doing business in india simplified

8/14/2019 Doing Business in India Simplified

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o i n g b u s i n e s s i nn d i a s i m p l i f i e d


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INTRODUCTION

FOREIGN EXCHANGE REGULATIONACT,1973(FERA) WAS REPEALED BYNEW ACT WHICH IS BEING CALLED

AS FOREIGN EXCHANGEMANEGEMENT ACT,1999(FEMA)BUTCAME INTO FORCE FROM JUNE

2000


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ABOUT FEMA


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REASON FOR THE ENACT MENTOF NEW ACT

LOOK ON IT WILL MAKE US SEE FEEL THAT IT WAS MEANT FOR PROHIBI


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T R O L , & P R O H I B I T IO N T O A N E W E R A F O R C O N S O L I D AT I O N &R O L , & P R O H I B I T IO N T O A N E W E R A F O R C O N S O L I D AT I O N &


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Difference between FERAand FEMA

BASIS OFDIFFERE

NCE

F.E.M.A 1999 F.E.R.A. 1973

1.

PREAMBLE

AN ACT TOCONSOLIDATEANDAMEND THE LAWRELATING TOFOREIGN EXCHANGEWITH THEOBJECTIVE OF

FACILITATINGEXTERNAL TRADE

PROMOTINGORDERLYDEVOLOPMENT AND

MAINTENANCE OFFOREX MARKET I

AN ACT TOCONTROL,REGULATE,RESTRICTOR PROHIBIT FOREIGNEXCHANGE WITH THEVIEW OFCONSERVATION

,PROPER UTILISATIONOF FOREIGNEXCHANGE KEEPINGIN VIEW THEINTEREST OF

ECONOMNICDEVOLOPME T OF

2. STRUCT

URE/CONTENT

CONSOLIDATED,SHORTER,CONTAININGONLY 49 SECTION OFWHICH 12 ARERELATED TO

OPERATION PART &REST FORPENALITIES

CONTAINING 81SECTION OF WHICH 32ARE RELATED TOOPERATIONAL PART &OTHER FOR

PENALITES ETC.


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3. NATURE OFACT

CIVIL LAW DARCONIAN,SEVERE,&HARSH4. PROHIBATIO

N &RELAXATIO

N

ONLY SPECIFIEDACT RELATING TOFORIGN EXCHANGE

ALL ACTS ARENORMALLYCONTROLLED &

REGULATED

5. APPLICABILITY

IT DOES NOY APPLYTOTO CITIZEN OF

INDIA WHO AREOUTSIDED INDIAUNLESS THEYAREARE RESIDENT OFINDIA

IT APPLIES TO CITIZENOF INDIA WHO WERE

OUTSIDE INDIA ,&WHETHER OR NOT THEYWERE RESIDENT ININDIA

6. CONTRAVE

NTION

ONLY FINE & NOT

IMPRISONMENT

FINE & IMPRISONMENT

7. PENALITIES 3 TIMES THE SUMINVOLVED & IF NOTQUANTIFIABLETHAN MAX 2LAKH .IF

CONTINUING THAN5000/- PER DAYFROM FIRST DAY

5 TIMES THE SUMINVOLVED & IN MOSTCASES IMPRISONMENT

8. COMPOUNDING OFOFFENCES

SEEKS TO VESTDIECTORATE OFENFORCEMENT THE

POWER

NO SUCH POWER WEREPRESENT

9. POWER OFSEARCH

,SEZIUREETC

RESTRICTED ASCONTAINED IN

SECTION 37 & 38 OFTHE ACT

NOT BELOW THE RANKOF D.S.P CAN DO

ANYTHING


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10. NEWTERM

CAPITAL ACCOUNT &CURRENT ACCOUNTTRANSACTION ETC. WERE

INTRODUCED

THESE TERM WERENOT USED

11. DEFINAT

ION OFRESIDENT OFINDIA

AS CON TAINED IN

INCOME TAX THAT IS 182DAYS OR MORE

EMPHASIS WERE

NOT ONLY ONCITIZENSHIP BUTALSO INTENTION12. PRESUM

PTIONOF

MENSREA

NO SUCH PRESUMPTIONOF GUILITY MIND UNLESSPROSECUTION PROVE IT

ACCUSE HAS TOPROVE THAT HE IS

NOT GUILITY MIND

13. RIGHTTO TAKELEGALPRACTIO

NER

YES LIKE CHARTEREDACCOUNTANT

NOT CLEARLYEXPRESSED

Sh i l


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Short title, extent,application and

commencement (1) This Act may be called the Foreign ExchangeManagement Act, 1999.

