Taxmann's Foreign Exchange Management (FEMA) Manual (Set of 2 Vols.) by Taxmann

I-5

CONTENTS PAGE

DIVISION HEADS PAGE

Contents

I-7-I-19

List of Basic Notifications

I-21-I-28

List of Amending Notifications

I-29-I-48

List of Notifications

I-49-I-90

List of Master Directions

I-91-I-92

List of FDI Circulars and Press Notes

I-93

List of Prescribed Forms

I-95-I-100

DIVISION ONE u

FEMA Glossary

1.1-1.35

DIVISION TWO u

Foreign Exchange Management Act, 1999

2.1-2.29

DIVISION THREE u

Rules & Regulations under FEMA

3.1-3.292

DIVISION FOUR u

Notifications under FEMA

4.1-4.24

DIVISION FIVE u

Master Directions

5.1-5.411

DIVISION SIX u

Memorandum of Instructions

6.1-6.96

DIVISION SEVEN u

Foreign Contributions

7.1-7.166

DIVISION EIGHT u

Prevention of Money Laundering

8.1-8.221

DIVISION NINE u

EURO Issue and Issue of Foreign Currency Convertible Bonds/Ordinary Shares through Depository Receipt Mechanism/Issue of Foreign Currency Exchange Bonds I-5

9.1-9.57

DIVISION CONTENTS HEADS

I-6 PAGE

DIVISION TEN u

Allied Acts/Rules & Guidelines

10.1-10.83

DIVISION ELEVEN u

Foreign Direct Investment Policy

11.1-11.116

DIVISION TWELVE u

Tribunal, Appellate Tribunal and other Authorities

12.1-12.40

DIVISION THIRTEEN u

FEMA & FDI Ready Reckoner

13.1-13.525*

DIVISION FOURTEEN u

FEMA Case Laws Digest

14.1-14.131*

DIVISION FIFTEEN u

RBI s Circulars & Clarifications (2000-2021)

15.1-15.495*

APPENDIX I u

Relevant Provisions of Exchange Control Manual

A1-A101*

APPENDIX II u

Foreign Exchange Regulation Act, 1973

A103-A135*

APPENDIX III u

FEDAI Rules

A137-A155*

APPENDIX IV u

Asian Clearing Union (Procedure) Rules

SUBJECT INDEX

*See Volume 2.

A157-A161* i-l

I-7

CONTENTS PAGE

Division Heads

I-5-I-6

List of Basic Notifications

I-21-I-28

List of Amending Notifications

I-29-I-48

List of Notifications

I-49-I-90

List of Master Directions

I-91-I-92

List of FDI Circulars and Press Notes

I-93

List of Prescribed Forms

I-95-I-100 DIVISION ONE

FEMA GLOSSARY 1.1

Glossary of Important Definitions

1.3

DIVISION TWO

FOREIGN EXCHANGE MANAGEMENT ACT, 1999 CHAPTER I PRELIMINARY

Short title, extent, application and commencement

2.3

Definitions

2.3 CHAPTER II REGULATION AND MANAGEMENT OF FOREIGN EXCHANGE

Dealing in foreign exchange, etc.

2.6

Holding of foreign exchange, etc.

2.7

Current account transactions

2.7

Capital account transactions

2.7

Export of goods and services

2.10

Realisation and repatriation of foreign exchange

2.10

Exemption from realisation and repatriation in certain cases

2.10

I-7

CONTENTS

I-8 PAGE

CHAPTER III AUTHORISED PERSON

10. 11. 12.

Authorised person Reserve Bank s powers to issue directions to authorised person Power of Reserve Bank to inspect authorised person

2.11 2.12 2.12

CHAPTER IV CONTRAVENTION AND PENALTIES

13. 14. 14A. 15.

Penalties Enforcement of the orders of Adjudicating Authority Power to recover arrears of penalty Power to compound contravention

2.13 2.14 2.15 2.15

CHAPTER V ADJUDICATION AND APPEAL

16. 17. 18. 19. 20. 21. 22.

Appointment of Adjudicating Authority Appeal to Special Director (Appeals) Appellate Tribunal Appeal to Appellate Tribunal [Omitted by the Finance Act, 2017, w.e.f. 26-5-2017] Qualifications for appointment of Special Director (Appeals) [Omitted by the Finance Act, 2017, w.e.f. 26-5-2017]

2.15 2.16 2.17 2.17 2.18 2.18 2.19

23. 24. 25. 26. 27. 28.

Terms and conditions of service of Special Director (Appeals) [Omitted by the Finance Act, 2017, w.e.f. 26-5-2017] [Omitted by the Finance Act, 2017, w.e.f. 26-5-2017] [Omitted by the Finance Act, 2017, w.e.f. 26-5-2017] Staff of Special Director (Appeals) Procedure and powers of Appellate Tribunal and Special Director (Appeals) [Omitted by the Finance Act, 2017, w.e.f. 26-5-2017] [Omitted by the Finance Act, 2017, w.e.f. 26-5-2017] [Omitted by the Finance Act, 2017, w.e.f. 26-5-2017] Right of appellant to take assistance of legal practitioner or chartered accountant and of Government, to appoint presenting officers Officers and employees, etc., to be public servant Civil court not to have jurisdiction Appeal to High Court

2.19 2.19 2.19 2.19 2.20

29. 30. 31. 32.

33. 34. 35.

2.20 2.21 2.21 2.21

2.21 2.21 2.21 2.22

CHAPTER VI DIRECTORATE OF ENFORCEMENT

36. 37.

Directorate of Enforcement Power of search, seizure, etc.

2.22 2.22

I-9

CONTENTS PAGE

37A. 38.

Special provisions relating to assets held outside India in contravention of section 4 Empowering other officers

2.23 2.23

CHAPTER VII MISCELLANEOUS

39. 40. 41. 42. 43. 44. 44A. 45. 46. 47. 48. 49.

