Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

GOA - WIRC - Overview of Provisions of FEMA - 01.02.2014

1,060 views

Published on

Overview of Provisions of FEMA
FROM FERA to FEMA

Published in: Business, Economy & Finance
  • Be the first to comment

GOA - WIRC - Overview of Provisions of FEMA - 01.02.2014

  1. 1. 1st February 2014 P. P. Shah & Associates 1 Goa Branch of WIRC of ICAI Conference on FEMA and Professional Opportunities for Chartered Accountants 1st February 2014 Overview of Provisions of FEMA - Current & Capital Account Transactions, Residential Status and Miscellaneous Remittance scheme Presented by: Mr. Paresh P. Shah P.P. Shah & Associates Chartered Accountants Email: ppshahandassociates@gmail.com
  2. 2. 1st February 2014 P. P. Shah & Associates 2 Overview of Presentation  Transition from Foreign Exchange Regulation Act 1973 (FERA) to Foreign Exchange Management Act 1999 (FEMA)  Foreign Exchange Regulation Act (FERA) & Foreign Exchange Management Act (FEMA)  Overview of Foreign Exchange Management Act  Capital Account Transactions  Current Account Transactions  Residential status  Exceptions to general rule:  Liberalized Remittance scheme  Remittance of Asset  Other aspects of FEMA
  3. 3. Transition from FERA to FEMA  Post liberalization (i.e. New Industrial policy of 1991) there was need to remove shackles of regulatory and legal provision  Need to consolidate and amend the law relating to foreign exchange with the objective of facilitating external trade and payment and for promoting the foreign exchange management  It was decided to review provision of Foreign Exchange Regulation Act 1973 1st February 2014 P. P. Shah & Associates 3
  4. 4. Transition from FERA to FEMA (contd..)  Intention was to bring the provision of FERA in line with liberalization so as to remove obstacle in inward flow of foreign exchange and foreign investment  Accordingly on June 1, 2000, the Foreign Exchange Management Act 1999 was brought in force to replace the then existing FERA. 1st February 2014 P. P. Shah & Associates 4
  5. 5. FERA & FEMA FERA  Object to conserve and prevent misuse  Violation was Criminal Offence and was non compoundable FEMA  Object is to manage Foreign Exchange  Violation is a civil offence and is compoundable 1st February 2014 P. P. Shah & Associates 5
  6. 6. Overview of Foreign Exchange Management Act  Applies to whole of India and all branches, offices and agencies outside India, which are owned or controlled by person resident in India – Extra territorial jurisdiction  FEMA has in total 49 sections in which sections 1 to 9 are substantive and the rest are procedural /administrative. 1st February 2014 P. P. Shah & Associates 6
  7. 7. Overview of Foreign Exchange Management Act (contd..)  Section 46 of the Act grants power to Central Government to makes rules and section 47 of the Act grants power to RBI to make regulations to implements its provisions and the rules made there under.  RBI is entrusted with the administration and implementation of FEMA  Every Rule and Regulation made under this Act shall be laid before each house of parliament 1st February 2014 P. P. Shah & Associates 7
  8. 8. Overview of Foreign Exchange Management Act (contd..) Section Description 1 Application and commencement of FEMA 2 Definition 3 to 9 Provision relating to regulation and management of foreign exchange 10 to 12 Provision relating to Authorized person 13 to 15 Provision relating to contravention and penalties 16 to 38 Provision relating to Adjudication, Appeal and Directorate of enforcement 39 to 49 Miscellaneous provisions 1st February 2014 P. P. Shah & Associates 8
  9. 9. A.P.(DIR Series) Circulars and Notifications  Directions issued by RBI u/s 10(4) and 11(1) of FEMA to Authorized Person (AP)  These directions are called A.P.(Dir Series ) Circulars  Legal validity of these circulars have been upheld in the case of Prof. Krishnaraj Goswami vs RBI, [2007(6) Bom. CR 565]  Mater circulars issued by RBI every year on 1st July to subsume the position as on date and consolidate all the existing circulars (subject wise)  RBI had initially issued 25 Notifications, covering capital account transactions referred to u/s 6(3) & certain miscellaneous provisions  As on date total no. of notification issued by RBI stand at 294 1st February 2014 P. P. Shah & Associates 9
