Rule 21 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Rule 21 of the Foreign Exchange Management (Overseas Investment) Rules, 2022 starts from a bar: no person resident in India may acquire or transfer immovable property outside India without general or special permission of the Reserve Bank. It then lists three property categories to which the rule does not apply, and a set of cases where acquisition and transfer are allowed, from inheritance and gift to purchase under the Liberalised Remittance Scheme. This article reads all three sub-rules.
The Rules are quoted as notified on 22 August 2022 (G.S.R. 646(E)); no amendment is in the texts consulted. Amendments after that date should be checked in the Gazette. They rest on section 46 of the Foreign Exchange Management Act, 1999, and section 4 of the Act, on holding foreign exchange, foreign security and property outside India, is the background provision; see our articles on section 46 and section 4. The Rules supersede the Acquisition and Transfer of Immovable Property Outside India Regulations, 2015, as the preamble says. For advice on a purchase abroad, our FEMA advisory service can help.
"Save as otherwise provided in the Act or this rule", a resident may not acquire or transfer immovable property outside India without general or special permission of the Reserve Bank. The rule does not apply to property held by a national of a foreign State resident in India, property acquired on or before 8 July 1947 and held with permission, or a lease not exceeding five years. Acquisition is allowed by inheritance, gift or purchase in listed cases, including purchase out of RFC Account funds or Liberalised Remittance Scheme remittances. A holding that was not permitted at the start cannot be held or transferred.
Sub-rule (1): the bar and its three carve-outs
The bar: no person resident in India shall acquire or transfer any immovable property situated outside India without general or special permission of the Reserve Bank.
The proviso says nothing in the rule applies to a property:
| Clause | Property |
|---|---|
| (i) | Held by a person resident in India who is a national of a foreign State |
| (ii) | Acquired by a person resident in India on or before the 8th day of July, 1947 and continued to be held with the permission of the Reserve Bank |
| (iii) | Acquired by a person resident in India on a lease not exceeding five years |
The carve-out in clause (iii) is for a lease "not exceeding five years"; the text says nothing about a longer lease.
Sub-rule (2): what is permitted
"Notwithstanding anything contained in sub-rule (1)", the following are permitted.
Clause (i): within India-resident chain
A person resident in India may acquire immovable property outside India by way of inheritance or gift or purchase from a person resident in India who has acquired such property as per the foreign exchange provisions in force at the time of acquisition.
Clause (ii): from a person resident outside India
A person resident in India may acquire immovable property outside India from a person resident outside India:
- (a) by way of inheritance;
- (b) by way of purchase out of foreign exchange held in an RFC Account;
- (c) by way of purchase out of the remittances sent under the Liberalised Remittance Scheme instituted by the Reserve Bank, with a proviso that such remittances may be consolidated in respect of relatives if the relatives, being persons resident in India, comply with the terms and conditions of the Scheme;
- (d) jointly with a relative who is a person resident outside India; or
- (e) out of the income or sale proceeds of the assets, other than ODI, acquired overseas under the provisions of the Act.
"Relative" has the meaning in clause (77) of section 2 of the Companies Act, 2013 (rule 2(1)(t)). "RFC Account" has the meaning given in the Foreign Currency Accounts Regulations, 2015 (rule 2(1)(v)); see our article on foreign currency accounts held outside India. The Rules print no amount for the Liberalised Remittance Scheme; for the scheme see our article on the Liberalised Remittance Scheme.
Clause (iii): office property of an Indian entity
An Indian entity having an overseas office may acquire immovable property outside India for the business and residential purposes of its staff, as per the directions issued by the Reserve Bank from time to time.
The Master Direction - Overseas Investment, updated as on April 01, 2026, gives the Reserve Bank's directions in its paragraph 25: an AD bank may allow such acquisition provided total remittances do not exceed the limits laid down for initial and recurring expenses. It prints those limits as fifteen per cent of the average annual sales, income or turnover of the Indian entity during the last two financial years or up to twenty-five per cent of the net worth, whichever is higher, and ten per cent of the average annual sales, income or turnover during the last two financial years, for initial and recurring expenses respectively. These are the Reserve Bank's directions and not text of the Rules.
Clause (iv): holders of lawfully acquired property
A person resident in India who has acquired any immovable property outside India in accordance with the foreign exchange provisions in force at the time of acquisition may:
- (a) transfer it by way of gift to a person resident in India who is eligible to acquire such property under the Rules, or by way of sale; and
- (b) create a charge on it in accordance with the Act or the rules or regulations under it or directions issued by the Reserve Bank from time to time.
Sub-rule (3): a permitted start
"The holding of any investment in immovable property or transfer thereof in any manner shall not be permitted if the initial investment in immovable property was not permitted under the Act." A property acquired in a way that was not permitted cannot be held or transferred in a permitted way later.
The Master Direction on immovable property
The Master Direction - Acquisition or Transfer of Immovable Property under the Foreign Exchange Management Act, 1999, updated as on September 01, 2022, in its Part I, says only that acquisition or transfer of immovable property outside India by a person resident in India is governed by rule 21 of the Overseas Investment Rules, 2022 and paragraph 25 of the Overseas Investment Directions, 2022. Paragraph 25 of those Directions is now paragraph 25 of the Master Direction - Overseas Investment, explained above. For the rest of that Master Direction, which deals with property in India, see our articles on property purchase by NRIs and OCIs and on the funds, IFSC and immovable property paragraphs of the Master Direction - Overseas Investment.
A worked example
Mohan Lal Ghosh, a resident in India, inherits a flat in a foreign city from his uncle, who lived abroad. Sub-rule (2)(ii)(a) allows the acquisition by inheritance from a person resident outside India. Later, Mohan wants to buy a second flat jointly with his sister, who is resident outside India. Sub-rule (2)(ii)(d) allows a joint purchase with a relative who is resident outside India. If instead he had acquired the first flat in breach of the exchange rules in force, sub-rule (3) would stop him from holding or transferring it as a permitted holding. The names are invented.
Need help with property abroad?
Buying a home or an office abroad as a resident touches the Reserve Bank's permission, the Liberalised Remittance Scheme and the tax return. Our FEMA advisory team can check the route under rule 21 before funds move.
Key takeaways
- The default is a bar on acquiring or transferring immovable property outside India without Reserve Bank permission.
- Not covered: property of foreign nationals resident in India, pre-8 July 1947 property held with permission, and leases of up to five years.
- Permitted routes include inheritance, gift, purchase from a resident, RFC Account funds, Liberalised Remittance Scheme remittances, joint purchase with a non-resident relative and income or sale proceeds of overseas assets other than ODI.
- Indian entities with an overseas office may buy property for staff under the Reserve Bank's directions.
- Property not permitted at the start cannot be held or transferred.
Read next
- Scope, administration and exclusions: rules 1, 3, 4, 6, 8 and 20
- Overseas investment by resident individuals: Schedule III
- Restrictions on real estate, startups and layers: rule 19
- Property purchase by NRIs and OCIs: rules 24 and 25
Disclaimer: Based on the Gazette text of the instrument this article names, as notified and as amended by the notifications named in the article (for the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 the latest amendment consulted is S.O. 4870(E) dated 2 September 2026), as consulted on 2 October 2026. There is no official consolidated text; the provisions were read with each amendment applied. Sectoral caps, entry routes, conditions, forms and time limits change by notification, press note and circular; later changes should be checked on the Gazette, DPIIT and Reserve Bank sites. This article is general information, not legal advice; check the official text before acting.