ACQUISITION OF IMMOVABLE PROPERTY OUTSIDE INDIA
Owning a House in any Indian metropolitan can be expensive and unaffordable with the drastic price rise of properties in India. With new amendments to Banking Laws, one could own a Villa or a Castle in Scandinavian Eurpoeor a flat in USA at the same price as against a small flat in India. As per the recent amendment, the Reserve Bank of India has decided to enhance the remittances upto to USD 2,50,000. The RBI issued a clarification on August 11th,2014 that the remittance scheme could be used to acquire immovable properties as well. The good news is that the RBI withdrew its 2013 notification which did not permit new remittances towards acquiring immovable properties. Hence, an Indian resident can buy a house overseas under the Liberalised Remittance Scheme (LRS) by making remittance of upto USD 2,50,000 per calendar year(April-March).
Introduced in the year 2004,the Liberalized Remittance Scheme (LRS)aims at helping resident Indians remit up to USD 125,000 to foreign countries for all purposes except restricted illegal purposes as specified. LRS has evolved since 2004 helping individuals increase their foreign investment ability which would help free flow of income and could be an economic strength of the country in a long way to come.
Under the Scheme, resident individuals including minors can acquire and hold shares or debt instruments or any other assets including property outside India, without prior approval of the Reserve Bank. Individuals can also open, maintain and hold foreign currency accounts with banks outside India for carrying out transactions permitted under the Scheme. The Scheme is prohibited for making remittances for any prohibited or illegal activities such as margin trading, purchase of lottery tickets/sweep stakes, prescribed magazines, etc. or any item restricted under Schedule II of Foreign Exchange Management (Current Account Transactions) Rules, 2000;
Earlier the law as per the Foreign Exchange Management (Acquisition and transfer of immovable property outside India) Regulations, 2000 was that no person resident in India shall acquire or transfer any immovable property situated outside India without general or special permission of the Reserve Bank except a foreign national. A person resident in India could only acquire immovable property outside India, by way of gift or inheritance from a personor by of purchase out of foreign exchange held in Resident Foreign Currency (RFC) account maintained in accordance with the Foreign Exchange Management (Foreign Currency accounts by a person resident in India) Regulations, 2000.
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