Foreign Exchange Management Act (FEMA) is an Act passed by the Indian Parliament in the year 1999. The objective of the FEMA is to consolidate and amend the law relating to foreign exchange with the objective of facilitating external trade and payments and for promoting the orderly development and maintenance of foreign exchange market in India. FEMA has replaced the Foreign Exchange Regulation Act (FERA), which was in place since 1973. The Act provides for the regulation and management of foreign exchange transactions in India and the offenses related to it.
Mechanism for Acquiring Property in India by a Non-Resident
A non-resident can acquire property in India by following the below-mentioned mechanism:
1. Eligibility criteria: A non-resident can acquire immovable property in India only if he is a person resident outside India as defined under FEMA.
2. Types of properties that can be acquired: A non-resident can acquire residential as well as commercial properties in India.
3. Payment for acquisition: The payment for the acquisition of the property should be made in foreign currency through banking channels, i.e., through normal banking channels or from his NRE/NRO/FCNR account in India.
4. Repatriation of funds: A non-resident can repatriate the sale proceeds of the property acquired in India provided that the property has been held for a period of three years from the date of acquisition.
5. Taxation: A non-resident has to pay taxes on the income earned from the property acquired in India. The tax is deducted at source.
6. Permission from RBI: A non-resident has to take permission from the Reserve Bank of India (RBI) for the acquisition of the property.
Mechanism for Acquiring Property Outside India by a Resident
A resident can acquire property outside India by following the below-mentioned mechanism:
1. Eligibility criteria: A resident individual can acquire immovable property outside India only if he has earned the money through legal means in India and the funds for the acquisition are remitted through normal banking channels.
2. Types of properties that can be acquired: A resident can acquire residential as well as commercial properties outside India.
3. Payment for acquisition: The payment for the acquisition of the property should be made in foreign currency through normal banking channels.
4. Repatriation of funds: A resident can repatriate the sale proceeds of the property acquired outside India.
5. Taxation: A resident has to pay taxes on the income earned from the property acquired outside India. The tax is deducted at source.
6. Permission from RBI: A resident has to take permission from the Reserve Bank of India (RBI) for the acquisition of the property.
Conclusion
In conclusion, the Foreign Exchange Management Act (FEMA) regulates and manages foreign exchange transactions in India and the offenses related to it. A non-resident can acquire property in India by following the above-mentioned mechanism, while a resident can acquire property outside India by following the above-mentioned mechanism. The mechanism is aimed at facilitating foreign exchange transactions and ensuring the orderly development and maintenance of the foreign exchange market in India. The Reserve Bank of India (RBI) plays a crucial role in regulating and managing foreign exchange transactions in India.
Subscribe on YouTube - NotesWorld
For PDF copy of Solved Assignment
Any University Assignment Solution
.webp)
