general awareness about fema

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Presented By Sunil Modgil NRO0212523 GENERAL AWARENESS ABOUT FEMA

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Page 1: General Awareness About FEMA

Presented By: Sunil ModgillNRO0212523

GENERAL AWARENESS ABOUT FEMA

Page 2: General Awareness About FEMA

NEED FOR FEMA

• World of Globalisation• Dealing in Foreign Currency

when enterprise– Import goods–Export goods–Make investments abroad

Page 3: General Awareness About FEMA

• Deposits, credits and balances

payable in any foreign currency;

• Drafts, travellers' cheques, letters of

credit or bills of exchange, expressed

or drawn in Indian currency but

payable in any foreign currency; and

• Drafts, travellers' cheques, letters of

credit or bills of exchange drawn by

banks, institutions or persons outside

India, but payable in Indian currency.

Meaning of Foreign Currency

Page 4: General Awareness About FEMA

FERA•Criminal legislation•Restrictive clauses which deterred foreign investments.•Incompatible with the pro-liberalisation policies of the Govt

•Foreign Exchange Regulations Act (FERA), 1973•Objective:- conservation and proper utilisation of the foreign exchange resources

Page 5: General Awareness About FEMA

Foreign Exchange Management Act, 1999.

ApplicabilityExtends to whole

of India.All branches,

offices and agencies outside India, owned or controlled by PRI.

Any contravention committed outside India by any person to whom this Act applies.

Investor Friendly Legislation

Page 6: General Awareness About FEMA

•Facilitate external trade and payments•Promote the orderly development and maintenance of foreign exchange market in India.•Consolidate and amend the law relating to foreign exchange.

OBJECTIVES OF FEMA

Page 7: General Awareness About FEMA

Rules, regulations and norms laid down by RBI in consultation with CG.Authorities for holding inquiries

Adjudicating AuthoritiesSpecial Directors

(Appeals)Appellate Tribunal

Director of Enforcement, for taking up investigations.

ADMINISTRATION OF FEMA

Page 8: General Awareness About FEMA

I. Only Authorized persons permitted to deal in foreign exchange.

II. They include:-I. authorised dealerII. money changerIII.off-shore banking unit

III.They are free to release foreign exchange upto the prescribed limits upon their satisfaction

Authorized

Persons

Page 9: General Awareness About FEMA

• Any person other than Authorised person is prohibited to:-

– Deal in or transfer any foreign exchange or foreign security to any person.

–Make any payment to or for the credit of any person resident outside India.

– Receive any payment by order or on behalf of any person resident outside India.

– Enter into any financial transaction in India to acquire any asset outside India.

PROHIBITIONS IN DEALING

Page 10: General Awareness About FEMA

Upto 3 times the sum involved in the contravention.

Upto Rs. 2,00,000 – if the amount involved in contravention is not quantifiable.

Upto Rs. 5,000 per day – if the contravention continues.

Any currency, security or any other money or property in respect of which the contravention has taken place shall be confiscated to the CG.

PENALTIES

Page 11: General Awareness About FEMA

CAPITAL ACCOUNT TRANSACTIONS

• Transaction which alters:- assets or liabilities outside India of

PRI assets or liabilities in India of PROI

• RBI with CG empowered to specify permissible capital account transactions along with prescribed limits.

Page 12: General Awareness About FEMA

No restrictions on withdrawal of currency for:-

amortization of loans

depreciation of direct investments

No restrictions on holding of assets:-

Acquired by a PRI outside India when he was a PROI

PRI acquired due to inheritance

Categories of permitted Capital Account Transactions:-

permitted to persons resident in India

permitted to non-residents

There are also some transactions not permitted to non-residents

CAPITAL ACCOUNT TRANSACTIONS

Page 13: General Awareness About FEMA

– Transactions include:-» Other than a capital

account transactions» Payments due in

connection with normal business trade.

» Payments dueon interest.» Remittances.» Expenses for travelling,

education, etc.– CG in consultation with RBI

can impose reasonable restrictions on withdrawal.

CURRENT ACCOUNT TRANSACTIONS

Page 14: General Awareness About FEMA

For some transactions withdrawl is:-Totally prohibitedPermitted, subject to the prior approval of concerned Ministry, CG

Permitted, subject to prior approval of RBI.

CURRENT ACCOUNT TRANSACTIONS

Page 15: General Awareness About FEMA

• For Resident Individuals only.• Remittance upto US $ 200,000 per financial year.• Not available for the transactions

» Totally prohibited

• Require the prior approval of CG.

LIBERALISED REMITTANCE SCHEME

Page 16: General Awareness About FEMA

Indian rupee fully convertible w.r.t current account transactions.Non-residents freely allowed remitting outside India the income or capital gain generated in India.Indian rupee w.r.t capital account transactions not fully convertible.

Page 17: General Awareness About FEMA