Who can buy property in India? Can foreigners also buy property in India?

Resident Indians – Like you and me, Resident Indians can acquire (by any mode say, purchase, gift, or inheritance), property anywhere in India, including in Jammu and Kashmir. There may be specific localized restrictions in some States to buy Agricultural or residential properties. Barring this, one can invest in any number of properties, be it residential, commercial, or industrial land and buildings anywhere in India.

Can an NRI or OCI Cardholder acquire property in India?

Non-Resident Indians (NRI) or OCI Cardholders (OCI) can also purchase properties in India. The Foreign Exchange Management Act (FEMA) empowers the Reserve Bank of India (RBI) to frame regulations to prohibit, restrict or regulate the acquisition or transfer of immovable property in India by persons residing outside India.

As per this regulation, an NRI or OCI can acquire immovable property through

1. Purchase - from anybody, say, builder, developer, resident Indian or NRI or OCI and pay them from their NRO/NRE account or transfer from abroad through normal banking channel or a loan availed from Banks or Financial Institutions in India.
2. Gift from Resident Indians – from any person who is a Resident in India. He can get a gift from a relative or a friend. But remember, any gift from a non-relative is subject to Income Tax. So, not advisable to get a gift from someone other than a relative. (Who is a relative? Relative as defined in Section 56 of Income Tax Act)
3. Gift from NRI or OCI - This is also possible. NRI or OCI can acquire property by way of gift from another NRI or OCI Cardholder who is a relative. (Who is a relative? In this case, Relative as defined in Section 2(77) of Companies Act. 'Relative' concerning an individual means husband, wife, brother or sister or any lineal ascendant or descendant of that individual)
4. Inheritance –

• by way of inheritance from a person resident in India or
• by way of inheritance from a person resident outside India if the transferor acquired the property as per FEMA regulations at the time of buying.
• Can they inherit agricultural land? They can inherit agricultural land, farmhouses, or plantation property.

 Can foreign nationals buy property in India?

1. Jointly with a spouse, who is a foreigner – Mrs. Pamela is a US Citizen, not an NRI or OCI Cardholder, but married Mr. Krishna Iyer, an NRI settled in the US. Can she also acquire property in India? A person resident outside India, not being an NRI or OCI, who is a spouse of an NRI or OCI, may acquire one immovable property (other than agricultural land/ farmhouse/ plantation property), jointly with his/ her NRI/ OCI spouse.

The marriage should have been registered and subsisted for a continuous period of not less than two years immediately preceding the acquisition of such property

2. Foreign Nationals (other than NRI or OCI) living in India can buy property in India.

Buy with RBI permission – The Citizens from the countries namely, Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, Bhutan, Macau, Hong Kong, or the Democratic People’s Republic of Korea (DPRK) cannot acquire immovable property in India, without prior approval of RBI. However, they can acquire immovable property by way of lease, not exceeding five years.

Buy without RBI permission – The foreign nationals of other countries (like the USA or UK or Australia) of non-Indian origin residing in India can acquire permitted property in India.

3. Foreign nationals of non-Indian origin residing outside India cannot acquire property in India. (can they inherit? They can, but a rare possibility).

      To illustrate –

• Ching of Hong Kong residing in Delhi for the last 5 years. He can’t acquire a flat in India without the prior permission of RBI
• David of Australia is residing in Delhi for the last 5 years. He can acquire a flat in India. No approval from RBI is required
• Johnson of Canada is residing in Toronto since birth. He can’t acquire property in India   

4. Long-Term Visa holder - A person is a citizen of Afghanistan, Bangladesh, or Pakistan belonging to minority communities in those countries viz., Hindus, Sikhs, Jains, Buddhists, Parsis, and Christians, who are residing in India and have been granted a Long-Term Visa (LTV) by the Central Government may purchase only one residential immovable property in India as a dwelling unit for self-occupation and only one immovable property for self-employment.

Can foreign companies acquire property in India?

1. Branch office of a foreign company - A Branch or liaison office or a project office of a foreign company can acquire property in India which is necessary for or incidental to carrying on their business (say, office space or a factory). However, the persons from the countries who share a border with India can’t acquire the property without the prior approval of RBI.
2. A subsidiary of a foreign company in India is considered as a domestic company, allowed to acquire property in India to conduct their business, in similar lines of a branch as mentioned above.

Is there a restriction to buy Agricultural property in India?

An NRI or OCI is not allowed to acquire Agricultural land/plantation property/farmhouse

Can one NRI pay another NRI outside India towards property in India?

Assume an NRI from the US buys a property in Bangalore owned by another NRI living in the US. Can they pay the sale amount in the USA? Not permitted. The sale value has to be routed through banks in India. 

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Read: Can OCI cardholders sell property in India without RBI permission?