FEMA Ready Reckoner with Commentary (2 Volumes) by Bloomsbury India Professional

Commentary

UPDATED UPTO 15 FEB 2019

CS R. Sridhar, LLB Covering:

Volume 1

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(i) Commentary (ii) FEMA & Allied Acts: • Foreign Exchange Management Act, 1999 • Foreign Contribution (Regulation) Act, 1976 • Foreign Exchange Regulation Act, 1973 • Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 • Foreign Trade (Development and Regulation) Act, 1992 • Prevention of Money Laundering Act, 2002 • Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 (iii) Rules and Regulations issued under FEMA Act, 1999 (iv) Forms (v) FAQs issued by Reserve Bank of India (vi) Press Notes

Bloomsbury Professional India

FEMA Ready Reckoner with

Contents at a glance Acknowledgement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v About the Author. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xv

DIVISION I Commentary PART I BASIC CONCEPTS OF FEMA Chapter 1

Overview of FEMA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.5

Chapter 2

Concept of Residence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1

Chapter 3

Current account transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1

Chapter 4

Overview of Capital Account Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1

PART II CAPITAL ACCOUNT TRANSACTIONS Chapter 5

Inbound Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3

Chapter 6

Outbound Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1

Chapter 7

Foreign Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1

Chapter 8

Maintaining Foreign Currency Accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1

Chapter 9

Gifts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.1

Chapter 10

Deposits â&#x20AC;&#x201C; Facilities for Non-residents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.1

Chapter 11

Immovable Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.1

Chapter 12

Cross Border Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.1

PART III CURRENT ACCOUNT TRANSACTIONS Chapter 13

Current account transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.3

Chapter 14

Search & Seizures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.1

Chapter 15

Appeals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.1 xi

FEMA Ready Reckoner with Commentary

PART IV PENALTY PROCEDURES & COMPOUNDING OF OFFENCES Chapter 16

Penalties and Compounding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.3

PART V RELEVANT ALLIED LAWS Chapter 17

The Foreign Exchange Regulation Act, 1973 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.3

Chapter 18

The Foreign Contribution Regulation Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.1

Chapter 19

The Foreign Trade (Development and Regulation) Act, 1992. . . . . . . . . . . . . . . . . . . . . . . . 19.1

Chapter 20

The Prevention of Money-Laundering Act, 2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.1

Chapter 21

The Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.1

Chapter 22

Smugglers and Foreign Exchange Manipulators Act, 1976. . . . . . . . . . . . . . . . . . . . . . . . . . 22.1

DIVISION 2 FEMA ACT, 1999 Foreign Exchange Management Act, 1999. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-3

DIVISION 3 Allied Legislation The Foreign Contribution (Regulation) Act, 2010 (42 of 2010). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . AL1.3 Foreign Exchange Regulation Act, 1973 (46 of 1973). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . AL2.1 Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (52 of 1974) . . . . . . . AL3.1 The Foreign Trade (Development and Regulation) Act, 1992 (22 of 1992). . . . . . . . . . . . . . . . . . . . . . . . AL4.1 Prevention of Money Laundering Act, 2002 (15 of 2003). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . AL5.1 Smugglers and Foreign Exchange Manipulators Act, 1976 (13 OF 1976). . . . . . . . . . . . . . . . . . . . . . . . . AL6.1

DIVISION 4 Rules issued under FEMA Act, 1999 The Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules, 2000. . . . . . . . . . . . . R1.3 The Foreign Exchange (Authentication of Documents) Rules, 2000. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . R2.1 Foreign Exchange (Compounding Proceedings) Rules, 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . R3.1 Foreign Exchange Management (Current Account Transactions) Rules, 2000. . . . . . . . . . . . . . . . . . . . . . . R4.1 xii

Contents at a glance

The Foreign exchange Management (Encashment of Draft, Cheque, Instrument and payment of interest) rules, 2000. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . R5.1 Appellate Tribunal for Foreign Exchange (Recruitment, Salary & Allowances & other Conditions of Service of Chairperson & Members) Rules, 2000. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . R6.1

DIVISION 5 FEMA Regulations FEMA Regulations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reg-1.3

DIVISION 6 FORMS FEMA Forms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-3

DIVISION 7 FAQs Frequently Asked Questions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . FAQ-3

DIVISION 8 Press Notes Press Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PN-3

Volume 2 DIVISION 9 Notifications Notifications. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not-3

xiii

FEMA Ready Reckoner with Commentary

DIVISION 10 AP DIR Circulars AP DIR Circulars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . APD-3

DIVISION 11 Master Directions Master Directions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . MD-3

xiv

Table of Contents Acknowledgement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v About the Author. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix Contents at a glance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xi

DIVISION I Commentary PART I BASIC CONCEPTS OF FEMA Chapter 1 Overview of FEMA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.5 1.1 Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.5 1.2 Difference between FERA and FEMA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.5 1.3 Extra territorial jurisdiction of FEMA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.6 1.4 Salient provisions of FEMA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.6 1.4.1 Enforcement of FEMA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.6 1.5 Overall scheme of FEMA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.6 1.6 Important jurisprudence around erstwhile FERA that can be applied to FEMA. . . . . . . . . . . . . . . 1.7 1.7 Dealings in foreign exchange. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.8 1.8 Authorised Person. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.9 1.9 Realisation and repatriation of foreign exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.10 1.10 Exemption from realisation and repatriation in certain cases. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.10 1.11 Regulations relating to realisation and repatriation of foreign exchange . . . . . . . . . . . . . . . . . . . 1.10 1.12 Duty of persons to realise foreign exchange due. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.11 1.13 Manner of Repatriation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.11 1.14 Period for surrender of realised foreign exchange. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.11 1.15 Period for surrender in certain cases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.11 1.16 Period for surrender of received/realised/unspent/unused foreign exchange by Resident individuals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.12 1.17 Exemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.12 1.18 Manner of Receipt in Foreign Exchange. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.12

FEMA Ready Reckoner with Commentary

1.19 1.20 1.21 1.22 1.23 1.24 1.25 1.26 1.27 1.28 1.29

Manner of Receipts in certain cases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Manner of payment in foreign exchange. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Manner of Payment in certain cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reserve Bank’s power to issue directors to Authorised Person. . . . . . . . . . . . . . . . . . . . . . . . . . . Suspension of operation of FEMA Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Power of Central Government to give directions.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Removal of difficulties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Power to make Rules. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Power to make regulations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Rules and regulations to be laid before Parliament. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Repeal and Saving. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1.13 1.14 1.15 1.16 1.16 1.17 1.17 1.17 1.18 1.18 1.19

Chapter 2 Concept of Residence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1 Meaning of the term “person”. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2 Persons Resident in India. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3 Non-Resident Indians. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4 Person of Indian Origin. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2.1 2.1 2.1 2.5 2.6

Chapter 3 Current account transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1 3.1 Laws and Regulations Relating to Current Account Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . 3.1 3.1.1 Definiton of Current Account transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1 3.1.2 General Permission For Current Account Transactions. . . . . . . . . . . . . . . . . . . . . . . . . 3.1 3.1.3 Export of goods and services.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1 3.1.4 Regulations relating to current account transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2 3.2 Interpretations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2 3.2.1 Prohibited and Regulated Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2 3.2.1.1 Meaning of current account transaction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2 3.2.1.2 General permission for entering into current account transactions. . . . . . . . 3.2 3.2.1.3 Prohibited current account transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3 3.2.1.4 Current account transactions requiring Government approval . . . . . . . . . . . 3.5 3.2.1.5 Current account transactions requiring RBI approval. . . . . . . . . . . . . . . . . . 3.7 3.2.1.6 Exemption from approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.11 3.2.2 Export of Goods and Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.11 3.2.2.1 Declaration of exports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.11 3.2.2.2 Procedure for furnishing declaration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.13 3.2.2.3 Contents of declaration form. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.13 3.2.2.4 Transfer of Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.14 3.2.2.5 Indication of importer-exporter code number. . . . . . . . . . . . . . . . . . . . . . . 3.14 3.2.2.6 Evidence in support of declaration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.14 3.2.2.7 Manner of payment of export value of goods. . . . . . . . . . . . . . . . . . . . . . . 3.14 3.2.2.8 Time limit for realisation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.15 xvi

Table of Contents

3.2.2.9 3.2.2.10 3.2.2.11 3.2.2.12

3.2.3

Delay in Receipt of Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Prohibition on actions compromising the realisation of export proceeds. . Advance payments against exports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Certain exports requiring prior approval â&#x20AC;&#x201C; Exports under trade agreement/Rupee Credit etc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2.2.13 Project exports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2.2.14 Issue of direction by RBI in certain cases. . . . . . . . . . . . . . . . . . . . . . . . . . 3.2.2.15 Exemptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Import of Goods and Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2.3.1 General Guidelines. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2.3.2 Remittances for Import Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2.3.3 Import Licenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2.3.4 Obligation of Purchaser of Foreign Exchange. . . . . . . . . . . . . . . . . . . . . . . 3.2.3.5 Time Limit for settlement of Import payments. . . . . . . . . . . . . . . . . . . . . . 3.2.3.6 Third Party Payments for Import Transactions. . . . . . . . . . . . . . . . . . . . . . 3.2.3.7 Advance Remittance for Import of Goods. . . . . . . . . . . . . . . . . . . . . . . . . .

3.15 3.15 3.16 3.16 3.16 3.17 3.17 3.18 3.18 3.18 3.18 3.19 3.20 3.21 3.21

Chapter 4 Overview of Capital Account Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1 4.1 Laws and regulations relating to capital account transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1 4.1.1 Definition of capital account transaction:. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1 4.1.2 Prohibition on certain capital account transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1 4.1.3 Permissible capital account transactions under law.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1 4.1.4 Related definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2 4.1.4.1 Currency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2 4.1.4.2 Currency notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2 4.1.4.3 Foreign currency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2 4.1.4.4 Foreign exchange. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2 4.1.4.5 Foreign Security. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3 4.1.4.6 Specify. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3 4.1.4.7 Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3 4.1.4.8 Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3 4.1.5 Permissible capital account transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3 4.1.5.1 Schedule. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4 4.1.6 Prohibition on capital account transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.5 4.1.6.1 Drawal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.6 4.1.7 Other regulations of FEM (Permissible Capital Account Transactions) Regulations, 2000. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.6 4.2 Interpretations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.7 4.2.1 Meaning of capital account transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.7 4.2.2 Permissible capital account transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.7 4.2.2.1 Transactions relating to change in assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.8 4.2.2.2 Import of foreign exchange into India. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.10 xvii

FEMA Ready Reckoner with Commentary

4.2.3

4.2.2.3 Export of foreign exchange and currency notes . . . . . . . . . . . . . . . . . . . . . 4.11 4.2.2.4 Export and import of Indian currency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.11 Prohibited capital account transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.26

PART II CAPITAL ACCOUNT TRANSACTIONS Chapter 5 Inbound Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3 5.1 Law and regulations relating to inbound investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3 5.1.1 Section 6 of the Act read with Schedule of FEM (Permissible Capital Account Transactions) Regulations, 2000. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3 5.1.2 Regulations relating to inbound investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3 5.2 Interpretations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.4 5.2.1 Overview of foreign investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.4 5.2.2 Permission for making investment by a person resident outside India. . . . . . . . . . . . . . 5.7 5.2.3 Capital instruments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.8 5.2.4 Purchase or sale of capital instruments of an Indian company by a resident outside India. . 5.9 5.2.5 Purchase or sale of capital instruments by a Foreign Portfolio Investor . . . . . . . . . . . 5.16 5.2.6 Purchase or sale of capital instruments by NRI/ OCI on repatriation basis. . . . . . . . . 5.19 5.2.7 Purchase or sale of capital instruments by NRI/ OCI on non-repatriation basis . . . . . 5.20 5.2.8 Purchase and sale of securities other than capital instruments by a person resident outside India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.21 5.2.9 Investment in a Limited Liability Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.26 5.2.10 Investment by a Foreign Venture Capital Investor (FVCI). . . . . . . . . . . . . . . . . . . . . . 5.27 5.2.11 Investment by a person resident outside India in an Investment Vehicle. . . . . . . . . . . 5.29 5.2.12 Investment in Depository receipts by a person resident outside. . . . . . . . . . . . . . . . . . 5.30 5.2.13 Investment in Depository receipts by a person resident outside. . . . . . . . . . . . . . . . . . 5.30 5.2.14 Acquisition through a rights issue or a bonus issue [Regulation 6]. . . . . . . . . . . . . . . 5.31 5.2.15 Issue of shares under Employees Stock Option Scheme to persons resident outside India [Regulation 7]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.32 5.2.16 Issue of convertible notes by an Indian startup company [Regulation 8]. . . . . . . . . . . 5.33 5.2.17 Merger or demerger or amalgamation of Indian companies [Regulation 9]. . . . . . . . . 5.33 5.2.18 Transfer of capital instruments of an Indian company by or to a person resident outside. 5.34 5.2.19 Taxes and Remittance of sale proceeds [Regulation 12] . . . . . . . . . . . . . . . . . . . . . . . 5.38 5.2.20 Downstream investment [Regulation 14]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.38 5.2.21 Prohibited Investments [Regulation 15]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.40 5.2.22 Reporting requirements [Regulation 13] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.40 5.2.22.1 Advance Remittance Form (ARF). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.40 5.2.22.2 Form Foreign Currency-Gross Provisional Return (FC-GPR) . . . . . . . . . . 5.40 5.2.22.3 Annual Return on Foreign Liabilities and Assets (FLA). . . . . . . . . . . . . . . 5.41 5.2.22.4 Form Foreign Currency-Transfer of Shares (FC-TRS). . . . . . . . . . . . . . . . 5.41 5.2.22.5 Form Employeesâ&#x20AC;&#x2122; Stock Option (ESOP). . . . . . . . . . . . . . . . . . . . . . . . . . . 5.41 xviii

