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:
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: