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Table Of Contents
INTRODUCTION ............................................................................................................................................. 3
Foreign Exchange Management Act [FEMA] ................................................................................................ 4
CHARACTERISTICS OF F E M A....................................................................................................................... 5
PROVISION IN FEMA ..................................................................................................................................... 6
Provision regarding dealing in foreign exchange. ..................................................................................... 6
Provision regarding holding of foreign exchange ..................................................................................... 7
Provision regarding current account transactions.................................................................................... 7
Provision regarding capital account transactions. .................................................................................... 7
Provision regarding goods and services .................................................................................................... 9
Provision regarding realisation and repatriation of foreign exchange. .................................................... 9
Provision regarding the exemption from the realisation and repatriation in certain cases. ................. 10
Who can deal in foreign exchange? ............................................................................................................ 11
Provision regarding the powers of R B I to inspect Authorized Person. ................................................. 12
Offices of enforcement ............................................................................................................................... 13
Powers of the officers of enforcement: -.................................................................................................... 14
Contraventions and penalties ..................................................................................................................... 14
FERA & FEMA .............................................................................................................................................. 15
Similarities:.............................................................................................................................................. 15
Differences: ............................................................................................................................................. 15
CONCLUSION............................................................................................................................................... 19
Bibliography ............................................................................................................................................... 20
INTRODUCTION
The Foreign Exchange Regulation Act, 1973 was
reviewed in 1993 and several amendments were enacted as part of the ongoing
process of economic liberalisation relating to foreign investment and foreign trade
for closes interaction with the world economy. Significant development have taken
place since 1993 such as substantial increase lours foreign exchange reserves ,
growth in foreign trade, nationalization of tariffs ,current account convertibility,
liberalization of Indian investments abroad increase access to external commercial
borrowings by Indian corporate and participation of foreign institutional investing
in our stock markets. At that stage the central government decided that a further
review of the Foreign Exchange Regulation Act would be undertaken in the light
of subsequent developments and experiences in relation to foreign trade and
investment. Keeping in view the changed environment, the central Government
decided to introduce. The Foreign Exchange Management Bill and repeat the
Foreign Exchange Regulation Act, 1973. The Foreign Exchange Management Bill
was passed by both the House of parliament and received the assent of the
parliament on 29 December 1999.
Through this seminar I am going to introduce a detail report about the Foreign
Exchange Management Act of 1999.This includes the operations, its objectives,
scope, characteristics and various provisions in the Foreign Exchange Management
Act. This Foreign Exchange Management Act 1999 was the conservation of
Foreign Exchange resources of the country.
Foreign
[FEMA]
Exchange
Management
Act
The Foreign Exchange Regulation Act is 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.
The act extends to the whole of India. It shall also apply to all branches, offices
and agencies outside India owned or controlled by a person resident in India and
also to any contravention there under committed outside India by any person to
whom this act applies.
The main objects of the foreign exchange management act are as follows.
1. To regulate import and export of currency
2. To Regulate acquisition, holding etc., of immovable property in India by
non-residents
3. To regulate holding o immovable property outside India
4. To regulate dealings in foreign exchange and securities.
5. To regulate certain payments
6. To regulate foreign companies.
7. To regulate the transactions indirectly officiating foreign exchange.
8. To regulate employment of foreign nationals
9. To conserve the foreign exchange resources of the country and to utilise the
same in the interest of the economic development of the country
CHARACTERISTICS OF F E M A
Foreign exchange Management act (FEMA) was formulated to repeal foreign
exchange regulation act (FERA), 1975 because the conditions had changed a lot
major characteristics of FEMA are as follows.
There is a major shift under FEMA. Under FEMA 1973, all transaction in foreign
exchange and all transactions with non residents [in foreign currency or in rupees]
were absolutely prohibited except where specific relaxations were made. Similarly
non residents were also not permitted to have any dealings in India. Under FEMA
1990, how was, the major focus is on transactions dealings foreign exchange and
foreign securities. Restrictions over dealings with non residents and by nonresidents in India have been, substantially diluted through eliminated.