(2) It extends to the whole of India.

(3) It shall also apply to all branches, offices and

agencies outside India owned or controlled by aperson resident in India and also to any contraventionthere under committed outside India by any person towhom this Act applies.

(4) It shall come into force on such date as the Central

Government may, by notification in the OfficialGazette, appoint:

Provided that different dates may be appointed fordifferent provisions of this Act and any reference inany such provision to the commencement of this Act

shall be construed as a reference to the coming intoforce of that provision.


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3.Dealing in foreignexchange

Save as otherwise provided in this Act,rules or regulations made thereunder, or with the general or special

permission of the Reserve Bank, noperson shall

(a) deal in or transfer any foreign

exchange or foreign security to anyperson not being an authorisedperson;

(b) make any payment to or for the

credit of any person resident outside


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(c) receive otherwise through anauthorised person, any payment byorder or on behalf of any person

resident outside India in anymanner;

d) enter into any financial transaction

in India as consideration for or inassociation with acquisition orcreation or transfer of a right to

acquire, any asset outside India by

4 H ldi f f i


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4.Holding of foreignexchange, etc.

Save as otherwise provided in thisAct, no person resident in Indiashall acquire, hold, own, possess or

transfer any foreign exchange,foreign security or any immovableproperty situated outside India


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. .C a p ita l a cco u n t tra n sa ctio n s( ) - ( ),1 Subject to the provisions of sub section 2

any person may sell or draw foreign exchange to or

from an authorised person for a capital account.transaction( ) ,2 The Reserve Bank may in consultation with the

, Central Government specify( )a any class or classes of capital account

;transactions which are permissible( )b the limit up to which foreign exchange shall

:be admissible for such transactionsProvided that the Reserve Bank shall not impose

any restriction on the drawel of foreign exchangefor payments due on account of amortization ofloans or for depreciation of direct investments in

.the ordinary course of business

( )3 With t j di t th lit f th


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( )3 Without prejudice to the generality of the- ( ), ,provisions of sub section 2 the Reserve Bank may by

, ,regulations prohibit restrict or regulate thefollowing

( )a transfer or issue of any foreign security by a;person resident in India( )b transfer or issue of any 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( )e 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( )f deposits between persons resident in India and

;persons resident outside India

) t i t h ldi f t


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) , ;g export import or holding of currency or currency notes( ) ,h transfer of immovable property outside India other

,than a lease not exceeding five years by a person resident;in India

( ) ,i acquisition or transfer of immovable property in India,other than a lease not exceeding five years by a person

;resident outside India( ) ,j 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


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.Export of goods and.ervices( ) 1 Every exporter of goods shall

( )a furnish to the Reserve Bank or to such otherauthority a declaration in such form and in such

,manner as may be specified containing true and,correct material particulars including the amount

,representing the full export value or if the fullexport value of the goods is not ascertainable at, ,the time of export the value which the exporter

,having regard to the prevailing market conditionsexpects to receive on the sale of the goods in a

;market outside India( )b furnish to the Reserve Bank such other

information as may be required by the Reserve Bankfor the purpose of ensuring the realisation of the

.export proceeds by such exporter

( )2 Th R B k f th f


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( ) ,2 The Reserve Bank may for the purpose ofensuring 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 delaydirect any exporter to comply with such.requirements as it deems fit

( )3 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


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.0 Suspension of operation of this.ct

. ( )40 1 If the Central Government is satisfied thatcircumstances have arisen rendering it necessary that any

permission granted or restriction imposed by this Act,should cease to be granted or imposed or if it considers

,necessary or expedient so to do in public interest the, ,Central Government may by notification suspend or relaxto such extent either indefinitely or for such period as

