What is the Foreign Exchange Management Act (FEMA) in property?

The Foreign Exchange Management Act, 1999 (FEMA) governs all foreign exchange transactions in India including purchase, sale, and inheritance of immovable property by Non-Resident Indians (NRIs), Persons of Indian Origin (PIOs), Overseas Citizens of India (OCIs), and foreign nationals. FEMA replaced the older FERA (Foreign Exchange Regulation Act) with a more liberalised framework.

Property Rights Under FEMA NRIs/PIOs/OCIs

• Can purchase residential and commercial properties in India without RBI approval.
• Cannot purchase agricultural land, plantation property, or farmhouses without special RBI permission.
• Can inherit any type of property from Indian residents.

Property Rights Foreign Nationals

• Cannot purchase immovable property in India without RBI approval.
• Exception: Property acquired through inheritance from Indian resident.
• Can rent property in India without RBI permission.

FEMA compliance is non-negotiable for NRIs and foreign nationals transacting in Indian real estate. All fund flows inward for purchase and outward for sale proceeds must route through designated NRE/NRO/FCNR accounts, with proper documentation maintained for RBI compliance and tax purposes.