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Seminar on FEMA

Framework of FEMA

Harshal Bhuta

Overview of FEMA

Statement of Objects of FEMA:

An Act to consolidate and amend the law relating to foreign exchange with the

objective of facilitating external trade and payments and for promoting the orderly

development and maintenance of foreign exchange market in India.

Jurisdiction of FEMA:

Whole of India (including J&K)

Extra-territorial jurisdiction (since it applies even to branches, offices and

agencies o/s India owned & controlled by a PRI)

Policy Instruments under FEMA

Notifications by RBI + CG for making / revising Regulations and Rules resp.

A.P.(DIR Series) Circular by RBI

Press Notes by DPIIT

Master Directions by RBI

FDI Policy by DPIIT

Overall Scheme of FEMA:

All current account transactions are freely permitted. However, CG can impose

reasonable instructions.

Capital account transactions are permitted to the extent allowed by RBI/CG

RBI authorizes ‘Authorized Persons’ to deal in foreign exchange.

Seminar on FEMA - Goa Branch of WIRC04th March 2020 3

Harshal Bhuta

Chapter Chapter title Subject Sections

I Preliminary Jurisdiction, Definitions 1-2

IIRegulation & Management

of Forex

• Restriction on dealing with PROI

• Holding of forex

• Current a/c transactions

• Capital a/c transactions

• Export of goods & services

• Realisation and repatriation of forex with exemptions

3-9

III Authorised Persons Provisions relating to Authorised Persons 10-12

IV Contravention and PenaltiesProvisions relating to Contravention, its consequences

and Compounding13-15

V Adjudication and Appeal

• Provisions relating to terms of service, composition,

appointment of Adjudicating Authority, Members to

Appellate Tribunal

• Provisions relating to Appeal to Special Director

(Appeals), Appellate Trubunal and High Court

16-35

VI ED Provisions relating to Appointment & Powers (*37A*) 36-38

VII Miscellaneous Power to make Rules and Regulations, etc 39-49

Structure of FEMA

Overview of FEMA


Harshal Bhuta

Overview of FEMA

Government of India

FIPB DPIIT RBICCEA

Ministry of Home Affairs

Ministry of Civil Aviation

Ministry of Information

& Broadcasting

Department of Telecom

Department of Financial

Services

Ministry of Defence

Ministry of Mines

Department of Space

Department of Economic

Affairs

Department of

Pharmaceuticals

Administration of FEMA


Important Definitions under FEMA

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Definition – ResidenceSec 2(v) – Person Resident in India:

Individuals

oBasic Rule: > 182 days in preceding FY

oException 1 to Basic Rule: Goes out of India for:

For employment o/s India

For carrying on business / vocation o/s India

For any other purpose indicating intention to stay o/s India for uncertain period

oException 2 to Basic Rule: Comes to India for:

For employment in India

For carrying on business / vocation in India

For any other purpose indicating intention to stay in India for uncertain period

PRI but not permanently resident: Employment for specified duration; specific job /

assignment ≤ 3 years. Used at following places:

No limit for possession of foreign currency in India – FEMA 11(R)

Contribution to foreign PF / superannuation / pension fund for expatriate staff –

FEMA 13(R)

FEMA 120 not to apply when foreign security is purchased out of forex resources

o/s India

LRS not to apply for net salary remittance – Sch III to CAT Rules, 2000

Basic rule mandatory satisfaction + Intention to be established with supporting

documentation including visa: MOF press release dated 1st Feb 2009 (Government’s advice on

acquiring land by persons residing outside India) | Intention test is supreme: Designation of

resident account as NRO upon change of residential status of account holder [FEMA 5(R)]7Seminar on FEMA - Goa Branch of WIRC04th March 2020

Harshal Bhuta

Definition – Non Resident Indian (NRI)

NRI definition under different Regulations

8

Definition Regulation

Means a person resident outside India

who is a citizen of India

FEM (Borrowing & Lending) Regulations, 2018

FEM (Deposits) Regulations, 2016

FEM (Remittance of Assets) Regulations, 2016

Means an individual resident outside

India who is a citizen of India

FEM (Non-Debt Instruments) Rules, 2019

FEM (Debt Instruments) Regulations, 2019

• As per Sec. 2(f) of the Citizenship Act, 1955, “person” does not include any

company or association or body of individuals, whether incorporated or not.

• Further, as per Sec. 2(u) of FEMA, 1999, “person” includes an individual.

• Effectually, there is no difference between both definitions.

Seminar on FEMA - Goa Branch of WIRC04th March 2020

Harshal Bhuta

Definition – Overseas Citizen of India (OCI)

9

OCI definition under different Regulations


Means an individual resident outside India

who is registered as an Overseas Citizen

of India Cardholder under Section 7(A) of

the Citizenship Act, 1955 (57 of 1955)

FEM (Non-Debt Instruments) Rules, 2019


Same meaning assigned to it under

Section 7(A) of the Citizenship Act, 1955

FEM (Borrowing & Lending) Regulations,

2018

Section 7(A) of the Citizenship Act, 1955 – Registration of OCI Cardholder

(a) any person of full age and capacity, ―

(i) who is a citizen of another country, but was a citizen of India at the time of, or at any time

after the commencement of the Constitution; or

(ii) who is a citizen of another country, but was eligible to become a citizen of India at the time

of the commencement of the Constitution; or

(iii) who is a citizen of another country, but belonged to a territory that became part

of India after the 15th day of August, 1947; or


Harshal Bhuta

Definition – Overseas Citizen of India (OCI)

10

Section 7(A) of the Citizenship Act, 1955 – Registration of OCI Cardholder

(a) any person of full age and capacity,―

(iv) who is a child or a grandchild or a great grandchild of such a citizen; or

(b) a person, who is a minor child of a person mentioned in clause (a); or

(c) a person, who is a minor child, and whose both parents are citizens of India or one of the

parents is a citizen of India; or

(d) spouse of foreign origin of a citizen of India or spouse of foreign origin of an

Overseas Citizen of India Cardholder registered under section 7A and whose marriage has been

registered and subsisted for a continuous period of not less than two years immediately

preceding the presentation of the application under this section:

Provided that for the eligibility for registration as an Overseas Citizen of India Cardholder,

such spouse shall be subjected to prior security clearance by a competent authority in India:

Provided further that no person, who or either of whose parents or grandparents or

great grandparents is or had been a citizen of Pakistan, Bangladesh or such other

country as the Central Government may, by notification in the Official Gazette, specify, shall

be eligible for registration as an Overseas Citizen of India Cardholder under this sub-section.


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Definition – Persons of Indian Origin (PIO)

11

Comparison of PIO definition between different Regulations


Means a person resident outside India who is a citizen of any country

other than Bangladesh or Pakistan, or such other country as may be

specified by the Central Government, satisfying the following

conditions :

(a)Who was a citizen of India by virtue of the Constitution of India

or the Citizenship Act, 1955 (57 of 1955); or

(b)Who belonged to a territory that became part of India after the

15th day of August, 1947; or

(c)Who is a child or grandchild or a great grandchild of a citizen of

India or of a person referred to in clause (a) or (b)

(d)Who is a spouse of foreign origin of a citizen of India or spouse

of foreign origin of a person referred to in clause (a) or (b) or (c)

Explanation: for the purpose of this sub-regulation, the expression

‘Person of Indian Origin’ includes an ‘Overseas Citizen of India’

cardholder within the meaning of Section 7(A) of the Citizenship

Act, 1955.

FEM (Deposits)

Regulations, 2016

FEM (Remittance of

Assets) Regulations, 2016


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Importance of NRI / PIO / OCI definition

12

Difference in definition becomes critical under certain situations.

For e.g. Indian Citizen is staying in Singapore on work visa. He marries a Singaporean

woman. His wife wants to invest in NRE FDs in India and also invest in house property at

Pondicherry.

Upon Marriage, she qualifies as PIO and can open NRE FD on an immediate basis

However, unless she obtains OCI cardholder (minimum 2 years), she does not qualify as

OCI and cannot invest in house property at Pondicherry either jointly or singly.

Maternal lineage is also to considered under definition of OCI and PIO.

For e.g. Portuguese citizen can open NRE deposit even if his great grandfather was a

Portuguese Citizen but whose great grandmother was born in Goa and acquired

Portuguese Citizenship before integration of Goa with India.


Inbound Investment

Harshal Bhuta

Key Highlights of FEM (Non-Debt Instruments) Rules, 2019

While Immovable property regulations has been added in these rules, no substantial

amendments has been made to the same.

The term ‘capital instrument’ has been deleted and replaced with the word ‘equity

instrument’ throughout the rule.

Clear distinction has been made between debt and non-debt instruments by these

amendments.

A definition of Hybrid Instruments has been introduced, However, the expression

has not been used across rule.

Requirement of consultation of CG has been added in certain provisions.

The Central Government, vide notification dated 17.10.2019, notified FEM (Non-

Debt Instruments) Rules, 2019 in suppression of FEM (TISPRO)Regulation, 2017

and FEM ( Acquisition & Transfer of Immovable Property)Regulation, 2018. The

RBI has, vide FEM (Mode of Payment and Reporting of Non-Debt Instruments)

Regulations, 2019 laid down the mode of payment and attendant conditions.


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Inbound InvestmentsFEM (Non-Debt Instrument) Rules, 2019 dated 17.10.2019


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Foreign InvestmentsImportant Definitions

Foreign Investment

‘Foreign Investment’ means any investment made by a person resident

outside India on a repatriable basis in equity instruments of an Indian

company or to the capital of an LLP;

o Note: A PROI may hold foreign investment either as Foreign Direct Investment

or as Foreign Portfolio Investment in any particular Indian company.

o Explanation: If a declaration is made by a person as per the provisions of the

Companies Act, 2013 about a beneficial interest being held by a person resident

outside India, then even though the investment may be made by a resident

Indian citizen, the same shall be counted as foreign investment

Foreign Direct Investment (FDI)

FDI means investment through equity instruments by a person resident

outside India in an unlisted Indian company;

Or

in 10 percent or more of the post issue paid-up equity capital on a fully

diluted basis of a listed Indian company;Seminar on FEMA - Goa Branch of WIRC04th March 2020 16

Harshal Bhuta


Foreign Direct Investment (FDI)

o Note: In case, an existing investment by a PROI in equity instruments of a listed

Indian company falls to a level below 10% of the post issue paid-up equity capital

on a fully diluted basis, the investment shall continue to be treated as FDI.

Equity Instruments

Equity Instruments means:

Equity shares: Equity shares issued in accordance with the provisions of the

Companies Act, 2013 shall include equity shares that have been partly paid.

Partly paid shares that have been issued to a person resident outside India shall

be fully called-up within twelve months of such issue. Twenty five percent of

the total consideration amount (including share premium, if any), shall be

received upfront.

Convertible Debentures: ‘Convertible Debentures’ means fully, compulsorily

and mandatorily convertible debentures.


Harshal Bhuta


Equity Instruments

Equity Instruments means:

Preference shares: ‘Preference shares’ means fully, compulsorily and

mandatorily convertible preference shares.

Share warrants: Share Warrants are those issued by an Indian Company in

accordance with the Regulations issued by the SEBI. In case of share warrants at

least twenty five percent of the consideration shall be received upfront and the

balance amount within eighteen months of issuance of share warrants.

Equity instruments can contain an optionality clause subject to a minimum lock-

in period of one year or as prescribed for the specific sector, whichever is higher,

but without any option or right to exit at an assured price.


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Foreign Portfolio Investment

‘Foreign Portfolio Investment’ means any investment made by a person resident

outside India through equity instruments where such investment is less than 10

percent of the post issue paid-up share capital on a fully diluted basis of a listed

Indian company or less than 10 percent of the paid up value of each series of

equity instruments of a listed Indian company.

Foreign Portfolio Investor (FPI)

FPI means a person registered in accordance with the provisions of Securities

Exchange Board of India (Foreign Portfolio Investors) Regulations, 2014.

Sectoral Cap

Sectoral cap’ means the maximum investment including both foreign

investment on a repatriation basis by persons resident outside India in equity

instruments of a company or the capital of an LLP, as the case may be, and

indirect foreign investment, unless provided otherwise. This shall be the

composite limit for the Indian investee entity;


Harshal Bhuta

Sch.

No.