,may be notified the operation of all or any of the.provisions of this Act

( )2 Where the operation of any provision of this Act has- ( )under sub section 1 been suspended or relaxed

, ,indefinitely such suspension or relaxation may at any,time while this Act remains in force be removed by the

.Central Government by notification


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(3) Every notification issued under this sectionshall be laid, as soon as may be after it isissued, before each House of Parliament, whileit is in session, for a total period of thirty days

which may be comprised in one session or intwo or more successive sessions, and if, beforethe expiry of the session immediately followingthe session or the successive sessionsaforesaid, both Houses agree in making anymodification in the notification or both Housesagree that the notification should not be issued,the notification shall thereafter have effect onlyin such modified form or be of no effect, as the

case may be; so, however, that any such

( ) d d h ld f


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( ) , ,4 A person resident in India may hold own transfer or,in ve st in fo re ig n cu rre n cy fo re ig n se cu rity o r a n y

im m o v a b le p ro p e rty situ a te d o u tsid e In d ia if su ch, ,cu rre n cy secu rity o r p ro p e rty w as a cq u ire d h e ld o r

o w n e d b y su ch p e rso n w h e n h e w a s re sid e n t o u tsid e In d ia.o r in h e rite d fro m a p e rso n w h o w a s re sid e n t o u tsid e In d ia

( ) , ,5 A person resident outside India may hold own,tra n sfe r o r in ve st in In d ia n cu rre n cy se cu rity o r a n y

,im m o v a b le p ro p e rty situ a te d in In d ia if su ch cu rre n cy,se cu rity o r p ro p e rty w a s a cq u ire d h e ld o r o w n e d b y su chp e rso n w h e n h e w a s re sid e n t in In d ia o r in h e rite d fro m a

.p e rso n w h o w a s re sid e n t in In d ia( ) ,6 Without prejudice to the provisions of this section the

, , , ,R e serv e B a n k m a y b y re g u la tio n p ro h ib it re strict o r,re g u la te e sta b lish m e n t in In d ia o f a b ra n ch o ffice o r o th e r

,p la ce o f b u sin e ss b y a p e rso n re sid e n t o u tsid e In d ia fo r,ca rryin g o n a n y a ctiv ity re la tin g to su ch b ra n ch o ffice o r

.o th e r p la ce o f b u sin e ss

&C t ti lti


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,If any person contravenes any provision of this Act or, , ,contravenes any rule regulation notification direction or

,order issued in exercise of the powers under this Act or

contravenes any condition subject to which an authorization is, , ,issued by the Reserve Bank he shall upon adjudication be

liable to a penalty up to thrice the sum involved in such,contravention where such amount is quantifiable or up to two,lakh rupees where the amount is not quantifiable and where such

,contravention is a continuing one further penalty which mayextend to five thousand rupees for every day after the first

.day during which the contravention continues,Any Adjudicating Authority adjudging any contravention may if

he thinks fit in addition to any penalty which he may impose,for such contravention direct that any currency security or any

other money or property in respect of which the contraventionhas taken place shall be confiscated to the Central Government, ,and further direct that the foreign exchange holdings if any

of the persons committing the contraventions or any part,thereof shall be brought back into India or shall be retainedoutside India in accordance with the directions made in this

.behalf.

&Contravention penalties

in respect of which contravention has


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" "roperty in respect of which contravention has, ,taken place shall include deposits in a bank

where the said property is converted into such,deposits Indian currency,where the said property

;is converted into that currency and any otherproperty which has resulted out of the conversion.of that property

If any person fails to make full payment of thepenalty imposed on him within a period of ninety

days from the date on which the notice for payment,of such penalty is served on him he shall be

liable to civil imprisonment
http://en.wikipedia.org/w/index.php?title=Indian_currency&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Indian_currency&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Indian_currency&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Indian_currency&action=edit&redlink=1


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. , , .7 Power of search seizure etc ofnforcement director( )1 The Director of Enforcement and other officers of

, ,Enforcement not below the rank of an Assistant Directorshall take up for investigation the contravention referred.to in section 13

( ) - ( ),2 Without prejudice to the provisions of sub section 1, ,the Central Government may also by notification authorise

,any officer or class of officers in the Central Government,State Government or the Reserve Bank not below the rank ofan Under Secretary to the Government of India to

.investigate any contravention referred to in section 13( ) - ( )3 The officers referred to in sub section 1 shall

-exercise the like powers which are conferred on income tax- , ( )authorities under the Income tax Act 1961 43 of 1961 and

,shall exercise such powers subject to such limitations.laid down under that Actmpowering other officers .


