FEMA and NRI Property: What Every Overseas Indian Must Know

Why FEMA Matters for NRI Property Owners

The Foreign Exchange Management Act, 1999 (FEMA) governs the acquisition, transfer, and repatriation of property in India by Non-Resident Indians and Persons of Indian Origin. Compliance with FEMA is not optional — violations can result in penalties of up to three times the value of the property involved. Understanding the basic FEMA framework is essential for every NRI with property interests in India.

Acquisition of Immovable Property by NRIs

Under FEMA and the Master Direction on Acquisition or Transfer of Immovable Property (Master Direction No. 12/2015-16, as updated), NRIs can acquire immovable property in India without prior RBI approval, subject to certain restrictions:

• NRIs can freely purchase residential and commercial property in India
• Agricultural land, plantation property, and farmhouses cannot be purchased by NRIs without specific RBI approval
• Payment must be made through banking channels from NRE, NRO, or FCNR accounts, or through inward remittance of foreign exchange
• Cash payments for property purchases are prohibited under FEMA

Inheritance of Property by NRI Heirs

An NRI heir inheriting property from a resident or NRI relative can do so without any FEMA restriction. The inheritance itself does not require RBI approval. However, if the NRI heir later wishes to sell the inherited property and repatriate the proceeds, FEMA regulations apply to that stage.

Repatriation of Sale Proceeds

Repatriation of sale proceeds from the sale of property in India is subject to conditions under FEMA:

• For self-acquired property: repatriation from NRE account is permitted for up to two residential properties
• For inherited property: the amount repatriable is limited to USD 1 million per financial year
• Form 15CA and Form 15CB (CA certificate) are required for remittances above a threshold
• The original purchase must have been made through legitimate banking channels

Gifting Property to or from an NRI

Property can be gifted between NRIs, and between NRIs and resident Indians who are relatives as defined under the Companies Act, 2013. Gifts of agricultural land, plantation property, or farmhouses to or by NRIs require RBI approval.

How Varasa Can Help

Varasa assists NRI families in navigating FEMA compliance across property acquisition, inheritance, transfer, and succession planning — ensuring that every transaction is properly structured and documented to withstand scrutiny.