Rule Particulars

I 6(a) Purchase/ Sale of Equity Instruments of an Indian company by a person

resident outside India

II 10(1) Purchase/ Sale of Equity Instruments of a listed or to be listed Indian

company on a recognized stock exchange in India by FPI

III 12(1) Purchase/ Sale of Equity Instruments of a listed Indian company on a

recognised stock exchange in India by NRI or OCI on repatriation

basis

IV 12(2) Investment on non-repatriation basis by NRI or OCI

V 14 Investment by other non-resident investors

VI 6(b) Investment in a LLP

VII 16 Investment by FVCI

VIII 6(c) Investment by a person resident outside India in an Investment Vehicle

IX 6(d) Investment in Depository Receipts by PROI

X 10(2) &

12(3)

Issue of Indian Depository Receipts

Entry Routes for Inbound Investments(FEM (Non-Debt Instrument) Rules, 2019 dated 17.10.2019)


Harshal Bhuta

Rule Seller Buyer Mode of Transfer

9(1) PROI (Other than NRI/ OCI/

OCB)

PROI Sale/ Gift

9(2) PROI (incl. NRI/OCI) PRI Sale/ Gift

9(3) PRI PROI Sale

9(4) PRI PROI Gift with limits (RBI

Approval)

9(6) PRI/ PROI PROI/ PRI Sale (deferred consideration)

13(1) NRI/ OCI (on Repat basis) PROI Sale/ Gift

13(2) NRI/ OCI (on Non-Repat

basis)

PROI Sale


basis)

PROI Gift with limits (RBI

Approval)


basis)

NRI/ OCI (on Non-Repat

basis)

Gift

13(5) OCB NRI

PRI

Sale/ Gift

Sale

Exit Routes for Inbound Investments(FEM (Non-Debt Instrument) Rules, 2019 dated 17.10.2019)


Harshal Bhuta

Acquisition through Rights Issue or Bonus Issue

PROI having investment in Indian company may acquire equity instruments (other than

share warrants) issued by such company as a rights issue or a bonus issue provided that:

The offer is in compliance with the provisions of the Companies Act, 2013:

Such issue shall not result in a breach of the sectoral cap applicable to Indian

company;

Original shareholding must have been acquired & held as per provisions of these rules;

For listed Indian company: Rights issue to persons resident outside India shall be at a

price determined by the company;

For unlisted Indian company: Rights issue to persons resident outside India shall not

be at a price less than the price offered to persons resident in India.

Amount of consideration to be paid as inward remittance from abroad through banking

channels or out of funds held in NRE/ FCNR(B) a/c.

If the original investment has been made on a non-repatriation basis, the amount of

consideration may also be paid by debit to the NRO a/c.

An individual who is a person resident outside India exercising a right which was issued

when he/ she was a person resident in India can hold the equity instruments so acquired

on exercising the right on a non-repatriation basis. (Change over from PRI to PROI)


Harshal Bhuta

Renunciation of entitlement PRI & PROI can subscribe for additional shares over and above the shares offered on

rights basis by the company and also renounce the shares offered either in full or part

thereof in favour of a person named by them.

Pricing guidelines to be followed

Rights shares shall be subject to the same conditions including restrictions in regard to

repatriability as applicable to the original shareholding.

Issue of ESOP and Sweat Equity SharesAn Indian company is permitted to issue “employees’ stock option” and/ or “sweat

equity shares” to its employees/ directors or employees/ directors of its holding

company or joint venture or wholly owned overseas subsidiary/ subsidiaries who are

resident outside India, subject to the following conditions:

Compliance with SEBI Regulations or the Companies (Share Capital and Debentures)

Rules, 2014;

Compliance with the sectoral cap applicable to the said company;

Issue of “employee’s stock option”/ “sweat equity shares” in a company where

investment by a person resident outside India is under the approval route requires prior

Government approval.


Harshal Bhuta

Issue of equity Instruments upon Merger / Amalgamation / Demerger:

Upon approval by National Company Law Tribunal (NCLT)/ Competent Authority,

the transferee company or the new company, as the case may be, can issue equity

instruments to the existing holders of the transferor company who are resident outside

India, subject to the following conditions:

• The transfer or issue should comply with entry routes, sectoral caps or investment

limits, as the case may be, and the attendant conditionalities of foreign investment;

• In case the foreign investment is likely to breach the Sectoral caps or the attendant

conditionalities, the transferor company or the transferee or the new company

should obtain necessary Government approval;

• The transferor company or the transferee company or the new company should not

be in a sector prohibited for foreign investment;

• Listed Companies: Scheme of arrangement shall be in compliance with SEBI

(Listing Obligation & Disclosure Requirement) Regulation, 2015.

Merger / Demerger / Amalgamation of Indian companies


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Company Law:

Position under Companies Act, 1956 [Section 394(4)(b)]: “a “transferee

company” does not include any company other than a company within the

meaning of this Act, but “transferor company” includes any body corporate,

whether a company within the meaning of this Act or not.” Accordingly,

“transferee company” could only be an Indian company while a “transferor

company” could include foreign companies as well. Therefore, only inbound

cross-border mergers were possible and not outbound mergers.

Companies Act, 2013: MCA notified Sec. 234 w.e.f. 13.04.2017 enabling

inbound as well as outbound mergers.

Cross Border Merger – Inbound Merger


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Foreign Exchange Management (Cross Border Merger) Regulations, 2018

[Notification No. FEMA.389/2018-RB Dated: March 20, 2018]

‘Inbound merger’ means a cross border merger where the resultant company is

an Indian company;

The resultant company may issue or transfer any security and/or a foreign

security, as the case may be, to a person resident outside India in accordance

with the pricing guidelines, entry routes, sectoral caps, attendant conditions and

reporting requirements for foreign investment as laid down in Foreign

Exchange Management (Transfer or Issue of Security by a Person Resident

outside India) Regulations, 2017.

Any transaction on account of a cross border merger undertaken in accordance

with these Regulations shall be deemed to have prior approval of the Reserve

Bank as required under Rule 25A of the Companies (Compromises,

Arrangement and Amalgamations) Rules, 2016.

Cross Border Merger – Inbound Merger


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Downstream Investment:

Total Foreign investment in a company = Direct + Indirect Foreign Investment

‘Downstream investment’ means indirect foreign investment, by an eligible Indian

entity, into another Indian company /LLP, by way of subscription or acquisition.

‘Ownership’ shall mean:

•A Company shall be considered as owned by resident Indian citizens if more than

50% of the equity in it is beneficially owned by resident Indian citizens and/or

Indian companies, which are ultimately owned and controlled by resident Indian

citizens.

•A Limited Liability Partnership will be considered as owned by resident Indian

citizens if more than 50% of the investment in such an LLP is contributed by

resident Indian citizens and/ or entities which are ultimately ‘owned and controlled

by resident Indian citizens’ and such resident Indian citizens and entities have

majority of the profit share.

‘Control’ shall include:

Company – Right to appoint a majority of the directors or to control the

management or policy decisions including by virtue of their shareholding or

management rights or shareholders agreements or voting agreements.

Downstream Investment


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‘Control’ shall include:

Limited Liability Partnership – Right to appoint majority of the designated

partners, where such designated partners, with specific exclusions to others,

have control over all the policies of Limited Liability Partnership.

If the investing company/ LLP is owned or controlled by ‘non-resident entities’, the

entire investment by the investing company/LLP into the subject Indian Company/

LLP would be considered as indirect foreign investment. Otherwise, indirect foreign

investment would be taken as the percentage of downstream investment.

Downstream investments which is treated as Indirect Foreign Investment for the

investee Indian entity can be made through by bringing in requisite funds from

abroad or through internal accruals. For this purpose, internal accruals will mean

profits transferred to reserve account after payment of taxes.

Foreign investment in investing companies registered as Non-Banking Financial

Companies (NBFCs) with the Reserve Bank, will be under 100% automatic route.

When Indian investing company does not have any operations at the time of

downstream, investment and subsequently commences business(s), it will have to

comply with the relevant sectoral conditions on entry route, conditionalities and

caps.

Downstream Investment (Cont.)


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Examples:

Indian Company Y has received foreign investment from non-resident investors. Company Y

makes further investment into Indian Company X.

Foreign Investors Foreign Investors Foreign Investors

Company Y Company Y Company Y

Company X Company XCompany X

≤ 50%

80%

> 50%

80%

> 50%

100%

Verdict for Total Indirect Investment in Company X:

0% since Co. Y owned by

Resident Indian citizens

80% since Co. Y is not owned

by Resident Indian citizens

100% of FDI in Co. Y

since mirror image


Harshal Bhuta

Transfer of Downstream Investment:

Compliance Obligation:

First level Indian company making downstream investment to be responsible for

ensuring compliance with provisions of these regulations for the downstream investment

made by it at second level and so on and so forth.

Such first level company to obtain a certificate to this effect from its statutory auditor on

an annual basis.

Such compliance of these regulations to be mentioned in the Director's report in the

Annual Report of the Indian company.

In case statutory auditor has given a qualified report, the same needs to be immediately

brought to the notice of the Regional Office of the Reserve Bank in whose jurisdiction

the Registered Office of the company is located and shall also obtain acknowledgement

from the RO.

Transferor Transferee

First level IndCo/ LLP PROI

First level IndCo/ LLP PRI

First level IndCo/ LLP Comparable first level IndCo/ LLP



Harshal Bhuta

Valuation of equity Instruments

FDI

Listed Co.Unlisted

Co.

Price as per

SEBI

preferential

allotment

Internationa

lly accepted

Pricing

Methodolog

y for

valuation of

shares on

Arm’s

length basis

Valuation &

Certificatio

n by CA/

SEBI

Merchant

Banker

Transfer - R

to NRTransfer -

NR to R

Price of

shares shall

not be less

than the Fair

Value

worked out

as per any

international

ly accepted

Pricing

Methodolog

y for

valuation of

shares on

Arm’s length

Price of

shares shall

not be more

than the Fair

Value

worked out

as per any

international

ly accepted

Pricing

Methodolog

y for

valuation of

shares on

Arm’s

length

Share

warrants

Price/

conversio

n formula

shall be

determin

ed

upfront

Swap of

equity

Instruments

Valuation

by SEBI

Merchant

Banker (in

India)

or

Investment

Banker

(o/s. India)

(Registere

d with app.

Authority)

Subs. to

MOA

At Face

Value,

subj. to

entry

routes

and

sectoral

caps

Pricing Guidelines


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Comprehensive Reporting requirements

With the objective of integrating the extant reporting structures of various types of

foreign investment in India, a Single Master Form (SMF) for reporting of foreign

investments by companies/LLPs/Start-ups in India has been prescribed. It is a single

stop form for all reporting relating to foreign investment subsuming all previously

notified forms. The SMF is to be filed online.

Single Master Form

Included Excluded

FLA Return

Form LEC (FII)

Form LEC (NRI)

ARFForm FC-GPR

Form FC-TRS

Form LLP-I

Form LLP-II

Form ESOP

Form CN

Form DRR

Form DI

Form InVi


Harshal Bhuta


Salient features of SMF:

Unlike Entity Master credentials which is entity specific, business user credentials can

be obtained by any individual/ entity which is required to make filing in SMF

essentially making it transaction type specific.

Pre-transaction values in Shareholding Pattern are fetched from details entered

previously in Entity Master.

ARF is no longer required to be filed.

Substantial stakeholder responsibility placed on AD bank for processing all forms in

SMF.

Issues in filing SMF:

Before completion of processing of previous form filing in SMF, additional forms

cannot be filed.

If for any reason form is rejected after filing, entire form needs to be filed again since

there is no resubmission option.

Forms submitted on e-biz and not processed now need to be filed physically as per

informal guidance.

Late fees need to be paid even if forms have been approved with delay.


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Sample Form FC-GPR:


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Prohibited activities

Lottery Business including Government/ private lottery, online lotteries

Gambling and betting including casinos

Chit funds

Nidhi company

Trading in Transferable Development Rights (TDRs)

Real Estate Business or Construction of Farm Houses

Explanation: For the purpose of this regulation, “real estate business” shall not

include development of townships, construction of residential /commercial

premises, roads or bridges and Real Estate Investment Trusts (REITs) registered

and regulated under the SEBI (REITs) Regulations 2014.

