Murari Lal, a person resident outside India, has invested in four residential immovable properties under construction in Kolkata. Each property is…

The investment in immovable properties in India by Mr. Murari Lal, a resident outside India, is a Capital Account Transaction which is permissible as per Schedule II of the Foreign Exchange Management (Permissible Capital Account Transactions) Regulations, 2000 which permits Acquisition and Transfer of Immovable Property in India by a Person Resident Outside India. According to Schedule III to Foreign Exchange Management (Current Account Transactions) Rules, 2000, remittances by persons other than individuals shall require prior approval of the Reserve Bank of India if Commission, per transaction, to agents abroad for sale of residential flats or commercial plots in India exceeds USD 25,000 or five percent of the inward remittance whichever is more. As per the facts of the question and mentioned provisions, the following are the answers to the questions asked: (i) Yes, the investment by Mr. Murari Lal and payment of commission on this transaction is permissible. (ii) Calculation of maximum commission that can be paid without the approval of RBI. The maximum amount of commission that can be paid to each broker for each transaction, without RBI approval is, more of- USD 25,000 or 6lakh [i.e. 5% of (60% of 2 crore)]. Thus,6,00,000 can be paid to each broker as commission without taking any prior approval of the RBI.