15 , March , 2022
In an interesting move, the government on Monday "amended and aligned" the existing definitions of the real estate business by introducing more clarity in its FDI policy for the realty sector.
FDI is not permitted in an entity which is engaged or proposes to engage in real estate business, construction of farmhouses and trading in transferable development rights, reads a press note from the Department for Promotion of Industry and Internal Trade (DPIIT).
Earning rent/income on lease of a property, not amounting to transfer, will not amount to real estate business, it added further. As per the note, FDI is not permitted in real estate business and construction of farmhouses.
In the norms pertaining to acquisition of shares under scheme of merger/demerger/amalgamation, there are changes made by DPIIT.
"Real estate business means dealing in land and immovable property with a view to earning profit, and does not include development of townships, construction of residential /commercial premises, roads or bridges, educational institutions, recreational facilities, city and regional level infrastructure, townships", the note said.
The merged or new entity "may issue capital instruments to the existing shareholders of the transferor company resident outside India", the note said.
"Where a scheme of compromise or arrangement or merger or amalgamation of two or more Indian companies, or a reconstruction by way of demerger or otherwise of an Indian company, the transferee company or the new company, as the case may be, may issue capital instruments to the existing shareholders of the transferor company resident outside India," it said.
This will be subject to certain conditions, it added.
(WITH INPUTS TAKEN FROM PTI)