Presumption as to documents in certain cases Suspension of operation of this Act Power of Central Government to give directions Contravention by companies Death or insolvency in certain cases Bar of legal proceedings Powers of Reserve Bank not to apply to International Financial Services Centre Removal of difficulties Power to make rules Power to make regulations Rules and regulations to be laid before Parliament Repeal and saving

2.24 2.24 2.25 2.25 2.25 2.25 2.25 2.26 2.26 2.27 2.28 2.28

DIVISION THREE

RULES & REGULATIONS UNDER FEMA LIST OF RULES AND REGULATIONS

3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 3.9 3.10 3.11 3.12 3.13

Foreign Exchange Management (Encashment of Draft, Cheque, Instrument and Payment of Interest) Rules, 2000 Foreign Exchange (Authentication of Documents) Rules, 2000 Foreign Exchange Management (Current Account Transactions) Rules, 2000 Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules, 2000 Foreign Exchange (Compounding Proceedings) Rules, 2000 Foreign Exchange Management (Permissible Capital Account Transactions) Regulations, 2000 Foreign Exchange Management (Issue of Security in India by a Branch, Office or Agency of a Person Resident outside India) Regulations, 2000 Foreign Exchange Management (Borrowing and Lending) Regulations, 2018 Foreign Exchange Management (Deposit) Regulations, 2016 Foreign Exchange Management (Export and Import of Currency) Regulations, 2015 Foreign Exchange Management (Acquisition and Transfer of Immovable Property outside India) Regulations, 2015 Foreign Exchange Management (Guarantees) Regulations, 2000 Foreign Exchange Management (Realisation, Repatriation and Surrender of Foreign Exchange) Regulations, 2015

3.3 3.5 3.6 3.11 3.18 3.22 3.26 3.27 3.37 3.55 3.58 3.60 3.65

CONTENTS

I-10 PAGE

3.14 3.15 3.16 3.17 3.18 3.19 3.20 3.21 3.22 3.23 3.24 3.25 3.26 3.27 3.28 3.29 3.30 3.31 3.32 3.33 3.34 3.35 3.36 3.37 3.38

Foreign Exchange Management (Foreign Currency Accounts by a Person Resident in India) Regulations, 2015 Foreign Exchange Management (Possession and Retention of Foreign Currency) Regulations, 2015 Foreign Exchange Management (Insurance) Regulations, 2015 Foreign Exchange Management (Remittance of Assets) Regulations, 2016 Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2016 Foreign Exchange Management (Non-debt Instruments) Rules, 2019 Foreign Exchange Management (Debt Instruments) Regulations, 2019 Foreign Exchange Management (Mode of Payment and Reporting of Non-debt Instruments) Regulations, 2019 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 Foreign Exchange Management (Export of Goods and Services) Regulations, 2015 Foreign Exchange Management (Foreign Exchange Derivative Contracts) Regulations, 2000 Currency Futures (Reserve Bank) Directions, 2008 Foreign Exchange Management (Transfer or Issue of any Foreign Security) Regulations, 2004 Appellate Tribunal for Foreign Exchange (Recruitment, Salary & Allowances & Other Conditions of Service of Chairperson & Members) Rules, 2000 Foreign Exchange Management (Offshore Banking Unit) Regulations, 2002 Foreign Exchange Management [Withdrawal of General Permission to Overseas Corporate Bodies (OCBs)] Regulations, 2003 Exchange Traded Currency Options (Reserve Bank) Directions, 2010 Foreign Exchange Management (Crystallization of Inoperative Foreign Currency Deposits) Regulations, 2014 Foreign Exchange Management (International Financial Services Centre) Regulations, 2015 Foreign Exchange Management (Regularization of Assets held Abroad by a Person Resident in India) Regulations, 2015 Foreign Exchange Management (Cross Border Merger) Regulations, 2018 Hedging of Commodity Price Risk and Freight Risk in Overseas Markets (Reserve Bank) Directions, 2018 Currency Futures in International Financial Services Centre (Reserve Bank) Directions, 2020 Currency Options in International Financial Services Centre (Reserve Bank) Directions, 2020 Foreign Exchange Management (Margin for Derivative Contracts) Regulations, 2020

3.68 3.79 3.81 3.83 3.87 3.93 3.154 3.160 3.167 3.178 3.185 3.193 3.197 3.262 3.265 3.267 3.271 3.275 3.277 3.279 3.280 3.284 3.287 3.289 3.291

ALPHABETICAL LIST OF RULES & REGULATIONS u u u u u

Appellate Tribunal for Foreign Exchange (Recruitment, Salary & Allowances & Other Conditions of Service of Chairperson & Members) Rules, 2000 Currency Futures (Reserve Bank) Directions, 2008 Currency Futures in International Financial Services Centre (Reserve Bank) Directions, 2020 Currency Options in International Financial Services Centre (Reserve Bank) Directions, 2020 Exchange Traded Currency Options (Reserve Bank) Directions, 2010

3.262 3.193 3.287 3.289 3.271

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CONTENTS PAGE

u u u u u u u u u u u u u u u u u u u u u u u u u u u u u u u

Foreign Exchange (Authentication of Documents) Rules, 2000 Foreign Exchange (Compounding Proceedings) Rules, 2000 Foreign Exchange Management (Acquisition and Transfer of Immovable Property outside India) Regulations, 2015 Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules, 2000 Foreign Exchange Management (Borrowing and Lending) Regulations, 2018 Foreign Exchange Management (Cross Border Merger) Regulations, 2018 Foreign Exchange Management (Crystallization of Inoperative Foreign Currency Deposits) Regulations, 2014 Foreign Exchange Management (Current Account Transactions) Rules, 2000 Foreign Exchange Management (Debt Instruments) Regulations, 2019 Foreign Exchange Management (Deposit) Regulations, 2016 Foreign Exchange Management (Encashment of Draft, Cheque, Instrument and Payment of Interest) Rules, 2000 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 Foreign Exchange Management (Export and Import of Currency) Regulations, 2015 Foreign Exchange Management (Export of Goods and Services) Regulations, 2015 Foreign Exchange Management (Foreign Currency Accounts by a Person Resident in India) Regulations, 2015 Foreign Exchange Management (Foreign Exchange Derivative Contracts) Regulations, 2000 Foreign Exchange Management (Guarantees) Regulations, 2000 Foreign Exchange Management (Insurance) Regulations, 2015 Foreign Exchange Management (International Financial Services Centre) Regulations, 2015 Foreign Exchange Management (Issue of Security in India by a Branch, Office or Agency of a Person Resident outside India) Regulations, 2000 Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2016 Foreign Exchange Management (Margin for Derivative Contracts) Regulations, 2020 Foreign Exchange Management (Mode of Payment and Reporting of Non-debt Instruments) Regulations, 2019 Foreign Exchange Management (Non-debt Instruments) Rules, 2019 Foreign Exchange Management (Offshore Banking Unit) Regulations, 2002 Foreign Exchange Management (Permissible Capital Account Transactions) Regulations, 2000 Foreign Exchange Management (Possession and Retention of Foreign Currency) Regulations, 2015 Foreign Exchange Management (Realisation, Repatriation and Surrender of Foreign Exchange) Regulations, 2015 Foreign Exchange Management (Regularization of Assets held Abroad by a Person Resident in India) Regulations, 2015 Foreign Exchange Management (Remittance of Assets) Regulations, 2016 Foreign Exchange Management (Transfer or Issue of any Foreign Security) Regulations, 2004