Major change under FEMA is that only a monetary penalty will be slopped on the
convicted and a there is no punishment by way of imprisonment for contraction of
any of the provisions. The only circumstance under which imprisonment can be
imposed is for non payment of such penalty. Under FERA however of the
enforcement directorate had sweeping process to arrest anyone suspected in
indulging in foreign exchange violations naturally, individual in are particularly
employees of companies would welcome the new provision of FEMA. Foreign
Exchange Management Act. Causes under the Exchange Management Act will
also have to refer by Reserve Bank of India.
PROVISION IN FEMA
Provisions in FEMA, 1999 regarding regulation and management of foreign
exchange. The provision under the act was us follows:1. Provisions regarding current account transactions[section 5]
2. Provision regarding dealing in foreign exchange (section 3)
3. Provision regarding capital account transaction(section 6)
4. Provision regarding goods and services(section 7)
5. Provision regarding and repatriation of foreign exchange (section 8)
6. Provision regarding the exemptions from realization and repatriation in
certain cases (section 9)
7. Provision regarding the exemption from the realisation and repatriation in
certain cases.
b) Make any payment to or for the credit of any person resident outside
India in any manner.
c) Receive otherwise through an authorised person, any payment by
order or on behalf of any person resident outside India in any manner.
d) Enter into any financial transition in India as consideration for or in
association with acquisition or creation or transfer of a right to acquire
any asset outside India by any person.
Provision regarding holding of foreign exchange.
No person resident in India shall acquire, hold, own, possess or transfer any
foreign exchange, foreign security or any immovable property situated outside
India.
Provision regarding current account transactions
Any person may sell or draw foreign exchange to or from an authorised person if
such sale or drawl is a current account transaction. It also empowers the Central
Government to prescribe in public interest and in consultation with the RBI, the
restrictions for such transactions as may be considered reasonable.
Provision regarding capital account transactions.
Any person may sell or draw foreign exchange to or from an authorised person for
capital account transaction (see 6(1)).The Reserve Bank of India may in
consolation with the central Government specify any class or classes of capital
account which are permissible; the limit up to which foreign exchange shall be
admissible for such transactions (sec 6(2)).The Reserve Bank of India may by
regulations, prohibit restrict or regulate the following.
name called between a person resident in India and a person resident outside
India.
India.
A person resident outside India may hold, own transfer or invest into
goods is
ascertainable at the time of export, the value which the exporter having regard to
the prevailing market conditions experts to receive on the sale of goods in a market
outside India(Sec 7 -1(a)).
Every exporter will furnish to the Reserve bank of India such other
information as may be required by the R B I for the purpose of ensuring the
realisation of the export proceeds by such exporter (Sec 7-1(b)).
The Reserve Bank of India may for the purpose of ensuring that the full
export value of goods or such reduced value of goods as the Reserve Bank
determines having required to the prevailing market conditions is received without
any delay, direct any exporter to comply with such requirements as it deems fit
(Sec7 (7)).
Provision regarding realisation and repatriation of foreign exchange.
Where any amount of foreign exchange is due or has acquired to any person
resident in India such person shall take all reasonable steps to realise and repatriate
to India such foreign exchange with in such period and in such manner as may be
specified by the Reserve Bank of India.
Provision regarding the exemption from the realisation and repatriation
in certain cases.
The provision of the act regulating holding of the foreign exchange etc. And
realisation and repatriation of foreign exchange shall not be applied under the
following cases:In case possession of foreign currency or foreign coins by any person up to
such limit as the Reserve Bank of India may specify.
In case foreign exchange acquired or received the eighth day of July 1947 or
any income arising or acquiring thereon which is held outside India by any person
is pursuance of a general or permission granted by the R B I.
In case of foreign exchange held by a person resident in India up to such
limit as the R B I may specify if such foreign exchange was acquired by way of
gift or inheritance from a person including any income outside there from.
In case foreign exchange acquired from employment business, trade relation,
service, honorarium, gifts, inheritance or any other legitimate means up to such
limit as the R B I may specify.
