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CS Executive · Setting Up of Business, Industrial and Labour Laws · Setting up of Business outside India and Issues Relating thereto

Rohan, a person resident in India, wishes to buy a flat in Dubai from his Indian savings, with no special permission or exemption applying. Under the general rule in Section 4 of FEMA, 1999, what is the position?

Section 4 of FEMA prohibits a person resident in India from acquiring, holding, owning, possessing or transferring foreign exchange, foreign security or immovable property outside India, save as otherwise provided in the Act. Rohan's Dubai flat purchase therefore falls within the general prohibition.

  1. AHe may freely acquire it because immovable property is not covered by Section 4
  2. BHe may acquire it only if the flat's value is below a prescribed limit, without any other condition
  3. CHe may acquire it only after informing the Competent Authority within thirty days
  4. DSave as otherwise provided in the Act, a resident in India cannot acquire, hold, own, possess or transfer immovable property outside IndiaCorrect

Explanation

Section 4 bars a person resident in India from acquiring, holding, owning, possessing or transferring foreign exchange, foreign security or immovable property outside India, save as otherwise provided. Immovable property is expressly covered, so the first option is wrong. The value limit appears only in the seizure proviso of Section 37A, not in Section 4.

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