3.5 3.18 3.58 3.11 3.27 3.280 3.275 3.6 3.154 3.37 3.3 3.167 3.55 3.178 3.68 3.185 3.60 3.81 3.277 3.26 3.87 3.291 3.160 3.93 3.265 3.22 3.79 3.65 3.279 3.83 3.197

CONTENTS

I-12 PAGE

u u

Foreign Exchange Management [Withdrawal of General Permission to Overseas Corporate Bodies (OCBs)] Regulations, 2003 Hedging of Commodity Price Risk and Freight Risk in Overseas Markets (Reserve Bank) Directions, 2018

3.267 3.284

CHRONOLOGICAL LIST OF RULES & REGULATIONS CENTRAL GOVERNMENT u u u u u u

u u

GSR 379(E), dated 3-5-2000 - Foreign Exchange Management (Encashment of Draft, Cheque, Instrument and Payment of Interest) Rules, 2000 GSR 380(E), dated 3-5-2000 - Foreign Exchange (Authentication of Documents) Rules, 2000 GSR 381(E), dated 3-5-2000 - Foreign Exchange Management (Current Account Transactions) Rules, 2000 GSR 382(E), dated 3-5-2000 - Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules, 2000 GSR 383(E), dated 3-5-2000 - Foreign Exchange (Compounding Proceedings) Rules, 2000 GSR 677(E), dated 28-8-2000 - Appellate Tribunal for Foreign Exchange (Recruitment, Salary and Allowances and other Conditions of Service of Chairperson and Members) Rules, 2000 S.O. No. 3732(E), dated 17-10-2019 - Foreign Exchange Management (Non-debt Instruments) Rules, 2019 GSR 796(E), dated 17-10-2019 - Foreign Exchange Management (Debt Instruments) Regulations, 2019

3.3 3.5 3.6 3.11 3.18 3.262 3.93 3.154

RBI u u u u u u u u u

FEMA 1/2000-RB, dated 3-5-2000 - Foreign Exchange Management (Permissible Capital Account Transactions) Regulations, 2000 FEMA 2/2000-RB, dated 3-5-2000 - Foreign Exchange Management (Issue of Security in India by a Branch, Office or Agency of a Person Resident outside India) Regulations, 2000 FEMA 3(R)/2018-RB, dated 17-12-2018 - Foreign Exchange Management (Borrowing and Lending) Regulations, 2018 FEMA 5(R)/2016-RB, dated 1-4-2016 - Foreign Exchange Management (Deposit) Regulations, 2016 FEMA 6(R)/2015-RB, dated 29-12-2015 - Foreign Exchange Management (Export and Import of Currency) Regulations, 2015 FEMA 7(R)/2015-RB, dated 21-1-2016 - Foreign Exchange Management (Acquisition and Transfer of Immovable Property outside India) Regulations, 2015 FEMA 8/2000-RB, dated 3-5-2000 - Foreign Exchange Management (Guarantees) Regulations, 2000 FEMA 9(R)/2015-RB, dated 29-12-2015 - Foreign Exchange Management (Realisation, Repatriation and Surrender of Foreign Exchange) Regulations, 2015 FEMA 10(R)/2015-RB, dated 21-1-2016 - Foreign Exchange Management (Foreign Currency Accounts by a Person Resident in India) Regulations, 2015

3.22 3.26 3.27 3.37 3.55 3.58 3.60 3.65 3.68

FEMA 10A/2014-RB, dated 21-3-2014 - Foreign Exchange Management (Crystallization of Inoperative Foreign Currency Deposits) Regulations, 2014

3.275

FEMA 11(R)/2015-RB, dated 29-12-2015 - Foreign Exchange Management (Possession and Retention of Foreign Currency) Regulations, 2015

3.79

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CONTENTS PAGE

FEMA 12(R)/2015-RB, dated 29-12-2015 - Foreign Exchange Management (Insurance) Regulations, 2015

3.81

FEMA 13(R)/2016-RB, dated 1-4-2016 - Foreign Exchange Management (Remittance of Assets) Regulations, 2016

3.83

FEMA 14(R)/2016-RB, dated 2-5-2016 - Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2016

3.87

FEMA 22(R)/2016-RB, dated 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

3.167

FEMA 23(R)/2015-RB, dated 12-1-2016 - Foreign Exchange Management (Export of Goods and Services) Regulations, 2015

3.178

FEMA 25/2000-RB, dated 3-5-2000 - Foreign Exchange Management (Foreign Exchange Derivative Contracts) Regulations, 2000

3.185

FEMA 120/2004-RB, dated 7-7-2004 - Foreign Exchange Management (Transfer or Issue of any Foreign Security) Regulations, 2004

3.197

FEMA 71/2002-RB, dated 7-9-2002 - Foreign Exchange Management (Offshore Banking Unit) Regulations, 2002

3.265

FEMA 101/2003-RB, dated 3-10-2003 - Foreign Exchange Management [Withdrawal of General Permission to Overseas Corporate Bodies (OCBs)] Regulations, 2003

3.267

FEMA 339/2015-RB, dated 2-3-2015 - Foreign Exchange Management (International Financial Services Centre) Regulations, 2015

3.277

FEMA 348/2015-RB, dated 25-9-2015 - Foreign Exchange Management (Regularization of Assets held Abroad by a Person Resident in India) Regulations, 2015

3.279

FEMA 389/2018-RB, dated 20-3-2018 - Foreign Exchange Management (Cross Border Merger) Regulations, 2018

3.280

FEMA 395/2019-RB, dated 17-10-2019 - Foreign Exchange Management (Mode of Payment and Reporting of Non-debt Instruments) Regulations, 2019 FEMA 399/2020-RB, dated 23-10-2020 - Foreign Exchange Management (Margin for Derivative Contracts) Regulations, 2020 FED 1/DG(SG)-2008, dated 6-8-2008 - Currency Futures (Reserve Bank) Directions, 2008

u u u

FED 01/ED(HRK)-2010, dated 30-7-2010 - Exchange Traded Currency Options (Reserve Bank) Directions, 2010

