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FEMA

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FERA FEMA differenceDifferences1. Provisions2.Features

3.Definitions

4.AuthorisedPerson

5.Compatibilitywith IT

FERAComplex 841 SecPresumption of MensRea

Current A/c not definedNarrow Def

Not dealt

FEMASimple 49 SecExcluded

Current a/c, serviceall definedHas been widenedto include banks

Considers residentin India similar to IT

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FERA /FEMA6.Punishment type

7.Quantity of monetary penality8.Appeal

9.Right of assistance

Criminal offence

5 Times the Amt.

AA went to highCourt

No help allowed

Civil Offence, withmonetary fine

3 times the Amt.

Special dir. (appeals), Appelate Tribunal /High C

Sec 32 gives rt tohelp of legalpractitioner

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Definitions: Capital account

transaction which alters the assets or liabilities, including contingent liabilities,outside India of persons resident in India

or assets or liabilities in India of personsresident outside India,

and includes transactions referred to insubsection (3) of section 6;

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Capital A/c transactions Sec 6(3) C Without prejudice to the generality of the provisions of

sub-section (2), the RBI may, by regulations prohibit,restrict or regulate the following,-

transfer or issue of any foreign security by a personresident in India;

transfer or issue of any security by a person residentoutside India;

transfer or issue of any security or foreign security byany branch, office or agency in India of a personresident outside India;

any borrowing or lending in foreign exchange inwhatever form or by whatever name called;

any borrowing or lending in rupees in whatever form or by whatever name called between a person resident inIndia and a person resident outside India;

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Capital A/c transactions Sec 6(3) C

deposits between persons resident in India and personsresident outside India;

export, import or holding of currency or currency notes; transfer of immovable property outside India, other than a

lease not exceeding five years, by a person resident inIndia; acquisition or transfer of immovable property in India,

other than a lease not exceeding five years, by a personresident outside India;

giving of a guarantee or surety in respect of any debt,obligation or other liability incurred,- by a person resident in India and owed to a person

resident outside India; or by a person resident outside India.

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Capital account

Prohibition Non resident not to make investment in

business of chit fund Nidhi co. Agricultural palntation Co.

Real estate

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Current account transaction means a transaction other than a capital account

transaction and includes,- payments due in connection with foreign trade, other

current business, services, and short-term banking and

credit facilities in the ordinary course of business, payments due as interest on loans and as net income

from investments, remittances for living expenses of parents, spouse and

children residing abroad, and expenses in connection with foreign travel, educationand medical care of parents, spouse and children;

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foreign exchange means foreign currency and includes,- deposits, credits and balances payable in any

foreign currency, drafts, travellers cheques, letters of credit or

bills of exchange, expressed or drawn inIndian currency but payable in any foreigncurrency,

drafts, travellers cheques, letters of credit or bills of exchange drawn by banks, institutionsor persons outside India, but payable in Indiancurrency

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foreign security

means any security, in the form of shares,stocks, bonds, debentures or any other instrument denominated or expressed inforeign currency and includes securitiesexpressed in foreign currency, but whereredemption or any form of return such as

interest or dividends is payable in Indiancurrency;

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Person resident in India means-

a person residing in India for more than 182 days during thecourse of the preceding financial year but does not include;- a person who has gone out of India or who stays outside

India, in either case- for or on taking up employment outside India, or for carrying on outside India a business or vocation

outside India, or for any other purpose, in such circumstances as would

indicate his intention to stay outside India for an uncertainperiod;

a person who has come to or stays in India, in either case,otherwise than-

for or on taking up employment in India, or for carrying on in India a business or vocation India, or for any other purpose, in such circumstances as would

indicate his intention to stay in India for an uncertainperiod;

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Person resident in India

any person or body corporate registered or incorporated in India,

an office, branch or agency in India owned or controlled by a person resident outside India,

an office, branch or agency outside India ownedor controlled by a person resident in India;

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Person resident in India

To qualify as the resident the personconcerned will have to fulfill foll. conditions

1. Duration of stay 2. Purpose of stay

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"repatriate to India"

means bringing into India the realised foreignexchange and-

the selling of such foreign exchange to anauthorised person in India in exchange for rupees; or

the holding of realised amount in an accountwith anauthorised person in India to the extentnotified by the Reserve Bank, and includes

use of the realised amount for discharge of adebt or liability denominated in foreignexchange and the expression "repatriation"shall be construed accordingly;

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Regulation and Management of ForeignExchange 1. Dealing in foreign exchange, etc2. Holding of foreign exchange, etc.3. Current account transactions4. Capital account transactions5. Export of goods and services6. Realisation and repatriation of foreign

exchange7. Exemption from realisation and repatriation in

certain cases

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Export of goods and services Every exporter of goods shall-

furnish to theRBI or to such other authority a declaration,containing true and correct material particulars, the amount of full export value or, where it is not ascertainable the expectedvalue on the sale in markets outside India.

furnish to the RBI other information as may be required , for the purpose of ensuring the realisation of the export proceedsby such exporter.

