The Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations, 2000
A foreigner would also have to meet the requirements set out by the RBI for Foreign Nationals and those of non-Indian origin: Reserve Bank of India Property Regulations also see Master Circular July 2013.
Foreign Exchange Management Act, 1999 (42 of 1999)
The Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations, 2000, issued by the Reserve Bank of India (RBI) under powers conferred by the Foreign Exchange Management Act, 1999 (FEMA), regulate the acquisition and transfer of immovable property in India by persons residing outside India. These regulations, notified through FEMA Notification No. 21/2000-RB dated 3rd May 2000, came into force on 1st June 2000 and define the circumstances under which foreign nationals, persons of Indian origin (PIOs), and Indian citizens residing abroad may acquire or transfer property in India.
Under these regulations, an Indian citizen residing outside India is permitted to acquire immovable property in India, except for agricultural land, plantation properties, and farmhouses, and can transfer such property to residents in India or to another Indian citizen residing abroad or a PIO. The regulations also permit PIOs residing outside India to acquire immovable property (excluding agricultural land, plantations, and farmhouses) through purchase, gift, or inheritance, provided the funds are routed through legitimate channels such as inward remittances or non-resident accounts maintained in India. Furthermore, they may transfer such properties to Indian residents or to eligible PIOs and citizens abroad.
For foreign companies or entities that have established a branch, office, or place of business in India (excluding liaison offices), acquisition of property necessary for business operations is permitted. However, the entity must comply with all applicable Indian laws and submit the IPI declaration form to the RBI within 90 days of acquisition. These entities may also mortgage such properties to authorised dealers for borrowing purposes.
Repatriation of sale proceeds of property acquired in accordance with these regulations is allowed under strict conditions. Specifically, the sale must occur at least three years after the acquisition or payment of the final instalment. Moreover, the amount repatriated cannot exceed the original investment made in foreign exchange or from permissible foreign currency accounts. In the case of residential property, repatriation is limited to the sale proceeds of a maximum of two such properties.
Significantly, Regulation 7 imposes restrictions on citizens of certain countries—namely Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, and Bhutan—who may not acquire or transfer immovable property in India without RBI approval, except for leases not exceeding five years. Finally, Regulation 8 provides a general prohibition on the transfer of immovable property in India by non-residents unless otherwise allowed under FEMA or with prior permission of the RBI.
These regulations form the core legal framework governing how foreign nationals and non-resident Indians may interact with India’s immovable property sector. For any individual or entity falling within the scope of these provisions, compliance is not only mandatory but crucial to avoiding invalid transactions, penalties, or confiscation of property.
A person of Indian origin resident outside India may – acquire any immovable property in India by way of inheritance from a person resident outside India who had acquired such property in accordance with the provisions of the foreign exchange law in force at the time of acquisition by him or the provisions of these Regulations or from a person resident in India;
Source: Published in the Official Gazette of Government
of India – Extraordinary – Part-II, Section 3,
Sub-Section (i) dated 08.05.2000 – G.S.R.No.407(E)