  10. 10. Capital Account Transaction  According to Sec 2 (e) of FEMA - 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, and includes transactions referred to in sub- section (3) of section 6;  RBI has been empowered under section 6(2) of FEMA in consultation with the Central Government, any class or classes of capital account transactions which are permissible 1st February 2014 P. P. Shah & Associates 10
  11. 11. Capital Account Transaction (contd..)  Sec. 6 (3) of FEMA specifies the class of capital account transactions which are regulated by RBI  Every transaction listed in this section is regulated by a corresponding Notification. 1st February 2014 P. P. Shah & Associates 11
  12. 12. Capital Account Transaction (contd..) Sl. No. Transaction specified under section 6(3) Corresponding notification 1 transfer or issue of any foreign security by a person resident in India; Notf. No. 120 Foreign Exchange Management (Transfer or Issue of any foreign security) Regulations 2 transfer or issue of any security by a person resident outside India; Notf. No. 20 Foreign Exchange Management (Transfer or issue of security by a person resident outside India) Regulations 3 transfer or issue of any security or foreign security by any branch, office or agency in India of a person resident outside India; Notf. No. 2 Foreign Exchange Management ( Issue of security in India by a branch , office or agency of a person resident outside India) Regulations 1st February 2014 P. P. Shah & Associates 12
  13. 13. Capital Account Transaction (contd..) 4 any borrowing or lending in Foreign currency in whatever form or by whatever name called; Notf. No. 3 Foreign Exchange Management (Borrowing or lending in Foreign Exchange) Regulations 5 any borrowing or lending in rupees in whatever form or by whatever name called between a person resident in India and a person resident outside India; Notf. No. 4 Foreign Exchange Management (Borrowing or lending in rupees) Regulations 6 deposits between persons resident in India and persons resident outside India; Notf.5 Foreign Exchange Management (Deposit) Regulations 7 export, import or holding of currency or currency notes; Notf. 6 Foreign Exchange Management (Export and Import of currency) Regulations 1st February 2014 P. P. Shah & Associates 13
  14. 14. Capital Account Transaction (contd..) 8 transfer of immovable property outside India, other than a lease not exceeding five years, by a person resident in India; Notf. 7 Foreign Exchange Management (Acquisition and transfer of immovable property outside India) regulations 9 acquisition or transfer of immovable property in India, other than a lease not exceeding five years, by a person resident outside India; Notf. 21 Foreign Exchange Management (Acquisition and transfer of immovable property in India) regulations 10 giving of a guarantee or surety in respect of any debt, obligation or other liability incurred- (i)by a person resident in India and owed to a person resident outside India; or (ii)by a person resident outside India. Notf.8 Foreign Exchange Management (Guarantees) regulations 1st February 2014 P. P. Shah & Associates 14
  15. 15. Capital Account Transaction (contd..)  Sec 6 (4) A person resident in India may hold, own, transfer or invest in foreign currency, foreign security or any immovable property situated outside India if such currency, security or property was acquired, held or owned by such person when he was resident outside India or inherited from a person who was resident outside India.  Sec 6 (5) A person resident outside India may hold, own, transfer or invest in Indian currency, security or any immovable property situated in India if such currency, security or property was acquired, held or owned by such person when he was resident in India or inherited from a person who was resident in India. 1st February 2014 P. P. Shah & Associates 15
