Automatically changes to Flash or non-Flash embed. WordPress Embed Customize Embed. Presentation Description Lectures delivered by Dr. Tabrez Ahmad in the areas of Foreign Exchange Management Law. Foreign Exchange Management Law: Foreign Exchange Management Law Dr.

Tabrez Ahmad Professor of Law 1 Dr. Objective The main objective behind the Foreign Exchange Management Act is to consolidate and amend the law relating to foreign exchange with the objective of facilitating external trade and payments. It was also formulated to promote the orderly development and maintenance of foreign exchange market in India.

FEMA is applicable to all parts of India. The act is also applicable to all branches, offices and agencies outside India owned or controlled by a person who is a resident of India. FOREIGN EXCHANGE FEMA prohibits: Dealing in or transfer of Foreign Exchange or Foreign Security to any person other than Authorised Person Make any payment otherwise through an authorized person to or for the credit of any person resident outside India in any manner receive otherwise through an authorized person, any payment by order or on behalf of any person resident outside India in any manner.

Exemptions possession of foreign currency or foreign coins by any person up to such limit as the Reserve Bank may specify foreign currency account held or operated by such person or class of persons and the limit up to which the Reserve Bank may specify foreign exchange acquired or received before the 8th day of July, foreign exchange held by a person resident in India up to such limit as the Reserve Bank may specify, if such foreign exchange was acquired by way of gift or inheritance from a person referred above 6 Dr.

Organizational setup The FEMA head-office, also known as Enforcement Directorate is situated in New Delhi and is headed by a Director.

FEMA ACT

The Directorate is further divided into 5 zonal offices in Delhi, Mumbai, Kolkata, Chennai and Jalandhar and each office is headed by a Deputy Director. Each zone is further divided into 7 sub-zonal offices headed by the Assistant Directors and 5 field units headed by Chief Enforcement Officers. Definitions Current account transaction means a transaction other than a capital account transaction and without prejudice to the generality of the foregoing such transaction includes: Definitions "Director of Enforcement" means the Director of Enforcement appointed under sub-section 1 of section 36 " export ", with its grammatical variations and cognate expressions, means— i the taking out of India to a place outside India any goods, ii provision of services from India to any person outside India Dr.

Definitions "foreign currency" means any currency other than Indian currency "foreign exchange" means foreign currency and includes,— i deposits, credits and balances payable in any foreign currency, ii drafts, travellers cheques , letters of credit or bills of exchange, expressed or drawn in Indian currency but payable in any foreign currency, iii drafts, travellers cheques , letters of credit or bills of exchange drawn by banks, institutions or persons outside India, but payable in Indian currency; Dr.

Definitions "foreign security" means any security, in the form of shares, stocks, bonds, debentures or any other instrument denominated or expressed in foreign currency and includes securities expressed in foreign currency, but where redemption or any form of return such as interest or dividends is payable in Indian currency import", with its grammatical variations and cognate expressions, means bringing into India any goods or services; Dr. Definitions "Indian currency" means currency which is expressed or drawn in Indian rupees but does not include special bank notes and special one rupee notes issued under section 28A of the Reserve Bank of India Act, 2 of Dr.

Definitions "service" means service of any description which is made available to potential users and includes the provision of facilities in connection with banking, financing, insurance, medical assistance, legal assistance, chit fund, real estate, transport, processing, supply of electrical or other energy, boarding or lodging or both, entertainment, amusement or the purveying of news or other information, but does not include the rendering of any service free of charge or under a contract of personal service Dr.

Definitions "person" includes— i an individual, ii a Hindu undivided family, iii a company, iv a firm, v an association of persons or a body of individuals, whether incorporated or not, vi every artificial juridical person, not falling within any of the preceding sub-clauses, and vii any agency, office or branch owned or controlled by such person Dr.

FEMA - highlights provides guidelines for the free flow of foreign exchange in India. It prohibits foreign exchange dealing undertaken other than an authorized person It also makes it clear that if any person residing in India, received any Forex payment without there being a corresponding inward remittance from abroad the concerned person shall be deemed to have received they payment from a non authorized person.

FEMA - highlights There are 7 types of current account transactions, which are totally prohibited, and therefore no transaction can be undertaken relating to them. These include transaction relating to lotteries, football pools, banned magazines and a few others.

FEMA and the related rules give full freedom to Resident of India ROI to hold or own or transfer any foreign security or immovable property situated outside India. Similar freedom is also given to a resident who inherits such security or immovable property from an ROI.

FEMA - highlights An ROI is permitted to hold shares, securities and properties acquired by him while he was a Resident or inherited such properties from a Resident. Certain prescribed limits have been substantially enhanced.

Manner of receipt in Foreign Exchange Payment for Export can be received: Manner of receipt in Foreign Exchange Contd. From a rupee account held in the name of exchange house with an authorised dealer if the amount does not exceed Rs 2 lacs In the form of precious metals Payment can be received in cash from Foreign Travelers in India if the same foreign exchange is duly surrendered RBI also permits offsetting of export proceeds against import payables etc.

