Description
export import ppt semester 4
FOREIGN EXCHANGE MANAGEMENT ACT, 1999
PRESENTED BY(GROUP IV)
FOREIGN EXCHANGE MANAGEMENT ACT,1999
An Act to consolidate and amend the law relating to foreign exchange with the objective of facilitating external trade and payments and for promoting the orderly development and maintenance of foreign exchange market in India.
HISTORICAL BACKGROUND
Replacement for earlier Foreign Exchange Regulation Act (FERA). FEMA became an act on the 1st day of June, 2000. FEMA was introduced because the FERA didn’t fit in with post-liberalisation policies. A significant change that the FEMA brought with it, was that it made all offenses regarding foreign exchange civil offenses, as opposed to criminal offenses as dictated by FERA.
OBJECTIVES
The object of the Act is to consolidate and amend the law relating to foreign exchange with the objective of facilitating external trade and payments and for promoting the orderly development and maintenance of foreign exchange market in India. ? The main intention behind the Foreign Exchange Management Act (1999) is to fuse and revise the law relating to foreign exchange with the goal of facilitating external deal and payments. It was also formulated to endorse the orderly development and continuance of foreign exchange market in India
?
EXTENT
?
FEMA extends to the whole of India. It applies to all branches, offices and agencies outside India owned or controlled by a person who is a resident of India and also to any contravention there under committed outside India by any person to whom this Act applies.
DIFFERENCE BETWEEN FERA AND FEMA
?
1-The objective of FERA was to conserve forex and to prevent its misuse. The objective of FEMA is to facilitate external trade and payments and maintenance of forex market in india.
? ? ? ?
2- Violation of FERA was a criminal offence whereas violation of FEMA is a civil offence. 3- Offences under FERA were not compoundable, while offences under FEMA are compoundable. 4- Citizenship was a criteria to determine the residential status of a person under FERA, while stay of more than 182 days in India is the criteria to decide residential status under FEMA. 5- Almost all current account transactions are free, except a few.
? ?
?
MAIN FEATURES
?
Activities such as payments made to any person outside India or receipts from them, along with the deals in foreign exchange and foreign security is restricted. It is FEMA that gives the central government the power to impose the restrictions. It forbids foreign exchange dealing undertaken other than an endorsed person. It also makes it lucid that if any person residing in India acknowledged any Forex payment (with no there being an equivalent inward transmittal from abroad) the concerned person shall be reckoned to have received they payment from a nonauthorised human being. There are 7 types of contemporary account transactions, which are completely outlawed, and as a result no contract can be undertaken relating to them. These embrace transaction relating to lotteries, football pools, prohibited magazines and a few others. FEMA and the associated rules give full liberty to Resident of India (ROI) to clasp or own or relocate any foreign protection or rigid property situated remote India.
? ?
?
?
OTHER….. ? - Deals in foreign exchange under the current account by an authorised person can be restricted by the Central Government, based on public interest. ?- Without general or specific permission of the Reserve Bank of India, FEMA restricts the transactions involving foreign exchange or foreign security and payments from outside the country to India – the transactions should be made only through an authorised person. ?- Restrictions are imposed on people living in India who carry out transactions in foreign exchange, foreign security or who own or hold immovable property abroad. ?FEMA and the associated rules give full liberty to Resident of India (ROI) to clasp or own or relocate any foreign protection or rigid property situated remote India.
RBI GUIDELINES
Except with the general or special permission of the Reserve Bank of India, no person can :? deal in or transfer any foreign exchange or foreign security to any person not being an authorized person; ? make any payment to or for the credit of any person resident outside India in any manner; ? receive otherwise through an authorized person, any payment by order or on behalf of any person resident outside India in any manner; ? reasonable restrictions for current account transactions as may be prescribed.
?
Any person may sell or draw foreign exchange to or from an authorized person for a capital account transaction. The Reserve Bank may, in consultation with the Central Government, specify :- any class or classes of capital account transactions which are permissible; the limit up to which foreign exchange shall be admissible for such transactions
The Directorate of Enforcement investigate to prevent leakage of foreign exchange which generally occurs through the following malpractices : Remittances of Indians abroad otherwise than through normal banking channels, i.e. through compensatory payments. Acquisition of foreign currency illegally by person in India. Non-repatriation of the proceeds of the exported goods.
Unauthorised maintenance of accounts in foreign countries. Under-invoicing of exports and over-invoicing of imports and any other type of invoice manipulation. Siphoning off of foreign exchange against fictitious and bogus imports. Illegal acquisition of foreign exchange through Hawala. Secreting of commission abroad.
Current scenario The main objectives in managing a stock of reserves for any developing country, including India, are preserving their long-term value in terms of purchasing power over goods and services, and minimizing risk and volatility in returns. After the East Asian crises of 1997, India has followed a policy to build higher levels of Foreign Exchange Reserves that take into account not only anticipated current account deficits but also liquidity at risk arising from unanticipated capital movements. Accordingly, the primary objectives of maintaining Foreign Exchange Reserves in India are safety and liquidity; maximizing returns is considered secondary. In India, reserves are held for precautionary and transaction motives to provide confidence to the markets, those foreign obligations can always be met. The Reserve Bank of India (RBI), in consultation with the Government of India, currently manages Foreign Exchange Reserves. As the objectives of reserve management are liquidity and safety, attention is paid to the currency composition and duration of investment, so that a significant proportion can be converted into cash at short notice.
doc_113525732.pptx
export import ppt semester 4
FOREIGN EXCHANGE MANAGEMENT ACT, 1999
PRESENTED BY(GROUP IV)
FOREIGN EXCHANGE MANAGEMENT ACT,1999
An Act to consolidate and amend the law relating to foreign exchange with the objective of facilitating external trade and payments and for promoting the orderly development and maintenance of foreign exchange market in India.