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5.2.23

5.2.22.6 Form Depository Receipt Return (DRR). . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2.22.7 Form LLP (I). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2.22.8 Form LLP (II). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2.22.9 LEC(FII) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2.22.10 LEC(NRI) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2.22.11 Downstream Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2.22.12 Form Convertible Notes (CN). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Permitted sectors, entry routes and sectoral caps for total foreign investment [Regulation 16]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2.23.1 Entry Routes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2.23.2 Sectoral Caps â&#x20AC;&#x201C; Sector Specific Policy for Total Foreign Investment. . . . .

5.42 5.42 5.42 5.42 5.42 5.42 5.42 5.43 5.43 5.43

Chapter 6 Outbound Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1 Law and regulation relating to outbound investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1.1 Section 4 of the Act prohibits transactions relating to foreign exchange. . . . . . . . . . . . 6.1.2 Section 2(o) defines foreign security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1.3 Regulations relating to foreign currency accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2 Interpretations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2.1 Meaning of Indian Party. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2.2 Meaning of direct investment outside India. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2.3 Permission to make ODI. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2.4 Prohibition and restriction on direct investment outside India. . . . . . . . . . . . . . . . . . . . 6.2.5 General permission for direct investment outside India by an Indian party (without any limit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2.6 General permission for direct investment outside India by an Indian party (with limit). . 6.2.6.1 Conditions for making direct investment outside India. . . . . . . . . . . . . . . . . 6.2.6.2 Total Financial Commitment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2.6.3 Valuation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2.6.4 Investment by capitalisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2.7 General permission for investment in agricultural operations overseas directly or through overseas offices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2.8 General permission for investment in equity of a company registered overseas. . . . . . 6.2.9 General permission for investment by mutual funds . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2.10 General permission for acquiring equity of SWIFT. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2.11 General permission for Investment by Indian party engaged in financial services sector. . . 6.2.12 Investment by a firm in a JV/WOS â&#x20AC;&#x201C; permission for partners to hold investments in their name. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2.13 Undertaking financial commitment (loans/ guarantees) with JV/WOS. . . . . . . . . . . . . 6.2.13.1 Advancing loans to overseas JV/WOS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2.13.2 Issue of guarantee to overseas JV/WOS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2.13.3 Issue of guarantee by an authorised dealer to overseas JV/ WOS. . . . . . . . .

6.1 6.1 6.1 6.1 6.1 6.1 6.1 6.2 6.2 6.3 6.3 6.3 6.4 6.4 6.5 6.6 6.6 6.7 6.7 6.7 6.7 6.8 6.8 6.8 6.8 6.9

xix

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6.2.14 6.2.15 6.2.16 6.2.17 6.2.18 6.2.19 6.2.20 6.2.21 6.2.22 6.2.23 6.2.24 6.2.25 6.2.26 6.2.27 6.2.28 6.2.29 6.2.30 6.2.31 6.2.32 6.2.33 6.2.34 6.2.35 6.2.36 6.2.37 6.2.38

6.2.13.4 Issue of guarantee on behalf of step down subsidiary (SDS) of overseas JV/ WOS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.9 6.2.13.5 Rollover of guarantees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.9 6.2.13.6 Undertaking financial commitment without equity contribution. . . . . . . . . . 6.9 ODI under approval route. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.10 Approval route â&#x20AC;&#x201C; Overseas Investments by Registered Trust/Society. . . . . . . . . . . . . 6.10 Post investment changes/additional investment in existing JV/WOS . . . . . . . . . . . . . 6.11 Acquisition of a foreign company through bidding or tender procedure. . . . . . . . . . . 6.11 Post investment obligations of the Indian party. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.11 Hedging of overseas direct investment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.12 Disinvestment from a JV/WOS outside India. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.12 Disinvestment involving write off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.14 Restructuring of the balance sheet of JV/WOS involving write-off of capital and receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.14 Pledge of Shares of JV, WOS and Step Down Subsidiary (SDS). . . . . . . . . . . . . . . . . 6.15 Creation of charge on domestic and foreign assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.15 Prior permission of the Reserve Bank for a Proprietary concern in India to accept shares.6.16 Overseas Direct Investments by Proprietorship Concern/Unregistered Partnership Firm in India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.16 Post Investment Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.17 Investment by Individuals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.17 Acquisition or Setting up of a JV or WOS abroad by resident individual. . . . . . . . . . 6.18 Disinvestment by Resident Individuals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.18 Reporting Requirements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.19 Prohibition on issue of foreign security by a person resident in India. . . . . . . . . . . . . 6.20 Permission for purchase/acquisition of foreign securities in certain cases. . . . . . . . . . 6.23 Transfer of a foreign security by a person resident in India. . . . . . . . . . . . . . . . . . . . . 6.24 General Permission for Acquisition of foreign securities as qualification/ rights shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.24 Prior permission of Reserve Bank in certain cases. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.25 Investment by Mutual Funds and other Funds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.25 Opening of Demat Accounts by Clearing Corporations of Stock Exchanges and Clearing Members. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.25

Chapter 7 Foreign Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1 Law and regulation relating to foreign loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1.1 Permissible Capital Account Transactions under law. . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1.2 Classification of Capital Account Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1.3 Regulations relating to inbound investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2 Interpretations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2.1 Prohibition to Borrow or Lend in Foreign Currency/Rupees. . . . . . . . . . . . . . . . . . . . .

7.1 7.1 7.1 7.1 7.1 7.2 7.2

Table of Contents

7.2.2 Lending in Foreign Exchange by an Authorised Dealer. . . . . . . . . . . . . . . . . . . . . . . . . 7.2 7.2.3 Borrowing in Foreign Exchange by an Authorised Dealer. . . . . . . . . . . . . . . . . . . . . . . 7.2 7.2.4 Lending in Foreign Currency by persons other than Authorised Dealers. . . . . . . . . . . . 7.3 7.2.5 Borrowing in Foreign Currency by persons other than Authorised Dealers. . . . . . . . . . 7.3 7.2.6 Framework for Raising External Commercial Borrowings (ECBs). . . . . . . . . . . . . . . . 7.4 7.2.7 Forms of ECB. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.4 7.2.8 Available routes for raising ECB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.5 7.2.9 Eligible Borrowers under the three tracks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.5 7.2.10 Minimum Average Maturity for the three tracks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.8 7.2.11 Ceiling on borrowing determining available route. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.8 7.2.12 Recognised Lendors/ Investors for the three tracks. . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10 7.2.13 Purpose (end use). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11 7.2.14 All-In-Cost Ceilings for all the tracks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.13 7.2.15 Security. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.13 7.2.16 Prepayment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.15 7.2.17 Parking of ECB proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.15 7.2.18 Loan Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.15 7.2.19 Drawal of Loan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.16 7.2.20 Reporting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.16 7.2.21 Debt Servicing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.16 7.2.22 Foreign Currency Borrowings for Low Cost Affordable Housing Projects. . . . . . . . . 7.17 7.2.23 Rescheduling of an Existing Foreign Currency Borrowing. . . . . . . . . . . . . . . . . . . . . 7.18 7.2.24 Powers for Executing Amendments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.18 7.2.25 Borrowing by Entities under Investigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.18 7.2.26 Trade Credits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.18 7.2.26.1 Routes and Amount of Trade Credits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.18 7.2.26.2 Cost of Raising Trade Credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.19 7.2.26.3 Guarantee for Trade Credits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.19 7.2.26.4 Reporting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.19 7.2.26.5 Maturity Prescription. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.20 Borrowing or Lending in Rupees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2.27 Borrowing in INR by persons other than Companies in India. . . . . . . . . . . . . . . . . . . 7.2.28 Borrowing in INR by Companies in India. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2.29 Borrowing in INR by persons other than Companies in India. . . . . . . . . . . . . . . . . . . 7.2.30 Lending by Authorised Dealers in INR to Non-Resident Indians . . . . . . . . . . . . . . . . 7.2.30.1 Lending for own requirements or own business purposes. . . . . . . . . . . . . . 7.2.30.2 Lending for Acquiring Shares under the Employees Stock Option Plan. . . 7.2.31 Providing Housing Loan in Rupees to Non-Residents. . . . . . . . . . . . . . . . . . . . . . . . . 7.2.32 Rupee Loans to NRI/PIO employees of India Body Corporate. . . . . . . . . . . . . . . . . . 7.2.33 Rupee loans to non-resident Indian by Resident. . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7.20 7.20 7.21 7.22 7.22 7.22 7.23 7.23 7.24 7.24

xxi

FEMA Ready Reckoner with Commentary

7.2.34 7.2.35 7.2.36 7.2.37

Continuance of rupee loan/overdraft to resident who becomes a person resident outside India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Continuance of rupee loan in the event of change in the residential status of the lender. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Overdraft in rupee account maintained with authorised dealer in India by a bank outside India. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . External Commercial Borrowings framework. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7.25 7.25 7.25 7.25

Chapter 8 Maintaining Foreign Currency Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1 Law and regulations relating to foreign currency accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1.1 Prohibition against transactions relating to foreign exchange. . . . . . . . . . . . . . . . . . . . 8.1.2 Definition of Foreign Exchange. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1.3 Definition of Foreign Currency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1.4 Regulations relating to foreign currency accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.2 Interpretations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.2.1 Meaning of foreign currency account. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.2.2 Restriction on holding foreign currency account by a person resident in India. . . . . . .

8.1 8.1 8.1 8.1 8.1 8.1 8.1 8.1 8.2

Foreign Currency Accounts Maintained in India. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.2 8.2.3 ‘Exchange Earners’ Foreign Currency Account (EEFC account). . . . . . . . . . . . . . . . . . 8.2 8.2.4 Resident Foreign Currency Account. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.5 8.2.5 Resident Foreign Currency (Domestic) Account. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.7 8.2.6 Diamond Dollar Accounts (DDAs). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.7 8.2.7 Miscellaneous foreign currency accounts maintained in India. . . . . . . . . . . . . . . . . . . . 8.8 8.2.8 Types of accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.10 8.2.9 Responsibility of authorised dealers maintaining foreign currency accounts . . . . . . . 8.10 Foreign Currency Accounts Maintained Outside India [Regulation 5]. . . . . . . . . . . . . . . . . 8.2.10 Accounts of authorised dealers or their branches. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.2.11 Account by a company/firm in the name of its office/branch/representative outside India. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.2.12 Foreign currency account for making Overseas Direct Investment. . . . . . . . . . . . . . . 8.2.13 Accounts in respect of Start-ups. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.2.14 Miscellaneous foreign currency accounts maintained outside India . . . . . . . . . . . . . . 8.2.15 Remittances out of the account after the account holder’s death. . . . . . . . . . . . . . . . .

