitations in place. That make it difficult for foreigners to purchase real estate in India. While some groups of foreign citizens, such those with Overseas Citizenship of India (OCI) & Persons of Indian Origin (PIO), are allowed to purchase property in certain situations, others may be subject to restrictions or need prior clearance from regulatory bodies like the RBI. Foreign investors are nevertheless interested in the Indian real estate sector. Because of its growth and return possibilities, despite its complexity.
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