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  NRI » FEMA

What is the preamble of FEMA,1999?
From which date the FEMA has come in to effect?
What are Capital Account Transactions and what are the transactions?
What are Current Account Transactions?
Who issues  directions to the Banks and other authrorised person under FEMA?
Who is Non-resident Indian?
Who is person of India Origin?
 
  What is the preamble of FEMA,1999?

 
To consolidate and amend the law relating to foreign exchange with the objectives of facilitating expernal trade and payments and for promoting the orderly development and maintenance of foreign exchange markets in India.
 
  From which date the FEMA has come in to effect?

The FEMA, 1999 has come in to force on the 1st DAY OF June, 2000 and the FERA,1973 stands repealed.
 
  What are Capital Account Transactions and what are the transactions?


Capital Account Transaction means a transaction which alters the assets or liabilities, including contingent liabilities, outside India or persons resident in India or assets or liabilities in India or persons resident outside India.
Investment by  a body corporate or an entity in India and Investment therein by a person resident outside India Eg: Investment by way of contribution by a person resident outside India to the capital of a firm or a proprietorship concern or an association of persons in India.

  • Import and Export of Currency/ currency notes in to/from India by a person resident outside India.

 

  What are Current Account Transactions?


Current Account Transactio means a transaction other than a capital account transaction and without prejudice to the generality of the foregoing such transaction. Eg: Payments due in connection with Foretign Trade, other current business services, and short-term banking and credit facilities in the ordinary course of business

  • Expenses in connect ion with  foreign travel, education and medical care of parents,spouse,and children
  • Remittances for living expenses of parents spouse and children residing abroad

 

  Who issues directions to the Banks and other authrorised person under FEMA?

  • Reserve Bank of India is empowered to issue directions. Reserve Bank issued FEMA Notificiations and A.P. (DIR Series) Circulars from time to time. Non-Resident Indian Banking

 

  Who is Non-resident Indian?


Section 2 (v) of FEMA,1999 has given definition of Person resident in India and from the definition one has to conclude whether he or she is Non-Resident Indian or not. A person residing in India for more than  182 days during the course of the preceding financial year  but does not include A person who has gone out of India or who stays outside India For taking up employment outside India

  • For carrying on outside India a business or vocation outside India
  • For any other purpose, in such circumstances as would indicate his intention to stay outside India for an uncertain period
  • Any  person or body corporate registered or incorporated in India
  • An office, branch or agency in India owned or controlled by a periosn resident outside India
  • An office,branch or agency outside India owned or controlled by a person resident in India
  • A person includes
  • An individual,
  • A Hindu Undivided Family
  • A company
  • A firm
  •  An association of persons or a body of individuals, whether incorporated or not
  • Every artificial judicial personl, not falling within any of the preceding sub clauses and
  • Any agency, office or branch owned or controlled by such person
 
  Who is person of India Origin?


FEMA,1999 has not given definition of Person of Indian Origin. However, Reserve Bank of India in its various FEMA Notifications issued under FEMA, 1999 has defined a  Person of Indian Origin as under:

I. For the purpose of  opening non-resident bank accounts in India PIO means a citizen of any country other  than that of Bangladesh or Pakistan

He at any time held Indian passport

He or either of his parents or any of his grand parents was a citizen of India by virture of the Constitution of India of the Citizenship Act, 1955 or

The person is a spouse of an Indina citizen or a person referred to in sub-clause a) or b) above

For the purpose of Investing in shares/debentures etc in Indi person of Indian origin   means a citizen of  any country other than that of Bangladesh or Pakistan if

  • He at any time held Indian passport; or
  • He or either of his parents or any of his grand parents was a citizen of India by virtue of the  Constitution of India of the Citizenship Act, 1955
  • The person is a spouse of an Indian citizen or a person referred to in sub-clause a) or b)

II.For the purpose of acquiring immovable property in Indi person of Indian Origin means a citizen of any country other than that of Bangladesh or Pakistan or Sri Lanka or Afghanistan or China or Iran or Nepal  and Bhutan if

He at any time held Indian passport; or

He or either of his parents or any of his grand parents was a citizen of India by virtue of the Constitution of India of the Citizenship Act 1955 or

III.For the purpose of establishing Branch  of Office in India  PIO means a citizen of any country other than that of Bangladesh or Pakistan or Sri Lanka or Afghanistan or China Or Iran if

He at any time held Indian passport; or

He or either of his parents or any of his grand parents was a citizen of India by virtue of the Constitution of India of the Citizenship Act 1955 or

The person is a spouse of an Indian citizen or a person referred to in sub-clause a) or b) above.

  1. For the purpose of acquiring PIO Card PIO means acitizen of any country other than that of Bangladesh or Pakistan, if
    1. He at any time held an Indian Pass port; or
    1. He/she or either of his /her parents or grand parents or great grand parents was born in India and permanently resident in India as defined in the Government of India Act, 1935 and other territories that became part of  Infia thereafter provided neither was at any time a citizen of any country as may be specified by Central Government  from time to time

    2. Who is spouse of a citizen of India or a Person of Indian Origin as mentioned above.