7/23/2019 BE+Week+7-2

1/11

ESSENTIALS OF BUSINESS

ENVIRONMENT

FEMA

7/23/2019 BE+Week+7-2

2/11

FEMA 2

Objectives

To facilitate external trade and paymentsTo promote the orderly development and

maintenance of foreign exchange market

7/23/2019 BE+Week+7-2

3/11

FEMA 3

Introduction: -

Foreign exchange transactions were regulated byForeign exchange regulation act (FER!" #$%&Following the liberali'ation ushered in #$$# some

amendments were made to FER in #$$& there wasa lot demand to bring certain major changes in

FER in the light of economic changes took placeonse)uently a new act was formed to replace

FER" known as Foreign exchange management act(FE*!" #$$$

7/23/2019 BE+Week+7-2

4/11

FEMA 4

+ection & of FE*

,t talks about dealings in foreign exchange and foreign securities and payments to andreceipts from any person outside ,ndia-

The general or special permission of the Reserve .ank of ,ndia is re)uired in thefollowing matters

(a! /ealing in any foreign exchange or foreign security with any person other than theauthori'ed person

(b! 0ayment to or for the credit of any person resident outside ,ndia in any manner

1 Receiving of any payment by order or on behalf of any person resident outside ,ndia inany manner otherwise through an authori'ed person

(d! Enter in to any financial transaction in ,ndia as a consideration for or in- associationwith re)uisition or creation or transfer of a right to ac)uire any asset outside ,ndia byany person

7/23/2019 BE+Week+7-2

5/11

FEMA 5

Holding of Foreign Exchange:- (section 4)

2o person resident in ,ndia shall ac)uire" hold" own" possess ortransfer any foreign exchange3foreign security or any

immovable property situated outside ,ndia

Current account Transactions:- (Section )

4ct permits dealing in foreign exchange through authori'ed

persons for current account transactions-4entral 5overnment can impose reasonable restrictions in

public interest with this regard

7/23/2019 BE+Week+7-2

6/11

FEMA 6

Ca!ital Account Transactions:4

ny person may sell or draw foreign exchange to or from an authori'ed

person for a capital account transaction permitted by R., in consultationwith central 5overnment -

R., prohibits" restricts or regulate the following"

(a! Transfer or issue of any foreign security by a person resident in ,ndia

(b! Transfer or issue of any foreign security by a person resident outside

,ndia1 Transfer or issue of any security or foreign security by any branch" office

or agency in ,ndia of a person resident outside ,ndia

(d! ny borrowing or lending in foreign exchange in whatever form or bywhatever name called

7/23/2019 BE+Week+7-2

7/11

FEMA 7

(e! ny borrowing or lending in rupees in whatever form or whatever

name called between a person resident in ,ndia and a person residentoutside ,ndia6

(f! /eposits between persons resident in ,ndia and a person residentoutside ,ndia

(g! Export" ,mport or holding of currency or currency notes

(h! Transfer of immovable property outside ,ndia other than a lease notexceeding five years by a person resident outside ,ndia

(i! c)uisition or transfer of immovable property in ,ndia other than alease not exceeding five years by a person resident outside ,ndia

(j! 5iving of guarantee or surety in respect of any debt obligation or theliability#- .y a person resident in ,ndia and owed to a person residentoutside ,ndia

or

7- .y a person resident outside ,ndia

7/23/2019 BE+Week+7-2

8/11

FEMA 8

Ex!ort of goods and ser"ices (Section #)Every exporter of goods shall famish to the R., or to such other authority the

following

(a)A declaration specified

#- True and correct material particulars

7- mount representing the value of full export of goods&- The time of the export

8- The value which exporter having regard to the prevailing market conditions expectsto receive on the sale of the goods in a market outside ,ndia

(b) Oter infor!ation

-That may be re)uired by R., for the purpose of ensuring the reali'ation of the exportproceeds by such exporter

4 Every exporter of the services shall furnish to the R., or to such other authorities adeclaration as specified" containing the true and correct material particulars inrelation to the payment for such services

7/23/2019 BE+Week+7-2

9/11

FEMA 9

$eali%ation and $e!atriation of foreign exchange:- (Sec&')

ny person in this concern shall have to follow the reasonablsteps to reali'e and repatriate it to ,ndia with or with in thetime in the manner prescribed by the act

Contra"ention and !enal ties94 For any kind of contravention under this act defaulter is

liable to pay up to thrice the amount involved where it is)uantifiable Up to Rs- 7 lakhs :here not )uantifiable

,f such contravention is continued further penalty whichmay extend to Rs- ;"

7/23/2019 BE+Week+7-2

10/11

FEMA 10

Adinistration of the Act

- The rules regulations and norms pertaining to many sections are laid down by R.,in consultation with central 5overnment-

4 The ct re)uires central 5overnment to appoint" Adjudicating Authorities for holding enquires related to the contravention of the Act one or more Special Directors (appeals) to hear appeals against the order of the

Adjudicating authorities

- entral 5overnment shall have to establish

1. An Appellate Triunal for foreign !"change to hear appeals against the order of the

Adjudicating Authorities and the Special Directors#. A Director of !nforcement $ith a Director and such officers or class of officers as itthin%s fit for ta%ing up for investigation the contravention under this Act

7/23/2019 BE+Week+7-2

11/11

FEMA 11

FE$A *s FEMA:-#- ,n FE* only the specified acts related to foreignexchange are regulated while in FER anything andeverything that has to do with foreign exchange wascontrolled

7- The objective of FE* is to facilitate trade while that ofFER is to prevent misuse

&- FE* is a much smaller enactment only 8$ sectionsagainst =# sections of FER