Manufacturing of Cigars, cheroots, cigarillos and cigarettes, of tobacco or of

tobacco substitutes

Activities/ sectors not open to private sector investment e.g. (I) Atomic energy

and (II) Railway operations

Foreign technology collaboration in any form including licensing for franchise,

trademark, brand name, management contract is also prohibited for Lottery

Business and Gambling and Betting activities

[Rule 2 of Schedule I]


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Schedule I to FEM Non-Debt Regulation 2019Schedule I – Purchase/ Sale of equity instruments of an Indian company by a person

resident outside India

An Indian company may issue equity instruments to PROI subject:

Entry Routes Automatic or Government Approval

Sectoral Caps and Attendant Conditionality(s) Sector wise- caps on foreign

investment permitted under automatic/approval route; In sectors/ activities not listed in

Rule 2 or 3 of Schedule I, foreign investment is permitted up to 100% on the automatic

route

PROI may purchase equity instruments of a listed Indian company on a stock

exchange in India provided that:

PROI making the investment has already acquired control of such company in

accordance with SEBI (SAST) Regulations, 2011 and continues to hold such control;

Amount of consideration may be paid as per the mode of payment prescribed in this

Schedule or out of the dividend payable by Indian investee company

WOS can issue equity instruments against pre-incorporation / preoperative expenses

incurred by NR entity for lower of (a) limit of 5% of authorized capital & (b) USD

500,000, within 12 months of incorporation max:

WOS operates in sector with 100% FDI under Automatic Route and no FDI linked

performance conditions;

Compliance of reporting requirement;

Statutory Auditor utilization certification for pre-incorporation / preoperative expenses.Seminar on FEMA - Goa Branch of WIRC04th March 2020 44

Harshal Bhuta

Schedule I – Purchase/ Sale of equity instruments of an Indian company by a person

resident outside India (cont…)

An Indian company may issue equity instruments to a PROI under automatic route, if

the Indian investee company is engaged in sector under automatic route against:

Swap of equity instruments,

Import of capital goods/ machinery/ equipment (excluding second-hand machinery),

Pre-operative/ pre-incorporation expenses (including payments of rent etc.)

An Indian company may issue equity shares against any funds payable by it to PROI,

the remittance of which is permitted under FEMA

Mode of Payment Inward remittance from abroad through banking channels or out of

funds held in NRE/ FCNR(B)/ Escrow account

Remittance of sale proceeds Sale proceeds (net of taxes) of the equity instruments may

be remitted outside India or may be credited to the NRE/ FCNR(B) [i.e. Repatriable]

Schedule I to FEM Non-Debt Regulation 2019 (Cont.)


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Schedule II to FEM Non-Debt Regulation 2019

Schedule II – Investment by Foreign Portfolio Investors

FPI may purchase/ sell equity instrument of listed/ to be listed Indian Co. subject:

Total holding by each FPI should be < 10% of paid-up capital (individual limit)

Total holding of all FPI put together should be < 24% of paid-up capital (aggregate

limit). However it can be increased to sectoral cap limit by passing special resolution

W.e.f. 01.04.2020, the aggregate limit shall be the sectoral cap limit. This limit can be

decreased to a lower threshold by passing special resolution. Once decreased, can

increase the limit also. However, once it is increased then cannot reduce to lower

threshold.

Aggregate limit in sector where FDI is prohibited shall be 24%.

In case of breach of prescribed limit:

Option to divest their holding within 5 trading days

If choses not to divest entire investment will be considered as FDI

To report within 7 days to the depositories as well as concerned company for effecting

necessary changes

Investment by foreign Government agencies shall be clubbed with investment by foreign

Government or related entity (if they are part of investor group)for the purpose of

calculation of 10% limit for FPI investment


Harshal Bhuta

Schedule II to FEM Non-Debt Regulation 2019 (Cont.)

Schedule II – Investment by Foreign Portfolio Investors (cont…)

FPI may purchase equity instrument of Indian Co. through public offer or private

placement subject to satisfaction of individual and aggregate limit:

Pricing in case of public offer: not less than price at which shares issued to resident

Pricing in case of private placement: not less than (a) price arrived as per SEBI

guidelines; or (b) fair price as per any Int’l pricing certified by merchant banker/ CA/

Cost Accountant

FPI may undertake short selling/ lending or borrowing of securities subject to conditions

FPI may purchase units of domestic mutual fund or Cat III AIF or Offshore fund for which

no objection is issued in accordance with SEBI (MF) regulations, 1996 which invests > 50%

in equity instrument on repatriation basis

FPI may purchase units of REITs and InVITs (Repatriation) subject to SEBI guidelines.


funds held in Foreign Currency/SNRR account.

Remittance of sale proceeds Sale proceeds (net of taxes) of the equity instruments and

units of domestic MF may be remitted outside India or may be credited to the Foreign

Currency/ SNRR account.


Harshal Bhuta

Schedule III to FEM Non-Debt Regulation 2019

Schedule III – Investment by NRI/ OCI on repatriation basis

NRI/ OCI may Purchase/ sell of equity instrument of listed Indian Co. subject:

Purchase/ sell through branch designated by an Ad

Total holding by any individual NRI/ OCI should be < 5% of paid-up capital

(individual limit)

Total holding of all NRI/ OCI put together should be < 10% of paid-up capital

(aggregate limit).

Ceiling of 10% and 24% can be increased by passing special resolution

NRI/ OCI may purchase/ sell without any limit units of domestic mutual fund which

invests more than 50% in equity.

NRI/ OCI may purchase/ sell without any limit shares in public sector enterprise being

disinvested by CG subject to terms and conditions stipulated in notice inviting bids

NRI/ OCI may subscribe to the National Pension System (NPS) governed by Pension

Fund Regulatory and Development Authority (PFRDA) provided:

Such person is eligible to invest as per the provision of PFRDA Act

Annuity/ accumulated saving will be repatriable


Harshal Bhuta

Schedule III to FEM Non-Debt Regulation 2019 (Cont.)

Schedule III – Investment by NRI/ OCI on repatriation basis (cont…)

Mode of Payment:

Inward remittance from abroad through banking channels or out of funds held in

NRE account

NRE account will be designated as NRE (PIS) account and the same shall be

exclusively used for putting through transaction permitted under this schedule

For investment in units of domestic mutual fund: Inward remittance from abroad

through banking channels or out of funds held in NRE/ FCNR(B) account

For subscription to NPS: : Inward remittance from abroad through banking channels

or out of funds held in NRE/ FCNR(B)/ NRO account

Remittance of sale proceeds:

Sale proceeds (net of taxes) of the equity instruments may be remitted outside India

or may be credited to the NRE (PIS) account.

Sale proceeds (net of taxes) of the units of mutual funds and subscription to NPS

may be remitted outside India or may be credited to the NRE (PIS)/ FCNR (B)/

NRO account.


Harshal Bhuta

Schedule IV to FEM Non-Debt Regulation 2019

Schedule IV – Investment on Non-Repatriable Basis

Non-Repatriable means -

Only Dividend / Interest can be sent back abroad

Principal + Gains cannot be repatriated

A. Purchase/ sale of equity instruments or convertible notes or units or contribution to

the capital of an LLP

Eligible Investor:

NRI

OCI

a company, a trust and a partnership firm incorporated outside India and owned and

controlled by NRIs or OCIs [Owned & Controlled not defined in Sch. IV, therefore as

per Rule 23, Ownership shall mean beneficial holding of 50% + of Share Capital / LLP

and major profit share Control shall mean right to appoint majority of Directors /

Partners / DPs with NRIs

Investment in:

Equity instruments i.e. shares / CCDs / warrants etc. without any limit either on the

stock exchange or outside it

Units issued by an investment vehicle without any limit, either on / off stock exchange

The capital of a Limited Liability Partnership without any limit.

Convertible notes issued by a startup company in accordance with these Regulations.


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Schedule IV – Investment on Non-Repatriable Basis (Cont…)

Investment deemed to be domestic investment at par with the investment made by residents

Shall not invest in equity instruments or units of a Nidhi or company engaged in

agricultural/ plantation activities or Real Estate Business or Construction of Farm Houses

or dealing in TDRs.

Real Estate Business means Dealing in land to earn profits but excludes Leasing of

property / Investment in REIT units / earning of rent income

Mode of Payment inward remittance from abroad through banking channels or out of

funds held in NRE/ FCNR(B)/ NRO account

Sale/ maturity proceeds

Credited only to the NRO account of the investor, irrespective of the type of account

from which the consideration was paid

Amount invested + capital appreciation shall not be allowed to be repatriated abroad

[NRI may avail USD $ 1 Million scheme]

Schedule IV to FEM Non-Debt Regulation 2019 (Cont.)


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Schedule IV – Investment on Non-Repatriable Basis (Cont…)

B. Investment in a Firm or Proprietary Concern

Eligible Investor:

NRI

OCI

Investment in:

Capital of firm / proprietary concern

Restricted Sectors for NRIs/ OCI:

Agricultural / Plantation / Real Estate Business / Print Media

Mode of Payment inward remittance from abroad through banking channels or out of

funds held in NRE/ FCNR(B)/ NRO account

Sale/ maturity proceeds

Credited only to the NRO account of the investor, irrespective of the type of account

from which the consideration was paid

Amount invested + capital appreciation shall not be allowed to be repatriated abroad

[NRI may avail USD $ 1 Million scheme]

Schedule IV to FEM Non-Debt Regulation 2019 (Cont.)


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Schedule V – Investment by Other Non-Resident Investors

Permission to other non-resident investors for purchase of securities:

Long term investors like Sovereign Wealth Funds (SWFs), Multilateral Agencies,

Endowment Funds, Insurance Funds, Pension Funds and Foreign Central Banks may

purchase securities subject to such terms and conditions specified by RBI/ SEBI.

“Eligible Foreign Entity (EEE)” as defined in SEBI circular dated the 9th October

2018 and having actual exposure to Indian physical commodity market may

participate in domestic commodity derivative markets in accordance with framework

specified by the Securities and Exchange Board of India.

Mode of Payment Inward remittance from abroad through banking channels

Sale/ maturity proceeds Eligible for remittance abroad

Schedule V to FEM Non-Debt Regulation 2019


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Schedule VI – Investment in LLP

Contribute to the capital of an LLP operating in sectors/ activities where

Foreign investment up to 100% is permitted under automatic route

There are no FDI linked performance conditions

Investment in compliance of LLP Act, 2008

No FDI in LLP in following cases:

Sectors with performance linked conditions. [E.g. FS, Real Estate, Single Brand

Retail]

Sectors eligible to receive less than 100% FDI under Automatic Route

Sectors where FDI possible only with Govt. permission

Agriculture / Plantation / Print Media / Private Security

Sectors not opened up for FDI – Tobacco / Railways

Foreign Investors not allowed to Invest in LLP:

Pakistani / Bangladeshi entity / citizen

FVCI

FPI

Meaning of FDI Linked Performance Conditions:

FDI linked performance conditions are the sector specific conditions stipulated in Rule

3 of Schedule I to these Rules for companies receiving foreign investment

Schedule VI to FEM Non-Debt Regulation 2019


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Schedule VI – Investment in LLP (cont…)

Pricing

Capital Contribution ≥ FMV worked out as per any Int’l Accepted Valuation

Methodology by CA / CMA / Regd. Valuer

Transfer of Capital Contribution or profit Share from R to NR ≥ FMV & vice versa

Payment

Only Cash Consideration (no CoC as allowed for FDI)

Inward remittance / NRE / FCNR (B) Account

Automatic Route Conversion of Co. with FDI into LLP and Conversion of LLP with

FDI into Co. only if :

Sector where FDI up to 100% in Automatic Route

No FDI linked Performance Conditions

Other Conditions

Designated Partner – must be an Indian Company / Indian Resident

Resident DP u/s. 7 of LLP Act must be a Resident u/s. 2 of FEMA,1999

DP responsible for all compliances and penalties on LLP

LLPs cannot avail ECBs

Schedule VI to FEM Non-Debt Regulation 2019 (Cont.)


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Schedule VII – Investment by Foreign Venture Capital Investor (FVCI)

Subject to terms & condition as laid down by CG, FVCI may purchase:

Securities issued by Indian company engaged in sector in which FVCI is allowed to

invest

Units of Venture Capital Fund (VCF) or of a Cat I AIF or units of scheme/ fund set up

by VCF/ Cat I AIF

Equity/ equity linked instrument/ debt instrument issued by an Indian start-up

irrespective of the sector in which start-up is engaged. Definition of start-up would be

as given in DPIIT’s notification no. G.S.R. 364(E) dated 11.04.2018.

If the investment is into the equity instrument, then the sectoral caps/ entry routes/

attendant conditions will apply

FVCI may purchase the securities or instrument from issuer/ person holding the instrument

FVCI may acquire/ transfer to any person resident in or outside India, any security or

instrument at a price that is mutually acceptable to the buyer and seller/ issuer.


funds held in Foreign Currency/SNRR account.

Schedule VII to FEM Non-Debt Regulation 2019


Harshal Bhuta

Schedule VII – Investment by Foreign Venture Capital Investor (FVCI) (cont…)

List of sectors in which a FVCI is allowed to invest:

Biotechnology

IT related to hardware and software development

Nanotechnology

Seed research and development

R&D in new chemical entities in pharma sector

Dairy industry

Poultry industry

Production of bio-fuels

Hotel-cum-convention centres with seating capacity of > 3000

Infrastructure sector (same meaning as given in Harmonised Master List of

Infrastructure sub-sectors approved by GOI vide notf. No. 13/06/2009 – INF dated

27.03.2012)

Remittance of sale proceeds Sale proceeds (net of taxes) of the securities may be

remitted outside India or may be credited to the Foreign Currency/ SNRR account.

