FOREIGN EXCHANGE AND MANAGEMENT ACT NOTES:
Table of Contents
INTRODUCTION
The FEMA is an act of the parliament of India
to coordinate global business. Foreign exchange management is associated with
currency transactions designed to meet and receive overseas payments. Beyond
these transactions, foreign exchange management requires you to understand the
relevant factors that influence currency values.
It was passed in the winter session of
parliament in 1999, replacing the foreign exchange and regulation act,1973
It
provides:-
- Free transactions on the current account subject to reasonable restrictions that may be imposed
- RBI control over Capital Account Transactions
- control over the realization of export proceeds
- Dealings in Foreign Exchange through Authorized Person (e.g Authorised Dealer/ Money Changer/ Off-shore Banking Unit)
- Adjudication of Offences
- Appeal provisions including Special Director (Appeals) and Appellate Tribunal
- Directorate of Enforcement
HISTORY OF (FEMA) ACT, 1999
In the acute shortage of foreign exchange in
the country, foreign and exchange management was enacted. The legislation was
passed by the Indian parliament by the government of Indira Gandhi but it comes
in the force with effect from 1994
It was repealed in 1999 by the government of
Atal Bihari Vajpayee and replaced by the Foreign Exchange Management Act, which
liberalized foreign exchange controls and restrictions on foreign investment.
It dealt in foreign exchange and securities
and the transactions which had an indirect impact on the foreign exchange and
the import and export of currency.
FEMA contains 7 Chapters divided into 49
sections of which 12 sections cover operational part and the rest
contravention, penalties, adjudication, appeals, enforcement directorate, etc.
GENERAL OVERVIEW OF THE FEMA ACT, 1999
As far as transactions on account of trade-in
goods and services are concerned, FEMA has, by and large, removed the
restrictions except for the enabling provision for the Central Government to
impose reasonable restrictions in public interest. The capital account
transactions will be regulated by RBI /Central Government for which necessary
circulars /notifications will have to be issued under FEMA.
CHAPTER I
– Preliminary (Sec 1&2)
CHAPTER
II- Regulation and Management of Foreign Exchange (Sec 3 –9)
CHAPTER
III – Authorized Person (Sec 10 –12)
CHAPTER
IV – Contravention and Penalties (Sec 13-15)
CHAPTER V
– Adjudication and Appeal (Sec 16- 35)
CHAPTER
VI – Directorate of Enforcement (Sec 36-38)
CHAPTER
VII- Miscellaneous (Sec 39 – 49)
Difference between FEMA and FERA
POINTS OF COMPARISON
|
FEMA-2000
|
FERA-1973
|
1. Content
|
There are 49 sections out of which 12 section relate to
operational part and rest with penal provisions
|
There were 81 sections out of which 32 sections related to
operational part and rest deal with penalties, appeals, etc
|
2. Nature
|
Basically, it is a civil law
|
It was considered as criminal law
|
3.Applicability
|
The act applies to all branches, offices, and branches
outside India owned or controlled by a person resident in India
|
The act applied to all citizen of India and to branches ad
agencies outsides India and to branches and agencies outside India
|
4. New terms
|
Capital account transactions, current account
transactions, persons, services like new terms ae introduced.
|
This terms were not defined
|
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