FMRD.FMD.01/ED(TRS)-2020, dated 20-1-2020 - Currency Futures in International Financial Services Centre (Reserve Bank) Directions, 2020 FMRD.FMD.02/ED(TRS)-2020, dated 20-1-2020 - Currency Options in International Financial Services Centre (Reserve Bank) Directions, 2020

3.160 3.291 3.193 3.271 3.287 3.289

DIVISION FOUR

NOTIFICATIONS UNDER FEMA 4.1 4.2 4.3 4.4

Notification under section 1(4) of FEMA/Enforcement of Amendments to provisions of FEMA Notification under section 2(h) of FEMA Notification under section 2(za) of FEMA Notifications under section 3 of FEMA

4.3 4.4 4.5 4.6

CONTENTS

I-14 PAGE

4.5

Notification under section 6 of FEMA

4.9

4.6

Orders under section 16 of FEMA

4.10

4.7

Notification under section 17 of FEMA

4.12

4.8

Notification under section 18 of FEMA

4.14

4.9

Notification under section 19 of FEMA

4.15

4.10

Notifications under section 36 of FEMA

4.16

4.11

Notifications under section 37A of FEMA

4.18

4.12

Notification under section 38 of FEMA

4.19

4.13

Notification under section 40 of RBI Act

4.20

4.14

Notification under section 47 of FEMA

4.21

4.15

Notification under section 50 of FEMA

4.22

4.16

Removal of Difficulties Order

4.24

DIVISION FIVE

MASTER DIRECTIONS 5.1 5.2 5.3 5.4 5.5 5.6 5.7 5.8 5.9 5.10 5.11 5.12 5.13 5.14 5.15 5.16 5.17 5.18 5.19 5.20

Master Direction on Risk Management and Inter-Bank Dealings Master Direction on Opening and Maintenance of Rupee/Foreign Currency Vostro Accounts of Non-resident Exchange Houses Master Direction on Money Changing Activities Master Direction on Compounding of Contraventions under FEMA, 1999 Master Direction on External Commercial Borrowings, Trade Credits and structured obligations Master Direction on Borrowing and Lending transactions in Indian Rupee between Persons Resident in India and Non-Resident Indians/Persons of Indian Origin Master Direction on Liberalised Remittance Scheme (LRS) Master Direction on other Remittance Facilities Master Direction on Insurance Master Direction on Establishment of Branch Office (BO)/Liaison Office (LO)/Project Office (PO) or any other place of business in India by foreign entities Master Direction on Foreign Investment in India Master Direction on Acquisition and Transfer of Immovable Property under Foreign Exchange Management Act, 1999 Master Direction on Remittance of Assets Master Direction on Deposits and Accounts Master Direction on Direct Investment by Residents in Joint Venture (JV)/Wholly Owned Subsidiary (WOS) Abroad Master Direction on Export of Goods and Services Master Direction on Import of Goods and Services Master Direction on Reporting under Foreign Exchange Management Act, 1999 Master Direction on Miscellaneous Master Direction on Money Transfer Service Scheme (MTSS)

5.3 5.29 5.39 5.57 5.67 5.86 5.93 5.107 5.131 5.138 5.152 5.188 5.199 5.203 5.222 5.246 5.277 5.300 5.397 5.403

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CONTENTS PAGE

DIVISION SIX

MEMORANDUM OF INSTRUCTIONS PEM : Memorandum of Instructions on Project Exports and Service Exports ACM : Memorandum of procedure for channelling transactions through Asian Clearing Union (ACU)

6.68

GIM : Revised Instructions under GIM

6.89

LIM

6.94

u u

: Revised Instructions under LIM

6.3

DIVISION SEVEN

FOREIGN CONTRIBUTIONS 7.1

Foreign Contribution (Regulation) Act, 2010

7.3

7.2

Foreign Contribution (Regulation) Rules, 2011

7.26

7.3

Foreign Contribution (Acceptance or Retention of Gifts or Presentations) Rules, 2012

7.67

7.4

Notifications issued under Foreign Contribution (Regulation) Act, 2010

7.69

7.5

Guidelines issued under section 36(1)(a) of the Banking Regulation Act, 1949 Implementation of the Provisions of Foreign Contribution (Regulation) Act, 2010

7.78

7.6

Guidelines for consideration of proposals for acceptance of foreign hospitality under the Foreign Contribution (Regulation) Act, 2010

7.84

7.7

Notified agencies not to be covered by definition of foreign sources

7.89

7.8

Standard Operating Procedure (SOP) to open and operate the FCRA Account as provided under Section 17(1) of the amended Foreign Contribution (Regulation) Act, 2010 with SBI, New Delhi Main Branch in terms of FCRA (Amendment) Act, 2020

7.94

7.9

Advisory for Compliance by FCRA NGOs/Associations with the Amended Provisions in FCRA, 2010 and FCRR, 2011

7.97

7.10

FAQs on FCRA, 2010

7.99

7.11

Advisory to NGOs on Foreign Funding

7.118

7.12

FCRA Account

7.119

7.13

Unique ID of NGOs Receiving Foreign Contribution

7.125

7.14

Charters

7.126

7.15

Case Laws Digest

7.134

DIVISION EIGHT

PREVENTION OF MONEY LAUNDERING 8.1 8.2 8.3

8.4 8.5

Prevention of Money Laundering Act, 2002 Notifications Prevention of Money-Laundering (the Manner of Forwarding a Copy of the Order of Provisional Attachment of Property along with the Material, and Copy of the Reasons along with the Material in Respect of Survey, to the Adjudicating Authority and its Period of Retention) Rules, 2005 Prevention of Money-Laundering (Receipt and Management of Confiscated Properties) Rules, 2005 Prevention of Money-Laundering (Maintenance of Records) Rules, 2005