Schedule VII to FEM Non-Debt Regulation 2019 (Cont.)


Harshal Bhuta

Schedule VIII – Investment by PROI in an Investment Vehicle

PROI (other than a citizen of Pakistan or Bangladesh) or an entity incorporated outside

India (other than entity incorporated in Pakistan or Bangladesh) may invest in units of

Investment Vehicle

PROI who has acquired/ purchased units may sell/ transfer in any manner or redeem the

units as per regulation framed by SEBI/ direction issued by the Reserve Bank

Investment Vehicle may issue its units to PROI against swap of equity instrument of a SPV

proposed to be acquired by such Investment Vehicle

Investment made by IV into an India entity shall be reckoned as indirect foreign investment

if Sponsor/ manager/ investment manager:

is not owned and controlled by resident Indian citizen; or

is owned or controlled by PROI


funds held in NRE/ FCNR (B) account.

Remittance of sale proceeds Sale proceeds (net of taxes) of the units may be remitted

outside India or may be credited to the NRE/ FCNR (B) account.

Schedule VIII to FEM Non-Debt Regulation 2019


Harshal Bhuta

Schedule IX – Investment in Depository Receipts by a PROI

Issue or transfer of eligible instrument to a foreign depository for the purpose of

issuance of depository receipts by eligible persons(s):

Any security in which PROI is allowed to invest under these rules shall be eligible

instrument

Eligible to issue/ transfer eligible instrument to foreign depository

Domestic custodian may purchase eligible instrument on behalf of PROI for

converting instruments into depository receipts in terms of Depository Receipt

Scheme, 2014 (DR Scheme, 2014)

Eligible instrument transferred/ issued to foreign depository + eligible instrument

already held shall not exceed the limit on foreign holding

Eligible instrument shall not be issued/ transferred at a price less than the price

applicable to a corresponding mode of issue/ transfer of such instrument to domestic

investor

Depository Receipt issued under The Issue of Foreign Currency Convertible Bonds

and Ordinary Shares (Through Depository Receipt Mechanism) Scheme, 1993 shall be

deemed to have been issued under corresponding provision of DR Scheme 2014.

Schedule IX to FEM Non-Debt Regulation 2019


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Schedule X – Issue of Indian Depository Receipts

Companies incorporated o/s India may issue IDRs through a domestic depository to a PRI/

PROI subject to:

Issue is in compliance with Companies (Registration of Foreign Companies) Rules

2014 and the SEBI (Issue of Capital and Disclosure Requirement) Regulation 2009

Issue of IDRS by financial/ banking companies having presence in India (either

through branch/ subsidiary) shall require prior approval of sectoral regulator(s)

IDRs shall be denominated in INR only

Proceeds of the IDRs shall be immediately repatriated outside India

FPI/ NRI/ OCI may purchase, hold or sell IDRs subject to:

Limited two way fungibility of IDRs shall be permissible

IDRs shall not be redeemable before expiry of 1 year from date of issue

Mode of Payment Out of funds held in their NRE/ FCNR (B) account

Remittance of sale proceeds Redemption/ conversion of IDRs into underlying equity

shares shall be in compliance with FEM (Transfer or Issue of any Foreign Security)

Regulation 2004

Schedule X to FEM Non-Debt Regulation 2019


Select Sector Specific FDI Policies

Harshal Bhuta

Agriculture & Animal Husbandry Sector[Schedule 1 to FEM (Non-Debt Instruments) Rules, 2019]

Other Conditions:

The term ‘under controlled conditions’ covers the following:

‘Cultivation under controlled conditions’ for the categories of Floriculture, Horticulture, Cultivation

of vegetables and Mushrooms is the practice of cultivation wherein rainfall, temperature, solar

radiation, air humidity and culture medium are controlled artificially. Control in these parameters

may be effected through protected cultivation under green houses, net houses, poly houses or any

other improved infrastructure facilities where micro-climatic conditions are regulated

anthropogenically.

Activity Sectoral Cap Entry Route

(a) Floriculture, Horticulture and Cultivation of vegetables &

mushrooms under controlled conditions;

(b) Development and production of seeds and planting material;

(c) Animal Husbandry (including breeding of dogs),

Pisciculture, Aquaculture and Apiculture; and

(d) Services related to agro and allied sectors.

Note: Other than the above, foreign investment is not

allowed in any other agricultural sector/ activity.

100% Automatic


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Manufacturing Sector

• Manufacturing activities may be either self manufacturing by

the investee entity or contract manufacturing in India through

a legally tenable contract, whether on Principal to Principal

or Principal to Agent basis. Further, a manufacturer is

permitted to sell his products manufactured in India through

wholesale and/or retail, including through e-commerce,

without Government approval.

• Notwithstanding the Provision of these Regulations on

Trading Sector, 100% Foreign Investment under Government

approval route is allowed for Trading, including through E-

commerce, in respect of food products manufactured and/or

produced in India (locally produced and packaged foods

products). Applications for foreign investment in food

products retail trading would be processed in the Department

of Industrial Policy & Promotion before being considered by

the Government for approval.


Manufacturing Sector 100% Automatic

[Schedule 1 to FEM (Non-Debt Instruments) Rules, 2019]


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Construction Development Sector


Construction-Development Projects (which would

include development of townships, construction of

residential/commercial premises, roads or bridges,

hotels, resorts, hospitals, educational institution,

recreational facility, city and regional level

infrastructure, townships.)

100% Automatic

Conditions:

1. Each phase of the construction development project would be considered as a separate project.

2. The investor will be permitted to exit on completion of the project or after development of trunk

infrastructure i.e. roads, water supply, street lighting, drainage and sewerage.

3. Notwithstanding anything contained at (b) above, a person resident outside India will be permitted

to exit and repatriate foreign investment before the completion of project under automatic route,

provided that a lock-in period of three years, calculated with reference to each tranche of foreign

investment has been completed. Further, transfer of stake from a person resident outside India to

another person resident outside India, without repatriation of foreign investment will neither be

subject to any lock-in period nor to any government approval.

4. The Indian investee company to sell only developed plots. For the purposes of this policy

"developed plots" will mean plots where trunk infrastructure i.e. roads, water supply, street lighting,

drainage and sewerage, have been made available.



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Construction Development Sector (Cont.)

Note:-

1. Foreign investment is not permitted in an entity which is engaged or proposes to engage in real

estate business, construction of farm houses and trading in transferable development rights

(TDRs).

2. Condition of lock-in period will not apply to Hotels and Tourist Resorts, Hospitals, Special

Economic Zones (SEZs), Educational Institutions, Old Age Homes and investment by NRIs/

OCIs.

3. Completion of the project will be determined as per the local bye-laws/ rules and other

regulations of State Governments.

4. Foreign investment up to 100 percent under automatic route is permitted in completed projects

for operating and managing townships, malls/ shopping complexes and business centres.

Consequent to such foreign investment, transfer of ownership and/ or control of the investee

company from persons resident in India to persons resident outside India is also permitted.

However, there would be a lock-in-period of three years, calculated with reference to each

tranche of foreign investment and transfer of immovable property or part thereof is not

permitted during this period.

5. Real estate broking services shall be excluded from the definition of “real estate business” and

100% foreign investment is allowed in real estate broking services under automatic route.



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‘Real estate business’ means dealing in land and immovable property with a view to earning

profit therefrom and does not include development of townships, construction of residential/

commercial premises, roads or bridges, educational institutions, recreational facilities, city

and regional level infrastructure, townships;

o Earning of rent income on lease of the property, not amounting to transfer will not amount

to real estate business.

o Transfer in relation to real estate includes,

i. the sale, exchange or relinquishment of the asset; or

ii. the extinguishment of any rights therein; or

iii. the compulsory acquisition thereof under any law; or

iv. any transaction involving the allowing of the possession of any immovable property

to be taken or retained in part performance of a contract of the nature referred to in

section 53A of the Transfer of Property Act, 1882 (4 of 1882); or

v. any transaction, by acquiring capital instruments in a company or by way of any

agreement or any arrangement or in any other manner whatsoever, which has the

effect of transferring, or enabling the enjoyment of, any immovable property.



Harshal Bhuta


Issues:

• How does one interpret the term “phase”? – Area allocation vs. sanctioned plan

• What if trunk infrastructure is pre-existing? Would that make exit simpler for investor? –

City projects vs. suburban projects

• When is the project considered to have been completed? – BCC vs. OC

• Should “developed plots” also include completed premises built thereupon?

• Activity of Leasing of property is not considered as ‘real estate business’. Can an investor

invest into a pure leasing company?

• Leasing of Property should not amount to transfer. However transfer includes any

agreement or arrangement enabling enjoyment of property?



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E-Commerce Sector


B2B E-commerce 100% Automatic

Market Place Model 100% Automatic

Conditions:

1. ‘E-commerce’ means buying and selling of goods & services over digital and electronic

network.

2. ‘E-commerce entity’ means a company incorporated under CA.

3. ‘Inventory based model of e-commerce’ means an e-commerce activity where inventory of

goods and services is owned by e-commerce entity and is sold to the consumers directly;

4. ‘Market place model of e-commerce’ means providing of an information technology

platform by an ecommerce entity on a digital & electronic network to act as a facilitator

between buyer and seller.

5. ‘Digital & electronic network’ will include network of computers, television channels and

any other internet application.

6. Marketplace e-commerce entity will be permitted to enter into transactions with sellers

registered on its platform on B2B basis.



Harshal Bhuta

E-Commerce Sector (Cont.)

Conditions(Cont.):

7. E-commerce marketplace may provide support services to sellers in respect of warehousing,

logistics, order fulfillment, call centre, payment collection and other services.

8. E-commerce entity providing a marketplace will not exercise ownership or control over the

inventory i.e. goods purported to be sold.

Explanation: Inventory of a vendor will be deemed to be controlled by e-commerce marketplace entity

if > 25% of purchases of such vendor are from the marketplace entity or its group companies which

will render the business into inventory based model.

9. An entity having equity participation by e-commerce marketplace entity or its group

companies or having control on its inventory by e-commerce marketplace entity or its group

companies, will not be permitted to sell its products on the platform run by such

marketplace entity.

10. Goods/ services made available for sale electronically on website should clearly provide

name, address and other contact details of the seller.

11. Payments for sale may be facilitated by the e-commerce entity in conformity with the

guidelines issued by the Reserve Bank in this regard.

12. Any warranty/ guarantee of goods and services sold will be the responsibility of the seller.



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E-Commerce Sector (Cont.)

Conditions(Cont.):

13. E-commerce entities providing marketplace will not, directly or indirectly, influence the

sale price of any goods or services and shall maintain level playing field. Services should

be provided by e-commerce marketplace entity or other entities in which e-commerce

marketplace entity has direct or indirect equity participation or common control, to vendors

on the platform at arm’s length and in a fair and non discriminatory manner.

14. No e-commerce marketplace entity shall mandate any seller to sell any of their product

exclusively on its platform.

15. e-commerce marketplace entity with FDI shall have to obtain and maintain a report of

statutory auditor by 30th of September every year for the preceding financial year

confirming compliance of the e-commerce guidelines.

Issues

o Since ‘e-commerce’ means buying and selling of services too, how does one determine if it

owns inventory of services?

o What is meant by directly / indirectly influencing sale price?

o Sr. No. 9 simple mentions ‘equity participation’ whereas Sr. No. 13 explicitly mentions

‘direct or indirect equity participation’. Is there a difference?



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Cash and Carry Wholesale Trading Sector

Activity Sectoral cap Entry Route

Cash and Carry Wholesale Trading / Wholesale

Trading (including sourcing from MSEs)

100% Automatic

Definition:

1. Cash and Carry Wholesale trading (WT)/ Wholesale trading, shall mean sale of goods/ merchandise

to retailers, industrial, commercial, institutional or other professional business users or to other

wholesalers and related subordinated service providers.

2. Wholesale trading shall, accordingly, imply sales for the purpose of trade, business and profession,

as opposed to sales for the purpose of personal consumption. The yardstick to determine whether

the sale is wholesale or not shall be the type of customers to whom the sale is made and not the size

and volume of sales. Wholesale trading shall include resale, processing and thereafter sale, bulk

imports with export/ ex-bonded warehouse business sales and B2B e-Commerce.

