RBI today said that a large number of queries have been received at various offices of the Reserve Bank, based on newspaper reports on a Supreme Court Judgement, on whether prior approval of RBI is required for acquisition/transfer of immovable property in India by as Overseas Citizen of India OCIs.
In this regard, Central Bank clarified that the concerned Supreme Court Judgement dated February 26, 2021, in Civil Appeal 9546 of 2010 was related to provisions of FERA, 1973, which has been repealed under Section 49 of FEMA, 1999. RBI further said that “At present, NRIs/OCIs are governed by provisions of FEMA 1999 and do not require prior approval of RBI for acquisition and transfer of immovable property in India, other than agricultural land/ farmhouse/ plantation property, as per the terms and conditions laid down in Chapter IX of the Foreign Exchange Management (Non-debt Instruments) Rules, 2019, dated October 17, 2019 (as amended from time to time), issued under Section 46 of FEMA 1999” RBI said.
The Supreme Court (SC) on 21st February 2021 delivered a judgment declaring that the sale or gift of property by a foreigner without the permission of RBI is illegal. In this case, the court was dealing with a suit relating to a property gifted by Mrs. F.L. Raitt, widow of Mr. Charles Raitt, who is a foreigner to Vikram Malhotra, without obtaining the permission of the Reserve Bank of India (RBI). The Supreme Court Bench infer that the sale or gift of property by a foreigner without the permission of RBI was in contravention of Section 31 of the Foreign Exchange Regulation Act, 1973 (FERA, 1973). As per the 1973 act, any person who is not a citizen of India or any company which is not incorporated in the country is required to get permission from RBI to acquire, hold, transfer or dispose of immovable property in the country.
RBI has made amendments to FEMA regulations in 2018, according to which similar provisions applicable to NRIs are also valid for OCI (Overseas Citizens of India) in respect of acquiring and transferring property in India. Earlier, there were separate guidelines for People of Indian Origin (PIO).
Meaning of transfer: As per section 2(ze) of FEMA transfer means, sale, purchase, exchange, mortgage, pledge, gift, loan or any other form of transfer of right, title, possession, or lien.
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