ch 11 fema 1999
TRANSCRIPT
8/12/2019 CH 11 FEMA 1999
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CH:11 FEMA-1999
Foreign exchange management act
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.