In case foreign currency account held or operated by such persons or class of
persons and the limit up to with the R B I may specified.
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does not use it for such purpose or dose not surrender it to authorized person with
in the specified period or uses the foreign exchange so acquired or purchased for
any other purpose for which purchases or acquisition of foreign exchange is not
permissible under the provision of the act or the rules or regulations or directions
made shall be deemed to have committed contravention of the provision of the act
(section 10(6) )Provision Regarding the Reserve Bank of Indias Power To Issue
Directions To Authorized persons.
The Reserve Bank of India may, for the purpose of securing compliance with the
provisions of this act and of any rules, regulations, notifications or directions made
there under, due to make the authorized person any directions in regarding to make
of payments or the doing or desist from doing any act relating to foreign exchange
or foreign security (section 11(1) ) The Reserve Bank of India may direct any
authorized person to furnish such information in such manner as it deems fit
(section 11(2) )
Where any authorized person contravenes any direction given by the R B I under
this act or fails to file any returns as directed by the R B I, the R B I may after
giving reasonable opportunity of being heard, impose on authorized person a
penalty which may extend to Rs.10000 and in case of counting contraventions with
an additional penalty which may extend to Rs. 2000 for every day during which
such contravention continues (sec 11(3)).
Provision regarding the powers of R B I to inspect Authorized Person.
Offices of enforcement
Classes of enforcement: - The various classes of offices that may appoint by the
Central Government for the purpose of this act are:o Directors of enforcement
o Additional Directors of enforcement
o Deputy Directors of enforcement
o Assistant Directors of enforcement
Such other classes of offices as may be appointed for the purpose of the act
13
Powers of the officers of enforcement: The central government may be appointing an officer of enforcement who
may exercise the powers and discharge the duties of conferred on him under this
act. The powers conferred upon the enforcement officer under this act are:1. Power to call for information
2. Power to search suspected person and to ceases documents
3. Power to arrest.
4. Power to search and stop conveyances.
5. Power to search premises.
6. Power to seize documents.
7. Power to examine persons.
8. Power to summons person to give evidence and produce documents.
9. Power to retain documents.
10.Power to encash cheques, drafts, travellers cheque, seized during
investigation.
11.Power to seize the books of accounts and other documents of any
authorised dealers.
DIFFERENCES FERA
PROVISIONS
1
FERA
sections,
FEMA
consisted
and
was
complex
FEATURES
of
Presumption
of
negative These
presumptions
of
joining
hands
in
IN FEMA
like
Capital
Transaction,
account
person,
15
FERA.
in
detail
in
FEMA.
DEFINITION
Definition
of
"Authorized The
OF
AUTHORIZED
PERSON
definition
of
person
has
MEANING
"RESIDENT"
Tax
Act,
in
TAX ACT.
brought
under
FEMA.
the
purposes
of
person
who
is
man
and
going
staying
PUNISHMENT
the
offence
is
money
some
as
amount
a
of
penalty.
Imprisonment
is
PENALTY.
monetary
penalty Under
FEMA
the
considerably
amount involved.
APPEAL
"Adjudicating
Appeals)
of
Adjudicating
Authorities
and
Director
special
(appeals)
before
Tribunal
Exchange."
lies
"Appellate
for
Foreign
An
appeal
expressly
ASSISTANCE
DURING
to
take
LEGAL
of
legal
PROCEEDINGS.
assistance
practitioner or chartered
accountant (32)
POWER
10 SEARCH
SEIZE
rank
of
18
CONCLUSION
After making a detailed study we made a conclusion that the foreign
exchange management act (FEMA) of 1999 that was formulated to repeal
foreign exchange regulations act (FERA) of 1973 because of the changed
conditions in the trading sector. This special act made a very strict control
over the foreign exchanges and transfer of foreign currencies and securities
and this act playing a great role in the field of foreign transfer or
transactions.
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Bibliography
WWW.GOOGLE.COM
WWW. WIKIPEDIA.ORG
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