overview on fema presentation.ppt

8/9/2019 Overview on FEMA Presentation.ppt

1/33

The Foreign Exchange

Management Act, 1999

Puneet Gupta

June 2014

An Overvie


2/33

E!ta"#i!hment o$ %O&'O in (n)iaSection 2

Over!ea! *irect (nve!tmentSection 3

Overvie o$ FEMASection 1

Agen)a


3/33

3

+ection 1

Overvie o$ Foreign

Exchange Management Act,

1999


4/33


5/33

FEMA 1999 FERA replaced by FEMA on June 1, 2000.

Aim! o$ FEMA

Facilitate external trade and payments

romotion o! orderly de"elopment o! !orei#n exc$an#e mar%ets

FEMA 6u#e! & 6egu#ation! Rules noti!ied by &entral 'o"ernment()&urrent account *

Re#ulations noti!ied t$e Reser"e +an% o! ndia )R+* (. )&apital account*

&onsultation bet-een R+ and t$e &entral 'o"ernment.

6%( A.. )ir /eries* issued !rom time to time

Master &irculars one in a year )July*

F.A.s )updated a"ailable on $ttp---.rbi.or#.in*

%roa) Frameor/


6/33

5

+u"!tantive Provi!ion!

+ection *e!cription

1 Application and &ommencement o! FEMA

2 e!initions

; to 9 ro"isions relatin# to Re#ulations and Mana#ement o! Forei#n Exc$an#e

10 to 12 ro"isions relatin# to Aut$ori6ed erson

1; to 1> ro"isions relatin# to &ontra"entions and enalties

1? to ;@ ro"isions relatin# to Ad7udication, Appeal and irectorate o! En!orcement

;9 to 49 Miscellaneous ro"isions


7/33

8

Extent, App#ication an) ommencement

Extends to -$ole o! ndia. Applies to all branc$es, o!!ices and a#encies outside ndia, o! person

resident in ndia. Applies to contra"ention committed outside ndia by any person to

-$om t$e Act applies.

+ection 1 o$ FEMA +cope

+ection 2u3 Per!on

ncludes An indi"idual, 9:F, &ompany, Firm, A; or a +;, -$et$er incorporated or not, E"ery arti!icial 7uridical person, not !allin# -it$in any o! t$e precedin#

sub


8/33

=

(mportant *e$inition!

erson residin# in ndia > 1=2 days durin# precedin# !inancial year but does not include

erson -$o $as #one out o! ndia or -$o stays outside ndia, in eit$er caseo Foron ta%in# up employment outside ndia, or o &arryin# on outside ndia a business or "ocation outside ndia, or o For any purpose, indicatin# intention to stay outside ndia !or an uncertain period.

erson -$o $as come to or stays in ndia, ot$er-ise t$an

o Foron ta%in# up employment in ndia, oro &arryin# on in ndia a business or "ocation in ndia, or o For any ot$er purpose, indicatin# intention to stay in ndia !or an uncertain period.

Any erson or body corporate re#istered or incorporated in ndia.

An o!!ice, branc$ or a#ency in ndia o-ned or controlled by a person resident outside ndia.

An o!!ice, branc$ or a#ency outside ndia o-ned or controlled by a person resident in ndia.

+ection 2v3 Per!on re!i)ent in (n)ia P6(3 mean!

+ection 23 5 Per!on re!i)ent out!i)e (n)ia P6O(3

erson resident outside ndia means a person -$o is not resident in ndia.


9/33

?

(mportant *e$inition!

@R $as been de!ined under FEMA Re#ulation 2)"i* o! t$e FEMA < )eposit* Re#ulations 2000 as !ollo-s

An @R is a person resident outside ndia -$o is a citi6en o! ndia or is a erson o! ndian ;ri#inB t is possible t$at you may be an @R under FEMA, yet you may be a resident under t$e ncome tax la-s.

8on 6e!i)ent (n)ian 86(3

Per!on o$ (n)ian Origin P(O3

; is de!ined di!!erently in

Re#ulation 2 o! FEMA )eposit* Re#ulations, 2000

Re#ulation 2)c* o! FEMA< 21 )AcCuisition and Drans!er o! mmo"able roperty in ndia* Re#ulations, 2000

Re#ulation 2 o! FEMA 24 ) n"estment in a Firm or roprietary concern in ndia*

Most ot$er noti!ications !ollo- t$e FEMA (. )eposit* de!inition o! ;


10/33

A transaction -$ic$ alters t$e assets or liabilities

;utside ndia o! persons resident in ndia,)includin# &ontin#ent iabilities*

n ndia o! persons resident outside ndia and

ncludes transactions speci!ied in /ection 5)3*.o Forei#n security by residento Any /ecurity by non


11/33

11

'eneral or /pecial permission o! R+ reCuired to

eal in or trans!er o! !orei#n exc$an#e or !orei#n securities to person ot$er t$an aut$ori6ed person.

