“FAQ”
What is the difference between the Lease Agreement and the Leave/Licence Agreement ?
Lease – This is defined under Section 105 of The Transfer of Property Act, 1882, is a transfer of the right to enjoy the concerned property for a pre-defined time period or in perpetuity. The lessor (owner of the property) gives the lessee (the one leasing the property) such consideration periodically, usually at the beginning or end of a lease agreement.
License – This is defined in Section 52 of the Indian Easements Act,1882. License does not allow any interest in the premises on the licensee’s part. It merely gives the licensee the right to use and occupy the premises for a limited duration.
A lease deed needs to be stamped and registered. The amount payable towards the lease deed’s stamp duty is more than that payable towards the Leave and License’s. For a period exceeding three years, the stamp duty is same for both agreements.
What are the implications of entering into a lease agreement ?
There are various implications of entering into a lease agreement such as you have to pay the stamp duty, the lease agreement has to be registered etc.
Does a foreign citizen of non-Indian origin require permission from the Reserve Bank of India (RBI) for acquisition of immovable property ?
Yes. The RBI may grant permission to a foreign citizen of non-Indian origin/foreign companies if the property is purchased for residential use and the consideration is paid by way of foreign exchange.
Why is it considered necessary to register a property? What is the purpose of registration?
By registering the transaction of an immovable property, it becomes permanent public record. Title or interest can be acquired only if the deed is registered.
What is the Definition of Non Resident Indian (NRI)?
NRI(s) can be defined as –
♦ Indian citizens who stay in a foreign country for employment.
♦ Indian citizens carrying on their businesses or vocations.
♦ Indian citizens abroad for any other purpose in the circumstances indicating a definite intention to stay outside India for an indefinite period.
NRI(s) can also be –
♦ Indian citizens working abroad on assignment with foreign governments or international agencies.
♦ Officials of central and state government and public sector undertakings deputed abroad on temporary assignments or posted to their offices abroad.
♦ Indians who have settled abroad permanently or gone abroad on immigration.
FAQs for NRIs
Who is a Non-Resident Indian (NRI)?
An Indian citizen who stays abroad for employment or business or a vocation outside India or stays abroad under circumstances indicating an intention for an uncertain duration of stay abroad is a non-resident. Non-resident foreign citizens of Indian Origin are treated at par with Non-resident Indian citizen (NRIs).
Who is a person of Indian origin(PIO)?
A person of Indian origin is:
- One who, at any time, held an Indian passport, or
- He/she or either of his/her parents or any of his/her grandparents was a citizen of India
- He/She is a spouse of a citizen of India or a person of Indian origin covered under 1 & 2 above.
What is an OCB?
Overseas Corporate Bodies (OCBs) are bodies predominantly owned by individuals of Indian nationality or origin resident outside India and include overseas companies, partnership firms, societies and other corporate bodies which are owned, directly or indirectly, to the extent of at least 60% by individuals of Indian nationality or origin resident outside India. In overseas trusts at least 60% of the beneficial interest is irrevocably held by such persons. Such ownership interest should be actually held by them and not in the capacity as nominees. The various facilities granted to NRIs are also available with certain exceptions to OCBs as long as the ownership/beneficial interest held in them by NRIs continues to be at least 60%
Can NRIs and Overseas Corporate Bodies (OCBs) invest in India?
Investments by NRIs and OCBs are allowed, both, through the RBI route and also through the Government route, i.e., through the Foreign Investment Promotion Board (FIPB). NRIs and OCBs are permitted to invest up to 100% equity in real estate development activity and civil aviation sectors. Investments made by the NRIs and OCBs, are fully repatriable, except in the case of real estate, which has a 3-year lock-in period on original investment and, 16% cap on dividend repatriation. For those proposals that do not qualify under the automatic route, Government approval is granted through FIPB.
Is there a limit to the number of investments in acquiring commercial properties in India?
It will be handy to check the background of the developer, the designer, and the architect. You should always check if there have been any problems with their other developments in past. The financial position of the developer should be strong so that he could complete the project on time if the project is under construction. Also, it is important to find out if the developer has the essential resource and building consents before paying anything. As far as quantity of NRI investment is concerned in real estate investment in India, there is no limit on the number of investments that can be made in commercial properties in India.
Can a person of Indian origin acquire any immovable property in India by way of inheritance?
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 foreign exchange law in force at the time of acquisition by him or the provisions of Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations, 2000. Immovable property, by way of inheritance, can also be acquired by a person of Indian origin resident outside from a person resident in India.
What is the approved method of sending remittances into India?
The approved method of sending remittances into India is through normal banking channels.
What is Foreign Exchange Management Act (FEMA)?
Residential status and nature of transaction i.e. capital account transaction (e.g. purchase/ sale of shares, property) or current account transaction (e.g. remittance of income on shares, property) are the cornerstones of FEMA. Under FEMA, certain types of transactions do not require RBI permission while others either require prior approval of RBI/ Government or it is mandatory to inform RBI of the same.
Can a person of Indian origin resident outside India gift properties acquired earlier in terms of the provisions of FERA/FEMA?
Yes. A person of Indian origin resident outside India may transfer residential or commercial property in India by way of gift to a person resident in India or to a person resident outside India who is a citizen of India or to a person of Indian origin resident outside India. A person of Indian origin resident outside India may also transfer by way of gift agriculture land / farm house / plantation property in India to a person resident in India who is a citizen of India.
How should purchase considerations for the residential immovable property be paid by foreign citizens of Indian origin under the general permission?
The purchase consideration should be met either out of inward remittances in foreign exchange through normal banking channels or out of funds from NRE/FCNR accounts maintained with banks in India.
At what rates are remittances in foreign currencies made by NRIs converted by banks into rupees?
Such remittances will be converted by banks at the market rate of exchange.
Can a person of Indian origin resident outside India gift properties acquired earlier in terms of the provisions of FERA/FEMA?
Yes. RBI will consider application from NRIs for remittance of assets, inherited by them in India. Such remittance may be permitted up to US$ 100,000 per year.
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