Holding Foreign Assets Acquired While Non-Resident [Section 6(4)]
# Section 6(4) – Holding Foreign Assets Acquired While Non-Resident
## The Core Principle
A person resident in India may hold, own, transfer or invest in:
foreign currency,
foreign security, or
any immovable property situated outside India,
…IF such currency/security/property was:
acquired, held or owned by such person when he was resident outside India, OR
inherited from a person who was resident outside India.
Effectively: whatever you legitimately built up abroad while you were a non-resident, you can keep, use, transfer, and reinvest — even after becoming a resident in India.
## Mirror Provision – Section 6(5)
A person resident outside India may hold, own, transfer or invest in:
Indian currency, security, or any immovable property in India,
…IF acquired/held/owned while resident in India or inherited from a person who was resident in India.
Foreign currency accounts opened and maintained when he was resident outside India
(ii)
Income earned through employment, business or vocation outside India taken up when he was resident outside India; OR income from investments made while resident outside India; OR gift/inheritance received while resident outside India
(iii)
Foreign exchange (including income/conversion/replacement/accrual) held outside India, acquired by way of inheritance from a person resident outside India
(iv)
A resident in India may freely utilise all eligible assets abroad and income/sale proceeds thereof — even after return to India — for making fresh investments abroad WITHOUT RBI approval, provided the cost is met exclusively out of eligible assets and the transaction does not contravene FEMA.
## Key Conditions to Remember
The cost of fresh investments and subsequent payments must come exclusively from these eligible assets.
The transaction must not contravene any extant FEMA provisions.
No prior RBI approval is required.
> Logic: FEMA recognises that wealth lawfully built up abroad does not become 'illegal' simply because the person returns to India. It remains free for use abroad.
Worked example
### Example 1
Example 1: Mr. P worked in Dubai for 15 years as a non-resident and saved USD 500,000 in a Dubai bank account. He has now returned permanently to India. Can he continue to hold and operate the Dubai account?
Answer: Yes. Under Section 6(4), foreign currency accounts opened and maintained while resident outside India can continue to be held, owned, and operated even after becoming resident in India. He can also reinvest these funds abroad without RBI approval.
### Example 2
Example 2: Mrs. Q, who returned from the UK 2 years ago, wishes to invest GBP 50,000 (out of her UK-earned savings held in a London account) in shares of a UK company. Does she need RBI approval?
Answer: No RBI approval is required. As per Section 6(4) read with the 2014 RBI clarification, she may freely utilise eligible assets held abroad (and income thereon) for fresh investments abroad, provided the cost is met exclusively out of those eligible assets and the transaction does not contravene FEMA.
### Example 3
Example 3: Mr. R, an NRI, gifts a flat in London to his sister Ms. S, who is resident in India. Can Ms. S hold this flat?
Answer: Yes. Under Section 6(4), immovable property outside India inherited or received from a person resident outside India can be held by a person resident in India.
⚠️ Common exam mistakes
Assuming returning Indians must repatriate all foreign assets — Section 6(4) explicitly permits holding, owning, transferring, and investing.
Believing fresh foreign investments require RBI approval — no approval is needed if the source is exclusively eligible Section 6(4) assets.
Mixing eligible Section 6(4) funds with new Indian-sourced funds when investing abroad — this defeats the 'exclusively out of eligible assets' condition.
Forgetting that gifts and inheritances received while non-resident also qualify as eligible assets.
Confusing Section 6(4) [residents holding foreign assets] with Section 6(5) [non-residents holding Indian assets].
Bare-Act text Section 6(4) and Section 6(5) · Foreign Exchange Management Act, 1999 (with RBI A.P. (DIR Series) Circular No. 90 dated 9 January 2014) · click to expand
Section 6(4): A person resident in India may hold, own, transfer or invest in foreign currency, foreign security or any immovable property situated outside India if such currency, security or property was acquired, held or owned by such person when he was resident outside India or inherited from a person who was resident outside India. Section 6(5): A person resident outside India may hold, own, transfer or invest in Indian currency, security or any immovable property situated in India if such currency, security or property was acquired, held or owned by such person when he was resident in India or inherited from a person who was resident in India.