8.3 8.57

8.77 8.82 8.85

CONTENTS

I-16 PAGE

8.6

8.7

8.8

8.9 8.10 8.11 8.12 8.13 8.14 8.15

Prevention of Money-Laundering (Forms, Search and Seizure or Freezing and the Manner of Forwarding the Reasons and Material to the Adjudicating Authority, Impounding and Custody of Records and the Period of Retention) Rules, 2005 Prevention of Money-Laundering (the Forms and the Manner of Forwarding a Copy of Order of Arrest of a Person along with the Material to the Adjudicating Authority and its Period of Retention) Rules, 2005 Prevention of Money-Laundering (the Manner of Forwarding a Copy of the Order of Retention of Seized Property along with the Material to the Adjudicating Authority and the Period of its Retention) Rules, 2005 Prevention of Money-Laundering (Manner of Receiving the Records Authenticated outside India) Rules, 2005 Prevention of Money-Laundering (Appeal) Rules, 2005 Adjudicating Authority (Procedure) Regulations, 2013 Prevention of Money-Laundering (Appointment and Conditions of Service of Chairperson and Members of Appellate Tribunal) Rules, 2007 Prevention of Money-Laundering (Appointment and Conditions of Service of Chairperson and Members of Adjudicating Authorities) Rules, 2007 Prevention of Money-Laundering (Issuance of Provisional Attachment Order) Rules, 2013

8.160 8.163

Prevention of Money-Laundering (Taking Possession of Attached or Frozen Properties Confirmed by the Adjudicating Authority) Rules, 2013

8.165

8.116

8.127

8.132 8.136 8.137 8.140 8.154

8.16

Prevention of Money-Laundering (Restoration of Property) Rules, 2016

8.171

8.17

Know Your Customer (KYC) Directions, 2016

8.173

DIVISION NINE

EURO ISSUE AND ISSUE OF FOREIGN CURRENCY CONVERTIBLE BONDS/ORDINARY SHARES THROUGH DEPOSITORY RECEIPT MECHANISM/ISSUE OF FOREIGN CURRENCY EXCHANGE BONDS 9.1 9.2 9.3 9.4 9.5

Euro Issue Issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depositary Receipt Mechanism) Scheme, 1993 Issue of Foreign Currency Exchangeable Bonds Scheme, 2008 Depository Receipts Scheme, 2014 Companies (Issue of Global Depository Receipts) Rules, 2014

9.3 9.33 9.49 9.52 9.56

DIVISION TEN

ALLIED ACTS/RULES AND GUIDELINES 10.1 10.2 10.3 10.4 10.5

Foreign Trade (Development and Regulation) Act, 1992 Notification under section 9A of the Foreign Trade (Development & Regulation) Act, 1992 Foreign Trade (Regulation) Rules, 1993 Foreign Trade (Exemption from Application of Rules in certain Cases) Order, 1993 Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974

10.3 10.18 10.20 10.28 10.33

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CONTENTS PAGE

10.6 10.7 10.8 10.9 10.10 10.11

Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 Smugglers and Foreign Exchange Manipulators (Appellate Tribunal for Forfeited Property) Rules, 1977 Appellate Tribunal for Forfeited Property (Procedure) Rules, 1986 Appellate Tribunal for Forfeited Property (Fees) Rules, 1987 Smugglers and Foreign Exchange Manipulators (Receipt, Management and Disposal of Forfeited Property) Rules, 2006 Safeguard Measures (Quantitative Restrictions) Rules, 2012

10.40 10.51 10.60 10.68 10.69 10.75

DIVISION ELEVEN

FOREIGN DIRECT INVESTMENT POLICY 11.1 11.2

Consolidated Foreign Direct Investment Policy Circulars issued in 2017-21

11.3 11.71

DIVISION TWELVE

TRIBUNAL, APPELLATE TRIBUNAL AND OTHER AUTHORITIES 12.1 12.2 12.3

Tribunals Reforms Act, 2021 Relevant sections of Finance Act, 2017 Tribunal (Conditions of Service) Rules, 2021

12.3 12.20 12.24

DIVISION THIRTEEN

FEMA & FDI READY RECKONER Acronyms used CHAPTER 1 : CHAPTER 2 : CHAPTER 3 : CHAPTER 4 : CHAPTER 5 : CHAPTER 6 : CHAPTER 7 : CHAPTER 8 : CHAPTER 9 : CHAPTER 10 : CHAPTER 11 : CHAPTER 12 : CHAPTER 13 : CHAPTER 14 : CHAPTER 15 : CHAPTER 16 : CHAPTER 17 : CHAPTER 18 : *See Volume 2.

in FEMA & FDI FEMA - Overview Authorised Person under FEMA Accounts in India by person resident out of India Accounts of Indian residents in Foreign Currency Receipt and payment in foreign exchange Realisation, repatriation and surrender of foreign exchange Money Changing Activities Money Transfer Service Scheme (MTSS) Possession and Retention of Foreign Currency Export and Import of Currency or Currency Notes Remittances on current account Liberalised Remittance Scheme (LRS) Export of Goods and Services Import of Goods and Services Project exports and service exports Foreign exchange rates Overview of capital account transactions Foreign Investment in India

13.v* 13.10* 13.18* 13.31* 13.42* 13.47* 13.50* 13.62* 13.67* 13.69* 13.73* 13.88* 13.96* 13.135* 13.157* 13.159* 13.166* 13.171*

CONTENTS

I-18 PAGE

CHAPTER 19 : CHAPTER 20 : CHAPTER 21 : CHAPTER 22 : CHAPTER 23 : CHAPTER 24 : CHAPTER 25 : CHAPTER 26 : CHAPTER 27 : CHAPTER 28 : CHAPTER 29 : CHAPTER 30 : CHAPTER 31 : CHAPTER 32 : CHAPTER 33 : CHAPTER 34 : CHAPTER 35 : CHAPTER 36 : CHAPTER 37 : CHAPTER 38 : CHAPTER 39 : CHAPTER 40 : CHAPTER 41 : CHAPTER 42 : CHAPTER 43 : CHAPTER 44 : CHAPTER 45 : CHAPTER 46 : CHAPTER 47 : CHAPTER 48 : CHAPTER 49 : CHAPTER 50 : CHAPTER 51 : CHAPTER 52 : CHAPTER 53 : CHAPTER 54 : SUBJECT INDEX

*See Volume 2.

