General

Under section 25 of Foreign Exchange Regulation Act, 1973, Indian nationals resident in India are required to obtain prior permission of Reserve Bank of India to acquire, hold, transfer or dispose of by sale, mortgage, lease for period exceeding 5 years, gift, settlement or otherwise any immovable property situated outside India. It may be noted that section 25 does not apply to a foreign national (including one of Indian origin).

Holding, acquisition, etc

As explained above, in terms of section 25, general exemption has been granted by RBI, vide its notification dated 7th September, 1992 to acquire immovable property outside India, out of foreign exchange held :

- in India, in RFC account, or any other RBI approved scheme; or

- outside india.

The exemption also extends to acquisition of such properties out of income out of such foreign exchange. It may be noted that the exemption does not expressly refer holding, sale, lease, etc., of such property, however, annexure II (c) of Circular No. 51, referred to above, which seeks to explain scope of the notification, states that returning Indians are "not required to declare to Reserve Bank for permission to continue to hold or dispose of the property held outside India as required thereto. The exemption also applies to the acquisition (which includes holding disposal also) of any property out of eligible foreign currency assets"

Permission to continue to hold

This does not require any permission if the conditions stated in the Notification No. 120, dated 7th September, 1992 are satisfied.

However, if the conditions are not satisfied then, Indian nationals who have acquired immovable properties outside India during their stay abroad and who returned to India require RBI permission to continue to hold such properties. Application in Form FAD-1 shall be made in this regard to RBI’s Central Office.

Following documents must be attached along with the application:

(a) authenticed copy of purchase deed / other relevant documents

(b) Appendix IV relating to immovable property outside India forming part of Form FAD-1.

Permission to hold property outside India shall be granted by RBI on certain conditions including repatriation of income to India at periodical intervals, restriction on transfer, etc.

Sale

This also does not require RBI permission, if the conditions stated in the Notification No. 120 are satisfied. In other cases RBI’s prior permission is necessary.
 

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