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Govt Tightens Norms on Foreign Purchase of Property in India
Monday, February 02, 2009

Foreign nationals seeking to purchase immovable property in India are set to face increased scrutiny. Taking a serious note of the foreign nationals acquiring immovable properties illegally in India, the Centre on Sunday asked the state governments to keep an eye on such transactions across the country. "It has come to the notice of the Central government that foreign nationals are buying immovable property illegally in some parts of the country, particularly in Goa, which has raised concerns," the Ministry of Finance said in a statement.

The increased scrutiny could include verification of relevant travel documents and the nature of visa before registration of such sale or purchase by state governments. "Government of India has advised state governments to be extra vigilant in matters of acquisition and transfer of immovable property in India by a person resident outside India and satisfy themselves about the eligibility under Foreign Exchange Management Act before registering a sale or purchase of immovable property in India. The enquiries may include both intending buyer and seller," the statement said here on Sunday.

The centre has also advised all concerned authorities in the state governments to review registration of sale or purchase already made to determine their compliance with legal requirements, wherever authorities consider appropriate. Further, persons acquiring immovable property have to fulfill the requirements, if any, prescribed by the state authorities, it said. The centre had received several representations expressing concerns on foreign nationals buying immovable property illegally in some parts of the country, particularly in Goa. Moreover, it has also been observed that foreign nationals coming to India and staying beyond 182 days on a tourist or other visa meant for a certain period are illegally acquiring immovable property in India in violation of the rules and regulations under Foreign Exchange Management Act, the statement said.

A foreign national, who is residing in India for more than 182 days during the course of the preceding financial year for taking up employment or carrying on business or vocation or for any other purpose indicating his intention to stay for an uncertain period, can acquire immovable property in India as he would be a 'person resident in India' as per the provisions under FEMA. But, to be treated as a person resident in India under FEMA, a person has to satisfy the condition of the period of stay (being more than 182 days during the course of preceding financial year). Also, his purpose of stay and the type of Indian visa granted to him should clearly indicate his intention to stay in India for an uncertain period. In this regard, to be eligible, the intention to stay has to be unambiguously established with supporting documentation including visa.

The FEMA also allows a foreign company which has established a branch office or other place of business in India, to acquire immovable property, which is necessary for or incidental to carrying on such activity. But, this is subject to conditions stipulated in the FEMA regulations. Further, the FEMA allows an Indian citizen resident outside India and a Person of Indian Origin resident outside India to acquire immovable property in India other than agricultural land, plantation or a farm house.
 

 

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