  16. 16. Capital Account Transaction (contd..)  Notification No. FEMA 1 /2000-RB dated 3rd May 2000 “Foreign Exchange Management (Permissible Capital Account Transactions) Regulations, 2000”.  Capital account transactions of a person may be classified under the following heads, namely :-  (A) transactions, specified in Schedule I, of a person resident In India; (B) transactions, specified in Schedule II, of a person resident outside India. 1st February 2014 P. P. Shah & Associates 16
  17. 17. Capital Account Transaction (contd..)  Schedule I Classes of capital account transactions of Persons resident in India a) Investment by a person resident in India in foreign securities b) Foreign currency loans raised in India and abroad by a person resident in India c) Transfer of immovable property outside India by a person resident in India d) Guarantees issued by a person resident in India in favour of a person resident outside India e) Export, import and holding of currency/currency notes 1st February 2014 P. P. Shah & Associates 17
  18. 18. Capital Account Transaction (contd..) f) Loans and overdrafts (borrowings) by a person resident in India from a person resident outside India g) Maintenance of foreign currency accounts in India and outside India by a person resident in India h) Taking out of insurance policy by a person resident in India from an insurance company outside India i) Loans and overdrafts by a person resident in India to a person resident outside India j) Remittance outside India of capital assets of a person resident in India k) Sale and purchase of foreign exchange derivatives in India and abroad and commodity derivatives abroad by a person resident in India. 1st February 2014 P. P. Shah & Associates 18
  19. 19. Capital Account Transaction (contd..)  Schedule II Classes of capital account transactions of persons resident outside India a) Investment in India by a person resident outside India, that is to say, i) issue of security by a body corporate or an entity in India and investment therein by a person resident outside India; and ii) investment by way of contribution by a person resident outside India to the capital of a firm or a proprietorship concern or an association of persons in India. b) Acquisition and transfer of immovable property in India by a person resident outside India. c) Guarantee by a person resident outside India in favor of, or on behalf of, a person resident in India. 1st February 2014 P. P. Shah & Associates 19
  20. 20. Capital Account Transaction (contd..) d) Import and export of currency/currency notes into/from India by a person resident outside India. e) Deposits between a person resident in India and a person resident outside India. f) Foreign currency accounts in India of a person resident outside India. g) Remittance outside India of capital assets in India of a person resident outside India. 1st February 2014 P. P. Shah & Associates 20
  21. 21. 1st February 2014 P. P. Shah & Associates 21 Capital Account Transaction (contd..)  Capital account transactions are generally prohibited unless permitted. They are regulated by RBI  No person resident outside India shall make investment in India , in any form, in any company or partnership firm or proprietary concern or any entity, whether incorporated or not, which is engaged or proposes to engage - (i) in the business of chit fund, or (ii) as Nidhi Company , or (iii) in agricultural or plantation activities or (iv) in real estate business, or construction of farm houses or (v) in trading in Transferable Development Rights (TDRs).  Explanation: For the purpose of this regulation, “real estate business” shall not include development of townships, construction of residential/commercial premises, roads or bridges.