Ma%e any payment to or !or t$e credit o! a non5 urrent Account Tran!action!

+ection ?5 apita# Account Tran!action!

Extent, App#ication an) ommencement cont)73


12/33

12

Exporter o! #oodsser"ices under obli#ation to !urnis$ to R+ or speci!ied aut$ority prescribed declaration. &ommon !orm called GExport eclaration FormH de"ised to declare all exports !rom @on


13/33

13

R+ to aut$ori6e persons to act as aut$ori6ed dealer, money c$an#er or o!!


14/33

14

FEMA 5 urrent Account Tran!action! 6u#e!, 2000

Dransactions expressly pro$ibited /c$edule read -it$

Rule 3

Dransactions -$ic$ reCuire prior appro"al o! 'o"ernment o!

ndia /c$edule read -it$ Rule 4

Dransactions -$ic$ reCuire prior appro"al o! R+ /c$edule

read -it$ Rule

Relaxations !rom Rule 4 and !or many items paid !rom

Resident Forei#n &urrency )RF&* Account and Exc$an#e

Earners Forei#n &urrency )EEF&* Accounts.

FEMA urrent Account Tran!action 6u#e!


15/33

1

urrent Account Tran!action!

1. Remittance out o! lottery -innin#s2. Remittance o! income !rom racin# ridin# or any ot$er

$obby3. Remittance !or purc$ase o! lottery tic%ets,

bannedprescribed products4. ayment o! commission on exports made to-ards

eCuity in"estment in Joint Ienture $olly ;-ned

/ubsidiary abroad o! ndian companies. Remittance o! di"idend by any company -$ere

di"idend balancin# is applicable5. ayment o! commission on exports under Rupee

state credit route, except commission up to 10percent o! in"oice "alue o! exports o! tea and tobacco

8. ayment related to G&all +ac% /er"icesH o! telep$ones=. Remittance o! interest income on !unds $eld in @on

Resident /pecial Rupee ) Account * /c$eme.

Tran!action! Expre!!#. Prohi"ite)

+che)u#e ( rea) ith 6u#e ;3

1. &ultural Dours2. Ad"ertisement in !orei#n print media exceedin#

:/ 10,000 except !or promotion o! tourism,!orei#n in"estments and international biddin#

3. Remittance o! !rei#$t o! "essel c$artered by aublic /ector :nit

4. ayment !or import by a 'o"ernment epartment

on &..F. basis. Multi< modal transport operators ma%in# remittance

to t$eir a#ents abroad5. Remittance o! $irin# c$ar#es o! transponders by

DI c$annels, nternet ser"ice pro"iders8. Remittance o! container detention c$ar#es

exceedin# t$e rate prescribed=. Remittance o! pri6e money sponsors$ip o! sports

acti"ity abroad exceedin# :/ 1,00,000 by personot$er t$an nternational @ational /tate e"elsports bodies

?. Remittance !or members$ip o! K club

Prior approva# o$ Government o$ (n)ia

+che)u#e (( rea) ith 6u#e 43


16/33

15

urrent Account Tran!action! (##u!trative Tran!action!

--Schedule III read with Rule 5

+r7 8o7 Tran!action 'imit! ithout an. 6%( approva#

1 ri"ate Iisit )except @epal K +$utan* :/ 10,000 per Financial Lear )FL*

2 'i!t Remittance :/ 000 per FL per remitter or donor

3 onations :/ 000 per donor

2 Exc$an#e !acilities !or employment abroad :/ 100,000

3 Medical Dreatment abroad Estimate !rom doctor in ndia or doctor $ospitalabroad

4 &onsultancy ser"ices For n!rastructure ro7ects < :/ 10,000,000

per pro7ect For ot$er ser"ices :/ 1,000,000 per pro7ect

Re


17/33

R/ a"ailable to all Resident indi"iduals )R* includin# minors )sin#ularly or 7ointly*.

