srilakshmi2020
New member
Dear friends please find note about forex
What FEMA means to you
K. Krishnamurthi
THE Foreign Exchange Regulation Act, 1973 has been replaced by the Foreign Exchange Management Act, 1999. The latter has dropped many of the stringent provisions of the older Act, in the area of transactions involving foreign exchange. The FEMA 1999 took effect from June 1, 2000.
What is FEMA?
The Foreign Exchange Management Act, 1999 is a new Act dealing with foreign exchange.
In a sense, it replaces the Foreign exchange Regulation Act of 1973, with contents to suit the present economic state in the country.
Has it been notified, regarding its applicability?
The Act has been notified to come into effect from June 1, 2000 and will extend to the entire country. It also applies to all branches, offices, agencies outside India -- those owned or controlled by a person residing in India. Any contravention of the provisions of the law committed outside India will attract action under the Act.
What are the objects of the Act?
The object is to consolidate and amend the law relating to foreign exchange to facilitate external trade/payment and promote the orderly development and maintenance of the forex market in India.
What is foreign exchange?
Foreign exchange means foreign currency and also includes:
Deposits, credits and balances payable in any foreign currency.
Drafts, traveller's cheques, letters of credit or bills of exchange drawn by banks, institutions or persons outside India, but payable in foreign and Indian currency.
What is foreign currency?
It means any currency other than Indian currency.
Is the Act applicable to individuals only?
The act applies to all persons, and person includes:
an individual,
a Hindu undivided family,
a company, and
a firm, an association of persons or body of individuals, incorporated or otherwise.
Who is a person resident in India ?
It means a person residing in India for more than 182 days, during the course of preceding financial year. This definition, however, does not include a person who has gone out of India, or who conducts a business or vocation, outside India. Similar definition applies to persons staying in India for these purposes, that is -- any person or corporate body registered in India and an office/branch/agency in India, owned or controlled by a resident outside India.
What are the provisions in the Act for regulation and management of foreign exchange?
It provides certain restrictions in dealing with foreign exchange. In essence, all transactions shall be through an authorised person only. Likewise, no person can make any payment to or for the credit of any person residing outside India in any manner. He shall not receive any payment by order or on behalf of any person, resident outside India, except through the authorised person.
What about the issue of holding or possessing foreign exchange by an Indian resident?
Acquisition holding/owning/possessing or transferring foreign exchange, or any immovable property, situated outside India with the RBI's approval.
How are current account transactions dealt with?
Any person may sell or draw foreign exchange, if such sale or withdrawal is a transaction vis-a-vis current account. However, the Centre is empowered to impose reasonable restrictions on current transactions.
Who is an authorised person?
An authorised person may be a dealer or a money-changer. The authority may also be an offshore banking unit or any other person appointed under the Act.
How is an authorised person appointed?
The RBI appoints any person to be known as a authorised person, to deal in foreign exchange or foreign securities.
An order appointing the authorised person shall be in writing, imposing necessary conditions.
Does the RBI have powers to revoke the order?
The authorisation granted can be revoked by the RBI on the grounds of public interest, or if the authorised person has failed to comply with the conditions stipulated in the order or if he has contravened any provisions of the Act, rules and regulation.
What are the duties and obligations of an authorised person?
The authorised person shall, in all his dealings in foreign exchange or foreign security, comply with the RBI, directions/orders, and shall not engage in any transactions involving foreign exchange.
Before undertaking any transaction in foreign exchange on behalf of any person, a declaration and information have to be taken from that person to the effect that the transaction will not contravene or evade the Act's provisions. If such information or declaration is not given to the authorised person, the transaction can be refused. Under such circumstances, the RBI needs to be notified.
What is the RBI's role in capital account transactions?
Though any persons may sell or draw foreign exchange to or from an authorised person for a capital transaction, the RBI in consultation with the Centre, can specify:
Any class/classes of capital account transactions which are permissible.
The limit for foreign exchange admissible for such transactions.
However the RBI cannot impose any restrictions on the withdrawal of foreign exchange for payments due on account of loans or depreciation of direct investments, in the ordinary course of business.
What are the other strings the RBI has in the Act?
The RBI has got powers to prohibit, restrict or regulate the following:
Transfer or issue of any foreign security by a resident of India and by a person residing outside India.
Transfer or issue of any security or foreign security by any branch, office or agency in India owned by a person outside India.
Any borrowing or lending in foreign exchange.
Any borrowing or lending in rupees, between a resident in India and a person outside India.
Deposits between residents in India and residents outside India.
Export, import or holding of currency or currency notes.
Transfer of immovable property outside India other than a lease not exceeding five years, by a person resident in India.
Acquisition or transfer of immovable property in India, other than a lease by a person resident outside India.
Giving guarantee or surety in respect of any debt obligation or other liability incurred by a person resident in India to a person outside India and vice-versa.
What are the rights of Indian residents owning immovable property or holding currency outside India?
Indian residents, in terms of the Act, can transfer or invest in foreign currency, foreign security or any immovable property outside India, if acquired by the persons when they were residing outside India.
What are the rights of a person resident outside India regarding owning, holding and transferring immovable property?
The Act permits residents outside India to hold, transfer or invest in Indian currency or any immovable property in India. But such currency should have been acquired by the person when he was resident in India or inherited from a person who was resident in India.
