- The Government of India formulated an act in
order to encourage external payments and across borders trades in India which
was called FEMA.
- The act was introduced in the year 1999 and
replaced the earlier act known as Foreign Exchange Regulation Act.
- Many major reforms were introduced under FEMA. FEMA was introduced in order to fulfil all the
loopholes of FERA and to de-regularize and have a liberal economy in India.
Objectives of FEMA:
- The primary aim of the FEMA's introduction in
India was to streamline payments and commerce with China. Furthermore, FEMA was
designed to support the currency market's orderly growth and upkeep in India.
- The requirements and procedures governing all
foreign exchange transactions in India are outlined by FEMA. The two categories
into which these foreign exchange transactions have been divided are Capital
Account Transactions and Current Account Transactions.
- The balance of payments, as defined by the FEMA
Act, is a record of transactions involving assets, services, and goods between
citizens of several nations. It falls mostly into two categories: current
accounts and capital accounts.
Usage of the FEMA Act
The Foreign Exchange Management Act (FEMA) applies to all of India as
well as to foreign agencies and offices that are run or controlled by Indian
citizens and are situated outside of the country. FEMA head office is situated
in New Delhi and known as Enforcement Directorate. FEMA is applicable to:
- Exporting any commodity or service from India
to a nation outside its borders.
- Any kind of goods or services imported from
outside of India.
- Securities in accordance with the 1994 Public
- Any type of purchase, sale, or exchange (i.e.
- Finance, insurance, and banking services.
- Any foreign business in which a non-resident
Indian (NRI) owns 60% or more of the shares.
- A person may be fined up to three times the
amount involved in the violation or up to Rs. 2 lakhs if they violate the
FEMA's provisions or any rule, instruction, regulation, order, or notification
issued under the agency.
- In the event that the violation persists, he
would be required to pay an additional fine of up to Rs. 5,000 for each day the
Our FEMA Consulting Services:
- Assistance for FEMA Application: We at Agarwal
Gupta and Associates streamline the application process in order to maximise
your approval chance.
- Compliance Examination: Agarwal Gupta and
associates is here to help you meet all the FEMA requirements in order to
protect your organisation from any setback.
- Recovery Plan: We help you develop the
strategies that will help you minimize the impact of disaster.
As a client centric FEMA Consulting Firm Agarwal Gupta and Associates is
dedicated to help you simply the complexities of FEMA regulations allowing you
to focus on your business and keep you hassle-free.