FEMA- Rules & Regulation (Capital account transaction )

FDI & FEMA : Reinforcing Indian Economy

Part 19

Capital account transaction

Capital account transaction means a transaction which alters the assets or liabilities, including contingent liabilities, outside India of persons resident in India or assets or liabilities in India of persons resident outside India, and includes transactions like Changes in Assets /Liabilities, transfer /issue of security, borrowing/lending, export, import or holding of currency or currency notes, giving guarantee.

Capital account transaction

Capital account transactions are deemed to be prohibited unless permitted and current account transactions are deemed to be permitted unless prohibited.

Export of goods and services

Every exporter of goods shall furnish to the Reserve bank or to such other authority a declaration in such form as may be specified, containing true and correct material, including the amount representing the full export value, if the full export value of goods is not ascertainable at the time of export, the value which the exporter, having in regard to the prevailing market conditions, expects to receive on the sale of the goods in the market outside India; furnish to the Reserve bank all information as may be required by the Reserve Bank for the purpose of ensuring the realization of export proceeds by such exporter.

Applicability of this act

The FEMA, is applicable- 1) To the whole of India 2) Any branch, office and agency, which is situated outside India, but is owned or controlled by a person resident in India.

Applicability of this act

Broadly speaking, FEMA covers three different types of categories, and deals differently with them.a) Person b) Person resident in India c) Person resident outside India

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