8.10 8.10 8.11 8.12 8.13 8.13 8.14

Chapter 9 Gifts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.1 Current Account Transactions relating to Gift. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.1.1 Gift/Donation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.1.2 Unspent foreign exchange. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.2 Export of Goods and Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.2.1 Approval for Trade Fair/Exhibitions abroad. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.3 Gifts relating to Foreign Investment in India. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

xxii

9.1 9.1 9.1 9.1 9.2 9.2 9.2

Table of Contents

9.3.1

9.4

Transfer from a person resident outside India by way of sale or gift to any person resident outside India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.3.2 Transfer by an NRI/ OCI by way of gift or sale to any person resident outside India. . . . . 9.3.3 Transfer by an NRI/ OCI holding capital instruments on a non-repatriable basis by way of gift to another NRI/ OCI who will hold such capital instruments on a non-repatriable basis. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.3.4 Sale by a person resident outside India on a recognised stock exchange in India. . . . . 9.3.5 Transfer by way of gift by an NRI/ OCI holding securities on a nonrepatriable basis or a resident to a person resident outside India. . . . . . . . . . . . . . . . . . Gifts relating to Overseas Direct Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.4.1 Permission for purchase/ acquisition of foreign securities in certain cases. . . . . . . . . .

9.2 9.3 9.4 9.4 9.4 9.4 9.4

Chapter 10 Deposits â&#x20AC;&#x201C; Facilities for Non-residents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.1 10.1 Laws and regulations Deposits by Non-Residents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.1 10.1.1 Prohibition on transactions relating to foreign exchange. . . . . . . . . . . . . . . . . . . . . . . 10.1 10.1.2 Definition of foreign exchange. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.1 10.1.3 Definition of Foreign Currency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.1 10.1.4 Regulations relating to foreign currency accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.1 10.2 Interpretations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.1 10.2.1 Restrictions on deposits between a person resident in India and a person resident outside India [Regulation 3]:. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.1 10.2.2 Acceptance of deposits by an authorised dealer/authorised banker from persons residents outside India. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.2 10.2.2.1 Non-resident External Rupee Account Scheme. . . . . . . . . . . . . . . . . . . . . . 10.2 10.2.2.2 Foreign Currency (Non-resident) Account Banks Scheme. . . . . . . . . . . . . 10.6 10.2.2.3 Non-Resident (Ordinary) Account Scheme. . . . . . . . . . . . . . . . . . . . . . . . . 10.8 10.2.2.4 Special Non-Resident Rupee Account. . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.12 10.2.2.5 Escrow Account. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.14 10.2.2.6 Other deposits made or held by authorised dealer. . . . . . . . . . . . . . . . . . . 10.15 10.2.2.7 Nomination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.16 10.3 Acceptance of deposits by persons other than authorised dealer/ authorised bank. . . . . . . . . . . 10.16 10.3.1 Overview [Regulation 6]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.16 10.3.2 Provisions of Schedule 6. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.16 10.3.3 Provisions of Schedule 7. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.17 10.3.4 Acceptance of deposits against issue of Commercial Paper. . . . . . . . . . . . . . . . . . . . 10.18 10.3.5 Exemptions from these regulations [Regulation 4] . . . . . . . . . . . . . . . . . . . . . . . . . . 10.18 Chapter 11 Immovable Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.1 11.1 Laws and regulations relating to immovable property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.1 11.1.1 Prohibition on transactions relating to immovable property. . . . . . . . . . . . . . . . . . . . . 11.1 11.1.2 Assets held outside India in contravention of sectionÂ 4. . . . . . . . . . . . . . . . . . . . . . . . 11.1 11.1.3 Regulations relating to immovable property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.2 11.2 Interpretations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.2 xxiii

FEMA Ready Reckoner with Commentary

11.2.1 11.2.2 11.2.3 11.2.4 11.2.5 11.2.6 11.2.7 11.2.8 11.2.9 11.2.10 11.2.11

Acquisition of Immovable Property by residents outside India for carrying on a permitted activity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Prohibition on transfer of immovable property in India. . . . . . . . . . . . . . . . . . . . . . . . Acquisition and transfer of immovable property by a Non-Resident Indian or an Overseas Indian Citizen. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Prohibition on acquisition or transfer of immovable property in India by citizens of certain countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Purchase/ sale of Immovable Property by Foreign Embassies/ Diplomats/ Consulate Generals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Acquisition by a Long-Term Visa holder. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Repatriation of sale proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Common conditions to acquisition and transfer of immovable property in India . . . . Saving provision. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Acquisitions permissible under FEM (Acquisition and Transfer of Immovable Property Outside India) Regulations, 2015. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Seizure pursuant to an immovable property held in contravention with sectionÂ 4.. . .

Chapter 12 Cross Border Mergers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.1 Laws and regulations relating to Cross Border Mergers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.1.1 Prohibition / Regulation of the establishment of a place of business in India. . . . . . . 12.1.2 Permissible Capital Account Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.1.3 Regulations relating to Cross Border Mergers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.2 Interpretations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.2.1 Transfer of Security/Debt/Asset as a result of Cross Border Mergers. . . . . . . . . . . . . 12.2.2 Valuation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.2.3 Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.2.4 Reporting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.2.5 Deemed Approval. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.2.6 Inbound Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.2.7 Outbound Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

11.2 11.3 11.3 11.6 11.7 11.7 11.8 11.8 11.8 11.8 11.9 12.1 12.1 12.1 12.1 12.1 12.2 12.2 12.2 12.3 12.3 12.3 12.3 12.4

PART III CURRENT ACCOUNT TRANSACTIONS Chapter 13 Current account transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.1 Law and rules relating to Current Account Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.1.1 Sale of exchange. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.1.2 Cultural Tours. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.1.3 Private visits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.1.4 Gift/ donation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.1.5 Going abroad on employment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.1.6 Emigration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.1.7 Maintenance of close relatives abroad. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xxiv

13.3 13.3 13.4 13.5 13.5 13.5 13.6 13.6 13.6

Table of Contents

13.1.8 13.1.9 13.1.10 13.1.11

13.2

13.3

13.4

Business trip. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.6 Medical treatment abroad. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.6 Facilities available to students for pursuing their studies abroad. . . . . . . . . . . . . . . . . 13.7 ‘Any other current account transaction’ as given at item no. (ix) of para 1 of Schedule III to FEM (CAT) Amendment Rules, 2015. . . . . . . . . . . . . . . . . . . . . . . . . 13.7 13.1.12 Period of surrender of foreign exchange. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.7 13.1.13 Unspent Foreign Exchange. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.8 13.1.14 Remittances for Tour Arrangements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.9 13.1.15 Payment in Rupees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.9 13.1.16 Issue of Guarantee – Import of service. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.10 13.1.17 Liberalised Remittance Scheme (LRS) of USD 2,50,000 for Resident individuals. . . . . 13.10 13.1.18 Facility to grant loan to NRI/ PIO close relative under Liberalised Remittance Scheme (LRS):. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.12 13.1.19 Documentation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.13 13.1.20 International Credit Cards. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.13 13.1.21 International Debit Cards. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.14 13.1.22 Store Value Cards/ Charge Cards/ Smart Cards, etc. . . . . . . . . . . . . . . . . . . . . . . . . . 13.14 Redemption of unutilised balance on prepaid travel cards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.14 13.2.1 Acquisition of foreign securities under Employees Stock Option (ESOP) . . . . . . . . 13.15 13.2.2 Income- tax clearance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.15 Export of Goods and Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.15 13.3.1 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.15 13.3.2 Realisation and repatriation of proceeds of export of goods / software / services. . . 13.16 13.3.3 Manner of receipt and payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.16 13.3.4 Foreign Currency Account. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.19 13.3.5 Diamond Dollar Account (DDA). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.20 13.3.6 Exchange Earners’ Foreign Currency Account (EEFC Account). . . . . . . . . . . . . . . . 13.20 13.3.7 Counter-Trade Arrangement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.21 13.3.8 Exports to neighbouring countries by road, rail or river. . . . . . . . . . . . . . . . . . . . . . . 13.21 13.3.9 Border trade with Myanmar. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.22 13.3.10 Counter –Trade arrangements with Romania. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.22 13.3.11 Repayment of State credits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.22 13.3.12 Forfaiting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.22 13.3.13 Export factoring on non-recourse basis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.22 13.3.14 Project Exports and Service Exports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.23 13.3.15 Export of goods on lease, hire, etc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.24 13.3.16 Export on elongated credit terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.24 13.3.17 Export of Currency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.24 EDF/SOFTEX Procedure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.24 13.4.1 Export of goods through Customs ports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.24 13.4.2 Export of goods/ software done through EDI ports . . . . . . . . . . . . . . . . . . . . . . . . . . 13.25 xxv

FEMA Ready Reckoner with Commentary

13.5

xxvi

13.4.3 Export of goods through Post. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.25 13.4.4 Mid-sea trans-shipment of catch by deep sea fishing vessels. . . . . . . . . . . . . . . . . . . 13.26 13.4.5 SOFTEX Forms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.27 13.4.6 Citing of specific identification numbers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.28 13.4.7 Export of Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.28 13.4.8 Third party export proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.28 13.4.9 Random verification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.28 13.4.10 Short Shipments and Shut out Shipments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.28 13.4.11 Consolidation of air cargo/sea cargo. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.28 13.4.12 Exemption from Declaration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.29 Obligations of Authorised Dealers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.29 13.5.1 Grant of EDF waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.29 13.5.2 Receipt of advance against exports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.30 13.5.3 EDF Approval for Trade Fair/Exhibitions abroad . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.32 13.5.4 EDF approval for export of goods for re-imports. . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.32 13.5.5 Re-export of unsold rough diamonds from Special Notified Zone of Customs without Export Declaration Form (EDF) formality . . . . . . . . . . . . . . . . . . . . . . . . . . 13.32 13.5.6 Setting up of Offices abroad and acquisition of immovable property for Overseas Offices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.33 13.5.7 Delay in submission of shipping documents by exporters. . . . . . . . . . . . . . . . . . . . . 13.33 13.5.8 Return of documents to exporters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.33 13.5.9 Landlocked countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.34 13.5.10 Direct dispatch of documents by the exporter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.34 13.5.11 Part Drawings/ Undrawn Balances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.34 13.5.12 Consignment Exports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.35 13.5.13 Opening / hiring of warehouses abroad . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.35 13.5.14 Export Bills Register. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.36 13.5.15 Follow-up of overdue bills. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.36 13.5.16 Reduction in invoice value on account of prepayment of usance bills. . . . . . . . . . . . 13.36 13.5.17 Reduction in invoice value in other cases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.36 13.5.18 Change of buyer/consignee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.37 13.5.19 Export of goods by Special Economic Zones (SEZs). . . . . . . . . . . . . . . . . . . . . . . . . 13.37 13.5.20 Extension of time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.37 13.5.21 Shipments lost in transit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.38 13.5.22 Export claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.38 13.5.23 Write-off of unrealised export bills. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.38 13.5.24 Write off in cases of payment of claims by ECGC and private insurance companies regulated by Insurance Regulatory and Development Authority (IRDA).13.40 13.5.25 Write-off â&#x20AC;&#x201C; relaxation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.40 13.5.26 Set-off of export receivables against import payables . . . . . . . . . . . . . . . . . . . . . . . . 13.40

Table of Contents

13.5.27

13.6

13.7

13.8

13.9

Netting-off of export receivables against import payments â&#x20AC;&#x201C; Units in Special Economic Zones (SEZs). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.5.28 Exportersâ&#x20AC;&#x2122; Caution List. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.5.29 Issue of Guarantees by an Authorised Dealer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.5.30 Issuance of Electronic Bank Realisation Certificate (eBRC). . . . . . . . . . . . . . . . . . . Remittances Connected with Export. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.6.1 Agency commission on exports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.6.2 Refund of export proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Import of Goods and Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.7.1 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.7.2 General Guidelines for Imports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.7.3 Remittances for Import Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.7.4 Import Licences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.7.5 Obligation of Purchaser of Foreign Exchange. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Time limit for Settlement of Import Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.8.1 Time limit for Normal Imports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.8.2 Time Limit for Deferred Payment Arrangements. . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.8.3 Time Limit for Import of Books. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.8.4 Extension of Time. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.8.5 Import of Foreign Exchange / Indian Rupees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.8.6 Import of Foreign Exchange into India. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.8.7 Import of Indian Currency and Currency Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.8.8 Third Party Payment for Import Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.8.9 Issue of Guarantees by an Authorised Dealer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Operational Guidelines for Imports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.9.1 Advance Remittance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.9.2 Advance Remittance for Import of Goods. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.9.3 Advance Remittance for Import of Rough Diamonds . . . . . . . . . . . . . . . . . . . . . . . . 13.9.4 Advance Remittance for Import of Aircrafts/Helicopters and other Aviation Related Purchases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.9.5 Advance Remittance for the Import of Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.9.6 Interest on Import Bills. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.9.7 Remittances against Replacement Imports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.9.8 Guarantee for Replacement Import. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.9.9 Import of Equipment by Business Process Outsourcing (BPO) Companies for their Overseas Sites. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.9.10 Receipt of Import Bills/Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.9.11 Receipt of import documents by the importer directly from overseas suppliers . . . . 13.9.12 Receipt of import documents by the importer directly from overseas suppliers in case of specified sectors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