Conditions:

1. Except in cases of sales to Government, sales made by the wholesaler shall be considered as 'cash

and carry wholesale trading/ wholesale trading' with valid business customers, only when WT is

made to the following entities:

i. Entities holding sales tax/ VAT registration/ service tax/ excise duty/Goods and Services Tax

(GST) registration; or



Harshal Bhuta

Cash and Carry Wholesale Trading Sector (Cont.)

ii. Entities holding trade licenses i.e. a license/ registration certificate/ membership certificate/

registration under Shops and Establishment Act, issued by a Government Authority/

Government Body/ Local Self Government Authority, reflecting that it is itself/ himself/

herself engaged in a business involving commercial activity; or

iii. Entities holding permits/ license etc. for undertaking retail trade (like tehbazari and similar

license for hawkers) from Government Authorities/ Local Self Government Bodies; or

iv. Institutions having certificate of incorporation or registration as a society or registration as

public trust for their self-consumption.

3. Full records indicating all the details of such sales like name of entity, kind of entity, registration/

license/ permit etc. number, amount of sale etc. should be maintained on a day to day basis.

4. WT of goods shall be permitted among companies of the same group. However, such WT to group

companies taken together shall not exceed 25 percent of the total turnover of the wholesale

venture.

5. WT can be undertaken as per normal business practice, including extending credit facilities subject

to applicable regulations.

6. A wholesale/ cash and carry trader can undertake single brand retail trading. An entity undertaking

wholesale/ cash and carry as well as retail business will be mandated to maintain separate books of

accounts for these two arms of the business and duly audited by the statutory auditors. Conditions

under these Regulations for wholesale/ cash and carry business and for retail business have to be

separately complied with by the respective business arms.



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Single Brand Product Retail Trading Sector


Single Brand Product Retail Trading (SBRT) 100% Automatic

Conditions:

1. Products to be sold - 'Single Brand' only. Covers only products - branded during

manufacturing.

2. Products should be sold under the same brand internationally. [Not applicable to Indian

brands.]

3. A PROI, whether owner of the brand or otherwise - permitted to undertake ‘single brand’

product retail trading in the country for the specific brand - directly by the brand owner or

through a legally tenable agreement executed between the Indian entity undertaking single

brand retail trading and the brand owner. [Not applicable to Indian brands.]

4. A SBRT operating through brick and mortar stores - permitted to undertake retail trading

through e-commerce.

5. Indian brands are those which are owned and controlled by resident Indian citizens and/or

companies which are owned and controlled by resident Indian citizens.



Harshal Bhuta

Single Brand Product Retail Trading Sector (Cont.)

Conditions (Contd.):

6. Sourcing norms:

• If foreign investment > 51%, then minimum sourcing to be done from India = 30% of the

value of goods purchased, preferably from MSMEs, village and cottage industries, artisans

and craftsmen, in all sectors. || Self certification for domestic sourcing + Verification by

Statutory auditors from a/cs. || Sourcing norm to be met as an average of first 5 FY years.

Thereafter, it is to be met on an annual basis. || Sourcing should be done by FDI recipient

Indian company only.

• All procurements made from India by the SBRT entity shall be counted towards local

sourcing, irrespective of whether the goods procured are sold in India or exported.

• SBRT entity is also permitted to set off sourcing of goods from India for global operations

against the mandatory sourcing requirement of 30%. For this, purpose, ‘sourcing of goods

from India for global operations’ shall mean value of goods sourced from India for global

operations for that single brand ( in INR terms) in a particular financial year directly by the

entity undertaking SBRT or its group companies (R/ NR), or indirectly by them through a

third party under a legally tenable agreement.

• Sourcing of goods from SEZs in India would qualify as sourcing from India.



Harshal Bhuta

Single Brand Product Retail Trading Sector (Cont.)


6. Sourcing norms:

• A SBRT entity operating through brick and mortar stores, can also undertake retail trading

through e-commerce. However, retail trading through e-commerce can also be undertaken

prior to opening of brick and mortar stores, subject to the condition that the entity opens

brick and mortar stores within two years from date of start of online retail.

• Exemption from sourcing norms for first three years from opening of 1st store for products

having state-of-the-art and cutting-edge technology and where local sourcing not possible. ||

A Committee under the Chairmanship of Secretary, DIPP, with representatives from NITI

Aayog, concerned Administrative Ministry and independent technical expert(s) on the subject

will examine the claim of applicants on the issue of the products being in the nature of ‘state-

of-art’ and ‘cutting-edge’ technology where local sourcing is not possible and give

recommendations for such relaxation.



Harshal Bhuta

Multi Brand Product Retail Trading Sector


Multi Brand Retail Trading (MBRT) 51% Govt. Approval

Conditions:

1. Fresh agricultural produce, including fruits, vegetables, flowers, grains, pulses, fresh poultry,

fishery and meat products can be unbranded. Government will have the first right to procure

agricultural products.

2. Minimum amount as foreign investment - USD 100 million.

3. Of USD 100 million – 50% of the total foreign investment brought in the first tranche - invested in

'back-end infrastructure' within 3 yrs

1. 'back-end infrastructure' will include capital expenditure on all activities, excluding that on

front-end units; for instance, back-end infrastructure will include investment made towards

processing, manufacturing, distribution, design improvement, quality control, packaging,

logistics, storage, warehouse, agriculture market produce infrastructure etc.

2. Expenditure on land cost and rentals, if any, will not be counted for purposes of back-end

infrastructure. Subsequent investment in the back-end infrastructure would be made by the

MBRT retailer as needed, depending upon its business requirements.

4. Retail trading, in any form, by means of e-commerce – not permissible for companies with foreign

investment in MBRT.



Harshal Bhuta

Multi Brand Product Retail Trading Sector (Cont.)


5. Sourcing norms: ≥ 30% of the procurement value of manufactured/ processed products to be

sourced from Indian micro, small and medium industries, which have a total investment in

plant & machinery not exceeding USD 2 million. || MSME valuation would refer to the value

at the time of installation, without providing for depreciation. Their status would be reckoned

only at the time of first engagement with the retailer and such industry shall continue to

qualify as a MSME for this purpose, even if it outgrows the said investment of USD 2 million

during the course of its relationship with the said retailer. || Sourcing from agricultural co-

operatives and farmers co-operatives would also be considered in this category. || Sourcing

norm to be met as an average of first 5 FY years. Thereafter, it is to be met on an annual basis.

6. Self-certification by company and verification by Statutory audits required for compliance

with Sourcing norms, minimum capitalisation norms and capital utilisation norms for back-end

infrastructure building

7. Retail sales outlets may be set up opened only in cities which cross threshold population.

Provision to be made for requisite facilities such as transport connectivity and parking. || State

/ Union Territories can have their own state policy for implementation.



Harshal Bhuta

Other Financial Service Sector


Other Financial services 100% Automatic

Conditions:

1. Other Financial Services will mean financial services activities regulated by financial sector

regulators, viz., RBI, SEBI, IRDA, PFRD, NHB or any other financial sector regulator as

may be notified by the Government of India.

2. 'Other Financial Services' activities need to be regulated by one of the Financial Sector

Regulators. In all such financial services activity which are not regulated by any Financial

Sector Regulator or where only part of the financial services activity is regulated or where

there is doubt regarding the regulatory oversight, foreign investment up to 100 percent will

be allowed under Government approval route subject to following minimum capitalization

requirement:

Type Entity Activity Minimum FDI Capital

Fund Based

activities

Unregistered / Exempted Unregulated US$ 20mn

Non-Fund based

activities

Unregistered / Exempted Unregulated US$ 2mn



Harshal Bhuta

Other Financial Service Sector (Cont.)

Conditions (Cont.):

3. Fund based activities: Merchant Banking, Under Writing, Portfolio Management

Services, Stock Broking, Asset Management, Venture Capital, Custodian Services,

Factoring, Leasing & Finance, Housing Finance, Credit Card Business, Micro Credit,

Rural Credit

4. Non-fund based activities: Investment advisory services, Financial Consultancy,

Forex Broking, Money Changing Business, Credit Rating Agencies’

5. Any activity which is specifically regulated by an Act, the foreign investment limits

will be restricted to those levels/ limit that may be specified in that Act, if so

mentioned.

6. Downstream investments by any of these entities engaged in "Other Financial

Services" will be subject to these Regulations.



Case Studies

Harshal Bhuta

Case Study - I

Question: Can he undertake this arrangement of swapping IndCo. shares with Foreign

Company Shares?

India

(1)

Facts: Mr. X, a Resident Indian, is holding shares in the capacity of promoter of IndCo.

which is engaged in hospitality business. Now, Mr. X has became an NRI. After becoming

NRI, Mr. X wants to widen hospitality business across the globe by incorporating Individual

Companies in respective jurisdictions. Further, he wants to consolidate his holding in all

companies across the globe into one holding company by way of share swap arrangement at a

fair value.

O/s India

RI

IndCo.

(2) (4)(3)

NRI NRI

UKCo. USCo.

GerCo.AusCo.NRI

IndCo. IndCo. IndCo.

FCo.

USCo.

GerCo.UKCo.

AusCo.


Harshal Bhuta

Facts: Mr. A, a Person Resident Outside India (PROI) since 40 years, had stock

broking business in UK. Due to his ill health, Mr. A died 2 months back. At the time

of his death, Mr. A owned following assets in UK: 1 apartment, 2 luxury cars, 2 bank

accounts, three diamond rings and 5,000 shares of IBM. Mr. A had acquired these

assets while being PROI. His son Mr. B is presently a resident in India and is

working as tax head of an large MNC Bank in India. Mr. B is named as the sole

inheritor of assets of Mr. A.

India

Mr. BMr. A’s

Assets

UK

Inheritance?

Question: Would Mr. B able to inherit assets of Mr. A while being PRI?

Case Study - II


Harshal Bhuta

Case Study - III

Question: Can the foreign company make investment under FDI into Indian

company which proposes to operate fantasy gaming app in India on a paid /

subscription basis?

Facts: A foreign company successfully runs a fantasy gaming app outside India. It

wants to incorporate an Indian company to replicate its overseas success in popular

Indian sports such as kabaddi and cricket.


Harshal Bhuta

Facts: TP Limited, a company incorporated in India is engaged in the business of

manufacturing smartphones in India. TP Ltd is WOS of TP Inc. USA. TP Limited

decided to issue 1,22,500 shares @ Rs. 100/- per share to TP Inc for capex. TP Ltd

was supposed to receive Rs. 12,25,00,000/- (USD 1,75,000/-* Rs. 70/- Per USD),

however, it received short amount due to deduction of bank charges @ 0.05%.

Accordingly, it received Rs. 12,24,38,750/- instead (Bank charges of Rs. 61,250/-).

Thereafter, it decided to issue only 1,20,000/- shares.

Questions:

1) What is the course of action to be adopted by TP Limited?

• Refund differential amount attributable to short allotment in USD (Assume Rs. 71

per USD) viz. 2500 shares * Rs. 100 = Rs. 2,50,000 / 71 = 3521.12 USD?

• Refund differential amount attributable to short allotment in INR viz. 2500 shares

* Rs. 100 = Rs. 2,50,000.

• Refund differential amount attributable to short allotment in USD, net of shortfall

due to deduction of bank charges viz. (Rs. 2,50,000 – Rs.61,250) / 71 = 2658.45

USD?

• Refund differential amount attributable to short allotment in INR, net of shortfall

due to deduction of bank charges viz. Rs. 2,50,000 – Rs.61,250 = Rs. 188,750/-

Case Study - IV


Harshal Bhuta

Facts: ZM Pvt. Ltd. is an Indian restaurant aggregator and food delivery company

which has received 30% of its share capital as FDI since its inception. It has

approached WJ Resto Pvt. Ltd. to offer an opportunity to them to become a partner

restaurant. ZM Pvt. Ltd. would charge 25% commission on total F&B revenue made

by the partner restaurant through their platform – either by way of booking

reservations or delivery through the platform. During Diwali festival, ZM Pvt. Ltd.

extended an offer to the partner restaurant to lower the commission to 5% instead of

25% if they in turn agree to offer higher discount of 20% discount to subscribers of

platform owned by ZM Pvt. Ltd.

Question: Is the offer of ZM Pvt. Ltd. in compliance with the FDI policy?

Case Study - V


Harshal Bhuta

Important Definitions Debt Instruments

Debt Instruments means the instruments listed under Schedule I of the

regulations.

FPI or Foreign Portfolio Investor

“FPI” or “Foreign Portfolio Investor” means a person registered in

accordance with the provisions of the Securities and Exchange Board of

India (Foreign Portfolio Investors) Regulations, 2014.

NRI

“NRI” or “Non-Resident Indian” means an individual resident outside India

who is a citizen of India.

