CH 11 FEMA 1999

8/12/2019 CH 11 FEMA 1999

http://slidepdf.com/reader/full/ch-11-fema-1999 1/19

CH:11 FEMA-1999

Foreign exchange management act

8/12/2019 CH 11 FEMA 1999


Introduction

• Foreign exchange regulation act came in to

force on January 1974.

• India’s foreign exchange reserve position was

not at all satisfactory during that period.

• Accordingly stringent controls were required

on the use of foreign exchange.

8/12/2019 CH 11 FEMA 1999


8/12/2019 CH 11 FEMA 1999


Foreign exchange management act

• FEMA emphasizes exchange management.

• It has only 49 sections.

•

Aim is to facilitate trade.• Only the specified acts, relating to foreign

exchange are regulated.

•

Except for section 3 which relates to dealing inforeign exchange, no other provision of FEMA

requires RBI’s permission.

8/12/2019 CH 11 FEMA 1999


8/12/2019 CH 11 FEMA 1999


FEMA-section 3

• Dealing with foreign exchange.

1. Section 3 states that no authorized personcan deal in or transfer any foreign exchange

or foreign security to any other personsituated outside India.

2. Authorized person means any bank or other

person including authorized money changer,authorized under FEMA to deal in foreignexchange or securities.

8/12/2019 CH 11 FEMA 1999


FEMA-section 4

• Holding of foreign exchange:

Section 4 restrains any person resident of India,

from acquiring, holding, owning, possessing or

transferring any foreign exchange, foreign

security or any immovable property, situated

outside India, except as specially provided in

the act.

If provided in the act he can hold.

8/12/2019 CH 11 FEMA 1999


FEMA section 5

• Current account transactions:

• Section 5 permits dealing in foreign exchange

through authorized persons, for current

account transactions.

• But the central government can impose,

reasonable restrictions in public interests.

8/12/2019 CH 11 FEMA 1999


Current account transactions include

• Payment due for foreign trade, business and

services.

• Interest on loans as income from investments.

• Remittances for living expenses of parents,

spouse and children, residing abroad.

• Expenses on foreign travel, education and

medical care of parents, spouse and children.

8/12/2019 CH 11 FEMA 1999


FEMA SECTION 6

• Capital account transactions:

• Section 6 deals with capital account

transactions.

• It means liberalizing capital flows.

• Capital account transactions include, transfer

or issue of any foreign security by a person

either in India or outside India.

8/12/2019 CH 11 FEMA 1999


FEMA section 6- capital a/c

• Acquisition or transfer of immovable property

outside India, by an Indian resident.

• Borrowing and lending of foreign exchange, in

what ever form, between a person resident in

India and person resident outside India.

8/12/2019 CH 11 FEMA 1999


8/12/2019 CH 11 FEMA 1999


Regulation & management of foreign

exchange

• All transactions, payment and receipt of

foreign exchange, shall be through authorized

person only-section 3.

• A person can acquire, hold, own, possess,

transfer foreign exchange or any immovable

property, situated outside India, with RBI’s

approval-section 4.

8/12/2019 CH 11 FEMA 1999


FEMA regulations

• Every exporter of goods and services, has to

furnish necessary data, by way of declaration,

to RBI. Section 7.

• There is no bar on a person outside India to

hold, own, transfer or invest in foreign

currency, foreign security or any immovable

property, situated outside India. Section 6.

8/12/2019 CH 11 FEMA 1999


Contravention, penalties, adjudication

and appeals

• Under FEMA any violation of provisions of said

act will attract, penal provisions, including the

right of arrest and detention.

8/12/2019 CH 11 FEMA 1999


Directorate of enforcement

• The central government establishes, a

directorate of enforcement, with a director

and other officers, called officers of

enforcement.

• They investigate contraventions.

• They collect and develop intelligence, relating

to violations of the provisions of FEMA.

• They conduct searches of suspected persons.

8/12/2019 CH 11 FEMA 1999


Enforcement directorate

• They adjudicate, cases of violations of FEMA

for levying penalties, departmentally.

• Civil court does not have the jurisdiction to

ascertain any proceedings pursued under

FEMA.

CH 11 FEMA 1999

Documents

Transcript of CH 11 FEMA 1999