13.41 13.41 13.42 13.42 13.42 13.42 13.43 13.43 13.43 13.44 13.44 13.44 13.44 13.45 13.45 13.46 13.46 13.46 13.46 13.47 13.47 13.47 13.47 13.48 13.48 13.48 13.49 13.50 13.51 13.51 13.52 13.52 13.52 13.52 13.52 13.53

xxvii

FEMA Ready Reckoner with Commentary

13.9.13

13.10

13.11

Receipt of import documents by the AD Category – I bank directly from overseas suppliers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Evidence of Import . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.10.1 Physical Imports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.10.2 Evidence of Import in Lieu of Bill of Entry. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.10.3 Non-physical Imports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.10.4 Detailed Operational Procedures for IDPMS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.10.5 Verification and Preservation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.10.6 Follow-up for Import Evidence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.10.7 Import of Gold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.10.8 Import of Gold Jewellery Including Jewellery Made of Precious Metals or/ and Studded With Diamonds / Precious Stones /Semi-precious.. . . . . . . . . . . . . . . . Import of other Precious Metals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.11.1 Import of Platinum /Palladium/Rhodium/ Silver/Rough, Cut & Polished Diamonds / Precious and Semi-precious Stones.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.11.2 Import of Platinum / Silver on Unfixed Price Basis. . . . . . . . . . . . . . . . . . . . . . . . . . 13.11.3 Import Factoring. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.11.4 Merchanting Trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.11.5 Merchanting trade to Nepal and Bhutan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.11.6 Processing of import related payments through Online Payment Gateway Service Providers (OPGSPs). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.11.7 Settlement of Import transactions in currencies not having a direct exchange rate. .

13.53 13.53 13.53 13.55 13.55 13.55 13.57 13.57 13.57 13.58 13.58 13.58 13.58 13.59 13.59 13.60 13.60 13.61

Chapter 14 Search & Seizures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.1 Law and Rules relating to Search and Seizures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.1.1 Directorate of Enforcement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.1.2 Power of search, seizure etc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.1.3 Section 37A - Provision relating to assets held outside India in contravention of section 4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.1.4 Empowering other officers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.1.5 Presumption as to documents in certain cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.1.6 Rules relating to Authentication of documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.2 Interpretations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.2.1 Scope – Directorate of Enforcement [Section 36] . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.2.2 Power of search and seizure [Section 37 and Section 38] . . . . . . . . . . . . . . . . . . . . . . 14.2.3 Assets held outside India in contravention of Section 4 [Section 37A]. . . . . . . . . . . . 14.2.4 Presumption as to documents in certain cases [Section 39]. . . . . . . . . . . . . . . . . . . . .

14.1 14.2 14.3 14.3 14.3 14.3 14.4 14.4 14.5

Chapter 15 Appeals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.1 Law and Rules relating to Appeals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.1.1 Chapter V of FEMA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.2 Interpretations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.2.1 Appeal to Special Director (Appeals). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

15.1 15.1 15.1 15.1 15.1

xxviii

14.1 14.1 14.1 14.1

Table of Contents

15.2.2 15.2.3 15.2.4 15.2.5 15.2.6 15.2.7 15.2.8

Appellate Tribunal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Appeal to Appellate Tribunal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Qualifications for appointment of Special Director (Appeals). . . . . . . . . . . . . . . . . . . Terms and conditions of service of Special Director (Appeals). . . . . . . . . . . . . . . . . . Staff of Special Director (Appeals). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Procedure and Powers of Appellate Tribunal and Special Director (Appeals). . . . . . . Right of appellant to take assistance of legal practitioner or chartered accountant and of Government, to appoint presenting officers . . . . . . . . . . . . . . . . . . 15.2.9 Officers and employees, etc. to be public servant. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.2.10 Civil court not to have jurisdiction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.2.11 Appeal to High Court. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.2.12 Form of Appeal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.2.13 Procedure before Special Director (Appeals). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.2.14 Contents of the Order in appeal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.2.15 Representation of party. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.2.16 Service of notices, requisitions or orders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.2.17 Form of Appeal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.2.18 Procedure before Appellate Tribunal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.2.19 Contents of the Order in appeal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.2.20 Representation of party. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.2.21 Service of notices, requisitions or orders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Form I Form of Appeal – Special Director (Appeals). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Form II Form of Appeal – Appellate Tribunal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

15.2 15.2 15.3 15.3 15.3 15.3 15.4 15.4 15.4 15.4 15.5 15.5 15.6 15.6 15.6 15.6 15.7 15.7 15.7 15.7 15.8 15.9

PART IV PENALTY PROCEDURES & COMPOUNDING OF OFFENCES Chapter 16 Penalties and Compounding. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.3 16.1 Law and Rules relating to Penalties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.3 16.1.1 Imposition of Penalty. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.3 Section 13 of the Foreign Exchange Act, 1999 (“Act”) imposes penalty. It provides that:. . . . . . 16.3 16.1.2 Circumstances of and procedure for civil imprisonment. . . . . . . . . . . . . . . . . . . . . . . 16.4 16.1.3 Powers to recover arrears of penalty. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.5 16.1.4 Power to compound contravention. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.6 16.1.5 Section 42 – Contravention by companies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.6 16.1.6 Death or insolvency in certain cases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.6 16.1.7 Section 44 – Bar of legal proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.7 16.1.8 Rules relating to compounding. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.7 16.2 Interpretations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.7 16.2.1 Penalities, Confiscation, Seizure [Section 13] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.7 16.2.2 Contravention by companies, firms and other association of persons [Section 42]. . . . . . 16.8 xxix

FEMA Ready Reckoner with Commentary

16.2.3

Form

Legal representatives liable in cases of death or insolvency or contravener [Section 43]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.9 16.2.4 Protection of Central Government, RBI and their officers [Section 44]. . . . . . . . . . . . 16.9 16.2.5 Ajudicating authority [Section 16]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.9 16.2.6 Circumstances of and Procedure for civil imprisonment [Section 14]. . . . . . . . . . . . 16.11 16.2.7 Power to recover arrears of penalty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.13 16.2.8 Power to compound contravention. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.13 (See Rule 4 or Rule 5 of FP(CP) Rules, 2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.15 16.2.9 Compounding procedure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.16

PART V RELEVANT ALLIED LAWS Chapter 17 The Foreign Exchange Regulation Act, 1973. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.3 17.1 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.3 17.1.1 Section 3- Classes of officers of enforcement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.3 17.1.2 Section 4- Appointment and powers of officers of enforcement . . . . . . . . . . . . . . . . . 17.3 17.1.3 Section 5- Entrustment of functions of Director or other officer of enforcement . . . . 17.3 17.1.4 Section 6– Authorised Dealers in foreign exchange. . . . . . . . . . . . . . . . . . . . . . . . . . . 17.4 17.1.5 Section 7- Money- changers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.4 17.1.6 Section 8- Restriction on dealing in foreign exchange. . . . . . . . . . . . . . . . . . . . . . . . . 17.5 17.1.7 Section 9- Restriction on payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.6 17.1.8 Section 10- Blocked accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.7 17.1.9 Section 11 and 12 has been omitted by Act 29 of 1993. . . . . . . . . . . . . . . . . . . . . . . . 17.7 17.1.10 Section 13- Restrictions on import and export of certain currency and bullion. . . . . . 17.7 17.1.11 Section 14- Acquisition by Central Government of foreign exchange. . . . . . . . . . . . . 17.8 17.1.12 Section 16-Duty of persons entitled to receive foreign exchange, etc.. . . . . . . . . . . . . 17.8 17.1.13 Section 18–payment for export goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.8 17.1.14 Section 19- Regulation of export and transfer of securities. . . . . . . . . . . . . . . . . . . . . 17.9 17.1.15 Section 22- Restriction on issue of bearer securities . . . . . . . . . . . . . . . . . . . . . . . . . 17.10 17.1.16 Section 23 – Omitted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.10 17.1.17 Section 24– Restriction on settlement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.10 17.1.18 Section 25- Restriction on holding of immovable property outside India. . . . . . . . . 17.10 17.1.19 Section 26- Certain provisions as to guarantee in respect of debt or other obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.10 17.1.20 Section 28- Restrictions on the appointment of certain persons and companies as agents or technical or management advisers in India. . . . . . . . . . . . . . . . . . . . . . . 17.10 17.1.21 Section 29- Restrictions on establishment of place of business in India . . . . . . . . . . 17.11 17.1.22 Section 30- Prior permission of Reserve Bank required for taking up employment, etc., in India by nationals of foreign States. . . . . . . . . . . . . . . . . . . . . . 17.11 17.1.23 Section 31- Restriction on acquisition, holding, etc. of immovable property in India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.11 xxx

Table of Contents

17.1.24 17.1.25 17.1.26 17.1.27 17.1.28 17.1.29 17.1.30 17.1.31 17.1.32 17.1.33 17.1.34 17.1.35 17.1.36 17.1.37 17.1.38 17.1.39 17.1.40 17.1.41 17.1.42 17.1.43 17.1.44 17.1.45 17.1.46 17.1.47 17.1.48 17.1.49 17.1.50 17.1.51 17.1.52 17.1.53 17.1.54 17.1.55 17.1.56 17.1.57 17.1.58

Section 33- Power to call for information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 34- Power to search suspected persons and to seize documents. . . . . . . . . . Section 35- Power to arrest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 36- Power to stop and search conveyances. . . . . . . . . . . . . . . . . . . . . . . . . . Section 37- Power to search premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 38–Power to seize documents, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 39 – Power to examine persons. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 40- Power to summon persons to give evidence and produce documents. . . . . . Section 41- Custody of documents, etc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 42- Encashment of cheque, Draft, etc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section- 43 Inspection. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 44- Prohibitions of disclosure of documents or information except in certain cases disclosure of documents or information except in certain cases. . . . . . Section 45- Power of police officer and other officers to enter, search, etc.. . . . . . . . Section 46- Procedure in respect of foreign exchange or any other goods seized by police officers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 47– Contracts in evasion of the act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 48– False Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 49- Failure to comply with conditions subject to which permissions, or licenses have been given or granted under the Act to be contravention of the provisions of the Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 50- Penalty. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 51- Power to adjudicate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 52- Appeal to Appellate board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 53- Powers of the adjudicating officer and the Appellate Board to summon witnesses, etc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 54– Appeal to high court. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 55- Continuance of proceeding in the event of death or insolvency. . . . . . . Section 56– Offences and Prosecutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 57- Penalty for contravention of order made by adjudicating officer, Appellate Board and High Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 58- Vexatious search, etc., by officers of Enforcement. . . . . . . . . . . . . . . . . Section 59– Presumption of culpable mental state. . . . . . . . . . . . . . . . . . . . . . . . . . . Section 60– Power to tender immunity from prosecution . . . . . . . . . . . . . . . . . . . . . Section 61– cognizance of offences. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 62– Certain offences to be non-cognizable. . . . . . . . . . . . . . . . . . . . . . . . . . Section 63– Confiscation of currency, Security, etc.. . . . . . . . . . . . . . . . . . . . . . . . . Section 64– Preparation, attempt, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 65– Correction of clerical errors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 66- Application of section 360 of the Code of Criminal Procedure, 1973, and of the Probation of Offenders Act, 1958 . . . . . . . . . . . . . . . . . . . . . . . . . . Section 67– Application of the Customs Act, 1962 . . . . . . . . . . . . . . . . . . . . . . . . . .

