FEMA - Foreign Exchange Management Act and That Feature

The Foreign Exchange Management Act, 1999 (FEMA) is an Act of the Parliament of India "to consolidate and amend the law regarding Foreign exchange with the target of facilitating external trade and payments and for promoting the orderly development and maintenance of interchange market in India". It had been passed within the session of Parliament in 1999, replacement the interchange Regulation Act (FERA). This act seeks to form offenses associated with interchange civil offenses. It extends to the total of India. Replacement FERA had become incompatible with the pro-liberalization policies of the government of India. It enabled a replacement exchange management regime in step with the rising framework of the World Trade Organization (WTO) and also do some change in FDI and ODI rules. It conjointly paved system to interference of cash laundering Act 2002, which was settled from 1st July 2005.

Some Important Feature of FEMA

• *It prohibits interchange dealing undertaken apart from a licensed person;
• *It conjointly makes it clear that if someone residing in India received any Forex payment the involved person shall be deemed to own received they payment from a non-authorized person.
• *There are seven rules of accounting transactions, that are altogether prohibited, and thus no group actions are often undertaken regarding them. These embrace group action regarding lotteries, soccer pools, illegal magazines and a couple of others.
• *FEMA and therefore the connected rules offer full freedom to Resident of India (ROI) to carry or own or transfer any foreign security or immobile property settled outside India.
• *Similar freedom is additionally given to a resident who inherits such security or immobile property from ROI.
• *An ROI is allowable to carry shares, securities and properties no inheritable by him whereas he was a Resident or familial such properties from a Resident.
• *The exchange drawn may be used for purpose apart from that it's drawn provided drawl of exchange is otherwise allowable for such purpose.
• *Certain prescribed limits are considerably increased. as an example, residence currently going abroad for business purpose or for taking part in conferences seminars won't would like the RBI's permission to avail interchange up to US$. 25,000 per trip regardless of the amount of keep, basic travel quota are redoubled from the prevailing US$ 3,000 to US$ 5,000 per year.

FEMA rules have a huge impact in international trade transactions and completely different modes of payments.RBI (Reserve Bank of India) unleash regular FEMA notifications and circulars, outlining its clarifications and modifications associated with varied sections of Foreign Exchange Management Act.

Source: NumeroUno Business Consultants