492. Paying NRI directly in Foreign

Exchange for property purchase in

India . . .

Question: Hi Hello, I hold an OCI card and intend to buy a piece of land in a development in Bangalore from a relative who lives abroad. Could I pay the price in foreign exchange directly to him in this transaction? Thanks for your input Geetanaman Answer: Payment for property purchases when the property is located in India must be made in India. Payment can be sent from abroad but the transaction must take place in India. Such payments cannot be made overseas. As per rules of the Reserve Bank of India, NRIs and Persons of Indian Origin for example OCI card holders, can pay for property out of the money sent to India through normal banking channels or from money they may have in their NRE/FCNR/NRO accounts in India. Reserve Bank of India rules also specifically state that ‘No payment can be made either by traveler’s cheque or by foreign currency notes or by other mode’. Furthermore, when it comes to land purchases in India, they need to be properly registered in India. To avoid possible disputes later, purchasers must have proper documentation of payment made and where the funds came from. I do realize that in cases where both purchaser and seller of property located in India are residing abroad, some people may exchange some amounts of money payable directly in foreign exchange and register the sale in India for a lesser price. However, such transactions are not legal and normally the purchaser in such transactions may face complications later.