Any indian resident can
purchase immovable property abroad, with general or special permission from the
RBI
Investment in real estate
abroad can offer profitable prospects for a person. In India, all transactions
that involve foreign exchange are regulated by Foreign Exchange Management Act,
1999 (FEMA) and regulations made thereunder. Before making any investment
decision in real estate overseas, one must understand the legalities involved.
Any person residing in India
can purchase immovable property abroad with general or special permission of
RBI. Such purchase is required to be made out of foreign exchange held in
Resident Foreign Currency Account (RFC). This must be:
- Maintained
with an authorized bank, which was received as pension or any other
superannuation or other monetary benefits from an employer outside India.
- Realized
on conversion of foreign currency, foreign security or any immovable
property situated outside India and repatriated to India.
- Received
or acquired as gift or inheritance from a person referred to in Section
6(4) of FEMA
- Acquired
or received before July 8, 1947 or any income arising or accruing thereon
held outside India in pursuance of general or special permission granted
by the RBI or
- Received
as proceeds of life insurance policy claims, maturity or surrender values
settled in foreign currency from an insurance company in India, permitted
to under-take life insurance business by the Insurance Regulatory and
Development Authority.
A resident of India may also
acquire immovable property abroad by way of gift or inheritance from a person
resident in India, who had;
- Acquired,
held or owned such property when he/she was resident outside India.
- Inherited
property from a person resident outside India or
- Acquired
such property on or before July 8, 1947 and continued to be held by him
with the permission of Reserve Bank of India (RBI).
Additionally, such a person can
inherit immovable property outside India from a resident outside India.
A resident in India can also
acquire immovable property abroad under the Liberalised Remittance Scheme (LRS)
wherein, RBI has permitted resident individuals to make remittances abroad,
within a specified threshold, for acquiring immovable property abroad without
obtaining prior approval of RBI.
At present, there are no
restrictions on the frequency of remittances under LRS in a given financial
year. However, the total amount remitted during the financial year should not
exceed the cumulative limit of US$125,000 per person. When making remittances
under LRS, one should also bear in mind the list of countries specifically
prohibited by RBI for the said purposes. Individuals seeking to avail LRS are
required to furnish an application cum declaration to RBI declaring that the
funds belong to them and will not be used for unspecified purposes. They are
mandatorily required to have a PAN number and are also required to maintain a
bank account for a minimum period of one year prior to the remittance.
KEEP IN MIND
- Immovable
property – abroad can be acquired by a resident of India, by way of
purchase, gift or inheritance.
- A
resident of India is permitted to remit upto US$125,000 per year under the
Liberalised Remittance Scheme for purchasing immovable property abroad.
- Alternatively,
an Indian resident may purchase immovable property abroad out of foreign
exchange held in a resident foreign currency account.