Manner of payment in Foreign Exchange Payment shall be made in a currency appropriate to the country of shipment of goods Drawal of Foreign Currency means drawal from an authorised person and includes opening of letter of credit, use of international credit card etc. Under the Scheme, resident individuals can acquire and hold immovable property or shares or debt instruments or any other assets outside India, without prior approval of the Reserve Bank. Individuals can also open, maintain and hold foreign currency accounts with banks outside India for carrying out transactions permitted under the Scheme.

Compounding refers to the process of voluntarily admitting the contravention, pleading guilty and seeking redressal Dr.

The role of Authorized Dealer banks here is primarily to provide facilities for remitting foreign currency amounts towards margin requirements from time to time, subject to verification of the underlying exposure. There are two channels through which residents can undertake hedge i. Forex facilities The legal framework for administration of foreign exchange transactions in India is provided by the Foreign Exchange Management Act, Under the Foreign Exchange Management Act, FEMA , which came into force with effect from June 1, , all transactions involving foreign exchange have been classified either as capital or current account transactions.

Guidelines for Travel Foreign exchange can be purchased from any authorized person, such as Authorized Dealer AD Category-I bank and AD Category II. Full-Fledged Money Changers FFMCs are also permitted to release exchange for business and private visits.

An Authorized Dealer is any person specifically authorized by the Reserve Bank under Section 10 1 of FEMA, , to deal in foreign exchange or foreign securities and normally includes banks.

Guidelines for Travel For private visits abroad, other than to Nepal and Bhutan, viz. This limit of USD 10, or its equivalent per financial year for private visits can also be availed of by a person who is availing of foreign exchange for travel abroad for any purposes, such as, for employment or immigration or studies.

A resident Indian is allowed to take INR of denomination of Rs. Guidelines for Travel For business trips abroad to countries, other than to Nepal and Bhutan, a person can avail of foreign exchange up to USD 25, per visit. Visits in connection with attending of an international conference, seminar, specialized training, study tour, apprentice training, etc.

Release of foreign exchange exceeding USD 25, for business travel abroad other than to Nepal and Bhutan , irrespective of the period of stay, requires prior permission from the Reserve Bank. Investments in Bhutan are permitted in Indian Rupees as well as in freely convertible currencies.

Exceptions to this are a travelers proceeding to Iraq and Libya who can draw foreign exchange in the form of foreign currency notes and coins not exceeding USD or its equivalent b travelers proceeding to the Islamic Republic of Iran, Russian Federation and other Republics of Commonwealth of Independent States who can draw entire foreign exchange in the form of foreign currency notes or coins.

The amount of USD 25, allowed to the patient going abroad is in addition to the limit of USD , mentioned above.

The entitlement of foreign exchange on International Credit Cards ICCs is limited by the credit limit fixed by the card issuing authority only. FEMA has brought a new management regime of Foreign Exchange consistent with the emerging frame work of the WTO Dr. If Rupee depreciates savings of person counted in USD depreciates 42 Dr. If Rupee depreciates savings of person counted in USD depreciates 43 Dr.

Manner of Repatriation It can be done in the following manner: Sell it to Authorised Person in India in exchange for Rupees Retain in an account with an authorised dealer Use it for discharge of a debt or liability denominated in foreign exchange in the manner specified by RBI 45 Dr.

Current Account Transactions Any person may sell or draw foreign exchange to or from an authorized person if such sale or drawal is a current account transaction. 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 required from time to time. Current Account Transactions Contd.

The definition is inclusive and any expenditure which is not a capital account transaction will be current account transaction. Restrictions on Current Account Transactions The following requires prior approval of RBI: Release of Exchange for Travel The following do not require any approval from RBI: Upto USD 10, or equivalent in one financial year for one or more pvt visits abroad nepal and Bhutan being exempted Upto USD 25, for business visits Upto USD 1,00, for person going to abroad for employment, education yearly and for medical Treatment 53 Dr.

Business and Commercial Remittance Abroad Foreign Technology Agreements are permitted except in High Priority Industries Payment can be made on lump sum or Royalty based on sales or by issue of Equity Shares after deducting TDS There are no limitations on royalty payment and payment of Technical Fees No collaboration permitted in Lottery, Gambling etc.

Capital Account Transactions "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 like: Foreign Direct Investment Dr. Who can make FDI?

Debentures with prior approval of RBI 59 Dr. Prohibited Sectors Retail Trading except single brand retailing Atomic Energy Lottery Business Gambling Betting etc. 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 upto Rs 2 lacs can be imposed If contravention is of continuing nature, further penalty up to Rs per day during which the contravention continues can be imposed 63 Dr.

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Manner of receipt in Foreign Exchange: Manner of receipt in Foreign Exchange Contd.: Manner of payment in Foreign Exchange: Hedging of Price Risk in Commodities: Guidelines for Travel Medical Treatment: Types of Accounts- NRE Non Resident External: Types of Accounts- NRO Non Resident Ordinary: Foreign Currency Non Resident Account: Current Account Transactions Contd.: Current Account Transactions Few Examples: Restrictions on Current Account Transactions: Prohibited Current Account Transactions: Release of Exchange for Travel: Business and Commercial Remittance Abroad: Who can make FDI?: Industrial Policy towards Foreign Investment: Activities requiring Government Approval: Penalties for Contravention under FEMA: An Introduction to Geocaching By: PPT ON FEMA Act Rashmi By: Channel Statistics Included in these Channels: You do not have the permission to view this presentation.

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