Acts Related To Foreign Investment
Foreign investments are subjected to certain guidelines. Government of India has come out with various acts that give clear guidelines to the foreign investors as to how to move towards investment. Foreign investors need to know these acts which would help them in their investment process.
Foreign Exchange Management Act, 1999 (FEMA)
Under FEMA provides full convertibility on capital and current account transactions for non-residents is allowed. However under this act, residents are subjected to non-convertibility on capital account transactions only. FEMA, treats an Indian company with foreign equity participation at par with other locally incorporated companies. The exchange control laws and regulations are applicable both for residents and the foreign-invested companies as well.
Repatriation
Repatriation of capital
Foreign capital that is invested in India can be repatriated along with capital appreciation, if any, after the payment of taxes due on them, provided the investment was approved on a repatriation basis.
Repatriation of dividends and profits
Profits and dividends earned through foreign investment in India can be repatriated after the payment of taxes due on them. In this case permission of RBI is not required for effecting remittance; however this is subject to compliance with certain specified conditions.
Acquisition of Immovable property
Acquisition of immovable property by a Non-resident
A person who is residing outside India, who has received permission from RBI to establish a branch, or office, or place of business in India (excluding a Liaison Office), has general permission of RBI to acquire immovable property in India, that is necessary for, or incidental to, the activity. However, in such cases, it is necessary to file a declaration, in prescribed form (IPI), with RBI, within 90 days of the acquisition of immovable property.
Foreign nationals of non-Indian origin acquiring immovable property in India with the specific approval of RBI can only transfer such property with prior permission from the RBI.
Acquisition of immovable property by NRI
An Indian citizen residing outside India (NRI) can acquire immovable property, other than agricultural/plantation/farm house in India by way of purchase. All the immovable properties except the agricultural or plantation property or farm house can be transferred to a person resident outside India who is a citizen of India or to a person of Indian origin resident outside India or a person resident in India.
Foreign Exchange Management Act, 1999 (FEMA)
Under FEMA provides full convertibility on capital and current account transactions for non-residents is allowed. However under this act, residents are subjected to non-convertibility on capital account transactions only. FEMA, treats an Indian company with foreign equity participation at par with other locally incorporated companies. The exchange control laws and regulations are applicable both for residents and the foreign-invested companies as well.
Repatriation
Repatriation of capital
Foreign capital that is invested in India can be repatriated along with capital appreciation, if any, after the payment of taxes due on them, provided the investment was approved on a repatriation basis.
Repatriation of dividends and profits
Profits and dividends earned through foreign investment in India can be repatriated after the payment of taxes due on them. In this case permission of RBI is not required for effecting remittance; however this is subject to compliance with certain specified conditions.
Acquisition of Immovable property
Acquisition of immovable property by a Non-resident
A person who is residing outside India, who has received permission from RBI to establish a branch, or office, or place of business in India (excluding a Liaison Office), has general permission of RBI to acquire immovable property in India, that is necessary for, or incidental to, the activity. However, in such cases, it is necessary to file a declaration, in prescribed form (IPI), with RBI, within 90 days of the acquisition of immovable property.
Foreign nationals of non-Indian origin acquiring immovable property in India with the specific approval of RBI can only transfer such property with prior permission from the RBI.
Acquisition of immovable property by NRI
An Indian citizen residing outside India (NRI) can acquire immovable property, other than agricultural/plantation/farm house in India by way of purchase. All the immovable properties except the agricultural or plantation property or farm house can be transferred to a person resident outside India who is a citizen of India or to a person of Indian origin resident outside India or a person resident in India.
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