17.12 17.12 17.13 17.13 17.13 17.14 17.14 17.14 17.14 17.15 17.16 17.17 17.17 17.17 17.18 17.19 17.19 17.19 17.19 17.19 17.20 17.21 17.21 17.22 17.23 17.23 17.23 17.24 17.24 17.25 17.25 17.25 17.26 17.26 17.26 xxxi

FEMA Ready Reckoner with Commentary

17.1.59 17.1.60 17.1.61 17.1.62 17.1.63 17.1.64 17.1.65 17.1.66 17.1.67 17.1.68 17.1.69 17.1.70 17.1.71 17.1.72 17.1.73

Section 68– Offences by companies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 69- Power of court to publish name, place of business, etc., of companies convicted under the Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 70– Recovery of sums due to government. . . . . . . . . . . . . . . . . . . . . . . . . . . Section 71– Burden of proof in certain cases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 72– Presumption as to documents in certain cases . . . . . . . . . . . . . . . . . . . . Section 73– Supplemental Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 73A- Penalty for contravention of direction of Reserve Bank or for failure to file returns. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 74– Delegation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 75– Power of central government to give directions. . . . . . . . . . . . . . . . . . . Section 76- Factors to be taken into account by the Central Government and the Reserve Bank while giving or granting permissions or licenses under the Act. . Section 77- Certain officers to assist officers of enforcement . . . . . . . . . . . . . . . . . . Section 78– Bar of legal proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 79– Power to make rules. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 80– Power to remove difficulties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 81– Repeal and saving. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

17.26 17.27 17.27 17.28 17.28 17.28 17.29 17.29 17.30 17.30 17.30 17.30 17.30 17.31 17.31

Chapter 18 The Foreign Contribution Regulation Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.1 18.1 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.1 18.2 Regulation of Foreign Contribution and Foreign Hospitality. . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.1 18.2.1 Meaning of “foreign contribution”. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.1 18.2.2 Section 3- Prohibition to accept foreign contribution. . . . . . . . . . . . . . . . . . . . . . . . . . 18.2 18.2.3 Section 4- Persons to whom section 3 does not apply . . . . . . . . . . . . . . . . . . . . . . . . . 18.3 18.2.4 Section 5- Procedure to notify an organisation of a political nature. . . . . . . . . . . . . . . 18.3 18.2.5 Section 6- Restriction on acceptance of foreign hospitality. . . . . . . . . . . . . . . . . . . . . 18.4 18.2.6 Section 7- Prohibition to transfer foreign contribution to other person. . . . . . . . . . . . 18.4 18.2.7 Section 8- Restriction to utilise foreign contribution for administrative purpose . . . . 18.5 18.2.8 Section 9- Power of Central Government to prohibit receipt of foreign contribution, etc., in certain cases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.5 18.2.9 Section 10- Power to prohibit payment of currency received in contravention of the act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.6 18.2.10 Section 11- Registration of certain persons with central government . . . . . . . . . . . . . 18.6 18.2.11 Section 12- Grant of certificate of registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.7 18.2.12 Section 13- Suspension of certificate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.8 18.2.13 Section 14- Cancelling of Certificate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.9 18.2.14 Section 15- Management of foreign contribution of person whose certificate has been cancelled. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.9 18.2.15 Section 16- Renewal of certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.10 18.3 Accounts, Intimation, Audit and Disposal of Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.10 18.3.1 Section 17- Foreign contribution through scheduled bank. . . . . . . . . . . . . . . . . . . . . 18.10 xxxii

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18.3.2 Section 18- Intimation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.10 18.3.3 Section 19- Maintenance of accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.11 18.3.4 Section 20- Audit of accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.11 18.3.5 Section 21- Intimation by candidate for election. . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.11 18.3.6 Section 22- Disposal of assets created out of foreign contribution . . . . . . . . . . . . . . 18.11 18.4 Inspection, Search and Seizure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.12 18.4.1 Section 23- Inspection of accounts or records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.12 18.4.2 Section 24- Seizure of accounts or records. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.12 18.4.3 Section 25- Seizure of article or currency or security received in contravention of the Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.12 18.4.4 Section 26- Disposal of seized article or currency or security. . . . . . . . . . . . . . . . . . 18.12 18.4.5 Section 27- Seizer to be made in accordance with act 2 of 1974. . . . . . . . . . . . . . . . 18.13 18.5 Adjudication. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.13 18.5.1 Section 28- Confiscation of article or currency or security obtained in contravention of the act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.13 18.5.2 Section 29- Adjudication of Confiscation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.13 18.5.3 Section 30- Procedure for confiscation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.14 18.6 Appeal and Revision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.14 18.6.1 Section 31- Appeal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.14 18.6.2 Section 32- Revision of orders by central government. . . . . . . . . . . . . . . . . . . . . . . . 18.14 18.7 Offences and Penalities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.15 18.7.1 Section 33- Making of false statement, declaration or delivering of false accounts. 18.15 18.7.2 Section 34- Penalty for article or currency or security obtained in contravention of section 10. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.15 18.7.3 Section 35- Punishment for contravention of any provision of the act. . . . . . . . . . . . 18.15 18.7.4 Section 36- Power to impose additional fine where article or currency or security is not available for confiscation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.15 18.7.5 Section 37- Penalty for offences where no separate punishment has been provided. 18.16 18.7.6 Section 38- Prohibition of acceptance of foreign contribution. . . . . . . . . . . . . . . . . . 18.16 18.7.7 Section 39- Offences by companies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.16 18.7.8 Section 40- Bar on prosecution of offences under the Act. . . . . . . . . . . . . . . . . . . . . 18.16 18.7.9 Section 41- Composition of certain offences. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.16 18.8 Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.17 18.8.1 Section 42- Power to call for information or document. . . . . . . . . . . . . . . . . . . . . . . 18.17 18.8.2 Section 43- Investigation into cases under the act . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.17 18.8.3 Section 44- Returns by prescribed authority to central government. . . . . . . . . . . . . . 18.18 18.8.4 Section 45- Protection of action taken in good faith. . . . . . . . . . . . . . . . . . . . . . . . . . 18.18 18.8.5 Section 46- Power of central government to give directions. . . . . . . . . . . . . . . . . . . 18.18 18.8.6 Section 47- Delegation of power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.18 18.8.7 Section 48- Power to make rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.18 18.8.8 Section 49- Orders and rules to be laid before parliament. . . . . . . . . . . . . . . . . . . . . 18.20 xxxiii

FEMA Ready Reckoner with Commentary

18.8.9 18.8.10 18.8.11 18.8.12 18.8.13

Section 50- Power to exempt in certain cases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 51- Act not to apply to certain government transactions. . . . . . . . . . . . . . . . Section 52- Application of other laws not barred. . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 53- Power to remove difficulties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 54- Repeal and saving. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

18.20 18.20 18.20 18.20 18.20

Chapter 19 The Foreign Trade (Development and Regulation) Act, 1992. . . . . . . . . . . . . . . . . . . . . 19.1 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.2 Power of Central Government to make Order and Announce. . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.2.1 Section 3 - Powers to make provisions relating to exports and imports. . . . . . . . . . . . 19.2.2 Section 4 - Continuance of existing orders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.2.3 Section 5 - Foreign Trade policy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.2.4 Section 6 - Appointment of director general and his functions . . . . . . . . . . . . . . . . . . 19.3 Importer- Exporter Code Number and Licence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.3.1 Section 7 - Importer- Exporter Code number. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.3.2 Section 8 - Suspension and cancellation of Importer-Exporter code number. . . . . . . 19.3.3 Section 9 - Issue, suspension and cancellation of license. . . . . . . . . . . . . . . . . . . . . . . 19.4 Quantitaive Restrictions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.4.1 Section 9A - Power of central government to impose quantitative restrictions. . . . . . 19.5 Search Seizure Penalty and Confiscation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.5.1 Section 10 – Power relating to search and seizure. . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.5.2 Section 11 - Contravention of provisions of this act rules order and foreign trade policy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.5.3 Section 11A - Crediting sums realised by way of penalties in Consolidated Fund of India. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.5.4 Section 11B - Empowering Settlement Commission for regularisation of export obligation default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.5.5 Section 12 - Penalty or confiscation not to interfere with other punishments . . . . . . . 19.5.6 Section 13 - Adjudicating Authority. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.5.7 Section 14 - Giving of opportunity to the owner of the goods. . . . . . . . . . . . . . . . . . . 19.6 Controls on Export of specified Goods, Services and Technology. . . . . . . . . . . . . . . . . . . . . . . . 19.6.1 Section 14A – Control on export of specified goods, services and technology. . . . . . 19.6.2 Section 14B – Transfer controls. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.6.3 Section 14C – Catch-all controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.6.4 Section 14D – Suspension or cancellation of a license. . . . . . . . . . . . . . . . . . . . . . . . . 19.6.5 Section 14E – Offences and Penalties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.7 Appeal and Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.7.1 Section 15- Appeal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.7.2 Section 16 - Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.7.3 Section 17 Powers of adjudicating and other authorities. . . . . . . . . . . . . . . . . . . . . . .

xxxiv

19.1 19.1 19.1 19.1 19.2 19.2 19.2 19.2 19.2 19.2 19.3 19.4 19.4 19.4 19.4 19.5 19.6 19.6 19.7 19.7 19.7 19.7 19.7 19.8 19.8 19.8 19.8 19.8 19.8 19.9 19.9

Table of Contents

19.8 Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.8.1 Section 18 Protection of action taken in good faith. . . . . . . . . . . . . . . . . . . . . . . . . . 19.8.2 Section 19 - Power to make rules. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.8.3 Section 20 - Repeal and savings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

19.10 19.10 19.10 19.11

Chapter 20 The Prevention of Money-Laundering Act, 2002. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.1 20.1 What is Money Laundering?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.1 20.2 Offense of Money-Laundering. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.1 20.2.1 Section 3– Offense of money-laundering. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.1 20.2.2 Section 4- Punishment for money-laundering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.2 20.3 Attachment, Adjudication and Confisication. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.2 20.3.1 Section 5- Attachment of property involved in money laundering. . . . . . . . . . . . . . . . 20.2 20.3.2 Section 6- Adjudicating authorities, composition, powers, etc.. . . . . . . . . . . . . . . . . . 20.2 20.3.3 Section 7- Staff of Adjudicating authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.3 20.3.4 Section 8- Adjudication. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.3 20.3.5 Section 9- Vesting of property in Central Government. . . . . . . . . . . . . . . . . . . . . . . . 20.4 20.3.6 Section 10- Management of properties confiscated under this act. . . . . . . . . . . . . . . . 20.4 20.3.7 Section 11- Power Regarding Summons, Production of documents and evidence, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.5 20.4 Obligations of Banking Companies, Financial Institutions and Intermediaries . . . . . . . . . . . . . . 20.5 20.4.1 Section 12-Reporting entity to maintain records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.5 20.4.2 Section 12A-Access to information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.6 20.4.3 Section 14-No civil or criminal proceedings against reporting entity, its directors and employees in certain cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.6 20.4.4 Section 15-Procedure and manner of furnishing information by reporting entities. . . 20.6 20.5 Summons, Searches and Seizures, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.6 20.5.1 Section 16- Power of survey. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.6 20.5.2 Section 17- Search and seizure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.7 20.5.3 Section 18- Search of persons. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.8 20.5.4 Section 19 - Power to arrest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.9 20.5.5 Section 20 - Retention of property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.9 20.5.6 Section 21 Retention of records. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.10 20.5.7 Section 22- Presumption as to records or property in certain cases. . . . . . . . . . . . . . 20.11 20.5.8 Section 23- Presumption in inter-connected transaction. . . . . . . . . . . . . . . . . . . . . . 20.11 20.5.9 Section 24- Burden of proof. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.11 20.6 Appellate Tribunal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.11 20.6.1 Section 25- Establishment of Appellate Tribunal. . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.11 20.6.2 Section 26- Appeals to the Appellate Tribunal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.11 20.6.3 Section 27- Composition. Etc. of Appellate Tribunal. . . . . . . . . . . . . . . . . . . . . . . . . 20.12 20.6.4 Section 28- Qualifications for appointment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.12 20.6.5 Section 30- Conditions of Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.13 xxxv

