In the Days past, India had an adverse Balance of Payment of International trade where the total imports were less than exports; due to which there was shortage of foreign exchange in India. To overcome this problem FEMA was introduced in 1947. In 1991 Government initiated the process of liberalization policy. Foreign Investment in various sectors were permitted. This Increased flow of foreign exchange and foreign reserve of India were increased simultaneously. In the view of this FERA was replaced By FEMA.
Provision of FEMA:-
- Free transaction on current Account subject to reasonable restriction
- RBI control over capital account transaction
- Control over realisation of export proceeds
- Dealing in foreign exchange through Authorised person (money changer, off-shore banking unit)
- Adjudication of offences
- Appeal comprising of special Director (Appeals) and Appellate Tribunal
- Directorate of Implementation
Authorities and enforcement Machinery under FEMA
- Department of Foreign exchange in Reserve Bank of India.
- Directorate of Implementation, Department of revenue, Ministry of finance.
- Capital Market Division, Department of Economic Affairs
- Foreign trade Division
Implementation of FEMA: - Reserve Bank of India (RBI) exercises overall control over foreign exchange deals, implementation of FEMA has been entrusted to a separate Directorate of enforcement for this Act.
Some FEMA Guidelines:-
- FEMA does not apply to Indian citizen who resided outside India. This criterion was checked by calculating the number of days a resided in India during the previous financial year. It was noted that even an office, a branch or an agency could be a person for the purpose of checking residency.
- FEMA authorized the central government to impose restrictions on and supervise payment made to any person outside India or receipts from them, Forex and Foreign security deals.
- It specified the areas around acquisition/holding of forex that require specific of the Reserve Bank of India (RBI) or Government.
- FEMA put foreign exchange transaction into two categories:-
- Capital Account Transaction
- Current Account Transaction
Annual compliances under FEMA:-
A. Annual Return on Foreign Liabilities and Assets (FLA):
In order to capture the statistics relating to FDI or ODI in a more comprehensive manner as also to align it with International Best practices, the RBI has introduced the requirement of filling Annual return on Foreign Liabilities and Assets on or before 15 July every year
B. Annual performance Report(APR):
An Indian Party / Resident Individual which has made overseas Direct Investment (ODI) has to submit Annual Performance Report (APR) on 31 December every year
How ASC Helps?
- Assistance In filling Foreign Liabilities & Assets and Annual Performance Report
- Checking compliances on the Business
- Regularly Updating to the recent amendments
- Conducting training session on regular Basis