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CA Intermediate · Corporate and Other Laws · The Foreign Exchange Management Act, 1999

Arjun, a resident in India, inherits a house in London from his late uncle, who lived there. Arjun wants to hold it. Under FEMA, what is the correct position about holding immovable property outside India?

Arjun may hold the London house. FEMA permits a person resident in India to hold, own or transfer immovable property outside India that was inherited from a person resident outside India. No forced sale or court approval is needed, and the prohibition is not absolute.

  1. AA person resident in India may hold, own or transfer foreign security or immovable property outside India if it was acquired by inheritance from a person resident outside IndiaCorrect
  2. BHe must sell the property within 30 days of inheritance
  3. CHe needs prior approval of the Supreme Court
  4. DHolding is prohibited for any resident in all circumstances

Explanation

Section 6(4) of FEMA allows a person resident in India to hold, own or transfer foreign currency, foreign security or immovable property situated outside India if acquired, held or owned when resident outside India, or inherited from a person resident outside India. Hence Arjun may hold it. Options B, C and D state rules that do not exist.

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