  22. 22. 1st February 2014 P. P. Shah & Associates 22 Current Account Transaction  Current account transaction means a transaction other than a capital account transaction  Section 5 of FEMA, Any person may sell or draw foreign exchange to or from an authorised person if such sale or drawal 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  Current account transactions are covered by Foreign Exchange Management (Current Account Transaction ) Rules,2000(“Current Account Transaction Rules”)  Current account transaction are divided into 3 schedules in current Account Transactions rules:  SCHEDULE I -Transactions which are prohibited  SCHEDULE II -Transactions which require prior approval of the Central Government  SCHEDULE III- Transactions which require prior approval of the RBI
  23. 23. Current Account Transaction (Contd..)  Current account transactions are freely permitted unless prohibited – they are regulated by Central Government  Rule 3 of FEM (CAT) Rules, 2000 Prohibition on drawal of Foreign Exchange - Drawal of foreign exchange by any person for the following purpose is prohibited, namely:- (a) a transaction specified in the Schedule I; or (b) a travel to Nepal and/or Bhutan; or (c) a transaction with a person resident in Nepal or Bhutan; Provided that the prohibition in clause (c) may be exempted by RBI subject to such terms and conditions as it may consider necessary to stipulate by special or general order. 1st February 2014 P. P. Shah & Associates 23
  24. 24. Current Account Transaction (Contd..)  As per Rule 4 current account transaction rule 2000 No person shall draw foreign exchange for a transaction included in the Schedule II without prior approval of the Government of India : Provided that this rule shall not apply where the payment is made out of funds held in Resident Foreign Currency (RFC) Account of the remitter.  As per Rule 5 current account transaction rule 2000 No person shall draw foreign exchange for a transaction included in the Schedule III without prior approval of the Reserve Bank : Provided that this rule shall not apply where the payment is made out of funds held in Resident Foreign Currency (RFC) Account of the remitter. 1st February 2014 P. P. Shah & Associates 24
  25. 25. 1st February 2014 P. P. Shah & Associates 25 Current Account Transaction (Contd..)  SCHEDULE I -Transactions which are prohibited a)Remittance out of lottery winnings. b)Remittance of income from racing/riding, etc., or any other hobby. c)Remittance for purchase of lottery tickets, banned/prescribed magazines, football pools, sweepstakes etc. d)Payment of commission on exports made towards equity investment in Joint Ventures/Wholly Owned Subsidiaries abroad of Indian companies. e)Remittance of dividend by any company to which the requirement of dividend balancing is applicable. f)Payment of commission on exports under Rupee State Credit Route, except commission up to 10% of invoice value of exports of tea and tobacco.] g) Payment related to “Call Back Services” of telephones. h)Remittance of interest income on funds held in Non-resident Special Rupee Scheme a/c.
  26. 26. 1st February 2014 P. P. Shah & Associates 26 Current Account Transaction (Contd..)  SCHEDULE II -Transactions which require prior approval of the Central Government Sl. No. Purpose of Remittance Ministry/Department of Govt. of India whose approval is required 1 Cultural Tours Ministry of Human Resources Development (Department of Education and Culture) 2 Advertisement in foreign print media for the purposes other than promotion of tourism, foreign investments and international bidding (exceeding US$ 10,000) by a State Government and its Public Sector Undertakings. Ministry of Finance, Department of Economic Affairs]
  27. 27. Current Account Transaction (Contd..) 3 Remittance of freight of vessel charted by a PSU Ministry of Surface Transport (Chartering Wing) 4 Payment of import [through ocean transport] by a Govt. Department or a PSU on c.i.f. basis (i.e., other than f.o.b. and f.a.s. basis) Ministry of Surface Transport (Chartering Wing) 5 Multi-modal transport operators making remittance to their agents abroad Registration Certificate from the Director General of Shipping 6 Remittance of hiring charges of transponders by (a)TV Channels (b)Internet service providers a)Ministry of Information and Broadcasting b)Ministry of Communication and Information Technology] 1st February 2014 P. P. Shah & Associates 27
  28. 28. 1st February 2014 P. P. Shah & Associates 28 Current Account Transaction (Contd..) 7 Remittance of container detention charges Ministry of Surface Transport (Director exceeding the rate prescribed by Director General of Shipping) General of Shipping 8 [***] 9 Remittance of prize money/sponsorship of sports activity abroad by a person other than International/National/State Level sports bodies, if the amount involved exceeds US $ 100,000 Ministry of Human Resource Development (Department of Youth Affairs and Sports 10 [***] 11 Remittance for membership of P & I Club Ministry of Finance (Insurance Division)
  29. 29. 1st February 2014 P. P. Shah & Associates 29 Current Account Transaction (Contd..) SCHEDULE III - Transactions which require prior approval of the RBI 1.[***] 2.Release of exchange exceeding US$ 10,000 or its equivalent in one financial year for one or more private visits to any country (except Nepal and Bhutan). 3.Gift remittance exceeding US$ 5,000 per financial year per remitter or donor other than resident individual.] 4. (i) Donation exceeding US$ 5,000 per financial year per remitter or donor other than resident individual; (ii) Donations by corporate, exceeding one per cent of their foreign exchange earnings during the previous three financial years or US$ 5,000,000, whichever is less, for,— a)creation of Chairs in reputed educational institutes; b)to funds (not being an investment fund) promoted by educational institutes; and c)to a technical institution or body or association in the field of activity of the donor company.  