This note is download from Business line - The Hindu web site.
srenivasarao
Chennai
What FEMA means to you
K. Krishnamurthi
THE Foreign Exchange Regulation Act, 1973 has been replaced by the Foreign Exchange Management Act, 1999. The latter has dropped many of the stringent provisions of the older Act, in the area of transactions involving foreign exchange. The FEMA 1999 took effect from June 1, 2000.
What is FEMA?
The Foreign Exchange Management Act, 1999 is a new Act dealing with foreign exchange.
In a sense, it replaces the Foreign exchange Regulation Act of 1973, with contents to suit the present economic state in the country.
Has it been notified, regarding its applicability?
The Act has been notified to come into effect from June 1, 2000 and will extend to the entire country. It also applies to all branches, offices, agencies outside India -- those owned or controlled by a person residing in India. Any contravention of the provisions of the law committed outside India will attract action under the Act.
What are the objects of the Act?
The object is to consolidate and amend the law relating to foreign exchange to facilitate external trade/payment and promote the orderly development and maintenance of the forex market in India.
What is foreign exchange?
Foreign exchange means foreign currency and also includes:
Deposits, credits and balances payable in any foreign currency.
Drafts, traveller's cheques, letters of credit or bills of exchange drawn by banks, institutions or persons outside India, but payable in foreign and Indian currency.
What is foreign currency?
It means any currency other than Indian currency.
Is the Act applicable to individuals only?
The act applies to all persons, and person includes:
an individual,
a Hindu undivided family,
a company, and
a firm, an association of persons or body of individuals, incorporated or otherwise.
Who is a person resident in India ?
It means a person residing in India for more than 182 days, during the course of preceding financial year. This definition, however, does not include a person who has gone out of India, or who conducts a business or vocation, outside India. Similar definition applies to persons staying in India for these purposes, that is -- any person or corporate body registered in India and an office/branch/agency in India, owned or controlled by a resident outside India.
What are the provisions in the Act for regulation and management of foreign exchange?
It provides certain restrictions in dealing with foreign exchange. In essence, all transactions shall be through an authorised person only. Likewise, no person can make any payment to or for the credit of any person residing outside India in any manner. He shall not receive any payment by order or on behalf of any person, resident outside India, except through the authorised person.
What about the issue of holding or possessing foreign exchange by an Indian resident?
Acquisition holding/owning/possessing or transferring foreign exchange, or any immovable property, situated outside India with the RBI's approval.
How are current account transactions dealt with?
Any person may sell or draw foreign exchange, if such sale or withdrawal is a transaction vis-a-vis current account. However, the Centre is empowered to impose reasonable restrictions on current transactions.
Who is an authorised person?
An authorised person may be a dealer or a money-changer. The authority may also be an offshore banking unit or any other person appointed under the Act.
How is an authorised person appointed?
The RBI appoints any person to be known as a authorised person, to deal in foreign exchange or foreign securities.
An order appointing the authorised person shall be in writing, imposing necessary conditions.
Does the RBI have powers to revoke the order?
The authorisation granted can be revoked by the RBI on the grounds of public interest, or if the authorised person has failed to comply with the conditions stipulated in the order or if he has contravened any provisions of the Act, rules and regulation.
What are the duties and obligations of an authorised person?
The authorised person shall, in all his dealings in foreign exchange or foreign security, comply with the RBI, directions/orders, and shall not engage in any transactions involving foreign exchange.
Before undertaking any transaction in foreign exchange on behalf of any person, a declaration and information have to be taken from that person to the effect that the transaction will not contravene or evade the Act's provisions. If such information or declaration is not given to the authorised person, the transaction can be refused. Under such circumstances, the RBI needs to be notified.
What is the RBI's role in capital account transactions?
Though any persons may sell or draw foreign exchange to or from an authorised person for a capital transaction, the RBI in consultation with the Centre, can specify:
Any class/classes of capital account transactions which are permissible.
The limit for foreign exchange admissible for such transactions.
However the RBI cannot impose any restrictions on the withdrawal of foreign exchange for payments due on account of loans or depreciation of direct investments, in the ordinary course of business.
What are the other strings the RBI has in the Act?
The RBI has got powers to prohibit, restrict or regulate the following:
Transfer or issue of any foreign security by a resident of India and by a person residing outside India.
Transfer or issue of any security or foreign security by any branch, office or agency in India owned by a person outside India.
Any borrowing or lending in foreign exchange.
Any borrowing or lending in rupees, between a resident in India and a person outside India.
Deposits between residents in India and residents outside India.
Export, import or holding of currency or currency notes.
Transfer of immovable property outside India other than a lease not exceeding five years, by a person resident in India.
Acquisition or transfer of immovable property in India, other than a lease by a person resident outside India.
Giving guarantee or surety in respect of any debt obligation or other liability incurred by a person resident in India to a person outside India and vice-versa.
What are the rights of Indian residents owning immovable property or holding currency outside India?
Indian residents, in terms of the Act, can transfer or invest in foreign currency, foreign security or any immovable property outside India, if acquired by the persons when they were residing outside India.
What are the rights of a person resident outside India regarding owning, holding and transferring immovable property?
The Act permits residents outside India to hold, transfer or invest in Indian currency or any immovable property in India. But such currency should have been acquired by the person when he was resident in India or inherited from a person who was resident in India.
This note is download from Business line - The Hindu web site.
srenivasarao
Chennai