FDI in Indian company Sector-wise FDI Policy at a glance FDI - Downstream investment i.e. indirect investment FDI through rights, bonus, sweat equity or merger/amalgamation FDI - Transfer of securities FDI in LLP FDI in GDR/ADR Investment by NRI or OCI FDI in startup company Investment by Foreign Portfolio Investor FDI in investment vehicle FDI by FVCI FDI - Investment in securities by Funds, Foreign Central Bank etc. Investment by Indian entity in JV/WOS abroad Guarantees Insurance Borrowing and Lending in foreign currency Borrowing and lending in Indian Rupees Foreign Investment in Debt Instruments External Commercial Borrowings Trade Credit (TC) and Structured Obligations Acquisition and transfer of immovable property in India Acquisition and transfer of immovable property out of India Remittance of Assets Branch/LO/Project Office in India by foreign entities Indian Depository Receipts Risk Management and Inter-Bank Dealings Vostro Account of Non-Resident Exchange Houses Industrial Policy of Government of India Enforcement of FEMA Penalties under FEMA Appeals under FEMA Compounding of Contraventions under FEMA Prevention of Money Laundering Act Foreign Contribution (Regulation) Act (FCRA) COFEPOSA, 1974

13.180* 13.201* 13.210* 13.217* 13.223* 13.238* 13.241* 13.247* 13.261* 13.264* 13.271* 13.274* 13.277* 13.279* 13.308* 13.313* 13.321* 13.326* 13.333* 13.344* 13.360* 13.367* 13.373* 13.375* 13.379* 13.395* 13.402* 13.405* 13.408* 13.414* 13.417* 13.423* 13.427* 13.439* 13.472* 13.498* 13.513*

I-19

CONTENTS PAGE

DIVISION FOURTEEN

FEMA CASE LAWS DIGEST 14.1 14.2 14.3 14.4

FEMA 1999 Foreign Contribution (Regulation) Act, 1976 Foreign Contribution (Regulation) Act, 2010 Foreign Exchange Regulation Act, 1973

14.3* 14.25* 14.27* 14.29*

DIVISION FIFTEEN

RBI s CIRCULARS & CLARIFICATIONS (2000-2021) 15.1 List of RBI s Circulars & Clarifications (2000-2021) 15.2 Text of Relevant Circulars & Clarifications (2000-2021) APPENDIX I u Relevant Provisions of Exchange Control Manual APPENDIX II u Foreign Exchange Regulation Act, 1973 APPENDIX III u FEDAI Rules

15.3* 15.160* A1-A101* A103-A135* A137-A155*

APPENDIX IV u Asian Clearing Union (Procedure) Rules

SUBJECT INDEX

*See Volume 2.

A157-A161* i-l

S. 3

FOREIGN EXCHANGE MANAGEMENT ACT, 1999

2.6

(ii) the holding of realised amount in an account with an authorised person in India to the extent notified by the Reserve Bank, and includes use of the realised amount for discharge of a debt or liability denominated in foreign exchange and the expression “repatriation” shall be construed accordingly; (z) “Reserve Bank” means the Reserve Bank of India constituted under sub-section (1) of section 3 of the Reserve Bank of India Act, 1934 (2 of 1934); (za) “security” means shares, stocks, bonds and debentures, Government securities as defined in the Public Debt Act, 1944 (18 of 1944), savings certificates to which the Government Savings Certificates Act, 1959 (46 of 1959) applies, deposit receipts in respect of deposits of securities and units of the Unit Trust of India established under sub-section (1) of section 3 of the Unit Trust of India Act, 1963 (52 of 1963) or of any mutual fund and includes certificates of title to securities, but does not include bills of exchange or promissory notes other than Government promissory notes or any other instruments which may be notified6 by the Reserve Bank as security for the purposes of this Act; (zb) “service” means service of any description which is made available to potential users and includes the provision of facilities in connection with banking, financing, insurance, medical assistance, legal assistance, chit fund, real estate, transport, processing, supply of electrical or other energy, boarding or lodging or both, entertainment, amusement or the purveying of news or other information, but does not include the rendering of any service free of charge or under a contract of personal service; (zc) “Special Director (Appeals)” means an officer appointed under 7[section 17]; (zd) “specify” means to specify by regulations made under this Act and the expression “specified” shall be construed accordingly; (ze) “transfer” includes sale, purchase, exchange, mortgage, pledge, gift, loan or any other form of transfer of right, title, possession or lien. CHAPTER II REGULATION AND MANAGEMENT OF FOREIGN EXCHANGE

Dealing in foreign exchange, etc.8 3. Save as otherwise provided in this Act, rules or regulations made thereunder, or with the general or special permission of the Reserve Bank9, no person shall— (a) deal in or transfer any foreign exchange or foreign security to any person not being an authorised person; (b) make any payment to or for the credit of any person resident outside India in any manner; (c) receive otherwise (than)10 through an authorised person, any payment by order or on behalf of any person resident outside India in any manner;

6. See Notification No. FEMA 223/2012-RB, dated 7-3-2012. (See Division Four) 7. Substituted for “section 18” by the Finance Act, 2017, w.e.f. 26-5-2017. 8. See Master Direction : Compounding of contraventions under FEMA, 1999 [No. 4/2015-16, dated 1-1-2016]. (See Division Five) 9. See Notification Nos. G.S.R. 403(E), 404(E) and 1009(E), dated 29-12-2015. (See Division Four) 10. Word ‘than’ should appear after word ‘otherwise’.

2.7

CAPITAL ACCOUNT TRANSACTIONS

S. 6

Explanation.—For the purpose of this clause, where any person in, or resident in, India receives any payment by order or on behalf of any person resident outside India through any other person (including an authorised person) without a corresponding inward remittance from any place outside India, then, such person shall be deemed to have received such payment otherwise than through an authorised person; (d) enter into any financial transaction in India as consideration for or in association with acquisition or creation or transfer of a right to acquire, any asset outside India by any person. Explanation.—For the purpose of this clause, “financial transaction” means making any payment to, or for the credit of any person, or receiving any payment for, by order or on behalf of any person, or drawing, issuing or negotiating any bill of exchange or promissory note, or transferring any security or acknowledging any debt. Holding of foreign exchange, etc. 4. Save as otherwise provided in this Act, no person resident in India shall acquire, hold, own, possess or transfer any foreign exchange, foreign security or any immovable property situated outside India. Current account transactions.11 5. Any person may sell or draw foreign exchange to or from an authorised person if such sale or drawal is a current account transaction: Provided that the Central Government may, in public interest and in consultation with the Reserve Bank, impose such reasonable restrictions for current account transactions as may be prescribed. Capital account transactions.12 6. (1) Subject to the provisions of sub-section (2), any person may sell or draw foreign exchange to or from an authorised person for a capital account transaction. (2) The Reserve Bank may, in consultation with the Central Government, specify— 12a