  30. 30. Current Account Transaction (Contd..) Explanation.—For the purposes of these item numbers 3 and 4, remittance of gift and donation by resident individuals are subsumed under the Liberalised Remittance Scheme.] 5.Exchange facilities exceeding US $ [100,000] for persons going abroad for employment. 6.Exchange facilities for emigration exceeding US $ [100,000] or amount prescribed by country of emigration. 7.Remittance for maintenance of close relatives abroad, (i)exceeding net salary (after deduction of taxes, contribution to provident fund and other deductions) of a person who is resident but not permanently resident in India and— (a)is a citizen of a foreign State other than Pakistan; or  (b)is a citizen of India, who is on deputation to the office or branch or subsidiary or joint venture in India of such foreign company,] (ii)exceeding US$ [100,000] per year per recipient, in all other cases. Explanation : For the purpose of this item, a person resident in India on account of his [employment or deputation of] a specified duration (irrespective of length thereof) or for a specific job or assignment, the duration of which does not exceed three years, is a resident but not permanently resident.]   1st February 2014 P. P. Shah & Associates 30
  31. 31. 1st February 2014 P. P. Shah & Associates 31 Current Account Transaction (Contd..) 8.Release of foreign exchange, exceeding US $ 25,000 to a person, irrespective of period of stay, for business travel, or attending a Conference or specialized training or for maintenance expenses of a patient going abroad for medical treatment or check-up abroad, or for accompanying as attendant to a patient going abroad for medical treatment/check-up. 9.Release of exchange for meeting expenses for medical treatment abroad exceeding the estimate from the doctor in India or hospital/doctor abroad. 10.Release of exchange for studies abroad exceeding the estimates from the institution abroad or US $ [100,000] [per academic year], whichever is higher. 11.Commission, per transaction, to agents abroad for sale of residential flats or commercial plots in India exceeding US $ 25,000 or 5% of the inward remittance whichever is more. 12. [***] 13. [***] 14. [***] 15.Remittances exceeding US$ 10,000,000 per project, for any consultancy services in respect of infrastructure projects and US$ 1,000,000 per project for other consultancy services procured from outside India. 16.[***] 17.Remittances exceeding five per cent of the investment brought into India or US$ 1,00,000 whichever is higher, by an entity in India by way of reimbursement of pre-incorporation expenses. 18.[***]
  32. 32. 1st February 2014 P. P. Shah & Associates 32 Residential Status under FEMA  Under FEMA residential status is of two types: Person resident in India Person resident outside India  Under FERA citizenship was considered as deciding factor  FEMA lays emphasis on ‘residing’ which denotes permanency
  33. 33. 1st February 2014 P. P. Shah & Associates 33 Residential Status under FEMA (contd..)  As Per sec 2(v) person resident in India" means- A) a person residing in India for more than one hundred and eighty- two days during the course of the preceding financial year but does not include- a)a person who has gone out of India or who stays outside India, in either case- i)for or on taking up employment outside India, or ii)for carrying on outside India a business or vocation outside India, or iii)for any other purpose, in such circumstances as would indicate his intention to stay outside India for an uncertain period; b)a person who has come to or stays in India, in either case, otherwise than- i)for or on taking up employment in India, or ii)for carrying on in India a business or vocation in India, or iii) for any other purpose, in such circumstances as would indicate his intention to stay in India for an uncertain period; B)any person or body corporate registered or incorporated in India, C)an office, branch or agency in India owned or controlled by a person resident outside India, D)an office, branch or agency outside India owned or controlled by a person resident in India;