FEMA Ready Reckoner with Commentary

20.6.6 20.6.7 20.6.8 20.6.9 20.6.10 20.6.11 20.6.12 20.6.13 20.6.14

Section 31- Vacancies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 32- Registration and removal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 33- Member to act Chairperson in certain circumstances. . . . . . . . . . . . . . . Section 34- Staff of Appellate Tribunal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 35- Procedure and power of Appellate Tribunal . . . . . . . . . . . . . . . . . . . . . . Section 36- Distribution of business amongst benches. . . . . . . . . . . . . . . . . . . . . . . Section 37-Power of chairperson to transfer cases. . . . . . . . . . . . . . . . . . . . . . . . . . . Section 38- Decision to be by majority. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 39- Right of appellant to take assistance of authorised representative and of Government to appoint presenting officers. . . . . . . . . . . . . . . . . . . . . . . . . . . 20.6.15 Section 40- Members. Etc. to be public servant. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.6.16 Section 41- Civil court not to have jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.6.17 Section 42- Appeal to high court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.7 Special Courts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.7.1 Section 43. Special court. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.7.2 Section 44 Offences triable by special court. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.7.3 Section 45- Offences to be cognizable and non-bailable. . . . . . . . . . . . . . . . . . . . . . 20.7.4 Section 46- Application of the Code of Criminal Procedure, 1973 to proceedings before Special Court. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.7.5 Section 47-Appeal and revision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.8 Authorities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.8.1 Section 48- Authorities under the Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.8.2 Section 49- Appointment and powers of authorities and other officers. . . . . . . . . . . 20.8.3 Section 50- Powers of authorities regarding summons, production of documents and to give evidence, etc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.8.4 Section 51- Jurisdiction of authorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.8.5 Section 52- Power of Central Government to issue directions, etc.. . . . . . . . . . . . . . 20.8.6 Section 53- Empowerment of certain officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.8.7 Section 54 Certain officers to assist in inquiry. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.9 Reciprocal arrangement for assistance in certain matters and procedure for attachment and confiscation of property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.9.1 Section 55- Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.9.2 Section 56- Agreements with foreign country . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.9.3 Section 57- Letter of request to a contracting State in certain cases . . . . . . . . . . . . . 20.9.4 Section 58-Assistance to a contracting State in certain cases. . . . . . . . . . . . . . . . . . . 20.9.5 Section 59A- Special court to release the property. . . . . . . . . . . . . . . . . . . . . . . . . . . 20.9.6 Section 59B- Letter of request of a contracting State or authority for confiscation or release the property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.9.7 Section 59- Reciprocal arrangements for processes and assistance for transfer of accused persons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.9.8 Section 60-Attachment, seizure and confiscation, etc., of property in a contracting State or India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.9.9 Section 61- Procedure in respect of letter of request . . . . . . . . . . . . . . . . . . . . . . . . . xxxvi

20.13 20.13 20.14 20.14 20.14 20.15 20.15 20.15 20.15 20.15 20.15 20.16 20.16 20.16 20.16 20.17 20.17 20.18 20.18 20.18 20.18 20.18 20.19 20.19 20.19 20.20 20.21 20.21 20.21 20.21 20.22 20.22 20.22 20.22 20.23 20.24

Table of Contents

20.10 Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.10.1 Section 62- Punishment for vexatious search. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.10.2 Section 63- Punishment for false information or failure to give information, etc.. . . 20.10.3 Section 64-Cognizance of offences. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.10.4 Section 65- Code of Criminal Procedure, 1973 to apply . . . . . . . . . . . . . . . . . . . . . . 20.10.5 Section 66- Disclosure of information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.10.6 Section 69- Recovery of fine or penalty. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.10.7 Section 70- Offences of companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.10.8 Section 71- Act to have overriding effect. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.10.9 Section 72- Continuation of proceedings in the event of death or insolvency. . . . . . 20.10.10 Section 74 Rules to be laid before parliament . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.10.11 Section 75- powers to remove difficulties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

20.24 20.24 20.25 20.25 20.25 20.25 20.26 20.26 20.26 20.27 20.27 20.28

Chapter 21 21.1

The Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Overview of the COFEPOSA Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.1.1 Section 3- Powers to make orders detaining certain persons. . . . . . . . . . . . . . . . . . . . 21.1.2 Section 3(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.1.3 Section 3(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.1.4 Section 5- Power to regulate place and condition of Detention. . . . . . . . . . . . . . . . . . 21.1.5 Section 5A- Grounds of detention servable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.1.6 Section 6- Detention orders not to be invalid or inoperative on certain grounds. . . . . 21.1.7 Section 7- powers in relating to absconding person. . . . . . . . . . . . . . . . . . . . . . . . . . . 21.1.8 Section 8- Advisory boards. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.1.9 Section 9- Cases in which and circumstances under which persons may be detained for periods longer than three months without obtaining the opinion of advisory board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.1.10 Section 10- Maximum period of detention. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.1.11 Section 11- Revocation of detention order. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.1.12 Section 12- Temporary release of persons detained. . . . . . . . . . . . . . . . . . . . . . . . . . . 21.1.13 Section 12A- Special provision of dealing with emergency. . . . . . . . . . . . . . . . . . . . . 21.1.14 Section 13- Protection of action taken in good faith. . . . . . . . . . . . . . . . . . . . . . . . . . .

Chapter 22 Smugglers and Foreign Exchange Manipulators Act, 1976. . . . . . . . . . . . . . . . . . . . . . . 22.1 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.1.1 Prohibition of holding illegally acquired property. . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.1.2 Competent authority. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.1.3 Notice of forfeiture. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.1.4 Forfeiture of property in certain cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.1.5 Burden of proof. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.1.6 Fine in lieu of forfeiture. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.1.7 Procedure in relation to certain trust properties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.1.8 Certain transfers to be null and void. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

21.1 21.1 21.1 21.1 21.2 21.2 21.2 21.2 21.2 21.2 21.3 21.3 21.3 21.4 21.4 21.4 22.1 22.1 22.1 22.1 22.1 22.2 22.2 22.2 22.3 22.3

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22.1.9 22.1.10 22.1.11 22.1.12 22.1.13 22.1.14 22.1.15 22.1.16 22.1.17 22.1.18 22.1.19 22.1.20 22.1.21 22.1.22

Constitution of Appellate Tribunal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Notice or order not to be invalid for error in description. . . . . . . . . . . . . . . . . . . . . . . Bar of jurisdiction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Competent authority and Appellate Tribunal to have powers of civil court. . . . . . . . . Information to competent authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Certain officers to assist competent authority and Appellate Tribunal. . . . . . . . . . . . . Power of competent authority to require certain officers to exercise certain powers. . Rectification of mistakes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Service of notices and orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Protection of action taken in good faith. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Act to have overriding effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Provisions of the Act not to apply to certain properties held in trust. . . . . . . . . . . . . . Power to make rules. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Repeal and saving. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

22.3 22.4 22.4 22.4 22.5 22.5 22.5 22.6 22.6 22.6 22.6 22.6 22.7 22.7

DIVISION 2 FEMA ACT, 1999 Foreign Exchange Management Act, 1999. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-3

Chapter I Preliminary 1. 2.

Short title, extent, application and commencement.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-3 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-3

Chapter II Regulation and Management of Foreign Exchange 3. 4. 5. 6. 7. 8. 9.

Dealing in foreign exchange, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-7 Holding of foreign exchange, etc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-7 Current account transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-7 Capital account transactions.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-7 Export of goods and services.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-9 Realisation and repatriation of foreign exchange.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-9 Exemption from realisation and repatriation in certain cases.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-9

Chapter III Authorised Person 10. 11. 12.

xxxviii

Authorised person.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-10 Reserve Bankâ&#x20AC;&#x2122;s powers to issue directions to authorised person.. . . . . . . . . . . . . . . . . . . . . . . . . . . A-11 Power of Reserve Bank to inspect authorised person.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-11

Table of Contents

Chapter IV Contravention and Penalties 13. Penalties.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-12 14. Enforcement of the orders of Adjudicating Authority. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-13 14A. [Power to recover arrears of penalty.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-14 15. Power to compound contravention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-14

Chapter V Adjudication and Appeal 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35.

Appointment of Adjudicating Authority.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-15 Appeal to Special Director (Appeals).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-16 [Appellate Tribunal.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-16 Appeal to Appellate Tribunal.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-17 Composition of Appellate Tribunal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-17 [Qualifications for appointment of Special Director (Appeals).. . . . . . . . . . . . . . . . . . . . . . . . . . . . A-18 [***]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-18 [Terms and conditions of service of Special Director (Appeals).. . . . . . . . . . . . . . . . . . . . . . . . . . . A-18 [***]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-19 [***]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-19 [***]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-19 [Staff of Special Director (Appeals).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-19 Procedure and Powers of Appellate Tribunal and Special Director (Appeals). . . . . . . . . . . . . . . . . A-19 [***]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-20 [***]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-20 [***]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-21 Right of appellant to take assistance of legal practitioner or chartered accountant and of Government, to appoint presenting officers.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-21 [Officers and employees, etc. to be public servant.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-21 Civil court not to have jurisdiction.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-21 Appeal to High Court.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-21

Chapter VI Directorate of Enforcement 36. 37. 37A. 38.

Directorate of Enforcement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-22 Power of search, seizure, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-22 [Special provisions relating to assets held outside India in contravention of section 4.. . . . . . . . . . A-22 Empowering other officers.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-23

Chapter VII Miscellaneous 39. 40. 41. 42. 43. 44. 45.

Presumption as to documents in certain cases.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-24 Suspension of operation of this Act.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-24 Power of Central Government to give directions.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-25 Contravention by companies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-25 Death or insolvency in certain cases.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-25 Bar of legal proceedings.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-25 Removal of difficulties.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-25 xxxix

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46. 47. 48. 49.

Power to make rules.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-26 Power to make regulations.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-27 Rules and regulations to be laid before Parliament. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-27 Repeal and saving.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-28

DIVISION 3 Allied Legislation The Foreign Contribution (Regulation) Act, 2010. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . AL1.3 Foreign Exchange Regulation Act, 1973. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . AL2.1 Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974. . . . . . . . . . . . . . AL3.1 The Foreign Trade (Development and Regulation) Act, 1992. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . AL4.1 Prevention of Money Laundering Act, 2002. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . AL5.1 Smugglers and Foreign Exchange Manipulators Act, 1976 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . AL6.1

DIVISION 4 Rules issued under FEMA Act, 1999 The Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules, 2000. . . . . . . . R1.3 The Foreign Exchange (Authentication of Documents) Rules, 2000. . . . . . . . . . . . . . . . . . . . . . . . . . . R2.1 Foreign Exchange (Compounding Proceedings) Rules, 2000. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . R3.1 Foreign Exchange Management (Current Account Transactions) Rules, 2000 . . . . . . . . . . . . . . . . . . R4.1 The Foreign exchange Management (Encashment of Draft, Cheque, Instrument and payment of interest) Rules, 2000. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . R5.1 Appellate Tribunal for Foreign Exchange (Recruitment, Salary & Allowances & other conditions of service of Chairperson & Members) Rules, 2000. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . R6.1

DIVISION 5 FEMA Regulations FEMA 1/RB-2000, 3-5-2000 FEMA 2/RB-2000, 3-5-2000

Foreign Exchange Management (Permissible capital account transactions) Regulations, 2000. . . . . . . . . . . . . . . .Reg-1.3 Foreign Exchange Management (Issue of security in India by a branch, office or agency of a person resident outside India) Regulations, 2000. . . . . . . . . . . . . . . Reg-2.1

Table of Contents

FEMA 3/2000-RB, 3-5-2000 FEMA 4/2000-RB, 3-5-2000 FEMA 5/2000-RB, 3-5-2000 FEMA 5(R)/RB-2016, 1-4-2016 FEMA 6/RB-2000, 3-5-2000 FEMA 6(R)/RB-2015, 29-12-2015 FEMA 7/2000-RB, 3-5-2000 FEMA 7(R)/RB-2015, 21-1-2016 FEMA 8/2000-RB, 3-5-2000 FEMA 9/2000-RB, 3-5-2000 FEMA 9(R)/RB-2015, 29-12-2015 FEMA 10/2000-RB, 3-5-2000 FEMA 10(R)/RB-2015, 21-1-2016 FEMA 11/2000-RB, 3-5-2000 FEMA 11(R)/2015-RB FEMA 12/2000-RB, 3-5-2000 FEMA 12(R)/RB-2015, 29-12-2015 FEMA 13/2000-RB, 3-5-2000 FEMA 13(R)/RB-2016, 1-4-2016 FEMA 14/2000-RB, 3-5-2000 FEMA 14(R)/RB-2016, 2-5-2016

