The Foreign Exchange Management Act, 1999
Section 2(ze) of the FEMA Act defines transfer. The definition is comprehensive
and includes leases within its ambit. It reads as:
includes sale, purchase, exchange, mortgage, pledge, gift,
loan or any other form of transfer of right, title, possession or lien.
FEMA (Acquisition and Transfer of Immovable Property in India) Regulations, 2018
The RBI on March 26, 2018 notified the Foreign Exchange Management (Acquisition
and Transfer of Immovable Property in India) Regulations, 2018 via Notification
No. FEMA 21(R)/2018-RB.
Rule 5 of the regulations provides the law for relating to sale/ purchase of
immovable property by foreign embassies.
It reads as follows:
5. Purchase/ sale of Immovable Property by Foreign Embassies/ Diplomats/
A Foreign Embassy/ Diplomat/ Consulate General may
purchase/ sell immovable property in India other than agricultural land/
plantation property/ farm house provided:
Rule 11 of the 2018 regulations may also be relevant. It reads as follows:
- clearance from Government of India, Ministry of External Affairs is
obtained for such purchase/ sale, and
- the consideration for acquisition of immovable property in India is paid
out of funds remitted from abroad through banking channels.
11. Miscellaneous:- Any transaction involving acquisition or transfer of
immovable property under these regulations shall be undertaken:
Foreign Exchange Management (Remittance of Assets) Regulations, 2016
- through banking channels in India;
- subject to payment of applicable taxes and other duties/ levies in
Remittance outside India by a person whether resident in India or not, of assets
in India, are governed by section 47 of the Foreign Exchange Management Act,
1999 (FEMA) read with 1Notification No. FEMA 13(R)/2016-RB dated April 1, 2016.
Rules 2(v) 3, 4(1), 7 and 8 are relevant. They read as follows:
2(v) 'Remittance of asset' means remittance outside India of funds representing
a deposit with a bank or a firm or a company, provident fund balance or
superannuation benefits, amount of claim or maturity proceeds of Insurance
policy, sale proceeds of shares, securities, immovable property or any other
asset held in India in accordance with the provisions of the Act or rules or
regulations made there under.
3. Prohibition on Remittance outside India of assets held in India. - Save as
otherwise provided in the Act or rules or regulations made or issued thereunder,
no person, whether resident in India or not, shall make remittance of any asset
held in India by him or by any other person:
Provided that the Reserve Bank may, for sufficient reasons, permit any person to
make remittance of any asset held in India by him or by any other person.
4. Permission for remittance of assets in certain cases. - (1) A citizen of
foreign state, not being a Person of Indian origin (PIO) or a citizen of Nepal
or Bhutan, who:
- has retired from an employment in India, or
- has inherited the assets from a person referred to in sub-section (5) of
section 6 of the Act; or
- Is a widow/widower resident outside India and has inherited assets of
the deceased spouse who was an Indian citizen resident in India, may remit
through an authorised dealer an amount, not exceeding USD 1,000,000 (US Dollar One
million only) per financial year on production of documentary evidence in
support of acquisition, inheritance or legacy of assets by the remitter.
Provided that for the purpose of arriving at annual ceiling of remittance, the
funds representing sale proceeds of shares and immovable property owned or held
by the citizen of foreign state on repatriation basis in accordance with the
Foreign Exchange Management (Acquisition and transfer of immovable property in
India) Regulations, 2016 and Foreign Exchange Management (Transfer or issue of
security by a person resident outside India) Regulations, 2000 made under the
Act, shall not be included.
7. Reserve Bank's prior permission in certain cases:
8. Payment of taxes:
- A person who desires to make a remittance of assets in the following
cases, may apply to the Reserve Bank, namely:
- Remittance exceeding USD 1,000,000 (US Dollar One million only) per
- on account of legacy, bequest or inheritance to a citizen of foreign
state, resident outside India; and
- by a Non-Resident Indian (NRI) or Person of Indian Origin (PIO), out of the
balances held in NRO accounts/ sale proceeds of assets/ the assets acquired by
way of inheritance/ legacy.
- Remittance to a person resident outside India on the ground that
hardship will be caused to such a person if remittance from India is not
- On consideration of the application made under sub-regulation (1), the
Reserve Bank may permit the remittance, subject to such terms and conditions
as it deem necessary.
Any transaction involving remittance of assets under
these regulations shall be subject to the applicable tax laws in India.