[(a) any class or classes of capital account transactions, involving debt instruments, which are permissible13;] (b) the limit up to which foreign exchange shall be admissible for such transactions;

13a

[(c) any conditions which may be placed on such transactions:]

11. See FEM (Current Account Transactions) Rules, 2000. (See Division Three) See Master Direction : Liberalized Remittance Scheme (LRS) [No. 7/2015-16, dated 1-1-2016]; Other Remittance Facilities [No. 8/2015-16, dated 1-1-2016]; Export of Goods & Services [No. 16/2015-16, dated 1-1-2016] and Import of Goods and Services [No. 17/2016-17, dated 1-1-2016]. (See Division Five) 12. See FEM (Offshore Banking Unit) Regulations, 2002/FEM (Permissible Capital Account Transactions) Regulations, 2000. (See Division Three) See Master Direction : Insurance [No. 9/2015-16, dated 1-1-2016] and Risk Management & Inter Bank Dealings [No. 1/2016-17, dated 5-7-2016]. (See Division Five) 12a. Substituted by the Finance Act, 2015, w.e.f. 15-10-2019. Prior to its substitution, clause (a) read as under : “(a) any class or classes of capital account transactions which are permissible;” 13. See FEM (Debt Instruments) Regulations, 2019. (See Division Three) 13a. Inserted by the Finance Act, 2015, w.e.f. 15-10-2019.

S. 6

2.8

FOREIGN EXCHANGE MANAGEMENT ACT, 1999

13b [Provided that the Reserve Bank or the Central Government shall not impose any restrictions on the drawal of foreign exchange for payment due on account of amortisation of loans or for depreciation of direct investments in the ordinary course of business.] 14

[(2A) The Central Government may, in consultation with the Reserve Bank, prescribe— (a) any class or classes of capital account transactions, not involving debt instruments, which are permissible;

(b) the limit up to which foreign exchange shall be admissible for such transactions; and (c) any conditions which may be placed on such transactions.]

(3) 15-25[***] 13b. Substituted by the Finance Act, 2015, w.e.f. 15-10-2019. Prior to its substitution, proviso read as under : “Provided that the Reserve Bank shall not impose any restriction on the drawal of foreign exchange for payments due on account of amortization of loans or for depreciation of direct investments in the ordinary course of business.” 14. Inserted, ibid. 15-25. Omitted, ibid. Prior to its substitution, sub-section (3) read as under : “(3) Without prejudice to the generality of the provisions of sub-section (2), the Reserve Bank may, by regulations, prohibit, restrict or regulate the followinga— (a) transfer or issue of any foreign security by a person resident in Indiab; (b) transfer or issue of any security by a person resident outside Indiac; (c) transfer or issue of any security or foreign security by any branch, office or agency in India of a person resident outside Indiad; (d) any borrowing or lending in foreign exchange in whatever form or by whatever name callede; (e) any borrowing or lending in rupees in whatever form or by whatever name called between a person resident in India and a person resident outside Indiaf; (f) deposits between persons resident in India and persons resident outside Indiag; (g) export, import or holding of currency or currency notesh; (h) transfer of immovable property outside India, other than a lease not exceeding five years, by a person resident in Indiai; (i) acquisition or transfer of immovable property in India, other than a lease not exceeding five years, by a person resident outside India; (j) giving of a guarantee or surety in respect of any debt, obligation or other liability incurred— (i) by a person resident in India and owed to a person resident outside India; or (ii) by a person resident outside Indiaj. See FEM (Cross Border Merger) Regulations, 2018. (See Division Three) See Master Direction : Acquisition and Transfer of Immovable Property under Foreign Exchange Management Act, 1999 [No. 12/2015-16, dated 1-1-2016]; Deposits and Accounts [No. 14/2015-16, dated 1-1-2016]. (See Division Five) b. See FEM (Transfer or Issue of any Foreign Security) Regulations, 2004/FEM (Borrowing and Lending) Regulations, 2018. (See Division Three) See Master Direction : Direct Investment by Residents in Joint Venture (JV)/Wholly Owned Subsidiary (WOS) Abroad [No. 15/2015-16, dated 1-1-2016]; External Commercial Borrowings, Trade Credits and Structured Obligations [No. 5/2018-19, dated 26-3-2019]. (See Division Five) c. See FEM [Withdrawal of General Permission to Overseas Corporate Bodies (OCBs)] Regulations, 2003. (See Division Three) See Master Direction : Foreign Investment in India [No. 11/2017-18, dated 4-1-2018]. (See Division Five) d. See FEM (Issue of Security in India by a Branch, Office or Agency of a Person Resident outside India) Regulations, 2000. (See Division Three) a.

(Contd. on page 2.9)

2.9

CAPITAL ACCOUNT TRANSACTIONS

S. 6

(4) A person resident in India may hold, own, transfer or invest in foreign currency, foreign security or any immovable property situated outside India if such currency, security or property was acquired, held or owned by such person when he was resident outside India or inherited from a person who was resident outside India27.

(5) A person resident outside India may hold, own, transfer or invest in Indian currency, security or any immovable property situated in India if such currency, security or property was acquired, held or owned by such person when he was resident in India or inherited from a person who was resident in India28. (6) Without prejudice to the provisions of this section, the Reserve Bank may, by regulation, prohibit, restrict, or regulate establishment in India of a branch, office or other place of business by a person (Contd. from page 2.8)