Foreign Exchange Management (Borrowing or Lending in Foreign Exchange) Regulations, 2000. . . . . . . . Reg-3.1 Foreign Exchange Management (Borrowing and lending in rupees) Regulations, 2000. . . . . . . . . . . . . . . . . . Reg-4.1 Foreign Exchange Management (Deposit) Regulations, 2000. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reg-5.1 Foreign Exchange Management (Deposit) Regulations, 2016. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reg-5a.1 Foreign Exchange Management (Export and import of currency) Regulations, 2000. . . . . . . . . . . . . . . . . . . . . . . Reg-6.1 Foreign Exchange Management (Export and Import of Currency) Regulations, 2015. . . . . . . . . . . . . . . . . . . . . Reg-6a.1 Foreign Exchange Management (Acquisition and transfer of immovable property outside India) Regulations, 2000. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reg-7.1 [Foreign Exchange Management (Acquisition and transfer of immovable property outside India) Regulations, 2015. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reg-7a.1 Foreign Exchange Management (Guarantees) Regulations, 2000. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reg-8.1 Foreign Exchange Management (Realisation, repatriation and surrender of foreign exchange) Regulations, 2000. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reg-9.1 [Foreign Exchange Management (Realisation, repatriation and surrender of foreign exchange) Regulations, 2015] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reg-9a.1 Foreign Exchange Management (Foreign currency accounts by a person resident in India) Regulations, 2000. Reg-10.1 [Foreign Exchange Management (Foreign currency accounts by a person resident in India) Regulations, 2015]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reg-10a.1 Foreign Exchange Management (Possession and retention of foreign currency) Regulations, 2000. . . . . . . . Reg-11.1 Foreign Exchange Management (Possession and retention of foreign currency) Regulations, 2015. . . . . . . Reg-11a.1 Foreign Exchange Management (Insurance) Regulations, 2000. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reg-12.1 [Foreign Exchange Management (Insurance) Regulations, 2015] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reg-12a.1 Foreign Exchange Management (Remittance of Assets) Regulations, 2000. . . . . . . . . . . . . . . . . . . . . . . . . . Reg-13.1 [Foreign Exchange Management (Remittance of Assets) Regulations, 2016]. . . . . . . . . . . . . . . . . . . . . . . . Reg.13a.1 Foreign Exchange Management (Manner of receipt and payment) Regulations, 2000. . . . . . . . . . . . . . . . . . . . .Reg-14.1 [Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2016]. . . . . . . . . . . . . . . . . . . Reg.14a.1 xli

FEMA Ready Reckoner with Commentary

FEMA 20/2000-RB, 3-5-2000

Foreign Exchange Management (Transfer or issue of security by a person resident outside India) Regulations,Â 2000. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reg-20.1 FEMA 20(R)/RB-2017, 7-11-2017 Foreign Exchange Management (Transfer or issue of security by a person resident outside India) Regulations,Â 2017. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reg-20a.1 FEMA 21/2000-RB, 3-5-2000 Foreign Exchange Management (Acquisition and transfer of immovable property in India) Regulations, 2000. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reg-21.1 FEMA 21(R)/2018-RB, 26-3-2018 Foreign Exchange Management (Acquisition and transfer of immovable property in India) Regulations, 2018. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reg-21a.1 FEMA 22/2000-RB, 3-5-2000 Foreign Exchange Management (Establishment in India of branch or office or other place of business) Regulations, 2000. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reg-22.1 FEMA 22(R)/2016-RB, 31-3-2016 [Foreign Exchange Management (Establishment in India of a branch office or a liaison office or a project office or any other place of business) Regulations, 2016] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reg-22a.1 FEMA 23/2000-RB, dated 3-5-2000 Foreign Exchange Management (Export of goods and services) Regulations, 2000. . . . . . . . . . . . . . . . . . . . . Reg-23.1 FEMA 23(R)/2015-RB, dated 12-1-2016 Foreign Exchange Management (Export of goods and services) Regulations, 2015. . . . . . . . . . . . . . . . . . . . Reg-23a.1 FEMA 24/2000-RB, 3-5-2000 Foreign Exchange Management (Investment in firm of proprietary concern in India) Regulations, 2000 . . . . . . Reg-24.1 FEMA 25/2000-RB, 3-5-2000 Foreign Exchange Management (Foreign exchange derivative contracts) Regulations, 2000. . . . . . . . . . . . . . . Reg-25.1 FEMA 71/2002-RB, dated 19-10-2002 Foreign Exchange Management (Offshore Banking Unit) Regulations, 2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . Reg-71.1 FEMA 101/2003-RB, 3-10-2003 Foreign Exchange Management [Withdrawal of general permission to overseas corporate bodies (OCBs)] Regulations, 2003. . . . . . . . . . . . . . . . . . . . . . . . Reg-101.1 FEMA 120/2004-RB, 7-7-2004 Foreign Exchange Management (Transfer or issue of any foreign security) (Amendment) Regulations, 2004. . Reg-120.1 FEMA 389/2018-RB, 20-3-2018 Foreign Exchange Management (Cross Border Merger) Regulations, 2018. . . . . . . . . . . . . . . . . . . . . . . . Reg-389.1

DIVISION 6 FORMS FORM-1

Form A2 - Application for drawal of foreign exchange . . . . . . . . . . . . . . . . . . . . . . . . . . F-3

FORM-2

Annual Activity Certificate of LO/BO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-5

FORM-3

Annual Return on Foreign Liabilities and Assets as on 31 March, 20 __ __. . . . . . . . . . F-6

FORM-4

Advance Remittance Form (ARF): For declaration of FDI advance remittances . . . . . F-14

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FORM-5

Application cum Declaration for purchase of foreign exchange under the Liberalised Remittance Scheme of USD 250, 000. . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-17

FORM-6

Application for obtaining permission to enter into Rupee / Foreign Currency Drawing Arrangements with Exchange Houses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-19

FORM-7

Application Form For FFMC License under Section 10(1) OF FEMA, 1999. . . . . . . . F-24

FORM-8

BEF - Statement showing the details of remittances effected towards import in respect of which documentary evidence has not been received despite reminders . . F-25

FORM-9

Booking of forward contracts on past performance basis. . . . . . . . . . . . . . . . . . . . . . . . F-31

FORM-10 CDF - Currency Declaration Form. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-32 FORM-11

Concepts & Definitions to be used while filling-in the Annual Return on Foreign Liabilities and Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-34

FORM-12 Contact Information Form for creation of User id- EDPMS. . . . . . . . . . . . . . . . . . . . . . F-40 FORM-13 Form CN : Reporting by an Indian startup company issuing Convertible Notes to a person resident outside India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-41 FORM-14 Form DI : Notificatio to the Secretariat for Industrial Assistance, DIPP by an Indian entity making downstream investment in another Indian company which falls within the meaning of indirect foreign investment for the investee company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-45 FORM-15 Cross- currency derivative transactions - statement for the half-year endedâ&#x20AC;Ś.. . . . . . . F-46 FORM-16 Details of guarantee invoked or availed of from non-resident entities for fund and non-fund based activities for the quarter ended ______. . . . . . . . . . . . . . . . . . . . . . F-47 FORM-17 Form DRR - Return to be filed by Issuer/Transferor who has arranged issue/ transfer of Depository Receipts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-48 FORM-18 Form ECB - Application for raising External Commercial Borrowings (ECB) under Approval Route. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-50 FORM-19 ECB - 2 - Reporting of actual transactions of External Commercial Borrowings (ECB) under Foreign Exchange Management Act, 1999 (for all categories and any amount of loan). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-54 FORM-20 EDF- Export Declaration Form for Export of Goods / Software . . . . . . . . . . . . . . . . . . F-58 FORM-21 ESOP Reporting - Statement of shares allotted to Indian employees / Directors under ESOP. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-66 FORM-22 Form FC-GPR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-68 FORM-23 Form FC-TRS - Declaration regarding transfer of shares / compulsorily and mandatorily convertible preference shares (CMCPS) / debentures /others by way of sale from resident to non resident / non-resident to resident. . . . . . . . . . . . . . . . F-76

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FORM-24 Form FOREIGN DIRECT INVESTMENt- LLP (I) - Report by the Limited Liability Partnerships (LLPs) receiving amount of consideration for capital contribution and acquisition / transfer of profit shares under the Scheme . . . . . . . . . . . F-83 FORM-25 LLP (I). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-95 FORM-26 Form LLP (II): The disinvestment/transfer of capital contribution or profit share between a resident and a non-resident (or vice versa) . . . . . . . . . . . . . . . . . . . . . F-96 FORM-27 FLM 8 - (For ADs Cat-II)- Summary statement of purchases and sale of foreign currency notes during the month of __________200. . . . . . . . . . . . . . . . . . . . . F-98 FORM-28 FLM 8 (For FFMCs)- Summary statement of purchases and sale of foreign currency notes during the month of _________200. . . . . . . . . . . . . . . . . . . . . . . . . . . F-100 FORM-29 FNC - Application for Establishment of Branch/Liaison Office in India. . . . . . . . . . . F-101 FORM-30 FTD- Statement showing daily turnover of foreign exchange dated……… . . . . . . . . F-104 FORM-31 Form IPI - Declaration of immovable property acquired in India by a person resident outside India who has established in India a branch, office or other place of business, excluding a liaison office. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-105 FORM-32 FORM ODI. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-107 FORM-33 Form-83 - Reporting of loan agreement details under Foreign Exchange Management Act, 1999. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-123 FORM-34 Format of Report by LO/ BO/ PO to DG of Police . . . . . . . . . . . . . . . . . . . . . . . . . . . F-130 FORM-35 GDR - Return to be filed by an Indian company who has arranged issue of GDR/ADR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-133 FORM-36 GPB -Statement showing gaps, position and cash balances as on……….. . . . . . . . . . F-136 FORM-37 Format of the Letter of Comfort. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-137 FORM-38 LEC(FII): Report by the Authorised Dealer Category-I banks to the Reserve Bank capturing the purchase/transfer of capital instruments by FPIs on stock exchanges in India. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-138 FORM-39 LEC(NRI): Report by the Authorised Dealer Category-I banks to the Reserve Bank capturing the purchase/transfer of capital instruments by Non-Resident Indians or Overseas Citizens over stock exchanges in India. . . . . . . . . . . . . . . . . . . . . F-139 FORM-40 LEG - Application for remittance of legacies, bequests or inheritances to beneficiaries resident outside India. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-141 FORM-41 Monthly Report to be submitted by the AD-Category II for the month of ________ . F-143 FORM-42 Particulars of operations in the account in the month of ___________. . . . . . . . . . . . F-145 FORM-43 Report by the Indian company receiving amount of consideration for issue of shares / Convertible debentures under the FDI Scheme. . . . . . . . . . . . . . . . . . . . . . . . F-146 FORM-44 Report of Overseas Foreign Currency Borrowings by AD Cat-I banks. . . . . . . . . . . . F-149 xliv

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FORM-45 Report on exposures of corporates in foreign currency . . . . . . . . . . . . . . . . . . . . . . . . F-150 FORM-46 Report on exposures of corporates in foreign currency . . . . . . . . . . . . . . . . . . . . . . . . F-151 FORM-47 Reports on Foreign Currency- Rupee Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-152 FORM-48 Requirements for filing of Compounding Application. . . . . . . . . . . . . . . . . . . . . . . . . F-154 FORM-49 RMC - F . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-163 FORM-50 SDF. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-164 FORM-51 Softex Forms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-166 FORM-52 Statement – Details of Forward cover undertaken by FII clients. . . . . . . . . . . . . . . . . F-168 FORM-53 Statement B Consolidated statement of position of Exchange Houses’ accounts to be closed/ under closure (to be submitted by the Account maintaining office through the International Division). . . . . . . . . . . . . . . . . . . . . . . . . F-169 FORM-54 Statement C Monthly statement regarding particulars of Exchange House account held at overseas branches of Indian banks (ADs Cat-I). . . . . . . . . . . . . . . . . . F-170 FORM-55 Statement D. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-171 FORM-56 Statement E Statement showing inflows of foreign currency through Exchange Houses during the quarter ended_______ . . . . . . . . . . . . . . . . . . . . . . . . . . F-172 FORM-57 Statement giving details of import / export turnover, overdues, etc. . . . . . . . . . . . . . . F-174 FORM-58 Statement of Nostro/Vostro Balances for the month of. . . . . . . . . . . . . . . . . . . . . . . . . F-175 FORM-59 Statement of Purchase transactions of USD 10,000 and above for the month of ___________. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-176 FORM-60 Statement of the amount of foreign currency written off during the financial year ended ___________. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-177 FORM-61 Statement on Commodity Hedging- Domestic Transactions . . . . . . . . . . . . . . . . . . . . F-178 FORM-62 Statement on Guarantees / Letter of Undertaking / Letter of Comfort issued by Authorized Dealer banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-179 FORM-63 Statement showing details of remittances received through Money Transfer Scheme during the quarter ended __________________. . . . . . . . . . . . . . . . . . . . . . . F-180 FORM-64 Statement showing summation of Foreign Currency Account opened out of export proceeds of Foreign Currency Notes/ encashed Travellers Cheques for the quarter ended ___________ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-181 FORM-65

TC - Approvals of Trade Credit granted by all branches during the (Month /Year)……….F-182

FORM-66 Weekly Reporting of Long Term Foreign Currency Rupee Swaps for the week from ______. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-184

