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CS Executive · Economic, Commercial and Intellectual Property Laws · Law relating to Foreign Exchange Management

Rohan, a person resident in India, holds a house in London bought without any permission under FEMA or its rules. Under the general prohibition in FEMA, which is the position, save as otherwise provided in the Act?

Save as otherwise provided in the Act, a person resident in India cannot acquire, hold, own, possess or transfer foreign exchange, foreign security or immovable property situated outside India. Rohan's London house therefore falls within the prohibition unless an exception applies.

  1. AHe may hold it freely, as only foreign exchange is restricted
  2. BHe may not acquire, hold, own, possess or transfer immovable property situated outside IndiaCorrect
  3. CHe may hold it, but only transfer it with RBI permission
  4. DThe restriction applies only to foreign securities, not to immovable property

Explanation

Section 4 states that, save as otherwise provided, no person resident in India shall acquire, hold, own, possess or transfer any foreign exchange, foreign security or any immovable property situated outside India. Immovable property abroad is expressly included, so the first and fourth options are wrong.

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