Introduction: In today’s interconnected world, the aspiration to own property beyond one’s home country is increasingly common. For resident individuals in India, venturing into this realm requires a thorough understanding of the Foreign Exchange Management Act, 1999 (FEMA) and its associated regulations. This blog aims to simplify the complexities and address common concerns regarding the acquisition of immovable property outside India by resident individuals.
Understanding FEMA Provisions: At the heart of this endeavor lies a comprehension of the Foreign Exchange Management (Overseas Investment) Rules, 2022, and the Foreign Exchange Management (Overseas Investment) Directions, 2022, dated August 22, 2022. These regulations provide the framework for resident individuals to navigate the landscape of overseas property ownership.
FEMA Guidelines: Section 6(4) of FEMA allows a resident in India to hold, own, transfer, or invest in immovable property situated outside India if the property was acquired, held, or owned during the individual’s non-resident status or inherited from a person residing outside India.
Remittances under the Liberalised Remittance Scheme (LRS): A resident individual can utilize the Liberalised Remittance Scheme (LRS) to send remittances for the purpose of acquiring immovable property outside India. Notably, these remittances can be consolidated for relatives residing in India, provided they comply with the terms and conditions of the LRS.
Exemptions from Restrictions: Certain scenarios exempt individuals from the restrictions on acquiring property outside India:
- The resident is a foreign national.
- The property was acquired before July 8, 1947, and continues to be held after obtaining permission from the Reserve Bank.
- The property is acquired on a lease not exceeding five years.
Avenues for Property Acquisition: There are various avenues through which a resident individual can acquire immovable property outside India:
- Inheritance, gift, or purchase from a person resident in India who acquired the property in compliance with foreign exchange provisions.
- Acquisition from a person resident outside India through inheritance, purchase with foreign exchange from RFC account, remittances under the Liberalised Remittance Scheme, jointly with a relative residing outside India, or using income or sale proceeds from assets acquired overseas under the Act.
- Indian entities with overseas offices can acquire immovable property outside India for business and residential purposes of their staff, following the guidelines issued by the Reserve Bank.
Conclusion: In the quest for overseas property ownership, understanding the Foreign Exchange Management Act (FEMA) and its guidelines is crucial for resident individuals in India. If you acquired the property as a non-resident, you can still own it. Utilizing the Liberalised Remittance Scheme (LRS) allows you to send money abroad for property, with the added benefit of consolidating remittances for relatives. Certain restrictions don’t apply if you’re a foreign national, acquired the property before July 8, 1947, with Reserve Bank permission, or if it’s a lease under five years. Acquiring property outside India is possible through inheritance, gifting, or purchase adhering to foreign exchange rules. Buying from a non-resident? Options include inheritance, using foreign exchange from your RFC account, or remitting money under LRS. Joint purchases with relatives abroad or using income from overseas assets are also viable. For Indian businesses with global offices, acquiring property abroad for staff is feasible by following Reserve Bank guidelines. While FEMA may seem complex, armed with knowledge, it becomes a roadmap to realizing your dream of overseas property ownership.