HISTORICAL BACKGROUND
Replacement for earlier Foreign Exchange Regulation Act (FERA). FEMA became an act on the 1st day of June, 2000. FEMA was introduced because the FERA didn’t fit in with post-liberalisation policies. A significant change that the FEMA brought with it, was that it made all offenses regarding foreign exchange civil offenses, as opposed to criminal offenses as dictated by FERA.
OBJECTIVES
The object of the Act is to consolidate and amend the law relating to foreign exchange with the objective of facilitating external trade and payments and for promoting the orderly development and maintenance of foreign exchange market in India. ? The main intention behind the Foreign Exchange Management Act (1999) is to fuse and revise the law relating to foreign exchange with the goal of facilitating external deal and payments. It was also formulated to endorse the orderly development and continuance of foreign exchange market in India
?
EXTENT
?
FEMA extends to the whole of India. It applies to all branches, offices and agencies outside India owned or controlled by a person who is a resident of India and also to any contravention there under committed outside India by any person to whom this Act applies.
DIFFERENCE BETWEEN FERA AND FEMA
?
1-The objective of FERA was to conserve forex and to prevent its misuse. The objective of FEMA is to facilitate external trade and payments and maintenance of forex market in india.
? ? ? ?
2- Violation of FERA was a criminal offence whereas violation of FEMA is a civil offence. 3- Offences under FERA were not compoundable, while offences under FEMA are compoundable. 4- Citizenship was a criteria to determine the residential status of a person under FERA, while stay of more than 182 days in India is the criteria to decide residential status under FEMA. 5- Almost all current account transactions are free, except a few.
? ?
?
MAIN FEATURES
?
Activities such as payments made to any person outside India or receipts from them, along with the deals in foreign exchange and foreign security is restricted. It is FEMA that gives the central government the power to impose the restrictions. It forbids foreign exchange dealing undertaken other than an endorsed person. It also makes it lucid that if any person residing in India acknowledged any Forex payment (with no there being an equivalent inward transmittal from abroad) the concerned person shall be reckoned to have received they payment from a nonauthorised human being. There are 7 types of contemporary account transactions, which are completely outlawed, and as a result no contract can be undertaken relating to them. These embrace transaction relating to lotteries, football pools, prohibited magazines and a few others. FEMA and the associated rules give full liberty to Resident of India (ROI) to clasp or own or relocate any foreign protection or rigid property situated remote India.
? ?
?
?
OTHER….. ? - Deals in foreign exchange under the current account by an authorised person can be restricted by the Central Government, based on public interest. ?- Without general or specific permission of the Reserve Bank of India, FEMA restricts the transactions involving foreign exchange or foreign security and payments from outside the country to India – the transactions should be made only through an authorised person. ?- Restrictions are imposed on people living in India who carry out transactions in foreign exchange, foreign security or who own or hold immovable property abroad. ?FEMA and the associated rules give full liberty to Resident of India (ROI) to clasp or own or relocate any foreign protection or rigid property situated remote India.
RBI GUIDELINES
Except with the general or special permission of the Reserve Bank of India, no person can :? deal in or transfer any foreign exchange or foreign security to any person not being an authorized person; ? make any payment to or for the credit of any person resident outside India in any manner; ? receive otherwise through an authorized person, any payment by order or on behalf of any person resident outside India in any manner; ? reasonable restrictions for current account transactions as may be prescribed.
?
Any person may sell or draw foreign exchange to or from an authorized person for a capital account transaction. The Reserve Bank may, in consultation with the Central Government, specify :- any class or classes of capital account transactions which are permissible; the limit up to which foreign exchange shall be admissible for such transactions
The Directorate of Enforcement investigate to prevent leakage of foreign exchange which generally occurs through the following malpractices : Remittances of Indians abroad otherwise than through normal banking channels, i.e. through compensatory payments. Acquisition of foreign currency illegally by person in India. Non-repatriation of the proceeds of the exported goods.
Unauthorised maintenance of accounts in foreign countries. Under-invoicing of exports and over-invoicing of imports and any other type of invoice manipulation. Siphoning off of foreign exchange against fictitious and bogus imports. Illegal acquisition of foreign exchange through Hawala. Secreting of commission abroad.
Current scenario The main objectives in managing a stock of reserves for any developing country, including India, are preserving their long-term value in terms of purchasing power over goods and services, and minimizing risk and volatility in returns. After the East Asian crises of 1997, India has followed a policy to build higher levels of Foreign Exchange Reserves that take into account not only anticipated current account deficits but also liquidity at risk arising from unanticipated capital movements. Accordingly, the primary objectives of maintaining Foreign Exchange Reserves in India are safety and liquidity; maximizing returns is considered secondary. In India, reserves are held for precautionary and transaction motives to provide confidence to the markets, those foreign obligations can always be met. The Reserve Bank of India (RBI), in consultation with the Government of India, currently manages Foreign Exchange Reserves. As the objectives of reserve management are liquidity and safety, attention is paid to the currency composition and duration of investment, so that a significant proportion can be converted into cash at short notice.
doc_113525732.pptx