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.1 Power of Central Government to give.irections

,For the purposes of this Act the Central, ,Government may from time to time give to

the Reserve Bank such general or special

,directions as it thinks fit and the Reserve,Bank shall in the discharge of its,functions under this Act comply with any

.such directions


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.3 Death or insolvency in certain.ases

, , ,Any right obligation liability proceeding or appealarising in relation to the provisions of section 13 shall

not abate by reason of death or insolvency of the person

liable under that section and upon such death orinsolvency such rights and obligations shall devolve onthe legal representative of such person or the official

, :receiver or the official assignee as the case may beProvided that a legal representative of the deceased shall

be liable only to the extent of the inheritance or estateof the deceased.


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. .4 Bar of legal proceedings,No suit prosecution or other legal proceeding shall lieagainst the Central Government or the Reserve Bank or anyofficer of that Government or of the Reserve Bank or any

other person exercising any power or discharging any

,functions or performing any duties under this Act foranything in good faith done or intended to be done under

, , ,this Act or any rule regulation notification direction or.order made there under

. .5 Removal of difficulties( )1 If any difficulty arises in giving effect to the, ,provisions of this Act the Central Government may by

,order do anything not inconsistent with the provisions of:this Act for the purpose of removing the difficulty

Provided that no such order shall be made under thissection after the expiry of two years from the

.commencement of this Act( ) ,2 Every order made under this section shall be laid as

,soon as may be after it is made before each House of.Parliament


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INVESTIGATIONThe Directorate of Enforcement investigate to preventleakage of foreign exchange which generally occurs through

:the following malpracticesRemittances of Indians abroad otherwise than through

, . . .normal banking channels i e through compensatory payments

Acquisition of foreign currency illegally by person in.India

- .Non repatriation of the proceeds of the exported goods.Unauthorised maintenance of accounts in foreign countries

- -Under invoicing of exports and over invoicing of imports.and any other type of invoice manipulation

Siphoning off of foreign exchange against fictitious and.bogus imports

.Illegal acquisition of foreign exchange through Hawala.Secreting of commission abroad


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.Realisation and repatriation of foreign.xchange

. ,8 Save as otherwise provided in this Act where any amountof foreign exchange is due or has accrued to any person

,resident in India such person shall take all reasonablesteps to realise and repatriate to India such foreign

exchange within such period and in such manner as may be

.specified by the Reserve Bankxemption from realisation and repatriation inertain cases .


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rocedural Provisions, ,For enforcing the provisions of various sections of FEMA 1999 the officers of

Enforcement Directorate of the level of Assistant Directorand above will haveto undertake the following functions

/ .Collection and development of intelligence information.Keeping surveillance over suspects

/ - , .Searches of persons vehicles by provisions of Income tax Act 1961- , .Searches of premises as per provisions of Income tax Act 1961Summoning of persons for giving evidence and producing of documents as per

- , .provisions of Income tax Act l96l- , .Power to examine persons as per provisions of Income tax Act 1961

/ - ,Power to call for any information document as per provisions of Income tax Act.1961

. - , .Power to seize documents etc as per provisions of Income tax Act 1961- , .Custody of documents as per Income tax Act 1961-Adjudication and appeals Officers of and above the rank of Dy Director of

, ;Enforcement are cases of contravention of the provisions of the Act these- ,proceedings which are quasi judicial in nature start with the issuance of show

; -cause notice in the event of cause shown by the Notice not being found, , . ,satisfactory further proceedings are held vis personal hearing in which the

,noticee has a further right to present his defence either in person or; ,through any authorised representative on conclusion of these proceedings the,adjudicating authority has to examine and consider the evidence on record in

