Foreign Exchange Management Act, 1999 (FEMA)
Overview
The Foreign Exchange Management Act, 1999 (FEMA) was enacted to consolidate and amend the laws related to foreign exchange. Its primary objective is to facilitate external trade and payments and promote the orderly development and maintenance of the foreign exchange market in India. FEMA regulates the holding and transactions of foreign currency and related banking transactions.
Key Impacts on NRI Transactions
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Bank Accounts: According to FEMA rules, NRIs cannot hold regular savings bank accounts. Instead, they must set up an NRO (Non-Resident Ordinary) or NRE (Non-Resident External) Account as stipulated by the Reserve Bank of India (RBI).
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Property Purchase: NRIs are permitted to purchase residential or commercial property in India. However, they are not allowed to buy agricultural land, plantations, or farmhouse land.
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Receiving Property: NRIs can receive immovable property as gifts from relatives or through inheritance.
For more details on FEMA refer the RBI link for FEMA.