  34. 34. 1st February 2014 P. P. Shah & Associates 34 Difference between FEMA & Income tax provision  In Income tax unlike FEMA purpose of stay is not relevant and only the period of stay is relevant.  Purpose under FEMA is different as compared to Income tax.  Under income Tax, issue is of taxability of income which is determined for the full year, therefore number of days concept has been adopted under Income Tax.  Whereas FEMA regulates the transactions and provides guidance for undertaking transaction itself and hence clarity on status at the time of undertaking transaction is must.  Status under FEMA may change within the same year but not under Income Tax law
  35. 35. 1st February 2014 P. P. Shah & Associates 35 Liberalized Remittance Scheme (LRS)  The Reserve Bank of India had announced a Liberalised Remittance Scheme (the Scheme) in February 2004 as a step towards further simplification and liberalization of the foreign exchange facilities available to resident individuals. As per the Scheme, resident individuals may remit up to USD 75,000 per financial year (USD 200,000 till 14.08.2013) for any permitted capital and current account transactions or a combination of both. The Scheme was operationalised vide A.P. (DIR Series) Circular No. 64 dated February 4,2004  Under the Liberalised Remittance Scheme, all resident individuals, including minors, are allowed to freely remit up to USD 75,000 per financial year (April – March) for any permissible current or capital account transaction or a combination of both.  In case of remitter being a minor, the LRS declaration form should be countersigned by the minor’s natural guardian.
  36. 36. 1st February 2014 P. P. Shah & Associates 36 Liberalized Remittance Scheme (LRS) (Contd..)  The remittance facility under the Scheme is not available for the following: i) Remittance for any purpose specifically prohibited under Schedule-I (like purchase of lottery tickets/sweep stakes, proscribed magazines, etc.) or any item restricted under Schedule II of Foreign Exchange Management (Current Account Transactions) Rules, 2000; ii) Remittance from India for margins or margin calls to overseas exchanges / overseas counterparty; iii) Remittances for purchase of FCCBs issued by Indian companies in the overseas secondary market; iv) Remittance for trading in foreign exchange abroad; v) Remittances directly or indirectly to Bhutan, Nepal, Mauritius and Pakistan;
  37. 37. 1st February 2014 P. P. Shah & Associates 37  vi) Remittances directly or indirectly to countries identified by the Financial Action Task Force (FATF) as “non co-operative countries and territories”, from time to time; and  vii) Remittances directly or indirectly to those individuals and entities identified as posing significant risk of committing acts of terrorism as advised separately by the Reserve Bank to the banks.  viii) With effect from August 14, 2013, the scheme is not available for remittances for acquisition of immovable property directly or indirectly outside India.( A. P. Dir Cir. 24 dated 14/08/2013) Liberalized Remittance Scheme (LRS) (Contd..)
  38. 38. Liberalized Remittance Scheme (LRS) (Contd..)  The facility under the Scheme is in addition to those already available for private travel, business travel, studies, medical treatment, etc., as described in Schedule III of Foreign Exchange Management (Current Account Transactions) Rules, 2000. The Scheme can also be used for these purposes. However, remittances for gift and donation cannot be made separately and are subsumed under the limit available under this LRS. Accordingly, resident individuals can remit towards gifts and donations up to USD 75,000 per financial year under the Scheme.  Remittance under this scheme is on a gross basis 1st February 2014 P. P. Shah & Associates 38
  39. 39. 1st February 2014 P. P. Shah & Associates 39 Liberalized Remittance Scheme (LRS) (Contd..)  A.P.(DIR Series ) Circular no. 90 dated 06/03/12 a)Remittances under the facility can be consolidated in respect of family members subject to individual family members complying with the terms and conditions of the scheme; and b)Remittances under the scheme can be used for purchasing objects of art subject to the provisions of other applicable laws such as the extant Foreign Trade Policy of the Government of India.
