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FEMA

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Depicts the brief view of FEMA...!!!

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FEMA

  1. 1. FEMA
  2. 2. INTRODUCTION • Foreign exchange transactions were regulated by Foreign exchange regulation act (FERA), 1973 • Following the liberalization ushered in 1991 some amendments were made to FERA in 1993 there was a lot demand to bring certain major changes in FERA in the light of economic changes took place • Consequently a new act was formed to replace FERA, known as Foreign exchange management act (FEMA), 1999
  3. 3. Objectives  The object of the Act is to consolidate and amend the law relating to foreign exchange with the objective of • To help RBI in maintaining exchange rate stability • To conserve precious foreign exchange • To prevent/regulate Foreign business in India • facilitating external trade and payments and
  4. 4. Overview of FEMA  The FEMA provides • Free transactions on current account subject to reasonable restrictions that may be imposed • RBI control over Capital Account Transactions • Control over realization of export proceeds • Dealings in Foreign Exchange through Authorised Person Adjudication of Offences • Appeal provisions including Special Director (Appeals) and Appellate Tribunal • Directorate of Enforcement
  5. 5. Difference between FERA & FEMA • Object to conserve and prevent misuse • Violation was Criminal Offence and was non compoundable • It was a draconian police law • To facilitate external trade and payments • Violation is a civil offence and is compoundable • It is a civil law
  6. 6. REGULATION AND MANAGEMENT OF FOREIGN EXCHANGE  Dealing in foreign exchange-  As per the Act no person shall- • 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 • enter into any financial transaction in India as consideration for or in association with acquisition or creation or transfer of a right to acquire, any asset outside India by any person
  7. 7. Holding of Foreign Exchange • No person resident in India shall acquire, hold, own, possess or transfer any foreign exchange/foreign security or any immovable property situated outside India •
  8. 8. Current Account Any person may sell or draw foreign exchange to or from an authorized person if such sale or drawl is a current account transaction: Provided that the Central Government may, in public interest and in consultation with the Reserve Bank, impose such reasonable restrictions for current account transactions as may be prescribed.
  9. 9. Capital Account transactions • As per sec 2 (e) “Capital account transaction” means a transaction which alters the assets or liabilities, including contingent liabilities, outside India of persons resident in India or assets or liabilities in India of persons resident outside India
  10. 10. RBI prohibits, restricts or regulate the following, (a) Transfer or issue of any foreign security by a person resident in India (b) Transfer or issue of any foreign security by a person resident outside India (c) Transfer or issue of any security or foreign security by any branch, office or agency in India of a person resident outside India (d) Any borrowing or lending in foreign exchange in whatever form or by whatever name called
  11. 11. Export of goods and services • Every exporter of goods shall furnish to the Reserve Bank such other information as may be required by the Reserve Bank for the purpose of ensuring the realization of the export proceeds by such exporter. • The Reserve Bank may, for the purpose of ensuring that the full export value of the goods or such reduced value of the goods as the Reserve Bank determines, having regard to the prevailing market conditions, is received without any delay, direct any reporter to comply with such requirements as it deems fit. • Every exporter of services shall furnish to the Reserve Bank or to such other authorities a declaration in such form and in such manner as may be specified, containing the true and correct material particulars in relation to payment for such services
  12. 12. Penalties for contravention under FEMA • The Penalty could be up to thrice the sum involved where amount is quantifiable • If the Amount is not quantifiable , penalty up to Rs 2 lacs can be imposed • If contravention is of continuing nature, further penalty up to Rs 5000 per day during which the contravention continues can be imposed
  13. 13. Realisation and repatriation of foreign exchange • Realisation and repatriation of foreign exchange.-Save as otherwise provided in this Act, where any amount of foreign exchange is due or has accrued to any person resident in India, such person shall take all reasonable steps to realize and repatriate to India such foreign exchange within such period and in such manner as may be specified by the Reserve Bank.

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