General Awareness About FEMA
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  • 1. GENERAL AWARENESS ABOUT FEM Presented By: Sunil Modgill NRO0212523
  • 2. • World of Globalisation• Dealing in Foreign Currency when enterprise – Import goods – Export goods – Make investments abroad
  • 3. Foreign Exchange ManagementAct, 1999.Applicability Extends to whole of India. All branches, offices and agencies outside India, owned or controlled by PRI. Any contravention committed outside India by any person to whom this Act applies.Investor Friendly Legislation
  • 4. •Facilitate external trade and payments•Promote the orderly development andmaintenance of foreign exchange market inIndia.•Consolidate and amend the law relating toforeign exchange.
  • 5. ADMINISTRATION OF FEMARules, regulations and norms laid down byRBI in consultation with CG.Authorities for holding inquiries Adjudicating Authorities Special Directors (Appeals) Appellate TribunalDirector of Enforcement, for taking upinvestigations.
  • 6. I. Only Authorized persons permitted to deal in foreign exchange.II.They include:- I. authorised dealer Authorize d II.money changer III.off-shore banking unit PersonsIII.They are free to release foreign exchange upto the prescribed limits upon their satisfaction
  • 7. PROHIBITIONS IN DEALING• Any person other than Authorised person is prohibited to:- – Deal in or transfer any foreign exchange or foreign security to any person. – Make any payment to or for the credit of any person resident outside India. – Receive any payment by order or on behalf of any person resident outside India. – Enter into any financial transaction in India to acquire any asset outside India.
  • 8.  Upto 3 times the sum involved in the contravention. Upto Rs. 2,00,000 – if the amount involved in contravention is not quantifiable. Upto Rs. 5,000 per day – if the contravention continues. Any currency, security or any other money or property in respect of which the contravention has taken place shall be confiscated to the CG.
  • 9. CAPITAL ACCOUNT TRANSACTIONS• Transaction which alters:- assets or liabilities outside India of PRI assets or liabilities in India of PROI• RBI with CG empowered to specify permissible capital account transactions along with prescribed limits.
  • 10. No restrictions on withdrawal of currency for:- amortization of loans depreciation of direct investments No restrictions on holding of assets:- Acquired by a PRI outside India when he was a PROI PRI acquired due to inheritance Categories of permitted Capital Account Transactions:- permitted to personsCAPITAL ACCOUNT resident in India TRANSACTIONS permitted to non- residents There are also some transactions not permitted to non-residents
  • 11. – Transactions include:- » Other than a capital account transactions » Payments due in connection with normal business trade. » Payments dueon interest. » Remittances. » Expenses for travelling, education, etc.– CG in consultation with RBI can impose reasonable restrictions on withdrawal.
  • 12. For some transactions withdrawl is:- Totally prohibited Permitted, subject to the prior approval of concerned Ministry, CG Permitted, subject to prior approval of RBI.
  • 13. LIBERALISED REMITTANCE SCHEME • For Resident Individuals only. • Remittance upto US $ 200,000 per financial year. • Not available for the transactions » Totally prohibited • Require the prior approval of CG.
  • 14. Indian rupee fully convertible w.r.t current account transactions.Non-residents freely allowed remitting outside India the income or capital gain generated in India.Indian rupee w.r.t capital account transactions not fully convertible.