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According to FEMA 2000, who can deal in foreign exchange in India?
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According to FEMA 2000, who can deal in foreign exchange in India?
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Question _index_:
According to FEMA 2000, who can deal in foreign exchange in India?
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B Com Exam>B Com Notes>Business Law>Definitions & Main provisions - Foreign Exchange Management Act(2000), Business Law
Definition of FEMA 2000
FEMA 2000 means Foreign exchange management Act 2000. Foreign exchange management act 2000 is a very helpful law for the development of foreign exchange market in India. It was passed in 1999 and came into effect from June 1, 2000, to the entire country. After this foreign exchange regulation act ( FERA ) 1973 was closed. FEMA was most suitable for India's corporate sector instead of FERA because almost all strict regulations of FERA were removed in FEMA.
Objectives of FEMA
1. Main objective of applying to FEMA is to reduce the restriction on foreign exchange. Now, any offense in foreign exchange will be civil offense not criminal offense .
2. This law's main objective is to increase the flow of foreign exchange in India. Now , under this law, you can bring foreign currency in India without any legal barrier .
Provision /Rules / Regulation of FEMA
1. Provision regarding dealing in foreign exchange:-
According to section 3 of FEMA 2000," only authorized person under the govt. terms can deal in foreign exchange in India. "
2. Provision regarding holding of foreign exchange:-
According to section 4 of FEMA 2000, " All persons which are provided authority only can hold or purchase foreign exchange in India or outside India."
3. Provision regarding current account transactions:-
According to section 5 of FEMA 2000," There is no restriction regarding sale or deal foreign exchange if it is a current account transaction ."
The following transaction are deemed current account transactions under FEMA :-
a) Expenses in connection with foreign travel, education, and medical care of parents, spouse and children (Anybody now can send the foreign currency in India for above expenses under current account )
b) Payment due as interest on loan
c) Payment due under short term loan for business .
4. Provision regarding capital account transactions :-
Under section six ," RBI will fix the limit of foreign exchange transactions relating to capital account after discussion with Indian govt. "
RBI can restrict following :-
a) transfer of foreign security by Indian resident .
b) transfer of foreign security by Indian resident which is now outside India .
c) transfer of immovable property .
5. Provision regarding export of goods and services :-
According to section 7 of FEMA 2000, " It is the duty of exporter to declare the true and correct detail of goods which, he have to sell the market outside India and must send complete report to RBI.
RBI can make particular requirement for any exporter .
RBI can also make rules and regulations for realization of amount earned from foreign country.
6. Provision regarding authorised persons :-
RBI can authorize any body who can deal in money exchange or off shore transaction and foreign exchange .
- He has to follow the rules and guidelines of RBI .
- RBI can revoke the authorisation granted to any person at any time in public interest .
- If authorized person will be done contravention the rules of RBI , he will be liable to pay up to Rs. 10000 penalty and Rs. 2000 for every day during which such contravention continue .
7. Provision regarding contravention and penalties :- 8. Provision regarding adjucation and appeal :-
Section 13 to 15
If anybody or person contravenes the rules and regulations of FEMA 2000 or RBI direction, he will be liable to a penalty three times of sum involved in contravention. If contravention will continue, then he will pay up to Rs. 5000 per day during the time of contravention.
According to section 18, " Central govt. can appoint adjudicating authority who can give the punishment of civil imprisonment of maximum six months if case is less than one crore. If demanded value is more than one crore then punishment of imprisonment may be of three years . the person can appeal to special director against the decisions of adjudicating officer. He can also appeal in appellate tribunal and also in high court with the sixty days of communication of order.
Question for Definitions & Main provisions - Foreign Exchange Management Act(2000), Business Law Try yourself: According to FEMA 2000, who can deal in foreign exchange in India? View Solution
You can understand the concepts of Foreign Exchange Management Act(2000) by going through this video.
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| 1. What is the Foreign Exchange Management Act (FEMA) 2000? |  |
Ans. The Foreign Exchange Management Act (FEMA) 2000 is an act of the Indian Parliament that aims to consolidate and amend the law relating to foreign exchange with the objective of facilitating external trade and payments and promoting the orderly development and maintenance of the foreign exchange market in India.
| 2. What are the main provisions of the Foreign Exchange Management Act (FEMA) 2000? | |
Ans. The main provisions of the Foreign Exchange Management Act (FEMA) 2000 are as follows:- It regulates foreign exchange transactions in India.- It prohibits transactions in foreign exchange except through authorized persons.- It permits the Reserve Bank of India to impose restrictions on foreign exchange transactions in certain circ*mstances.- It empowers the Reserve Bank of India to issue directions to authorized persons in relation to foreign exchange transactions.- It provides for the imposition of penalties for contravention of the provisions of the Act.
| 3. Who is required to comply with the provisions of the Foreign Exchange Management Act (FEMA) 2000? | |
Ans. Any person resident in India, including individuals, companies, and other entities, is required to comply with the provisions of the Foreign Exchange Management Act (FEMA) 2000. Any person who is not a resident in India but who carries on business or other activities in India is also required to comply with the provisions of the Act.
| 4. What are some of the common contraventions of the provisions of the Foreign Exchange Management Act (FEMA) 2000? | |
Ans. Some of the common contraventions of the provisions of the Foreign Exchange Management Act (FEMA) 2000 are:- Acceptance of foreign exchange outside India without RBI's permission.- Payment for imports without the necessary approvals from RBI or other authorized banks.- Delay or non-repatriation of foreign exchange received in India.- Delay or non-repatriation of foreign exchange earned abroad.- Non-compliance with the provisions relating to foreign investments in India.
| 5. What are the penalties for contravention of the provisions of the Foreign Exchange Management Act (FEMA) 2000? | |
Ans. The penalties for contravention of the provisions of the Foreign Exchange Management Act (FEMA) 2000 vary depending on the nature and severity of the contravention. Penalties may include the imposition of fines, confiscation of assets, and imprisonment. In addition to penalties, contravening parties may also be subject to civil proceedings and may be barred from conducting further foreign exchange transactions.
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