Updated as per RBI circular dated April 6, 2023
The Foreign Exchange Management (Overseas Investment, or OI) Rules, notified by the Reserve Bank of India (RBI) on 22 August 2022, supersedes the erstwhile provisions governing the acquisition of immovable property overseas by a resident individual.
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.
As per these rules, no person resident in India shall acquire or transfer any immovable property situated outside the country without the RBI’s permission, except as provided in the rules.
Immovable property can be acquired outside India:
1. 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.
2. To whom do the restrictions of transferring property outside India not apply?
The prohibition of a resident acquiring property outside India is not applicable if:
- The resident is a foreign national; or
- The property was acquired before July 8, 1947, and continued to be held after obtaining permission from the Reserve Bank; or
- If it is acquired on a lease not exceeding five years
3. Acquisition from a resident Indian:
A resident Indian can acquire immovable property outside India through inheritance gift or purchase from another resident Indian, provided such resident Indian has acquired the property as per the law in force at the time of such acquisition.
4. Acquisition from a non-resident:
A resident Indian may acquire immovable property outside India from a non-resident:
a. By way of inheritance.
b. By way of purchase out of foreign exchange held in a resident foreign currency account (RFC), a savings account maintained in foreign currency for Non-Resident Indians, who have returned to India and hold funds in foreign currency.
c. A resident individual can send remittances under the Liberalised Remittance Scheme (LRS) that allows remittances by resident individuals up to USD 250000 per financial year for purchasing immovable property outside India. The remittance under the Liberalised Remittance Scheme may be consolidated with respect to 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-income or sale proceeds of assets outside India (other than Overseas Direct Investment or ODI).
5. 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;
