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General Awareness About FEMA


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General Awareness About FEMA

  1. 1. GENERAL AWARENESS ABOUT FEM Presented By: Sunil Modgill NRO0212523
  2. 2. • World of Globalisation• Dealing in Foreign Currency when enterprise – Import goods – Export goods – Make investments abroad
  3. 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. 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. 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. 6. I. Only Authorized persons permitted to deal in foreign exchange.II.They include:- I. authorised dealer Authorize d changer banking unit PersonsIII.They are free to release foreign exchange upto the prescribed limits upon their satisfaction
  7. 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. 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. 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. 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. 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. 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. 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. 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.