Acquisition of Immovable property outside India

A person resident in India may acquire immovable property outside India by way of inheritance or gift or purchase from a person resident in India who has acquired such property as per the foreign exchange provisions in force at the time of such acquisition

It can be done by following the Rules as specified in Foreign Exchange Management (Overseas Investment) Rules, 2022.

Rule 21 of the Foreign Exchange Management (Overseas Investment) Rules, 2022 specifies that

“Save as otherwise provided in the Act or this rule, no person resident in India shall acquire or transfer any immovable property situated outside India without general or special permission of the Reserve Bank”

Recently on 6th April 2023 RBI issued FAQ with regard to acquisition of immovable property outside India by Resident Individuals. These FAQs attempt to put in place the common queries that users have on the subject in easy-to-understand language. However, for conducting a transaction, the Foreign Exchange Management Act, 1999 (FEMA) and the rules and regulations made or directions issued thereunder may be referred to. The relevant principal provisions are?Foreign Exchange Management (Overseas Investment) Rules, 2022?and?Foreign Exchange Management (Overseas Investment) Directions, 2022 dated August 22, 2022?as amended from time to time.

Q.1 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.

Q.2 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. The remittance under the Liberalised Remittance Scheme may be consolidated in respect of relativesi?if such relatives, being persons resident in India, comply with the terms and conditions of the Scheme.

Q.3 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:

1. The resident is a foreign national; or
2. The property was acquired before July 8, 1947 and continued to be held after obtaining permission of Reserve Bank; or
3. If it is acquired on a lease not exceeding five years

Q.4 How can immovable property be acquired outside India by a resident?

Answer:?Immovable property can be acquired outside India:

(i). A person resident in India may acquire immovable property outside India by way of inheritance or gift or purchase from a person resident in India who has acquired such property as per the foreign exchange provisions in force at the time of such acquisition.

(ii). A person resident in India may acquire immovable property outside India from a person resident outside India–

(a) by way of inheritance;

(b) by way of purchase out of foreign exchange held in RFC account;

(c) by way of purchase out of the remittances sent under the Liberalised Remittance Scheme instituted by the Reserve Bank:

Provided that such remittances under the Liberalised Remittance Scheme may be consolidated in respect of relatives if such relatives, being persons resident in India, comply with the terms and conditions of the Scheme;

(d) jointly with a relative who is a person resident outside India;

(e) out of the income or sale proceeds of the assets, other than ODI, acquired overseas under the provisions of the Act;

(iii) An Indian entity having an overseas office may acquire immovable property outside India for the business and residential purposes of its staff, as per the directions issued by the Reserve Bank from time to time;