  40. 40. 1st February 2014 P. P. Shah & Associates 40 Liberalized Remittance Scheme (LRS) (Contd..)  A resident individual is permitted to gift in rupee to his NRI/PIO close relative under LRS and credit the same to his NRO A/c [A.P. (DIR series) Circular no. 17 dated Sept 16,2011]  Under the Scheme, Resident individuals are free to acquire and hold shares or debt instruments or any other asset outside India without prior approval of the Reserve Bank  As per Notification 263 dated 05/03/2013 - A resident individual (single or in association with another resident individual or with an ‘Indian Party’ as defined in Notification) satisfying the criteria as per Schedule V of this Notification, may make overseas direct investment in the equity shares and compulsorily convertible preference shares of a Joint Venture (JV) or Wholly Owned Subsidiary (WOS) outside India and the permissible ceiling shall be within the overall ceiling prescribed for the resident individual under LRS  For undertaking transactions under the Scheme, resident individuals may use the application-cum-Declaration Form and it is mandatory to have PAN number to make remittances under the Scheme.
  41. 41. 1st February 2014 P. P. Shah & Associates 41  A citizen of foreign state, not being a citizen of Nepal or Bhutan or a person of Indian origin (PIO), who – (i) has retired from an employment in India, or (ii) has inherited the assets from a person referred to in sub-section (5) of section 6 of the Act; or (iii) is a widow resident outside India and has inherited assets of her deceased husband who was an Indian citizen resident in India, may remit an amount, not exceeding US$ 1,000,000 (US Dollar One million only) per financial year, on production of - (a) documentary evidence in support of acquisition, inheritance or legacy of assets by the remitter and (b) an undertaking by the remitter and certificate from a Chartered Accountant in the format prescribed by the Central Board of Direct Taxes, Ministry of Finance, Government of India in their Circular No. 10/2002 dated October 9, 2002. Remittance of asset (Notf. No.13)
  42. 42. 1st February 2014 P. P. Shah & Associates 42  A Non-Resident Indian (NRI)/Person of Indian Origin (PIO) may remit an amount, not exceeding US $ 1,000,000 (US Dollar One million only) per financial year, (i) Out of the balances held in NRO accounts/sale proceeds of assets/the assets in India acquired by him by way of inheritance/legacy on production of: (a) documentary evidence in support of acquisition, inheritance or legacy of assets by the remitter, and (b) an undertaking by the remitter and certificate from a Chartered Accountant in the format prescribed by the Central Board of Direct Taxes, Ministry of Finance, Government of India in their Circular No. 10/2002 dated October 9, 2002 (ii) Under a deed of settlement made by either of his parents or a close relative (as defined in Section 6 of the Companies Act, 1956) and the settlement taking effect on the death of the settler, on production of: (a) the original deed of settlement; and (b) an undertaking by the remitter and certificate from a Chartered Accountant in the format prescribed by the Central Board of Direct Taxes, Ministry of Finance, Government of India in their Circular No. 10/2002 dated October 9, 2002 Remittance of asset (Notf. No.13) (Contd..)
  43. 43. 1st February 2014 P. P. Shah & Associates 43 Other aspects of FEMA  Banking accounts of Persons resident outside India  Hospitability to PROI by PRII  Export & Import of Goods  Manner of receipt of Foreign Exchange  Special relationship with Nepal & Bhutan  Facilitation of Business – overriding provisions of Overseas Investments  Penalties & Compounding
  44. 44. Foreign Investment in India Foreign Investment 01/02/2014 P. P. Shah & Associates 44 Foreign direct investment (Sch 1) Foreign Portfolio Investment Foreign Venture Capital Investment (Sch 6) Other Investment(G- sec, NCD) (Sch 5) Investment on Non repatriation basis Automatic route Government route FIIs (sch 2) NRIs, PIO (Sch 3) SEBI regd FVCIs VCF, IVCUs FIIs NRIs, PIO NRIs, PIO (Sch 4) Investment made by QFI (Sch 8) IDR by companies resident outside India (Sch 7)
  45. 45. 1st February 2014 P. P. Shah & Associates 45

×