Foreign Exchange Management Act, 1999
The transaction involving foreign exchange is regulated by Foreign Exchange Management Act, 1999 in India. The main thrust from the liberalization of the economy has been on the promotion of foreign exchange rather than control of foreign exchange. All transaction involving foreign exchange is regulated by FEMA and the provisions of FEMA have to comply with wherever applicable. The preamble of the Act says that it 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
Foreign Exchange Management Act, 1999 (“FEMA”) has come into force from 1st June 2000 by replacing Foreign Exchange Regulations Act (“FERA”). The main change that has been brought is that FEMA is a civil law, whereas the FERA was a criminal law. FERA was popular for its draconian provisions. The shift of FERA to FEMA was the shift of control of the foreign exchange to regulation and promotion and orderly development of the Foreign exchange. FEMA is forward-looking legislation which aims to facilitate foreign trade.
FEMA aims to achieve self-regulation instead of imposed restrictions. The rationale for strict regulations under FERA 1973 after Independence was that India was left with little forex reserves and during the oil –crisis of the seventies ballooning oil import bills further drained foreign exchange reserves. Unsatisfactory reserves made it imperative to put in place stringent controls to conserve foreign exchange and to utilize it in the best interest of the country.
FEMA has 49 Sections of which 9 Sections (Sections 1 to 9) are substantive and the rest are procedural or administrative. RBI is entrusted with the administration and implementation of FEMA. RBI has so far issued over 200 Notifications, each of which contains several regulations for a particular class of transactions, e.g., Notification No. FEMA/21/RB-2000, deals with acquisition and transfer of immovable property in India.
We at Taxpert Professionals provide the following services:
- Due Diligence under FEMA
- Availing of External Commercial borrowings
- Assistance and guidance on remittance of funds from India
- Advisory relating to current and capital account transaction
- Compounding under FEMA
- Advisory in relation to Export and Import regulations under FEMA
- Advisory in relation to acquisition of immovable property in India and vice versa
- Advisory in relation to guarantee provisions under FEMA
- Guidance on remittance of funds outside India
- Certification under FEMA
- Assistance in Pledge of shares
- Assistance in NRE/NRO Bank accounts
- ESOPS and compliance
- opening of Branch office/Liaison office and wholly owned subsidiary in India
- Investment outside India
- Assistance in Liberalised remittance scheme.
- Advisory in relation to issuance and conversion of CCDs and CCPs
- Advisory in relation to cross charge of services
- Annual compliances and return filing
- Advisory on effect of various changes in law
- Foreign Direct Investment in India
- Training of staff
- System creation for compliance
- Valuation of shares for transfer of shares from resident to non-resident and vice versa