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

Karan, a person resident outside India, inherits an immovable property in Pune from his father, who was a resident of India. A friend claims that Karan cannot hold it because a non-resident cannot own Indian property. What is the correct position under FEMA?

Under FEMA, a person resident outside India may hold Indian immovable property when he has inherited it from a person who was resident in India. Karan therefore need not sell the property or become a resident, so the friend's claim of an absolute bar is wrong.

  1. AKaran must sell the property within 90 days of inheritance
  2. BKaran is barred from holding any Indian immovable property in all circumstances
  3. CA person resident outside India may hold immovable property in India if it was acquired by inheritance from a person who was resident in IndiaCorrect
  4. DKaran may hold it only if he first becomes a resident of India

Explanation

FEMA provides that a person resident outside India can hold, own, transfer or invest in Indian immovable property if the property was acquired when he was resident in India, or inherited from a person who was resident in India. Karan's inheritance from a resident father fits this rule. Option B ignores this express exception.

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