Indian expats in the UAE: Property sale without RBI nod now illegal? No need for old passports anymore? Find out!
Experts reveal whether or not the new regulations affect NRIs in UAE, and elsewhere
Dubai: The Indian Supreme Court ruled that any sale or gift of a property in India by a foreigner without prior permission of the Indian central bank (RBI) would be found illegal. The government also notified separately that certain overseas Indian citizens don’t need to carry your old passports anymore when travelling.
This brought on chatter among Indian expatriates who are residing in the UAE, as to whether or not these new key rulings affected them in any way – and experts who handle recurrent queries from Non-Resident Indians (NRIs) on related matters sheds light on this. First let’s understand these new norms.
What to know about the ruling on sale or gifting of properties in India?
The Indian Supreme court ruled this week that a norm that requires special permission of the Reserve Bank of India (RBI) for transfer or disposal of a property situated in India by sale or mortgage by a person, who is not a citizen of India, be made mandatory.
The top court added that until such permission is given, any such transfer of ownership cannot be permitted for flouting that requirement. However, the court add that transactions which have already been granted permission, need not be contested as a result of this verdict.
Why did such a ruling come into being?
The court was dealing with a case relating to a property, measuring 12,306 square feet at Bengaluru, India which was gifted in March, 1977 by widow of Charles Raitt, a foreigner and property owner, to Vikram Malhotra, an Indian citizen, without obtaining previous permission of the RBI. It overruled the state high court's order which allowed the deal.
The top court further added that for a non-Indian national buying real estate in India, there is now “little doubt” that the requirement of prior permission of the RBI is mandatory. In other words, without previous permission of the RBI, such a transaction is forbidden.
How does this ruling affect Indians residing overseas or other expatriates?
“The Supreme Court’s judgment is limited to this particular case and any other such pending cases under similar conditions, it has also stated that any other transactions that already been finalised by the decision of the court of competent jurisdiction, need not be opened and disturbed,” said Dixit Jain, director of The Tax Experts, DMCC.
In any case, there are specific provisions in the law to facilitate the transaction of immovable properties by NRIs and Overseas Citizens of India (OCI) residing in other countries, Jain said, while adding that the existing norms have made specific provisions for acquisition and transfer of property in India through India’s Foreign Exchange Management Regulations of 2000.
“So in my view, this will not affect OCIs and NRIs for now as this judgement is more on the foreign citizens and nowhere mentions specific to OCIs, Jain further added. “Will have to wait if government take any stand on OCIs in coming times.”
Non-resident Indian are also referred as Indian Diaspora, are the people of Indian birth or descent who live outside India. As an individual of Indian origin staying in another country, you could either apply for a PIO Card or an OCI Card.
Person of Indian Origin (PIO) refers to a foreign citizen who held an Indian Passport at any point in time or whose parents/grandparents/great grandparents were citizens of India.
The Overseas Citizens of India or OCI card is issued to people of Indian origin globally which gives them almost all the privileges of an Indian national except for the right to vote, government service and buying agricultural land.
OCI is an immigration status that allows foreign citizens of Indian origin to live, study or work in India. OCI cardholders can visit India at any time and stay for any time. An OCI Card is issued to foreign citizens who hold a passport of another country.
OCI card holders no longer need to carry old passports for India travel
In a separate notification, people of Indian origin and the Indian diaspora having Overseas Citizens of India (OCI) cards are now not required to carry their old, expired passports for travel to India, as required earlier, according to a government notification.
In order to ease the travel of OCI card holders, it has been decided that the time line for re-issuance of OCI cards for card holders, who may be required to get their OCI card reissued has been extended until December 31, 2021.
Further requirement of carrying old and new passports along with the OCI card has been done away with. Henceforth, the OCI card holders travelling on the strength of their existing OCI card bearing old passport number are not required to carry their old passport. The move was welcomed by all.
“This is a welcome move and will give ease to OCIs travelling to India without worrying about old passports that they do not use,” weighed in Dixit Jain.