Section 6 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.
The last sub-sections of section 6 do two different jobs. Sub-sections (4) and (5) protect assets that a person acquired, held or owned while resident on the other side of the line, or inherited from such a person. Sub-section (6) lets the Reserve Bank prohibit, restrict or regulate, by regulation, the establishment in India of a branch, office or other place of business by a person resident outside India. This article takes those three sub-sections only; sub-sections (1), (2), (2A) and (7) have their own article, and sub-section (3) is shown as omitted.
A person resident in India may hold, own, transfer or invest in foreign currency, foreign security or immovable property outside India if it was acquired, held or owned while he was resident outside India, or inherited from a person who was. A person resident outside India has the mirror right for Indian currency, security and immovable property in India. Separately, the Reserve Bank may, by regulation, prohibit, restrict or regulate the establishment in India of a branch, office or other place of business by a person resident outside India.
About this article
This article is based on the consolidated text of the Act consulted (amendments shown up to Act 50 of 2019). Later amendments should be checked. Sub-sections (4) to (6) carry no amending footnote in the copy consulted; the footnotes at this place concern sub-section (3), omitted by Act 20 of 2015, s. 139, w.e.f. 15-10-2019. For a foreign company planning an Indian presence, our liaison, branch and project office team can help with the practical side.
Sub-section (4): a resident keeps assets from the period of non-residence
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."
This is the main answer to section 4, which bars a person resident in India from acquiring, holding, owning, possessing or transferring foreign exchange, foreign security or immovable property outside India. Section 4 opens with "save as otherwise provided in this Act", and section 6(4) is one of those provisions. Our article on section 4 explains the restriction.
Two points come out of the wording.
- Two sources of protected assets. (i) assets acquired, held or owned when the person was resident outside India, and (ii) assets inherited from a person who was resident outside India.
- Four verbs, not two. The permission is to hold, own, transfer or invest in. The permission is not limited to keeping the asset; the person may also transfer it or invest in it.
Example. Meera worked abroad for several years as a person resident outside India and built up a foreign-currency balance and a flat there. She returns to India and becomes a person resident in India. Under section 6(4), she may hold, own, transfer or invest in the foreign currency and the property, because they were acquired, held or owned when she was resident outside India. Her residence is tested under section 2(v); see our separate article on the person resident in India.
Sub-section (5): the mirror rule for non-residents
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."
| Section 6(4) | Section 6(5) | |
|---|---|---|
| Who | Person resident in India | Person resident outside India |
| What | Foreign currency, foreign security, immovable property outside India | Indian currency, security, immovable property in India |
| Protected if | Acquired, held or owned while resident outside India, or inherited from a person who was | Acquired, held or owned while resident in India, or inherited from a person who was |
| Verbs | Hold, own, transfer or invest in | Hold, own, transfer or invest in |
For the practical side of non-residents holding property in India, see our guide on immovable property by NRI, PIO and OCI in India. That guide is not the source of any limit or condition here; the Act is silent on them in this sub-section, and the rules and regulations should be checked for any limits.
What the two sub-sections do not say
- They do not set a time limit for holding the asset or say what happens when it is sold.
- They do not say how the proceeds may be used or sent abroad.
- They do not deal with a gift received after the change of residence; section 9(d) deals with a class of gift and inheritance for foreign exchange held by a resident up to a limit the Reserve Bank specifies, and our article on section 9 covers it.
Sub-section (6): branch, office or other place of business in India
Section 6(6): "Without prejudice to the provisions of this section, the Reserve Bank may, by regulation, prohibit, restrict, or regulate establishment in India of a branch, office or other place of business by a person resident outside India, for carrying on any activity relating to such branch, office or other place of business."
Breaking this down:
- Who acts. The Reserve Bank, by regulation. Regulations are made under section 47, so "specified" in section 2(zd) is the matching term. Section 47(2) has no clause that names section 6(6); the general power in section 47(1) and the residuary clause (h) are the relevant hooks, as far as the text shows.
- What it can do. Prohibit, restrict or regulate. Three levers, not one.
- Over what. The establishment in India of a branch, office or other place of business.
- Whose. A person resident outside India. Under section 2(v)(iii), an office, branch or agency in India owned or controlled by a person resident outside India is itself a person resident in India, so once established, the Indian branch is classified accordingly.
- "Without prejudice to the provisions of this section." The power sits alongside the rest of section 6 and does not cut down the earlier sub-sections.
The regulations made for this purpose, which this article names only, are the Foreign Exchange Management (Establishment in India of a branch office or a liaison office or a project office or any other place of business) Regulations, 2016, as amended from time to time. The article does not describe what is inside them. The Act does not name liaison offices or project offices; those names come from the regulations.
Companies Act position. A foreign company that establishes a place of business in India also faces filing requirements under the Companies Act, 2013, for which see our post on documents a foreign company must deliver under section 380 of the Companies Act, 2013. That is a separate law, and nothing in section 6(6) of this Act replaces it.
Practical reading
Sub-sections (4) and (5) deal with people changing residence; sub-section (6) deals with entities. The three belong together only because they sit at the end of section 6. For the differences between the three kinds of office a foreign company may consider, see our post on liaison, branch and project offices compared. For the first part of section 6, see our article on section 6(1), (2), (2A) and (7).
Need help setting up an office in India?
If a foreign company wants to set up a branch, liaison or project office, the Reserve Bank's regulations decide what is allowed, and the Companies Act adds its own steps. Our liaison, branch and project office team can walk you through both layers and the filings after set-up.
Key takeaways
- Section 6(4) lets a resident keep, transfer or invest in foreign currency, foreign security and property outside India that was acquired or owned while he was resident outside India, or inherited from a person who was.
- Section 6(5) gives non-residents the matching right for assets in India.
- Section 6(6) lets the Reserve Bank, by regulation, prohibit, restrict or regulate the establishment in India of a branch, office or other place of business by a person resident outside India.
- The Act prints no limits, forms or conditions in these sub-sections; check the regulations.
- A foreign company's Companies Act obligations are separate.
Read next
- Section 6: capital account transactions, debt and non-debt instruments
- Section 9: exemption from realisation and repatriation
- Branch Office in India by a Foreign Company
- Immovable Property by NRI, PIO and OCI in India
Disclaimer: Based on a consolidated text of the Foreign Exchange Management Act, 1999 showing amendments up to Act 50 of 2019, as consulted on 2 October 2026. Limits, forms, timelines and procedures are set by rules, regulations and Reserve Bank directions made under the Act; they change from time to time and are not covered here. Later amendments should be checked. This article is general information, not legal advice; check the official text before acting.