OCI

“OCI” or “Overseas Citizen of India” means an individual resident outside

India who is registered as an Overseas Citizen of India Cardholder under

section 7(A) of the Citizenship Act, 1955 ( 57 of 1955);


Harshal Bhuta

Issue of Redeemable NCPS / Redeemable NCD as bonus in Scheme of

Arrangement - Rule 6 of FEM (Debt Instruments) Regulations, 2019:

Upon approval by National Company Law Tribunal (NCLT)/ Competent

Authority, the Indian company can issue non-convertible redeemable preference

shares/ debentures to shareholders who are resident outside India, out of its

general reserves by way of distribution as bonus, subject to the following

conditions:

The original investment made in the Indian company by a person resident

outside India is in accordance with these regulation and the conditions

specified therein;

The said issue is in accordance with the provisions of the Companies Act,

2013 and the terms and conditions, if any, stipulated in the scheme

approved by National Company Law Tribunal (NCLT)/ Competent

Authority;

The Indian company is not engaged in any activity/ sector in which foreign

investment is prohibited.

Merger / Demerger / Amalgamation of Indian companies


Harshal Bhuta

Schedule I to FEM Debt Instr. Regulation 2019Schedule I – Purchase/ Sale of debt instruments by a person resident O/s India

A. Permission to Foreign Portfolio Investors (FPI):

Subject to terms and condition specified by SEBI and RBI, FPI may purchase the

following debt-instrument on repatriation basis:

dated Government securities/ treasury bills;

NCDs/ bonds issued by an Indian company;

commercial papers issued by an Indian company;

units of domestic MF or ETFs which invest less than or equal to 50% in equity;

Security Receipts (SRs) issued by Asset Reconstruction Companies;

debt instruments issued by banks, eligible for inclusion in regulatory capital;

Credit enhanced bonds;

Listed non-convertible/ redeemable pref. shares or debentures issued in terms of

Regulation 6 of these Regulations;

Securitised debt instruments, including (i) any certificate or instrument issued by a

special purpose vehicle (SPV) set up for securitisation of asset/s with banks, Financial

Institutions or NBFCs as originators;

Rupee denominated bonds/ units issued by Infrastructure Debt Funds;

o This will include instruments issued on or after 22.11.11 and held by FPIs.

Municipal Bonds :

Provided that FPIs may offer such instruments as permitted by the Reserve Bank from time

to time as collateral to the recognized Stock Exchanges in India for their transactions in

exchange traded derivative contracts as specified in sub Reg. 2 of Reg. 5.


Harshal Bhuta

Schedule I – Purchase/ Sale of debt instruments by a person resident O/s India (cont…)

B. Permission to NRIs or OCIs – Repatriation basis:

A NRI or OCI may without limit purchase the following instrument on

repatriation basis:

Government dated securities (other than bearer securities) or treasury bills or units

of domestic MF or ETFs which invest less than or equal to 50% equity;

Bonds issued by a PSU in India;

Bonds issued by Infrastructure Debt Funds;

Listed non-convertible/ redeemable preference shares or debentures (as per

Reg.6);

NRI/ OCI may purchase debt instruments issued by the banks.

NRI may subscribe to National Pension Scheme provided he is eligible to invest.

B. Permission to NRIs or OCIs – Non-Repatriation basis

An NRI/ OCI may without limit on non-repatriation basis:

Purchase Gov. sec. (other than bearer securities), treasury bills, units of domestic

MF or ETFs which invest less than or equal to 50% in equity, or National Plan/

Savings Certificates;

Purchase listed non-convertible/ redeemable pref. shares or debentures (as per

Reg.6);

Subscribe to chit funds authorised by the Registrar of Chits or an officer

authorised by the State Government in this behalf.

Schedule I to FEM Debt Instr. Regulation 2019 (Cont.)


Harshal Bhuta

Schedule I to FEM Debt Instr. Regulation 2019 (Cont.)Schedule I – Purchase/ Sale of debt instruments by a person resident O/s India (cont…)

D. Permission to Foreign Central Banks or Multilateral Development Banks for purchase

of Government Securities:

Foreign Central Banks, Multilateral Development Banks or any other entity permitted

by the Reserve Bank, may purchase or sell dated Government Securities/treasury bills,

as per terms and conditions specified by the Reserve Bank.

Mode of Payment

FPI: Inward remittance from abroad through banking channels or out of funds held in

foreign currency/ SNRR account.

NRI/ OCI (Non-Repatriation basis): Inward remittance from abroad through banking

channels or out of funds held in NRE/ FCNR(B) account.

NRI/ OCI (Repatriation basis): Inward remittance from abroad through banking channels

or out of funds held in NRE/ FCNR(B)/ NRO account.

Foreign Central Banks or Multilateral Development Banks: Inward remittance from

abroad through banking channels or out of funds held in an account opened with RBI

approval.

Other non-resident investors: inward remittances from abroad through banking channels.


Harshal Bhuta

Schedule I to FEM Debt Instr. Regulation 2019 (Cont.)

Schedule I – Purchase/ Sale of debt instruments by a person resident O/s India (cont…)

Permission for Sale of Instrument

A person resident outside India who has purchased instruments in accordance with this

Schedule may sell/ redeem the instruments subject to such terms and conditions as

may be specified by RBI/ SEBI.

Remittance/ Credit of sale/ maturity proceeds

FPI: Remit abroad or credit to foreign currency/ SNRR account of the FPI.

NRI (Repatriation basis): Remit abroad or credit to NRE/ FCNR(B)/ NRO account.

However, if the payment for the purchase of instrument was made out of funds held in

NRO account, credit should be made to NRO account only.

NRI (Non-Repatriation basis): Credit to NRO account.

In all other cases, the sale/ maturity proceeds (net of taxes) may be remitted abroad or

credited to an account opened with the prior permission of the RBI.


Acquisition of Immovable Property in India(Subsumed in FEM (Non-Debt Instruments) Rules , 2019

Harshal Bhuta

Immovable Property in India Applicable to NRIs / OCIs

Particulars NRI / OCI

Acquisition

Purchase (other than agricultural land/ farmhouse/

plantation etc) from

Resident/ NRI/ OCI [Rule 24(a)]

Acquire as gift (other than agricultural land/ farmhouse/

plantation etc) from

Resident/ NRI/ OCI [Rule 24(b)]

who is a relative

Inheritance

Acquire (any IP) as inheritance from a. Any person who has acquired it

under laws in force [Rule 24(c)];

b. Resident [Rule 24(c)]

Sale

Sell (other than agricultural land / farmhouse / plantation

etc) to

Resident/ NRI/ OCI [Rule 24(d) &

Rule 24(e)]

Sell (agricultural land / farmhouse / plantation etc) to Resident [Rule 24(d)]

Gift

Gift (other than agricultural land / farmhouse / plantation

etc) to

Resident/ NRI/ OCI [Rule 24(d) &

Rule 24(e)]

Gift (agricultural land / farmhouse / plantation etc) to Resident [Rule 24(d)]


Harshal Bhuta

Immovable Property in India

Joint acquisition of the property by the spouse of an NRI/ OCI

A PROI, not being a NRI/ OCI who is a spouse of NRI/ OCI may acquire one immovable

property (other than agricultural land/ farm house/ plantation property) jointly with his/

her NRI/ OCI spouse subject to:

The consideration for transfer, shall be made out of (i) funds received in India

through banking channels by way of inward remittance from any place outside India

or (ii) funds held in any non-resident account maintained in accordance with the

provisions of the Act and the regulations made by the RBI;

Payment for any transfer of immovable property shall not be made either by

traveler’s cheque or by foreign currency notes or by any other mode other than those

specifically permitted under this clause;

Marriage has been registered and subsisted for a continuous period of not less than

two years immediately preceding the acquisition of such property;

Non-resident spouse is not otherwise prohibited from such acquisition.

Prohibition on acquisition/ transfer of property in India by Citizens of

certain countries

No person being a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran,

Nepal, Bhutan, Hong Kong or Macau or Democratic People’s Republic of Korea (DPRK)

without prior permission of the RBI shall acquire/ transfer immovable property in India,

other than lease, not exceeding five years. This prohibition shall not apply to an OCI.


Harshal Bhuta


Payment for Acquisition of Immovable Property

Out of funds received in India through normal banking channels by way of inward

remittance from any place outside India or by debit to his NRE / FCNR (B) / NRO

account;

Payments cannot be made by traveller’s cheque or by foreign currency notes or by other

mode except those specifically mentioned above

Repatriation of sale proceeds of immovable property

Property acquired by way of Sec 6(5) or his successor cannot repatriate outside India the

sale proceeds of such immovable property without the prior permission of the RBI except

by NRIs and PIOs up to USD 1 million

Sale of IP (other than agricultural land/ farm house/ plantation property) in India by a

NRI/ OCI resident outside India provided:

IP acquired by the seller in accordance with FEMA

Amount for acquisition of IP paid out of funds received in India through banking

channels by way of inward remittance or out of funds held in his NRE/ FCNR (B)

account;

In the case of residential property, the repatriation of sale proceeds is restricted to not

more than two such properties


Harshal Bhuta


DOs for NRIs / OCIs

Can acquire property for holding/self-use

Can only inherit agricultural land, plantations & farm houses

Can sell the property & repatriate sale proceeds abroad, most of the times

Can give property on rent & repatriate funds abroad post payment of taxes

Spouse of foreign origin of NRI / OCI Can jointly acquire IP subject to conditions

No limit on number of properties acquired in India

DON’Ts for NRIs / OCIs

Can not purchase agricultural land, plantations & farm houses

Can not do Real Estate Trading, or trade in Transferable Development Rights

Citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, Bhutan,

Macau, Hong Kong and Democratic People’s Republic of Korea cannot, without prior

permission of the Reserve Bank, acquire or transfer immovable property in India, other than

on lease, not exceeding five years. (Prohibition does not apply to OCI)


Harshal Bhuta

Immovable Property in India Compounding Orders – Acquisition of Immovable Property in India (1/6)

Applicant Name Mr. Barry Kendal Dansie, Ms. Wendy Dansie, Mr. Derek Alfred Parker

and Ms. Catherine Margaret Ingram

Compounding App.

No. & Date of Order

C.A. No. 48/2016,

21st October, 2016

Period of

contravention and

Compounding Fees

21 Years 10 Months 21 days approximately

Rs. 30,00,000/-

Facts of the case The applicants, being foreign nationals of non-Indian origin, had

jointly acquired property on 17th April, 1995 for Rs.10,00,000/- in Goa,

India.

The applicants did not obtain RBI approval at the time of acquisition.

They were subsequently granted permission by RBI to dispose of the

property in question within a period of six months to a person eligible

to acquire the same as per FEMA provisions subject to fulfillment of

certain conditions.

The immovable property was sold by the applicants on 09th March,

2016 for a consideration of Rs.90,00,000/-.


Harshal Bhuta


Name of the Applicant Mr. Barry Kendal Dansie, Ms. Wendy Dansie, Mr. Derek Alfred Parker

and Ms. Catherine Margaret Ingram

Contravention Section 31(1) of erstwhile FERA, 1973 stipulated that no person who

was not a citizen of India shall, except with the previous general or

special permission of RBI, acquire any immovable property situate in

India.

Regulation 8 of erstwhile FEMA Notification No. 21/2000-RB stated

as follows: “No person resident outside India shall transfer any

immovable property in India provided that the Reserve Bank may for

sufficient reasons, permit the transfer, subject to such conditions as

may be considered necessary.”

Since the applicants were foreign nationals of non-Indian origin at the

time of acquisition of immovable property in India, they were

obligated to obtain RBI permission under FERA before making such

acquisition. Further, they continued to hold such property even after

introduction of FEMA without obtaining permission from RBI. Thus

the applicants contravened the provisions of Section 31(1) of erstwhile

FERA, 1973 read with Regulation 8 of notification ibid.

Compounding Orders – Acquisition of Immovable Property in India (1/6 cont.)


Harshal Bhuta


Our Comments• Though RBI may possess powers to grant permission to either acquire or transfer

immovable property in India under provisions of FEMA, it is a point to ponder

whether RBI could have compounded at all the contravention of provisions of FERA

viz. acquisition of immovable property without obtaining RBI approval in the year

1995.

• Penalty has been levied under Section 13 of FEMA, 1999 at thrice the amount of

purchase consideration without giving regard to guidance note on compounding

matrix. In doing so, it has not neutralized undue gains earned by the applicants. (Para

7.4 (ii) (iv) of FED Master Direction on Compounding of Contravention under FEMA

states that “in cases where it is established that the contravenor has made undue gains,

the amount thereof may be neutralized to a reasonable extent by adding the same to

the compounding amount calculated as per chart.”)



