RBI / FEMA Compliances

Foreign Exchange Management Act, 1999 (FEMA) was introduced as a replacement of the earlier Foreign Exchange Regulation Act (‘FERA’). The main objective behind introducing FEMA was to consolidate and amend the law relating to foreign exchange to facilitate the external trade and payments and for promoting the well-ordered growth and management of the foreign exchange market in India. An outstanding change that FEMA lead to in India was that it made all the crimes regarding foreign exchange civil mal-practices as opposed to criminal as dictated by FEMA.

FEMA is significant & pertinent all over India & also applicable to all the abroad branches, offices & agencies owned & maintained by an Indian resident. Generally, FEMA apllies to the following transactions:

1. Transfer or publish of any foreign security by an Indian Resident
2. Transfer or publish of any security by a person living abroad
3. Transfer or publish any security or foreign security by any branch or any agency in India of an abroad resident. 
4. Any borrowing or loan in foreign exchange
5. Any borrowing or lending in rupees between a person resident in India and a person resident outside India.
6. Deposits between an Indian resident and a person living abroad
7. Holding of currency or currency notes or its export or import.
8. Transfer of immovable property outside India, other than a lease not exceeding five years, by a person resident in India.
9. Purchase or transfer of immovable property in India, apart from a lease not more than five years by a person not living in India.

The foreign transactions under FEMA are categorized into two categories – capital account transactions and current account transactions. Capital Account consists of all capital transactions whereas the current account comprises trade of goods or services. Current Account transactions are those transactions that involve inflow and outflow of money to and from the country/countries during a year, due to the trading/rendering of commodity, service, and income. In addition to the above, some transactions are specifically prohibited by FEMA. 

How ASC Helps 

FEMA prescribes certain compliances in the form of reporting by any person who undertakes transactions prescribed under FEMA. Such compliances include foreign liabilities and assets return, annual performance report, Form FC_GPR, etc. 

Our team of professionals stays constantly abreast with the regulatory environment in India and assists our clients in making compliances under FEMA promptly. Our key services offerings include the following:

• Advisory about the establishment of  foreign company’s presence in India in the form of the liaison office, project office or branch office, etc. and preparing an application in the prescribed format to the Reserve Bank of India (‘RBI’) and regular follow up with the RBI for obtaining the approval.
• Advisory about the documents to be maintained and compliance to be made by foreign companies having a presence in India.
• Assistance concerning to timely reporting to RBI of the transactions in the nature of sale/purchase of securities, issuance of shares to non-residents, making remittances outside India, etc.
• Advisory in relation to Indian companies establishing their presence outside India and compliances to be made.
• Representation before the RBI for compounding of offenses committed under FEMA.