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[RBI] Purchase Of Immovable Property Outside India By Resident Individuals

The below mentioned FAQs are an attempt to describe the answers in layman's language to various common queries that many people have on the subject matter. (Source: RBI)

However, for conducting a transaction, the Foreign Exchange Management Act, 1999 (FEMA) and the regulations made or directions issued thereunder may be referred to.

The relevant principal regulations are the Foreign Exchange Management (Acquisition and transfer of immovable property outside India) Regulations, 2015 issued vide Notification No. FEMA 7(R)/2015-RB dated January 21, 2016.

The directions issued are consolidated in Part I of the Master Direction No 12 on Acquisition and Transfer of Immovable Property under Foreign Exchange Management Act, 1999. Amendments, if any, to the principal regulations are appended at the end.

Q1. Can a resident continue to hold immovable property outside India which was acquired by him when he was a non-resident?

Answer: According to section 6(4) of the FEMA, a person resident in India can hold, own, transfer or invest in any immovable property situated outside India if such property was acquired, held or owned by him/ her when he/ she was resident outside India or inherited from a person resident outside India.

Q2. Can a resident individual send remittances and purchase property outside India?

Answer: A resident individual can send remittances under the Liberalised Remittance Scheme (LRS) for purchasing immovable property outside India. In case members of a family pool their remittances to purchase a property, then the said property should be in the name of all the members who make the remittances.

Q3. To whom do the restrictions of transferring property outside India not apply?

Answer: The prohibition of a resident acquiring property outside India is not applicable if:

(a) The resident is a foreign national; or

(b) The property was acquired before July 8, 1947 and continued to be held after obtaining permission; or

(c) If it is acquired on a lease not exceeding five years

Q4. How can immovable property be acquired outside India by a resident?

Answer: Immovable property can be acquired outside India:

a. Under section 6(4) of FEMA.

b. As an inheritance/ gift from a person (i) referred to in sec 6(4) of FEMA; or (ii) who has acquired it prior to July 8, 1947 (iii) who has acquired such property in accordance with the foreign exchange provisions in force at the time of such acquisition.

c. Purchased with balances in the Resident Foreign Currency (RFC) account of the resident.

d. As a gift from persons at (b) & (c) above, provided he is a relative of such persons.

e. Purchased with remittances made under the Liberalised Remittance Scheme (LRS).

f. Jointly with a relative provided there are no outflow of funds from India.

g. By an Indian company having overseas offices, for housing its business or for residence of staff.

Amendments to the Principal Regulations
1. Notification No. FEMA 65/2002-RB dated June 29, 2002
2. Notification No. FEMA 93/2003-RB dated June 9, 2003
3. Notification No. FEMA 146/2006-RB dated February 10, 2006
4. Notification No. FEMA 186/2009-RB dated February 3, 2009
5. Notification No. FEMA 200/2009-RB dated October 5, 2009
6. Notification No. FEMA 321/2014-RB dated September 26, 2014
7. Notification No. FEMA 335/2015-RB dated February 4, 2015

Related article:

(1) Purchase of immovable property in India by Non-Resident Individuals (NRI) - available here

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