The Reserve Bank may, direct any exporter to comply torequirements to received without any delay such export value.

Every exporter of services shall furnish to the RBI or to such other authorities a declaration in such form , containing the true andcorrect material particulars in relation to payment for suchservices.

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"authorised person

" means an authorised dealer, moneychanger, off-shore banking unit or anyother person for the time being authorisedunder sub-section (1) of section 10 to dealin foreign exchange or foreign securities;

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Authorised Person :role

Application to be made to RBI Authorisation will be in writing may be revoked by RBI: in public interest ,failed

to foll. Instructions Before transacting require the person to make

declaration ,incase of doubt report the matter to

the Reserve Bank. RBI can inspect AP record, Accounts

documents

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Contravention and Penalties Penalties

3 times the amount if quantifiable, or up to Rs2 L where the amount is not quantifiable,contravention is a continuing one, further penalty which may extend to 5000/ for everyday after the first day during which thecontravention continued

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Contravention and Penalties

Enforcement of the orders of adjudicatingauthority

1. Civil imprisonment if fine not paid

2. Order for arrest will be made after due notice3. give the defaulter an opportunity showing

cause why not be arrested

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Contravention and Penalties

Power to compound contraventionapplication made by the person committing suchcontravention, be compounded within 180 days

from the date of receipt of application by theDirector of Enforcement or such other officers of the Directorate of Enforcement and officers of the RBI may be authorised in this behalf by theCentral Government in such manner as may beprescribed.

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Adjudicating authority

Special Dir. Appeals

Appelate Tribunal

High Court

Adjudiaction and Appeal

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Adjudication and Appeal The CG shall, while appointing the Adjudicating

Authorities AA will hold an enquiry on a complaint in writing made byany officer authorised by a general or special order by theCG.

The said person may appear either in person or take theassistance of a legal practitioner/CA of his choice for presenting his case before the AA

AA shall have the powers of a civil court the AA shall deal the case expeditiously, & record

periodically the reasons in writing for not disposing off thecomplaint within the said period.

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Special Director (Appeals Appeal to Special Director (Appeals The CG shall, by notification, appoint one or more Special

Directors (Appeals ) to hear appeals against the orders of theAA

Any person aggrieved by an order made by the AA, beingan Assistant Director of Enforcement or a Deputy Director

of Enforcement, may prefer an appeal to the SpecialDirector (Appeals) Appeal to be made within 45 days of receipt of order of AA the Special Director (Appeals) may after giving the parties

to the appeal an opportunity of being heard, pass suchorder thereon :confirming, modifying or setting aside theorder appealed against

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Appelate Tribunals to hear appeals against the orders of the AA and the

Special Director (Appeals) deposit the amount of such penalty with such authority as

may be notified by CG Appeal to be filed within 45 days from the date on which a

copy of the order made by the AA or the Special Director (Appeals) is received by the aggrieved person Appeal to be disposed within 180 days or reasons given

thereon and copy givn to AA/ SDA

the Appellate Tribunal and the Special Director (Appeals)shall have powers to regulate its own procedure unlikeCPC

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High Court

Appeal to High Court Any person aggrieved by any decision or order

of the Appellate Tribunal or the Special Director

(Appeals) may file an appeal to the High Courtwithin sixty days from the date of communicationof the decision or order of the Appellate Tribunalor the Special Director (Appeals) to him on anyquestion of law arising out of such order:

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Directorate of Enforcement

Appointed by CG shall be called officers of

Enforcement, the Director of Enforcement / Additional Director

of Enforcement / Special Director of Enforcement / Deputy Director of Enforcement toappoint officers of Enforcement below the rankof an Assistant Director of Enforcement.

The officers shall exercise the like powers which

are conferred on the income-tax authorities,subject to such conditions and limitations as theCG