Section 6 of FEMA : Section 6: Capital Account Transactions

Explanation using Example

Imagine that Raj, an Indian citizen, has recently moved to Germany for work. He wishes to purchase a property in Berlin. Under Section 6(1) of the Foreign Exchange Management Act (FEMA), 1999, Raj can approach an authorized dealer (a bank authorized by the Reserve Bank of India) to buy the necessary foreign exchange to complete this transaction.

However, the Reserve Bank of India (RBI), as per Section 6(2), may have specified certain limits or conditions for such capital account transactions. For instance, there might be a cap on the amount of money Raj can remit overseas for the purpose of purchasing property.

If Raj had inherited a property in Berlin from his uncle who was a permanent resident of Germany, as per Section 6(4), he would be allowed to hold and transfer this property without the need for any special permissions, because the property was acquired while his uncle was a resident outside India.

Conversely, if Raj's friend, who is a German resident, inherited a property in India, according to Section 6(5), his friend could legally hold or transfer this property in India, since it was inherited from a person who was a resident in India at the time of acquisition.