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MS Legal Associates:We are FEMA Consultants in JC Road.
The Foreign Exchange Management Act, 1999 (FEMA) is an Act of the Parliament of India "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". It was passed in the winter session of Parliament in 1999, replacing the Foreign Exchange Regulation Act (FERA). This act makes offences related to foreign exchange civil offenses. It extends to the whole of India., replacing FERA, which had become incompatible with the pro-liberalisation policies of the Government of India. It enabled a new foreign exchange management regime consistent with the emerging framework of the World Trade Organisation (WTO). It also paved the way for the introduction of the Prevention of Money Laundering Act, 2002, which came into effect from 1 July 2005.
The Foreign Exchange Management Act (1999) or in short FEMA has been introduced as a replacement for earlier Foreign Exchange Regulation Act (FERA). FEMA became an act on the 1st day of June, 2000. FEMA was introduced because the FERA didn't fit in with post-liberalisation policies. A significant change that the FEMA brought with it, was that it made all offenses regarding foreign exchange civil offenses, as opposed to criminal offenses as dictated by FERA.
The FEMA head-office, also known as Enforcement Directorate is situated in New Delhi and is headed by a Director. The Directorate is further divided into 5 zonal offices in Delhi, Mumbai, Kolkata, Chennai and Jalandhar and each office is headed by a Deputy Director. Each zone is further divided into 7 sub-zonal offices headed by the Assistant Directors and 5 field units headed by Chief Enforcement Officers.
Main Features of the Foreign Exchange Management Act (FEMA)
1. It is consistent with full current account convertibility and contains provisions for progressive liberalisation of capital account transactions.
2. It is more transparent in its application as it lays down the areas requiring specific permissions of the Reserve Bank/Government of India on acquisition/holding of foreign exchange.
3. It classified the foreign exchange transactions in two categories, viz. capital account and current account transactions.
4. It provides power to the Reserve Bank for specifying, in, consultation with the central government, the classes of capital account transactions and limits to which exchange is admissible for such transactions.
5. It gives full freedom to a person resident in India, who was earlier resident outside India, to hold/own/transfer any foreign security/immovable property situated outside India and acquired when s/he was resident.
6. This act is a civil law and the contraventions of the Act provide for arrest only in exceptional cases.
7. FEMA does not apply to Indian citizen's resident outside India.
Regulations/Rules under FEMA
Foreign Exchange Management (Current Account Transactions) Rule, 2000
Foreign Exchange Management (Permissible Capital Account Transactions) Regulations, 2000
Foreign Exchange Management (Transfer or Issue of any Foreign Security) regulations, 2004
Foreign Exchange Management (Foreign currency accounts by a person resident in India)Regulations, 2000
Foreign Exchange Management (Acquisition and transfer of immovable property in India) regulations, 2000
Foreign Exchange Management (Establishment in India of branch or office or other place of business) regulations, 2000
Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2000
Foreign Exchange Management (Export of Goods and Services) regulations, 2000
Foreign Exchange Management (Realisation, repatriation and surrender of Foreign Exchange)regulations, 2000
Foreign Exchange Management (Possession and Retention of Foreign Currency) Regulations, 2000
Foreign Exchange (g proceedings) rules, 2000