NRI Property Transfer: Legal Aspect
India has always been rich in human capital and Indian diaspora thriving in every country comes as no surprise. Hence, the interest of India’s Non-Residents in investing in India is natural. One of the most constant attractions and interests of NRIs is the real estate sector.
Foreign Exchange Management Act 1999 (FEMA), describes an NRI as someone who, “is an Indian citizen or Foreign National of Indian Origin resident outside India for purposes of employment, carrying on business or vocation in circumstances as would indicate an intention to stay outside India for an indefinite period”. An individual will also be considered NRI if his stay in India is less than 182 days during the preceding financial year as per the Income Tax Act 1961 (IT Act).
Transfer Of Immovable Properties By NRIs:
The transfer of immovable property by NRIs should always be done in accordance with FEMA and RBI regulations. FEMA Act [Section 6 (3), (4), (5)] empowers the Reserve Bank of India for regulating, prohibiting and restricting the transfer of immovable property by NRIs in India. Also, with coming into force of the Real Estate Regulation Act (RERA) one needs to keep a check on compliances.
Disclaimer- Since land is a state subject, the applicability of RERA varies from state to state. Some states have progressed in this regard such as Punjab, which is also mulling over law for the protection of NRIs from property fraud.
An NRI can transfer any immovable property other than inherited, agricultural or plantation property or farmhouse to any person who is:
- A person resident outside India (who is a citizen of India) or
- A person of Indian origin, resident outside India or
- A person resident in India.
An NRI may transfer agricultural land/plantation property/farmhouse acquired by way of inheritance, only to Indian citizens permanently residing in India. In case of “Foreign Citizen of Indian Origin” purchasing a residential property, a declaration with the Central office of the RBI is to be made within 90 days of purchase.
NRI Property Disputes: Hindrance In Getting Property Transferred.
- A lot of NRIs who deal with property, may come across disputes from builder’s side like compliance issues, environmental clearance and delays in construction, which can delay the transfer of property. In such a scenario, one can always move to consumer court which has power under the Consumer Protection Act, 1986 for seeking the paid amount back along with interest. However, this is applicable only when the project is not registered under RERA. When a project is registered under RERA, one can always move to the appointed regulatory authority of that state under Section 31.
- There can be property disputes among other stakeholders which may prevent NRIs from selling a property. In such cases, it is important to resolve the dispute through legal means to get a clear title of property before selling it further.