Rules 26 to 28 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Three rules in Chapter IX of the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 open the property market to categories other than NRIs and OCIs. Rule 26 lets a foreign company's branch or other place of business, other than a liaison office, buy property it needs for its permitted activity. Rule 27 covers foreign embassies, diplomats and consulates general. Rule 28 covers long-term visa holders from three neighbouring countries.
This article is based on the Rules as notified on 17 October 2019 (S.O. 3732(E)) as amended by the notifications named in this article; the latest amendment consulted is S.O. 4870(E) dated 2 September 2026. Rules 26 to 28 are as notified on 17 October 2019; none of the 19 amending notifications up to 2 September 2026 changes them. Amendments made after that date should be checked in the Gazette. There is no official consolidated text. The Reserve Bank's Master Direction - Acquisition or Transfer of Immovable Property, used as a cross-check, is dated "updated as on September 01, 2022". For a foreign company setting up a branch or liaison office, see our liaison, branch and project office service.
Rule 26: a person resident outside India who has set up a branch, office or other place of business (excluding a liaison office) under the 2016 establishment regulations may acquire immovable property necessary for or incidental to its activity, file Form IPI within ninety days and may mortgage it to an authorised dealer. Rule 27: foreign embassies, diplomats and consulates general may buy or sell with clearance from the Ministry of External Affairs. Rule 28: a long-term visa holder from Afghanistan, Bangladesh or Pakistan in a listed minority community may buy one residence and one property for self-employment on six conditions.
Rule 26: a branch or place of business
Rule 26 is headed "Acquisition of immovable property for carrying on a permitted activity". It applies to a person resident outside India who has established in India, in accordance with the Foreign Exchange Management (Establishment in India of a Branch office or a liaison office or a project office or any other place of business) Regulations, 2016, as amended from time to time, a branch, office or other place of business for carrying on in India any activity, excluding a liaison office. Such a person may:
- (a) acquire any immovable property in India which is necessary for or incidental to carrying on such activity, provided that (i) all applicable laws, rules and regulations are duly complied with and (ii) the person files with the Reserve Bank a declaration in the Form IPI as specified by the Reserve Bank from time to time, not later than ninety days from the date of acquisition;
- (b) transfer by way of mortgage to an authorised dealer, as security for any borrowing, the immovable property so acquired.
A proviso follows: no person of Pakistan or Bangladesh or Sri Lanka or Afghanistan or China or Iran or Hong Kong or Macau or Nepal or Bhutan or Democratic People's Republic of Korea (DPRK) shall acquire immovable property, other than on lease not exceeding five years, without the prior approval of the Reserve Bank. The Master Direction (paragraph 7.4) states it as applying to a branch, office or other place of business of persons of those countries, by origin, nationality or ownership.
Two points about the text. The proviso is printed after clause (b), and the Rule does not say which clause it limits; read with the Master Direction, it governs acquisition under this rule. And the Rule names the 2016 establishment regulations as printed; the reader should check the current instrument. Because a liaison office is excluded, it cannot rely on this rule to buy property. Form IPI is named in the Rule; the Rules give no other detail of it, and the Master Direction on Reporting is not in the texts consulted. The Master Direction on property restates the rule (paragraph 7) and adds nothing to the conditions. Our guide on closing a foreign company's operations in India and the article on the Remittance of Assets Regulations cover the exit side.
Rule 27: embassies, diplomats and consulates general
A Foreign Embassy or Diplomat or Consulate General may purchase or sell immovable property in India other than agricultural land, plantation property or farm house, provided:
- clearance from the Government of India, Ministry of External Affairs, is obtained for the purchase or sale; and
- the consideration for acquisition is paid out of funds remitted from abroad through banking channels.
The Master Direction (paragraph 6) states the same. The Rule does not describe how the clearance is sought.
Rule 28: long-term visa holders
Rule 28 covers a citizen of Afghanistan, Bangladesh or Pakistan belonging to a minority community in those countries, namely Hindus, Sikhs, Buddhists, Jains, Parsis and Christians, who is residing in India and has been granted a Long Term Visa by the Central Government. Such a person may purchase only one residential immovable property as a dwelling unit for self-occupation and only one immovable property for carrying out self-employment, subject to these conditions:
| Clause | Condition |
|---|---|
| (a) | The property is not located in and around restricted or protected areas notified by the Central Government and cantonment areas |
| (b) | The person submits a declaration to the Revenue Authority of the district where the property is located, specifying the source of funds and that he or she is residing in India on a Long Term Visa |
| (c) | The registration documents mention the nationality and the fact that the person is on a Long Term Visa |
| (d) | The property may be attached or confiscated in the event of the person's indulgence in anti-India activities |
| (e) | A copy of the documents is submitted to the Deputy Commissioner of Police, Foreigners Registration Office or Foreigners Regional Registration Office concerned and to the Ministry of Home Affairs (Foreigners Division) |
| (f) | The person is eligible to sell the property only after acquiring Indian citizenship; transfer before that requires prior approval of the Deputy Commissioner of Police or Foreigners Registration Office or Foreigners Regional Registration Office concerned |
The Master Direction (paragraphs 5.1 to 5.7) repeats the six conditions. Rule 28 is a special permission and sits beside rule 31, which bars citizens of a list of countries from acquiring or transferring property without Reserve Bank permission; see our article on rules 30 to 33. The rule says nothing about price, mode of payment or reporting to the Reserve Bank.
A worked example
Pelican Trading Limited, a company incorporated abroad, has set up a branch in India. It buys an office floor which is necessary for the branch's permitted activity. Within ninety days it files Form IPI with the Reserve Bank, and it may mortgage the floor to an authorised dealer as security for a loan. Had Pelican set up only a liaison office, rule 26 would not apply. Separately, a foreign embassy that wants to sell a plot (not agricultural or plantation land) needs clearance from the Ministry of External Affairs and must have paid for it from funds remitted from abroad.
Need help with property for a foreign branch?
A branch that buys property must file on time and stay within what is necessary for its activity. Our liaison, branch and project office team can help with the set-up and the follow-up compliance.
Key takeaways
- A branch or other place of business, but not a liaison office, may buy property necessary for or incidental to its permitted activity and must file Form IPI within ninety days.
- The mortgage of such property to an authorised dealer is permitted as security for borrowing.
- Embassies, diplomats and consulates general need Ministry of External Affairs clearance.
- Long-term visa holders from Afghanistan, Bangladesh or Pakistan in the listed communities may buy one residence and one self-employment property on six conditions.
- The Master Direction consulted is dated 1 September 2022.
Read next
- Rules 24 and 25 of the FEM (Non-debt Instruments) Rules, 2019: property purchase by NRI, OCI and spouse
- Rule 29 of the FEM (Non-debt Instruments) Rules, 2019: repatriation of property sale proceeds
- Rules 30 to 33 of the FEM (Non-debt Instruments) Rules, 2019: transfer of property and citizens of certain countries
- How to set up a foreign subsidiary in India
Disclaimer: Based on the Gazette text of the instrument this article names, as notified and as amended by the notifications named in the article (for the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 the latest amendment consulted is S.O. 4870(E) dated 2 September 2026), as consulted on 2 October 2026. There is no official consolidated text; the provisions were read with each amendment applied. Sectoral caps, entry routes, conditions, forms and time limits change by notification, press note and circular; later changes should be checked on the Gazette, DPIIT and Reserve Bank sites. This article is general information, not legal advice; check the official text before acting.