,its entirety and in case the charges not being found proved the noticee is, , ,acquitted and in the event of charges being found substantiated such penalty

as is considered appropriate as per provisions of section 13 of the Act can be, .imposed besides confiscation of amounts involved in these contraventions

rganisational Set Up and Functions Of Enforcement Directorate
http://en.wikipedia.org/wiki/Assistant_Directorhttp://en.wikipedia.org/wiki/Assistant_Directorhttp://en.wikipedia.org/wiki/Assistant_Director


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Directorate of Enforcement has to detect cases of violation and also perform.substantially adjudicatory functions to curb above malpractices

,The Enforcement Directorate with its Headquarters at New Delhi has seven, , , , ,zonal offices at Bombay Calcutta Delhi Jalandhar Madras Ahmedabad and

.Bangalore The zonal offices are headed by the eputy Directors . The-Directorate has nine sub zonal offices at Agra, Srinagar,Jaipur,Varanasi,

Trivandrum,Calicut, Hyderabad, Guwahatiand Goa, which are headed by the. ,Assistant Directors The Directorate has also a Unit at Madurai which is

. ,headed by a Chief Enforcement Officer Besides there are three Special.Directors of Enforcement and one Additional Director of Enforcement

:The main functions of the Directorate are as underTo collect and develop intelligence relating to violation of the provisions of

,Foreign Exchange Regulation Act and while working out the same depending upon:the circumstances of the case

,To conduct searches of suspected persons conveyances and premises for seizing( )incriminating materials including Indian and foreign currencies involved

/ .and orTo enquire into and investigate suspected violations of provisions of the

.Foreign Exchange Management ActTo adjudicate cases of violations of Foreign Exchange Management Act for

levying penalties departmentally and also for confiscating the amounts;involved in contravent ions

.To realise the penalties imposed in departmental adjudication
http://en.wikipedia.org/wiki/Agrahttp://en.wikipedia.org/wiki/Srinagarhttp://en.wikipedia.org/wiki/Srinagarhttp://en.wikipedia.org/wiki/Jaipurhttp://en.wikipedia.org/wiki/Jaipurhttp://en.wikipedia.org/wiki/Varanasihttp://en.wikipedia.org/wiki/Varanasihttp://en.wikipedia.org/wiki/Trivandrumhttp://en.wikipedia.org/wiki/Trivandrumhttp://en.wikipedia.org/wiki/Calicuthttp://en.wikipedia.org/wiki/Hyderabad,_Indiahttp://en.wikipedia.org/wiki/Guwahatihttp://en.wikipedia.org/wiki/Goahttp://en.wikipedia.org/wiki/Goahttp://en.wikipedia.org/wiki/Guwahatihttp://en.wikipedia.org/wiki/Hyderabad,_Indiahttp://en.wikipedia.org/wiki/Calicuthttp://en.wikipedia.org/wiki/Trivandrumhttp://en.wikipedia.org/wiki/Varanasihttp://en.wikipedia.org/wiki/Jaipurhttp://en.wikipedia.org/wiki/Srinagarhttp://en.wikipedia.org/wiki/Agra


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.9 The provisions of sections 4 and 8 shall not apply to, :the following namely

( )a possession of foreign currency or foreign coins byany person up to such limit as the Reserve Bank may

;specify( )b foreign currency account held or operated by suchperson or class of persons and the limit up to which the

;Reserve Bank may specify( )c foreign exchange acquired or received before the 8th

,day of July 1947 or any income arising or accruingthereon which is held outside India by any person in

pursuance of a general or special permission granted by

;the Reserve Bank( )d foreign exchange held by a person resident in India

,up to such limit as the Reserve Bank may specify if suchforeign exchange was acquired by way of gift or

inheritance from a person referred to in clause ( )c ,;including any income arising therefrom

( ) , ,e foreign exchange acquired from employment business

, , , , ,trade vocation services honorarium gifts inheritanceor any other legitimate means up to such limit as the

;Reserve Bank may specify and( )f such other receipts in foreign exchange as the

.Reserve Bank may specify

Th E d


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Thank YouThank You

The End

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