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FEMA Ready Reckoner with Commentary

DIVISION 7 FAQs Frequently Asked Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . FAQ-3 1. Accounts in India by Non-residents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . FAQ-3 2. Asian Clearing Union . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . FAQ-9 3. Compounding of Contraventions under FEMA, 1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . FAQ-11 4. Exchange Earner’s Foreign Currency (EEFC) Account. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . FAQ-20 5. External Commercial Borrowings (ECB) and Trade Credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . FAQ-22 6. Annual Return on Foreign Liabilities and Assets (FLA return) under FEMA 1999. . . . . . . . . . . FAQ-34 7. Foreign Currency Accounts by Resident Individuals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . FAQ-45 8. Foreign Investment in India. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . FAQ-49 9. Hedging of Price Risk in Commodities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . FAQ-58 10. Issuance of Rupee Denominated Bonds Overseas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . FAQ-60 11. Liberalised Remittance Scheme . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . FAQ-63 12. Liaison/Branch/Project Offices of foreign entities in India. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . FAQ-71 13. Miscellaneous forex facilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . FAQ-74 14. Money Changing Activities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . FAQ-79 15. Remittances [Money Transfer Service Scheme (MTSS) and Rupee Drawing Arrangement (RDA)]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . FAQ-84 16. Overseas Direct Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . FAQ-87 17. Purchase of Immovable Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . FAQ-106 18. Remittance of Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . FAQ-110 19. Swap Window for attracting FCNR (B) Dollar funds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . FAQ-112

DIVISION 8 Press Notes (2010-2019) Prior years (1991-2009) on http://bit.ly/FEMARR Press Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PN-3

2010 Series Press Note No. 1 (2010 Series), dated 25-03-2010 – Review of cases under Government Route i.e which require prior approval of the Government of India for making foreign investment. . . . . . . . . . . PN-3 Press Note No. 2 (2010 Series), dated 10-05-2010 – Review of the policy on foreign direct investment in the manufacture of Cigarettes etc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PN-4

2011 Series Press Note No. 1(2011 Series), dated 20-05-2011 – Review of the policy on Foreign Direct Investment- Allowing FDI in Limited Liability Partnership firms-amendment to paragraphs 2.1, 3.3.5 and 3.3.6 of ‘Circular 1 of 2011-Consolidated FDI Policy ‘. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PN-5 Press Note No. 2 (2011 Series), dated 04-11-2011 – National Manufacturing Policy. . . . . . . . . . . . . . . . . PN-6 xlvi

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Press Note No. 3 (2011 Series), dated 08-11-2011 – Review of the policy on Foreign Direct Investment in pharmaceuticals sector-insertion of a new paragraph 6.2.25 to ‘Circular 2 of 2011-Consolidated FDI Policy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PN-24

2012 Series Press Note No. 1 (2012 Series), dated 10-01-2012 – Review of the policy on Foreign Direct Investment- liberalization of the policy in Single-Brand Retail Trading. . . . . . . . . . . . . . . . . . . . . . . . . . PN-25 Press Note No. 2 (2012 Series), dated 31-07-2012 – Downstream investment by a banking company incorporated in India, which is owned and/or controlled by non-residents/ a nonresident entity/non-resident entities - Insertion of a Note below paragraph 3.10.4.1 of ‘Circular 1 of 2012-Consolidated FDI Policy’. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PN-26 Press Note No. 3 (2012 Series), dated 01-08-2012 – Review of the Foreign Direct Investment policy - permitting investments from Pakistan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PN-27 Press Note No. 4 (2012 Series), dated 20-09-2012 – Amendment of the existing policy on Foreign Direct Investment in Single-Brand Product Retail Trading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PN-28 Press Note No. 5 (2012 Series), dated 20-09-2012 – Review of the policy on Foreign Direct Investment- allowing FDI in Multi-Brand Retail Trading. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PN-29 Press Note No. 6 (2012 Series), dated 20-09-2012 – Review of the policy on Foreign Direct Investment in the Civil Aviation sector. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PN-31 Press Note No. 7 (2012 Series), dated 20-09-2012 – Review of the policy on Foreign Direct Investment in the Civil Aviation sector. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PN-33 Press Note No. 8 (2012 Series), dated 20-09-2012 – Policy on foreign investment in Power Exchanges. PN-36 Press Note No. 9 (2012 Series), dated 03-10-2012 – Setting up of step down (operating) subsidiaries by NBFCs having foreign investment above 75% and below 100% and with a minimum capitalisation of USS 50 million - amendment of paragraph 6.2.24.2 (1) (iv) of ‘Circular 1 of 2012- Consolidated FDI Policy ‘. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PN-37

2013 Series Press Note No. 1 (2013 Series), dated 03-06-2013 – Review of the policy on foreign direct investment in the Multi Brand Retail Trading Sector- amendment of paragraph 6.2.16.5(2) of ‘Circular 1 of2013-Consolidated FDI Policy’. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PN-38 Press Note No. 2(2013 Series), dated 03-06-2013 – Foreign Direct Investment Policy definition of ‘group company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PN-39 Press Note No. 3 (2013 Series), dated 04-07-2013 – Review of the policy on foreign direct investment in the Multi Brand Retail Trading Sector- amendment of paragraph 6.2.16.5(2) of ‘Circular 1 of 2013-Consolidated FD1 Policy’. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PN-40 Press Note No. 4 (2013 Series), dated 22-08-2013 – Amendment of the existing policy on Foreign Direct Investment - definition of the term “control”, for calculation of total foreign investment i.e. direct and indirect foreign investment, in Indian companies. . . . . . . . . . . . . . . . . . . . . . . PN-41 Press Note No. 5 (2013 Series), dated 22-08-2013 – Review of the policy on foreign direct investment in the Multi-Brand Retail Trading Sector-amendment of paragraph 6.2.16.5 (in), (iv) and (vi) of Circular 1 of 2013-Consolidated FDI Policy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PN-42 xlvii

FEMA Ready Reckoner with Commentary

Press Note No. 6 (2013 Series), dated 22-08-2013 – Review of the policy on Foreign Direct Investment (FDI)-Caps and routes in various sectors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PN-43 Press Note No. 7 (2013 Series), dated 03-12-2013 – Amendment of the existing policy on issue of shares by unlisted Indian Companies under FCCB/ADR/GDR, pursuant to the Foreign Currency Convertible Bonds and Ordinary shares (Through Depository Receipt Mechanism) (Amendment) Scheme, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PN-49

2014 Series Press Note No. 1 (2014 Series), dated 08-01-2014 – Review of the existing policy on Foreign Direct Investment in the Pharmaceuticals Sector. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PN-50 Press Note No. 2 (2014 Series), dated 02-02-2014 – Policy on foreign investment in the Insurance Sector- amendment of paragraph 6.2.17.7 of ‘Circular 1 of 2013-Consolidated FDI Policy’. . PN-51 Press Note No. 3 (2014 Series), dated 26-06-2014 – Policy on foreign investment in the Insurance Sector- amendment of paragraph 6.2.17.7 of ‘Circular 1 of 2013-Consolidated FDI Policy’. . PN-52 Press Note No. 4 (2014 Series), dated 27-06-2014 – Switching over from NIC 1987 to NIC-2008. . . . . PN-54 Press Note No. 5 (2014 Series), dated 02-07-2014 – Switching over from NIC 1987 to NIC-2008. . . . . PN-55 Press Note No. 6 (2014 Series), dated 08-07-2014 – Security manual for licensed defence Industries. . . PN-56 Press Note No. 7 (2014 Series), dated 26-08-2014 – Review of the policy on Foreign Direct Investment (FDI) in Defence sector - amendment to ‘Consolidated FDI Policy Circular 2014’. . . . . . . . PN-56 Press Note No. 8 (2014 Series), dated 26-08-2014 – Policy for Private Investment in Rail Infrastructure through Domestic and Foreign Direct Investment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PN-60 Press Note No. 9 (2014 Series), dated 20-08-2014 – Subject: Streamlining the procedure for grant of industrial Licenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PN-62 Press Note No. null (2014 Series), dated 29-09-2014 – Possession and sale of fireworks of foreign origin in India is illegal and punishable under the Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PN-63 Press Note No. 10 (2014 Series), dated 03-12-2014 – Review of Foreign Direct Investment (FDI) policy on the Construction Development Sector- amendment to ‘Consolidated FDI Policy Circular 2014’. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PN-63

2015 Series Press Note No. 1 (2015 Series), dated 05-01-2015 – Mapping of the sector specific FDI Policy in Consolidated FDI Policy 2014 in terms of National Industrial Classification (NICJ-2008. . . . . . . . . . PN-66 Press Note No. 2 (2015 Series), dated 06-01-2015 – Review of the policy on Foreign Direct Investment (FDI) in Pharmaceutical Sector- carve out for medical devices.. . . . . . . . . . . . . . . . . . . . . . . PN-86 Press Note No. 3 (2015 Series), dated 02-03-2015 – Review of Foreign Direct Investment (FDI) policy on Insurance Sector-amendment to ‘Consolidated FDI Policy Circular of 2014’. . . . . . . . . PN-88 Press Note No. 4 (2015 Series), dated 24-04-2015 – Policy on foreign investment in the Pension Sector- addition of paragraph 6.2.17.9 of ‘Consolidated FDI Policy Circular of 2014-’. . . . . . . PN-90

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Press Note No. 5 (2015 Series), dated 27-04-2015 – Streamlining the Procedure for Grant of Industrial Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PN-91 Press Note No. 6 (2015 Series), dated 03-06-2015 – Review of the investment limit for cases requiring prior approval of the Foreign Investment Promotion Board (FIPB)/ Cabinet Committee on Economic Affairs (CCEA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PN-91 Press Note No. 7 (2015 Series), dated 03-06-2015 – Review of Foreign Direct Investment (FDI) Policy on Investments by Non Resident Indians (NRIs), Persons of Indian Origin (PIOs) and Overseas Citizens of India (OCIs). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PN-92 Press Note No. 8 (2015 Series), dated 30-07-2015 – Introduction of Composite Caps for Simplification of Foreign Direct Investment (FDI) policy to attract foreign investments. . . . . . . . . . . . . PN-93 Press Note No. 9 (2015 Series), dated 15-09-2015 – Review of the existing Foreign Direct Investment policy on Partly Paid Shares and Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PN-95 Press Note No. 10 (2015 Series), dated 22-09-2015 – Streamlining the Procedure for Grant of Industrial Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PN-96 Press Note No. 11 (2015 Series), dated 01-10-2015 – Foreign Direct Investment (FDI) upto 100% in White Label ATM Operations under automatic route . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PN-96 Press Note No. 12 (2015 Series), dated 24-11-2015 – Review of Foreign Direct Investment (FDI) policy on various sectors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PN-97

2016 Series Press Note No. 1 (2016 Series), dated 23-03-2016 – Review of Foreign Direct Investment Policy (FDI) on Insurance Sector. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PN-106 Press Note No. 2 (2016 Series), dated 23-03-2016 – Review of Foreign Direct Investment (FDI) policy on Pension Sector. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PN-107 Press Note No. 3 (2016 Series), dated 29-03-2016 – Guidelines for Foreign Direct Investment (FDI) on E-commerce. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PN-108 Press Note No. 4 (2016 Series), dated 06-05-2016 – Policy on foreign investment for Asset Reconstruction Companies- amendment of paragraph 6.2.18.1 of ‘Consolidated FDI Policy Circular of 2015’. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PN-109 Press Note No. 5 (2016 Series), dated 24-06-2016 – Review of Foreign Direct Investment (FDI) policy on various sectors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PN-111 Press Note No. 6 (2016 Series), dated 25-10-2016 – Foreign Direct Investment (FDI) Policy on Other Financial Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PN-116

2017 Series Press Note No. 1 (2017 Series), dated 20-02-2017 – Policy on foreign investment in Indian Stock Exchanges- amendment to paragraph 5.2.21 of ‘Consolidated FDI Policy Circular of 2016’. . . . PN-117

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2018 Series Press Note No. 1 (2018 Series), dated 20-01-2018 – Review of Foreign Direct Investment (FDI) policy on various sectors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PN-118 Press Note No. 2 (2018 Series), dated 26-12-2018 – Review of the policy on Foreign Direct Investment (FDI) in e-commerce. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PN-121

2019 Series Press Note No. 1 (2019 Series), dated 01-01-2019 – List of Defence Items requiring Industrial Licence under Industries (Development and Regulation) Act, 1951. . . . . . . . . . . . . . . . . . . . . . . . . . . . PN-123