R can remit o"erseas up to :/ 1, 2,000 per !inancial year !or any permissible current capital accounttransaction.

AcCuisition o! immo"able property, directly or indirectly, outside ndia by resident indi"idual is no lon#erpermitted under R/.

R can acCuire and $old s$ares or any ot$er asset outside ndia -it$out prior appro"al o! R+ usin# t$e R/.

RHs are no- permitted to acCuire or set up Joint Ientures )GJIH* or $olly ;-ned /ubsidiaries )G;/H* outsidendia en#a#ed in bona!ide operatin# business acti"ities only )except !or real estate business, ban%in# business,business o! !inancial ser"ices acti"ity or $oldin# o! a step do-n JI or ;/ -$ic$ are pro$ibited* -it$in t$eo"erall remittance limit o! :/ 12,000.

R can open, $old and maintain !orei#n currency accounts -it$ a ban% outside ndia !or remittances under t$esc$eme -it$out t$e prior appro"al o! R+.

ncome and sum remitted need not be brou#$t bac% into ndia and can be rein"ested o"erseas.

Remittances inter alia not permitted !oro Remittance directly or indirectly to +$utan, @epal, Mauritius or a%istano Remittances to speci!ied non< cooperati"e countries territories or t$ose identi!ied by t$e Financial Action Das%

Force as Gnon


18/33

1=

+cheme! $or (n"oun) (nve!tment

+che)u#e Particu#ar!

+che)u#e 1 F /c$eme

+che)u#e 2 urc$ase/ale o! /$ares andor &on"ertible ebentures o! an ndian &ompany by a re#isteredForei#n nstitutional n"estor under ort!olio n"estment /c$eme

+che)u#e ; urc$ase/ale o! /$ares andor &on"ertible ebentures by a @R on a /toc% Exc$an#e in ndiaon repatriation andor non


19/33

1?

(n"oun) (nve!tment Proce!!

* A citizen or entities of Bangladesh/Pakistan can invest with prior approval of Foreign Investment Promotion Board (‘FIPB’ in

sectors/activities other than those e!pressl" prohi#ited in the Foreign $irect Investment (‘F$I’Polic"


20/33

20

6oute! o$ (nve!tment


21/33

21

21

+ection 25 E!ta"#i!hment o$

'iai!on O$$ice&%ranch O$$ice

in (n)ia


22/33

22

Entr. +trategie! $or Foreign Entit.

E8T6C +T6ATEG(E+ FO6 A

FO6E(G8 E8T(TC

A+ A FO6E(G8

OMPA8C

A+ A '(M(TE*

'(A%('(TC

PA6T8E6+B(P

A+ A8 (8*(A8

OMPA 8C

A/;@

;FF&E )G;H*

+RA@&9

;FF&E)G+;H*

R;JE&D

;FF&E )G;H*

9;L ;@E

/:+/ARL

)G;/H*

J;@D

IE@D:RE

)GJIH*


23/33

ro"isions !or establis$ment o! ;+; are re#ulated by @oti!ication @o. FEMA 22 2000


24/33

A))itiona# riteria

24

on)ition!

For +; >> A pro!it ma%in# trac% record

durin# t$e immediately

precedin# FLHs in t$e $omecountry.

For ; >>

A pro!it ma%in# trac% record

durin# t$e immediately

precedin# 3 FLHs in t$e $ome

country.

%rack

&ecord

For +; >>

>:/ 100,000 or its eCui"alent.

For ; >>

:/ 0,000 or its eCui"alent

'et

orth*

* 'et orth) %otal paid p capital+ free reserves , less intangi#le assets- as per the latest Adited Balance .heet or Accont

.tatement certifies #" PA or an" registered Acconts Practitioner #" whatever name0


25/33

P i i"# A i i i $ %O=


26/33

&ompanies incorporated outside ndia and en#a#ed in manu!acturin# or tradin# acti"ities are allo-ed to set up

+;Hs in ndia -it$ speci!ic appro"al o! R+. /uc$ +;Hs are permitted to represent t$e parent #roup companies andunderta%e t$e !ollo-in# acti"ities in ndia

Export mport o! #oods.Renderin# pro!essional or consultancy ser"ices.&arryin# out researc$ -or% in areas in -$ic$ t$e parent company is en#a#ed.romotin# tec$nical or !inancial collaborations bet-een ndian companies and parent or o"erseas #roup

company.Representin# t$e parent company in ndia and actin# as buyin# sellin# a#ent in ndia.

