 Under the FERA, the regulations concerning buying and selling of real estate property was mainly based on the citizenship of the individuals. Under FEMA, the restrictions involving the acquisition, transfer of immovable property in India are no longer linked to citizenship of a person but are now generally governed by the residential status of a person.
In general, the acquisition and transfer of immovable property by non-resident in India are capital account transactions. The RBI is empowered under the FEMA to frame regulations to prohibit, restrict or regulate the acquisition or transfer of immovable property in India by a person resident outside India.
Regulations of immovable property in India are primarily based on the residential status of a person under FEMA. However, under the FERA, the controls were mainly based on the citizenship.
The restrictions are not applicable to a lease of immovable property for a period not exceeding five years. The RBI has framed the regulations the Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations, 2000, which have been notified, vide notification no. FEMA 21-2000 RBI dated May 3, 2000
In a nutshell, the RBI has given only three general permissions to the following categories in connection with immovable property in India.
- A non-resident who is a citizen of India.
- A non-resident who is a Person of Indian origin.
- A non-resident who has established in India a branch or other place of business.
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