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 The Foreign Exchange Regulation Act (FERA)
of 1973 enacted in 1973
 In the backdrop of acute shortage of foreign
exchan...
 The FEMA (1999) or in short FEMA has been
introduced as a replacement for earlier Foreign
Exchange Regulation Act (FERA)...
 To consolidate & amend the law relating to foreign
exchange.
 To facilitating external trade & payments.
 To remove im...
 Activities such as payments made to any person outside
India or receipts from them, along with the deals in
foreign exch...
 Deals in foreign exchange under the current account by an
authorized person can be restricted by the Central
Government,...
 The buying and selling of foreign currency and other debt
instruments by businesses, individuals and governments
happens...
 FEMA is applicable to all parts of India.
 The act is also applicable to all branches, offices &
agencies outside India...
 Liberal Form of FERA.
 Extends of whole of India.
 It is more human & natural.
 Removes restrictions on drawal of for...
Fera fema
Objective is to conserve FOREX and
to prevent its misuse
Objective is to facilitate external trade
and payments ...
DIFFRENCES FERA FEMA
Definitions Current A/c not
defined
Current a/c, service all
defined
2.Provisions Complex 81 Sec Simp...
 The Reserve Bank of India and central
government would continue to be the
regulatory bodies.
 Presumption of extra terr...
 Current Account Transactions Rules, 2000
 Permissible Capital Account Transactions
Regulations,2000
 Transfer or Issue...
 Export of Goods and Services regulations,
2000
 Realization, repatriation and surrender of
Foreign Exchange regulations...
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Foreign exchange management act (FEMA), 1999

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The FEMA (1999) or in short FEMA has been introduced as a replacement for earlier Foreign Exchange Regulation Act (FERA)
FEMA came into act on the 1st day of June,2000
49 sections in the Act.

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Foreign exchange management act (FEMA), 1999

  1. 1. TheYoungIndianEconomists.wordpress.com
  2. 2.  The Foreign Exchange Regulation Act (FERA) of 1973 enacted in 1973  In the backdrop of acute shortage of foreign exchange in the country  FERA had a controversial 27 year stint during which many bosses of the Indian corporate world found themselves at the mercy of the Enforcement Directorate (E.D). TheYoungIndianEconomists.wordpress.com
  3. 3.  The FEMA (1999) or in short FEMA has been introduced as a replacement for earlier Foreign Exchange Regulation Act (FERA)  FEMA came into act on the 1st day of June,2000  49 sections in the Act. TheYoungIndianEconomists.wordpress.com
  4. 4.  To consolidate & amend the law relating to foreign exchange.  To facilitating external trade & payments.  To remove imbalance of payment.  To make strong & developed foreign exchange market.  Regulation of employment business & investment of non-residents. TheYoungIndianEconomists.wordpress.com
  5. 5.  Activities such as payments made to any person outside India or receipts from them, along with the deals in foreign exchange and foreign security is restricted. It is FEMA that gives the Central Government the power to impose the restrictions  Restrictions are imposed on residents of India who carry out transactions in foreign exchange, foreign security or who own or hold immovable property abroad  Without general or specific permission of the MA restricts the transactions involving foreign exchange or foreign security and payments from outside the country to India – the transactions should be made only through an authorized person. TheYoungIndianEconomists.wordpress.com
  6. 6.  Deals in foreign exchange under the current account by an authorized person can be restricted by the Central Government, based on public interest generally.  Although selling or drawing of foreign exchange is done through an authorized person, the RBI is empowered by this Act to subject the capital account transactions to a number of restrictions.  Residents of India will be permitted to carry out transactions in foreign exchange, foreign security or to own or hold immovable property abroad if the currency, security or property was owned or acquired when he/she was living outside India, or when it was inherited by him/her from someone living outside India.  Exporters are needed to furnish their export details to RBI. To ensure that the transactions are carried out properly, RBI may ask the exporters to comply to its necessary requirements.
  7. 7.  The buying and selling of foreign currency and other debt instruments by businesses, individuals and governments happens in the foreign exchange market  Largest and most liquid market in the world as well as in India  The management of foreign exchange market becomes necessary in order to mitigate and avoid the risks.  Central banks would work towards an orderly functioning of the transactions which can also develop their foreign exchange market.
  8. 8.  FEMA is applicable to all parts of India.  The act is also applicable to all branches, offices & agencies outside India owned or controlled by a person who is resident of India. TheYoungIndianEconomists.wordpress.com
  9. 9.  Liberal Form of FERA.  Extends of whole of India.  It is more human & natural.  Removes restrictions on drawal of foreign exchange. TheYoungIndianEconomists.wordpress.com
  10. 10. Fera fema Objective is to conserve FOREX and to prevent its misuse Objective is to facilitate external trade and payments and maintenance of FOREX market in India Violation of FERA was a criminal offence Violation of FEMA is a civil offence Offences under FERA were not compoundable Offences under FEMA are compoundable Citizenship was a criteria to determine the residential status of a person under FERA Stay of more than 182 days in India is the criteria to decide residential status under FEMA. TheYoungIndianEconomists.wordpress.com
  11. 11. DIFFRENCES FERA FEMA Definitions Current A/c not defined Current a/c, service all defined 2.Provisions Complex 81 Sec Simple 49 Sec 3.Authorised Person Narrow Definition Has been widened to include banks 4. Compatibility with IT Not dealt Considers resident in India similar to IT 5. Right of Assistance No help allowed Sec 32 gives right to help of legal practitioner TheYoungIndianEconomists.wordpress.com
  12. 12.  The Reserve Bank of India and central government would continue to be the regulatory bodies.  Presumption of extra territorial jurisdiction as envisaged in section (1) of FERA has been retained.  The Directorate of Enforcement continues to be the agency for enforcement of the provisions of the law such as conducting search and seizure. TheYoungIndianEconomists.wordpress.com
  13. 13.  Current Account Transactions Rules, 2000  Permissible Capital Account Transactions Regulations,2000  Transfer or Issue of any Foreign Security regulations, 2004  Foreign currency accounts by a person resident in India Regulations,2000  Acquisition and transfer of immovable property in India regulations,2000  Establishment in India of branch or office or other place of business regulations, 2000  Manner of Receipt and Payment Regulations, 2000 TheYoungIndianEconomists.wordpress.com
  14. 14.  Export of Goods and Services regulations, 2000  Realization, repatriation and surrender of Foreign Exchange regulations, 2000  Possession and Retention of Foreign Currency Regulations, 2000  Foreign Exchange (compounding proceedings) rules, 2000 TheYoungIndianEconomists.wordpress.com
  15. 15. TheYoungIndianEconomists
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The FEMA (1999) or in short FEMA has been introduced as a replacement for earlier Foreign Exchange Regulation Act (FERA) FEMA came into act on the 1st day of June,2000 49 sections in the Act.

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