Harshal Bhuta


Applicant Name Mrs. Rajini Kodeswaran

Compounding App.

No. & Date of Order

C.A. No. 76/2016,

28th August, 2018

Period of

contravention and

Compounding Fees

9 Years 2 Months 5 days approximately

Rs. 18,78,208/-

Facts of the case The applicant, a Sri Lankan Citizen, had acquired an immovable

property in Chennai, India on 17th October, 2008 for a total

consideration of Rs. 6,84,000/-. Subsequently, she constructed a flat on

the same property by incurring a cost of Rs. 32,97,085/-.

Since a citizen of Sri Lanka was not permitted then to acquire

immovable property without taking permission from RBI, she was

advised by RBI to sell the immovable property immediately within 6

months to a PRI who is citizen of India and not to repatriate sale

proceeds of the property outside India w/o prior RBI approval. The

property under reference was sold by the applicant on 12th May, 2017

for total sale consideration of Rs. 44,00,000/-. The contravention was

accordingly regularized by RBI vide letter dated 12th January, 2018.

Compounding Orders – Acquisition of Immovable Property in India (2/6)


Harshal Bhuta


Name of the Applicant Mrs. Rajini Kodeswaran

Facts of the case

(cont.)

Since the valuation report dated 20th July 2018 submitted by applicant

indicated appreciation in value of land to Rs. 24,82,350/- since the year

2008, the applicant was considered to have Rs. 17,98,350/- (Rs.

24,82,350 - Rs. 6,84,000) as undue gain. Whereas the purchase price of

the immovable property i.e. Rs. 6,84,000/- and the cost of construction

was Rs. 32,97,085/- aggregating to Rs. 39,81,085/- was considered as

the amount of contravention.

The period of contravention was taken as the period between date of

purchase and the date of regularization by RBI (viz. 12th January

2018).

Contravention Regulation 7 of erstwhile FEMA notification No. 21/2000-RB stated :

“No person being a citizen of Pakistan, Bangladesh, Sri Lanka,

Afghanistan, China, Iran, Nepal, Bhutan, Macau or Hong Kong without

prior permission of the Reserve Bank shall acquire or transfer

immovable property in India, other than lease, not exceeding five

years.”

The applicant, being a Sri Lankan Citizen, acquired IP in India w/o the

prior RBI approval and thus contravened the provisions of Reg. 7.



Harshal Bhuta


Our Comments• The actual amount of undue gains (Rs. 44,00,000 – Rs. 6,84,000 – Rs. 32,97,085 = Rs.

4,18,915) has been ignored completely.

• Additionally, typical allowance for opportunity cost equivalent to notional returns on

investment in FDs / GOI securities has also not been given.

• Undue gain has been computed purely by taking into consideration the notional

appreciated sale value of land minus the actual cost of acquisition of land.

• The amounts corresponding to cost of construction of flat as well as realized sale value

of entire property have not been taken into consideration at all.

• The period of contravention should have ended on the date of sale i.e. 12th May, 2017.

However, the period of contravention has been considered upto the date of

regularization i.e. 12th January, 2018.



Harshal Bhuta


Applicant Name Mr. Joel Queirel and Mrs. Benedicte Pascale Mireille Caille

Compounding App.

No. & Date of Order

C.A. No. 90/2019,

26th February, 2019

Period of

contravention and

Compounding Fees

11 Years 11 Months 03 Days

Rs. 30,00,000/-

Facts of the case The applicants are non-resident French citizens of non–Indian origin.

They have acquired a plot in Kerala, India in joint names without RBI

permission and subsequently, built a residential building on the same

plot. As per information furnished by the applicants, the source of fund

to make payment for purchase of land under reference, was brought

from France. Cost of acquisition of land was Rs. 15,00,000/- whereas

construction cost amounted to Rs. 85,00,000/-.

The applicants were advised by RBI to sell the property under

reference to PRI within 6 months. Applicants sold the said property for

a total consideration of Rs. 75,00,000/-.

Compounding Orders – Acquisition of Immovable Property in India (3/6 )


Harshal Bhuta


Name of the Applicant Mr. Joel Queirel and Mrs. Benedicte Pascale Mireille Caille

Facts of the case

(cont.)

Though the applicants have submitted the valuation report prepared by

Er. J.K. Nair wherein the land and Building has been valued

at Rs. 84,91,000/-. RBI has independently obtained the valuation report

prepared by V. Sankaranarayanan, wherein the land and building is

valued at Rs. 1,28,75,000/-.

Contravention Regulation 8 of Notification No. FEMA 21/2000-RB ibid. states that

save as otherwise provided in the Act or Regulations, no person

resident outside India shall transfer any immovable property in India,

provided that the Reserve Bank may, for sufficient reasons, permit the

transfer, subject to such conditions as may be considered necessary.

Since the applicant being a foreign national and non-resident in India

had acquired the immovable property in India without the prior RBI

approval, applicants had contravened the above provision of FEMA.

Our Comment• Calculation of amount of contravention:

1) Rs. 1,00,00,000/- being cost of acquisition of land as well as construction cost

2) Rs. 28,75,000/- being diff. of amount as per valuation report obtained by RBI and COA



Harshal Bhuta


Applicant Name Mr. Sha Mathew

Compounding App.

No. & Date of Order

C.A. No. 87/2019,

08th March, 2019

Period of

contravention and

Compounding Fees

5 Years 10 Months 04 Days

Rs. 24,53,590/-

Facts of the case The applicant being an NRI had purchased an agricultural properties in

Idukki district, Kerala, India for Rs. 16,38,700/-.

The acquisition of immovable property viz. agricultural land by an NRI

without RBI permission is not permitted as per FEMA guidelines.

Thus, the applicant was advised by the RBI to sell the immovable

property to a PRI within 6 months and not to repatriate sale proceeds of

the property without prior RBI approval.

Applicant had transferred property under consideration to Mr. Kevin

Sha. As per the valuation report submitted by the applicant, value of

land has been appreciated to Rs. 40,30,000/-.



Harshal Bhuta

Immovable Property in India Compounding Orders – Acquisition of IP in India w/o RBI approval (4/6 cont.)

Name of the Applicant Mr. Sha Mathew






Regulation 3(a) of Notification No. FEMA 21/2000-RB dated May 03,

2000 states that a person resident outside India who is a citizen of India

may acquire any immovable property in India other than agricultural /

plantation / farm house.

Since the applicant being a NRI had acquired the agricultural land in

India without the prior RBI approval, applicant had contravened the

above provision of FEMA.

Our Comments• Calculation of amount of contravention:

1) Rs. 16,38,700/- being cost of acquisition of land

2) Rs. 23,91,300/- being difference of amount as per valuation report and COA


Harshal Bhuta


Applicant Name Mr. Chandan Kumar Mishra

Compounding App.

No. & Date of Order

C.A. No. 89/2019,

18th March, 2019

Period of

contravention and

Compounding Fees

1 Year 3 Months 1 Day

Rs. 1,43,680/-

Facts of the case The applicant had purchased an agricultural land in Coimbatore

district, India for Rs. 97,60,000/-.

The acquisition of immovable property viz. agricultural land by an NRI

without RBI permission is not permitted as per FEMA guidelines.

Thus, applicant was advised by the RBI to sell the immovable property

to a PRI within 6 months and not to repatriate sale proceeds of the

property without prior RBI approval.

However, applicant had already transferred property under

consideration to Mrs. Shanti Mishra. As per the valuation report

submitted by the applicant, value of land has been appreciated to Rs.

98,00,000/-.

Compounding Orders – Acquisition of Immovable Property in India (5/6)


Harshal Bhuta


Name of the Applicant Mr. Chandan Kumar Mishra













Our Comment• RBI has properly calculated compounding fee taking into the consideration undue gains

made by the applicant on account of appreciation in the value of land.



Harshal Bhuta


Applicant Name Mr. Jayant Nanda

Compounding App.

No. & Date of Order

C.A. No. 93/2019,

20th May, 2019

Period of

contravention and

Compounding Fees

15 Years 22 Days

Rs. 29,75,000/-

Facts of the case The applicant is a NRI since 1990. From the year 2003 to 2007, the

applicant had acquired 6 pieces of agricultural land for Rs. 9,75,000/-

in Gujarat, India without RBI approval.

As NRI is not allowed to acquire agricultural land without RBI

approval, applicant was advised by RBI to sell the property to the PRI.

Applicant had transferred property under reference to Mrs. Anita

Jayant Nanda on 03rd October, 2018.

The contravention has been regularized by RBI subject to the

compounding.



Harshal Bhuta


Name of the Applicant Mr. Jayant Nanda













Our Comment• Penalty has been levied under Section 13 of FEMA, 1999 at thrice the amount of

purchase consideration without giving regard to guidance note on compounding matrix.

In doing so, it has not neutralized undue gains earned, if any by the applicant.



Case Studies

Harshal Bhuta

Facts: Mr. DT, a non-resident Indian has settled in USA since last 15 years. Mr. DT

had acquired a residential premises in Goa during the year 2011 for consideration of

Rs. 50 lakhs. Payment for the same has been made by Mr. DT as (i) Rs. 35 Lakhs out

his NRE account and (ii) Balance Rs. 15 Lakhs out his NRO account. Since,

presently investment in real estate is not as impressive as it was earlier, Mr. DT has

sold the said residential premises for Rs. 1.5 crore to a person resident in India. Now,

Mr. DT wants to repatriate the sale proceeds outside India to his foreign bank

account held in USA.

Question: Whether Mr. DT is permitted to repatriate the sale proceeds outside India

as per FEMA guidelines?

Case Study - I


Outward Remittances (Residents)

Harshal Bhuta

Liberalised Remittance Scheme (LRS)

Liberalised Remittance Scheme (Master Direction No. 7/2015-16)

AD may freely allow remittances by resident individuals up to USD 2,50,000 per

Financial Year (April-March) for any permitted current or capital account transaction

or a combination of both.

The Scheme is available to all resident individuals including minors.

The Scheme is not available to corporates, partnership firms, HUF, Trusts, etc.

The LRS limit has been revised in stages consistent with prevailing macro and micro

economic conditions. During the period from February 4, 2004 till date, the LRS limit

has been revised as under:

Remittances under the Scheme can be consolidated in respect of family members

subject to individual family members complying with its terms and conditions.

However, clubbing is not permitted by other family members for capital account

transactions such as opening a bank account/investment/purchase of property, if they

are not the co-owners/co-partners of the overseas bank account/ investment/property.

The limit of USD 2,50,000/- per FY also subsumes remittance made for private visit/

gift/ donation/ medical treatment abroad/ studies abroad.

Date Feb 4, 2004Dec 20,

2006

May 8,

2007

Sep 26,

2007

Aug 14,

2013Jun 3, 2014

May 26,

2015

LRS limit

(USD)25,000 50,000 1,00,000 2,00,000 75,000 1,25,000 2,50,000


Harshal Bhuta


Prohibited items under the LRS

Remittance for any purpose specifically prohibited under Schedule-I (like

purchase of lottery tickets/sweep stakes, proscribed magazines, etc.) or any

item restricted under Schedule II of Foreign Exchange Management (Current

Account Transactions) Rules, 2000.

Remittance from India for margins or margin calls to overseas exchanges /

overseas counterparty.

Remittances for purchase of FCCBs issued by Indian companies in the

overseas secondary market.

Remittance for trading in foreign exchange abroad.

Capital account remittances, directly or indirectly, to countries identified by

the Financial Action Task Force (FATF) as “non- cooperative countries and

territories”, from time to time.

Remittances directly or indirectly to those individuals and entities identified

as posing significant risk of committing acts of terrorism as advised

separately by the Reserve Bank to the banks.


Harshal Bhuta


Purpose for which Resident Individual can avail of foreign exchange

facility

Private visits to any country (except Nepal and Bhutan)

Gift or donation

Going abroad for employment

Emigration

Maintenance of close relatives abroad

Travel for business, or attending a conference or specialised training or for

meeting expenses for meeting medical expenses, or check-up abroad, or for

accompanying as attendant to a patient going abroad for medical treatment/

check-up

Expenses in connection with medical treatment abroad

Studies abroad

Any other current account transaction which is not covered under the

definition of current account in FEMA 1999.


Harshal Bhuta


Documentation by the remitter

The individual will have to designate a branch of an AD through which all the capital

account remittances under the Scheme will be made.

The applicants should have maintained the bank account with the bank for a minimum

period of one year prior to the remittance for capital account transaction.

For permissible current account transaction, AD should carry out due diligence.