Renderin# ser"ices in in!ormation tec$nolo#y and de"elopment o! so!t-are in ndia.Renderin# tec$nical support to t$e products supplied by parent#roup companies.Forei#n airline s$ippin# company

'ormall"- the B1 shold #e engaged in the activit" in which the parent compan" is engaged0

Prohi"ite) Activitie! $or %O!

Retail tradin# acti"ities o! any nature.Manu!acturin# or processin# acti"ities in ndia, directly or indirectly.

ro!its earned by t$e +;s are !reely remittable !rom ndia, sub7ect to payment o! applicable taxes.

25

Permi!!i"#e Activitie! $or %O=!


27/33

28

+ection ;5 Over!ea! *irect

(nve!tment

O *i t ( t t


28/33

n"estment by an ndian arty by -ay o! contribution to t$e capital or subscription to t$e

Memorandum o! Association )GM;AH* o! a !orei#n entity or by -ay o! purc$ase o! existin# s$ares o! a!orei#n entity by

n"estment t$rou#$ stoc% exc$an#e or ri"ate placement in t$at entity or Mar%et purc$ase or n"estment in a Joint Ienture or $olly ;-ned /ubsidiary abroad .

+ut does not include ort!olio n"estment

2=

Over!ea! *irect (nve!tment


29/33

2?

Po!!i"#e 6oute! $or (nve!tment

Automatic 6oute Approva# 6oute

;"erseas JI;/ to be en#a#ed in bona!ide

business acti"ity except real estate and ban%in#

n"estment in Financial /ector s$ould comply -it$

additional conditions

ndian party not on R+Hs ExportersH &aution istlist

o! de!aultersunder in"esti#ation by an Aut$ority

suc$ as E, /E+ etc.

;"erall ceilin# o! !inancial commitment in all

JI;/ is 100N o! net -ort$ as on last audited

+alance /$eet

/ubmission o! Form Annual er!ormance Report inrespect o! all its o"erseas in"estment

&ases not co"ered under Automatic route

/peci!ic application to R+ -it$ necessary

documents in Form ; t$rou#$ t$e A )&ate#ory

+an%* alon# -it$ prescribed supportin# anddocuments

R+ -ould inter alia consider t$e !ollo-in# !actors

o rima !acie "iability o! JI;/ outside ndiao &ontribution to external trade and ot$er bene!its

-$ic$ -ill accrue to ndia t$rou#$ suc$ in"estmento Financial position and business trac% record o! t$e

ndian party and !orei#n entityo Expertise and experience o! t$e ndian party in t$e

same or related line o! acti"ity o! t$e JI;/ outside

ndia.

Over!ea! O$$ice!


30/33

;penin# o! +ranc$ ;!!ice )+;* or Representati"e ;!!ice )R;* o"erseas is allo-ed

A ban%s in ndia are permitted to remit !unds !or

(nitia# Expen!e!

Remittance up to !i!teen per cent o! t$e a"era#e annual salesincome or turno"er durin# t$e last t-o !inancial

years or up to t-enty

6ecurring Expen!e!

Remittance up to ten per cent o! t$e a"era#e annual salesincome or turno"er durin# t$e last t-o !inancial

years

;penin# up o! suc$ +;R; is allo-ed sub7ect to !ollo-in# conditions

o +;R; s$ould be conductin# normal business acti"ities o! t$e ndian companyo ;"erseas branc$ s$all not enter into any contract or a#reement in contra"ention o! t$e FEMA )Act, rules or

re#ulations. *o ;"erseas o!!ice )tradin#non


31/33

31

D$e in!ormation contained $erein is o! a #eneral nature and is not intended to address t$e circumstances o!any particular indi"idual or entity. Alt$ou#$ $a"e endea"ored to pro"ide accurate and timely in!ormation, t$ere

can be no #uarantee t$at suc$ in!ormation is accurate as it is recei"ed or t$at it -ill continue to be accurate int$e !uture. @o one s$ould act on suc$ in!ormation -it$out appropriate pro!essional ad"ice a!ter a t$orou#$

examination o! t$e particular situation.

D$e "ie-s presented by means o! t$is presentation are presenterHs o-n and s$ould not construed as position

ta%en by any or#ani6ation or any !ormer employer o! t$e aut$or

*i!c#aimer


32/33


33/33

Than/ Cou

overview on fema presentation.ppt

Documents