The resident individual seeking to make the remittance should furnish Form A2 for

purchase of foreign exchange under LRS.

AD bank may insist to produce Form 15CA and CA Certificate in Form 15CB.

It is mandatory for the resident individual to provide his/her PAN to make remittance.

Retention of funds abroad

Investor, who has remitted funds under LRS can retain/ reinvest the income earned on

the investments.

At present, the resident individual is not required to repatriate the funds or income

generated out of investments made under the Scheme.

However, resident individual who has made ODI within LRS limit, shall have to

comply with ODI regulation.


Harshal Bhuta


Do’s and Don’ts

A resident cannot gift to another resident, in foreign currency, for the credit of the

latter’s foreign currency account held abroad under LRS.

Ultimate responsibility is of the remitter to ensure compliance to the extant FEMA

rules/regulations.

There are no restrictions on the frequency of remittances under LRS.

Once a remittance is made for an amount up to USD 2,50,000 during the financial

year, a resident individual would not be eligible to make any further remittances under

this scheme, even if the proceeds of the investments have been brought back.

The remittances can be made in any freely convertible foreign currency.

The remittance to non-cooperative countries listed by FATF not allowed.

If a sole proprietorship firm intends to remit the money under LRS by debiting its

current account then the eligibility of the proprietor in his individual capacity has to be

reckoned.

A resident individual can make a rupee loan to a NRI/PIO who is a close relative

(‘relative’ as defined in Section 2(77) of the Companies Act, 2013) of the resident

individual by way of crossed cheque/ electronic transfer subject to the fulfillment of

certain condition as prescribed.

Resident individual can make a rupee gift to a NRI/PIO who is a relative as defined in

Section 2(77) of Companies Act. The amount should be credited to the NRO a/c of the

NRI/ PIO.


Harshal Bhuta


Amendments made by Finance Bill 2020 which relates to LRS

An AD receiving an amt or an aggregate of amt of ≥7 lakh rupees in a FY for

remittance out of India under the LRS, shall be liable to collect TCS, if AD receives

sum in excess of said amount from a buyer being a person remitting such amount out

of India @ 5%. In non- PAN/Aadhaar cases @ 10%.

A seller of an overseas tour program* package who receives any amount from any

buyer, being a person who purchases such package, shall be liable to collect TCS @

5%. In non-PAN/ Aadhaar cases @ 10%.

The above TCS provision shall not apply if the buyer is -

o liable to deduct tax at source under any other provision of the Income Tax Act

and he has deducted such amount.

o CG, SG, an embassy, a High Commission, legation, commission, consulate, the

trade representation of a foreign State, a local authority or any other person

notified by CG in the Official Gazette for this purpose.

* Overseas tour program package is proposed to be defined to mean any tour package which

offers visit to a country or countries or territory or territories outside India and includes

expenses for travel or hotel stay or boarding or lodging or any other expense of similar nature

or in relation thereto.


Outward Remittances (NRI/ PIO)

Harshal Bhuta

Remittance of Assets o/s India by NRI/PIO AD Bank may allow to remit upto $ 1 million per year (popularly known as $1 million scheme):

out of :

balances in NRO

sale proceeds of assets

assets acquired in India by way of inheritance/ legacy;

in respect of assets acquired under a deed of settlement made by either of his / her parents

or a relative as defined in Companies Act, 2013. The settlement should take effect on the

death of the settler;

in case settlement is done without retaining any life interest in the property i.e. during the

lifetime of the owner/ parent, it would tantamount to regular transfer by way of gift and

remittance of sale proceeds of such property would be guided by instructions on remittance

of balance in the NRO account mentioned above

NRI/PIO to give declaration that

Remittance is out of balances held in the account arising from his / her legitimate

receivables in India

Remittance is not by borrowing from any other person

Remittance is not a transfer from any other NRO account

Practically, AD banks also insist on furnishing CA certificate in Form 15CB


Case Studies

Harshal Bhuta

Facts: Mr. N, a person resident in India is into the business of cutting and polishing

diamonds. As the Indian real estate sector is not as impressive as it was, Mr. N is

contemplating to buy a house property in New Jersey, USA. Mr. N wants to purchase

an under construction property for a total consideration of USD 5,30,000/-. The

developer will call for initial remittance of USD 80,000/- and thereafter call for

remaining amount in equal instalments per quarter totalling to twelve instalments

over twelve quarters.

Questions: Whether Mr. N is permitted to acquire the said property in New Jersey,

USA on an instalment basis?

Case Study - I


Harshal Bhuta

Facts: Mr. PS had booked an immovable property in California in the year 2018 for

USD 10,00,000/- on an installment basis. Mr. PS had already paid the first instalment

that accrued in the year 2018-19 out of his LRS entitlement for FY 2018-19.

Now for the year 2019, Mr. PS has received the second instalment call letter for USD

2,10,000/-. For FY 2019-20, Mr. PS has already utilised USD 37,000/- for his Son’s

education abroad, USD 10,000/- for purchase of shares of Alphabet Inc. and USD

5,000/- for family vacations abroad out of his LRS entitlement for FY 2019-20.

Thus, utilising USD 52,000/- out of his total LRS entitlement for FY 2019-20.

PRI is allowed to remit USD 2,50,000/- per year under LRS. Therefore, Mr. PS is

falling short of USD 12,000/- (USD 2,50,000/- less USD 52,000/-) to pay for the

instalment of the property purchased.

Question: To meet the shortfall of USD 12,000/- there are 3 options that Mr. PS

is exploring. Kindly advice him on the following options:

Mr. PS’s mother sending remittance from India under LRS on his behalf to

the California developer;

Mr. PS’s cousin in US making payment on his behalf as a gift;

Mr. PS’s cousin in US is making payment on his behalf as a loan.

Case Study - II


Harshal Bhuta

Facts: Mr. A has utilised the entire LRS limit of USD 2,50,000/- for FY 2019-20. He

now wants to travel abroad

Questions:

1) Whether LRS Limit would apply for booking from India of air tickets for foreign

travel and overseas accommodation?

2) Whether LRS Limit would apply to duty free shopping at airports in India?

3) Whether LRS Limit would apply if any purchase is made abroad by using Indian

credit card?

Case Study - III


Harshal Bhuta

Facts: Mr. CA has recently qualified the chartered accountancy examination held by

the ICAI. Mr. CA is desirous of working in the field on International Taxation as it is

very evolving subject recently. As Mr. CA do not have material knowledge/ insight

on the subject of International Tax Laws, Mr. CA is planning to subscribe to

International database for a block period of 5 years for a consideration of 6000/-

Pounds. Mr. CA will make the payment from his Indian credit card for the purchase

of the publication.

Questions: Is TDS applicable on such payment? Mr. CA required to furnish

Chartered Accountants certificate in Form 15CB for the same? Mr. CA is required to

furnish Form 15CA?

Case Study - IV


Harshal Bhuta

Facts: Mr. P, an Non-Resident Indian wants to settle in USA. The United States EB-

5 Immigrant Investor Visa Program, provides a method for eligible Immigrant

Investors to become lawful permanent residents informally known as “green card”

holders by investing at least USD 500,000/- (from 21.11.2019 it is USD 9,00,000).

As per the subscription agreement, Mr. P proposes to remit (i) USD 5,00,000/- for

subscription of units as capital contribution for EB-5 and (ii) USD 40,000/- for

related administrative fees. Mr. P intends to remit such funds from India.

Questions:

1) Whether Mr. P is required to deduct tax at source while making the remittance?

2) Whether Mr. P is required to furnish Form 15CB and 15CA?

Case Study - V


Harshal Bhuta

Facts: Mr. Q, an Resident Indian wants to settle in Grenada. Grenada’s Citizenship

by Investment Programme allows individuals and their families to obtain citizenship

by investment. For the same, Mr. P proposes to remit (i) USD 1,50,000/- for

contribution to National Transformation Fund in the form of donation (ii) USD

1,500/- for application fees (iii) USD 5,000/- for due diligence fees and (iv) USD

1,500/- for processing fees.

Questions:

1) Whether Mr. Q is required to deduct tax at source while making the remittance?

2) Whether Mr. Q is required to furnish Form 15CB and 15CA?

Case Study - VI


Change in Residential Status

Harshal Bhuta

Facts: Mr. John is a British national and a Overseas Citizen of India. He is working

as CEO of an event management company that he founded in India in the year 2018.

He draws salary from the Indian company and remits the same to the UK for family

maintenance.

He had purchased an immovable property in UK on mortgage while he was person

resident outside india (PROI). His next instalment of mortgage payment is now due.

Mr. John works in the Indian company for about 20 days in a month and for balance

days, he goes to UK to provide consultancy services to the NGO based in UK. He

has stayed in India for more than 182 days during FY 2018-19. Income earned by

Mr. John for providing consultancy services to the UK NGO gets directly credited in

his UK bank account. He holds NRO and NRE a/c in India.

Question: Are his affairs in order for the purpose of FEMA?

Case Study - I


Emigrating Indians

Harshal Bhuta

Emigrating Indians Assets in India: Sec 6(5)

A person resident outside India may hold, own, transfer or invest in Indian currency, security or

any immovable property situated in India if such currency, security or property was acquired,

held or owned by such person when he was resident in India or inherited from a person who was

resident in India.

Bank a/c’s

Resident a/c into NRO a/c

EEFC and RFC(D) balance can be credited into NRE/FCNR(B) a/c

Shares and Securities

Immediately intimate company, registrar, broker, depository of change in residential status to

comply with FEM Debt Regulation and FEM Non-Debt rules provisions

Borrowings and lending

See impact of change in residential status (Reg. 8 of FEMA 3(R))

Immovable property – Covered u/s 6(5)

Insurance policy

Can continue to hold life/general insurance policy in India. No permission required for payment

of premium

Partner in firm or proprietor of concern

Can continue to remain partner/proprietor. Intimation to be given about change in status.

However, loan given to firm / concern to be governed as per the borrowing & lending regulation

NRI / PIO can become karta of HUF. Residential status of HUF?


Case Studies

Harshal Bhuta

Facts: Mr. D’Souza takes up an employment in Portugal. He currently operates the

following Bank Accounts/ Deposits jointly held with close relatives:

Questions: Kindly advise Mr. D’Souza about transition on change in residential

status:

Case Study - I

Fixed Deposits First name Rs. 30,00,000/-

Current a/c First name Rs. 2,50,000/-

RFC(D) a/c First name Rs. 5,75,000/-

Savings a/c Second name Rs. 12,00,000/-

Fixed Deposits First name

Convert to NRO a/c

Thereafter can continue a/c with

resident relative on “former or

survivor basis”. Can also give POA

to them for operating the account.

Current a/c First name

RFC(D) a/c First name Can be converted to

NRE/FCNR(B)

Savings a/c Second name Para 3 of RBI Master Direction 19/2015-16: Can continue

as resident a/c on “either or survivor basis”. Other

conditions applicable.


Returning Indians

Harshal Bhuta

Returning Indians Assets abroad: Sec 6(4)

A person resident in India may hold, own, transfer or invest in foreign currency, foreign security

or any immovable property situated outside India if such currency, security or property was

acquired, held or owned by such person when he was resident outside India or inherited from a

person who was resident outside India.

Bank a/c’s

Redesignation of NRO/NRE/FCNR a/c

Continuation of Foreign bank accounts covered under Sec 6(4)

Can take benefit of RFC a/c

Shares and Securities – Covered u/s 6(4)

Immovable property – Covered u/s 6(4)

Insurance policy

Can continue to hold life/general insurance policy o/s India. No permission required for

payment of premium. However, maturity proceeds to be repatriated within 7 days.

Partner in firm or proprietor of concern

Advisable to take RBI permission to continue being partner/proprietor of foreign firm/concern.

Movable assets? – Covered u/s 6(4)?


Case Studies

Harshal Bhuta

Facts: Mr. Antonio returns to India from USA after 10 years. He currently owns the

following Bank Accounts/ Deposits:

Questions: Kindly advise Mr. Antonio about transition on change in residential

status:

Case Study - I

FCNR(B) a/c $ 2,20,000/-

NRE FD a/c Rs. 37,50,000/-

NRE Savings a/c Rs. 3,50,000/-

NRO a/c Rs. 3,50,000/-

Wells Fargo Bank Savings a/c $ 28,000/-

FCNR(B) a/c Can continue up to maturity. Thereafter, convert to Resident a/c or RFC

a/c.

NRE FD a/cConvert into Resident a/c or RFC a/c immediately

NRE Savings a/c

NRO a/c Convert to Resident a/c immediately

Wells Fargo

Bank Savings a/c

Can continue as per Sec 6(4) of FEMA, 1999


Harshal Bhuta

Thank you


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