See FEM (Borrowing and Lending) Regulations, 2018/FEM [Withdrawal of General Permission to Overseas Corporate Bodies (OCBs)] Regulations, 2003. (See Division Three) See Master Direction : External Commercial Borrowings, Trade Credits and Structured Obligations [No. 5/ 2018-19, dated 26-3-2019]. (See Division Five) f. See FEM [Withdrawal of General Permission to Overseas Corporate Bodies (OCBs)] Regulations, 2003/FEM (Borrowing and Lending) Regulations, 2018. (See Division Three) See Master Direction : External Commercial Borrowings, Trade Credits and Structured Obligations [No. 5/ 2018-19, dated 26-3-2019]; Borrowing and Lending transactions in Indian Rupee between Persons Resident in India and Non-Resident Indians/Persons of Indian Origin [No. 6/2015-16, dated 1-1-2016]. (See Division Five) g. See FEM (Crystallisation of Inoperative Foreign Currency Deposits) Regulations, 2014/FEM [Withdrawal of General Permission to Overseas Corporate Bodies (OCBs)] Regulations, 2003/FEM (Deposit) Regulations, 2016. (See Division Three) See Master Direction : Deposits & Accounts [No. 14/2015-16, dated 1-1-2016]. (See Division Five) h. See FEM (Export and Import of Currency) Regulations, 2015. (See Division Three) i. See FEM (Acquisition and Transfer of Immovable Property outside India) Regulations, 2015. (See Division Three) See Master Direction : Acquisition and Transfer of Immovable Property under Foreign Exchange Management Act, 1999 [No. 12/2015-16, dated 1-1-2016]. (See Division Five) j. See FEM (Guarantees) Regulations, 2000. (See Division Three) See Master Direction : External Commercial Borrowings, Trade Credits and Structured Obligations [No. 5/201819, dated 26-3-2019]. (See Division Five) Section 47(3), with effect from 15-10-2019, provides that all Regulations/Master Directions issued by RBI prior to omission of section 6(3), i.e., 15-10-2019, shall continue to be valid until amended or rescinded by the Central Government. 26. See Master Direction : Miscellaneous [No. 19/2015-16, dated 1-1-2016]; Acquisition and Transfer of Immovable Property under Foreign Exchange Management Act, 1999 [No. 12/2015-16, dated 1-1-2016]. (See Division Five) 27. AP (DIR Series) (2013-14) Circular No. 90, dated 9-1-2014 clarifies that section 6(4) of FEMA, 1999 covers the following transactions: (i) Foreign currency accounts opened and maintained by such a person when he was resident outside India; (ii) Income earned through employment or business or vocation outside India taken up or commenced while such person was resident outside India, or from investments made while such person was resident outside India, or from gift or inheritance received while such a person was resident outside India; (iii) Foreign exchange including any income arising therefrom, and conversion or replacement or accrual to the same, held outside India by a person resident in India acquired by way of inheritance from a person resident outside India; (iv) A person resident in India may freely utilise all their eligible assets abroad as well as income on such assets or sale proceeds thereof received after their return to India for making any payments or to make any fresh investments abroad without approval of Reserve Bank, provided the cost of such investments and/ or any subsequent payments received therefor are met exclusively out of funds forming part of eligible assets held by them and the transaction is not in contravention to extant FEMA provisions. 28. See Master Direction : Acquisition and Transfer of Immovable Property under Foreign Exchange Management Act, 1999 [No. 12/2015-16, dated 1-1-2016]. (See Division Five) e.

S. 9

FOREIGN EXCHANGE MANAGEMENT ACT, 1999

2.10

resident outside India, for carrying on any activity relating to such branch, office or other place of business29. [(7) For the purposes of this section, the term “debt instruments” shall mean, such instruments as may be determined by the Central Government in consultation with the Reserve Bank.31]

Export of goods and services.32 7. (1) Every exporter of goods shall— (a) furnish to the Reserve Bank or to such other authority a declaration in such form and in such manner as may be specified, containing true and correct material particulars, including the amount representing the full export value or, if the full export value of the goods is not ascertainable at the time of export, the value which the exporter, having regard to the prevailing market conditions, expects to receive on the sale of the goods in a market outside India33; (b) furnish to the Reserve Bank such other information as may be required by the Reserve Bank for the purpose of ensuring the realisation of the export proceeds by such exporter. (2) The Reserve Bank may, for the purpose of ensuring that the full export value of the goods or such reduced value of the goods as the Reserve Bank determines, having regard to the prevailing market conditions, is received without any delay, direct any exporter to comply with such requirements as it deems fit. (3) Every exporter of services shall furnish to the Reserve Bank or to such other authorities a declaration in such form and in such manner as may be specified, containing the true and correct material particulars in relation to payment for such services33. Realisation and repatriation of foreign exchange.34 8. Save as otherwise provided in this Act, where any amount of foreign exchange is due or has accrued to any person resident in India, such person shall take all reasonable steps to realise and repatriate to India such foreign exchange within such period and in such manner as may be specified by the Reserve Bank. Exemption from realisation and repatriation in certain cases.35 9. The provisions of sections 4 and 8 shall not apply to the following, namely:—

29. See FEM (Establishment in India of a Branch Office or a Liaison Office or a Project Office or any other Place of Business) Regulations, 2016. (See Division Three) See Master Direction : Establishment of Branch Office (BO)/Liaison Office (LO)/Project Office (PO) or any other Place of Business in India by foreign entities [No. 10/2015-16, dated 1-1-2016]. (See Division Five) 30. Inserted by the Finance Act, 2015, w.e.f. 15-10-2019. 31. See Notification No. SO 3722(E), dated 16-10-2019 (see Division Four). 32. See FEM (Offshore Banking Unit) Regulations, 2002. (See Division Three) 33. See FEM (Export of Goods and Services) Regulations, 2015. (See Division Three) See Master Direction : Export of Goods & Services [No. 16/2015-16, dated 1-1-2016]. (See Division Five) 34. See FEM (Offshore Banking Unit) Regulations, 2002/FEM (Realisation, Repatriation and Surrender of Foreign Exchange) Regulations, 2015. (See Division Three) 35. See FEM (Foreign Currency Accounts by a Person Resident in India) Regulations, 2015/FEM (Offshore Banking Unit) Regulations, 2002/FEM (Crystallisation of Inoperative Foreign Currency Deposits) Regulations, 2014. (See Division Three) See Master Direction : Deposits and Accounts [No. 14/2015-16, dated 1-1-2016]. (See Division Five)

2.11

AUTHORISED PERSON

S. 10

(a) possession of foreign currency or foreign coins by any person up to such limit as the Reserve Bank may specify36; (b) foreign currency account held or operated by such person or class of persons and the limit up to which the Reserve Bank may specify; (c) foreign exchange acquired or received before the 8th day of July, 1947 or any income arising or accruing thereon which is held outside India by any person in pursuance of a general or special permission granted by the Reserve Bank; (d) foreign exchange held by a person resident in India up to such limit as the Reserve Bank may specify, if such foreign exchange was acquired by way of gift or inheritance from a person referred to in clause (c), including any income arising therefrom; (e) foreign exchange acquired from employment, business, trade, vocation, services, honorarium, gifts, inheritance or any other legitimate means up to such limit as the Reserve Bank may specify36; and (f) such other receipts in foreign exchange as the Reserve Bank may specify. CHAPTER III AUTHORISED PERSON

Authorised person. 10. (1) The Reserve Bank may, on an application made to it in this behalf, authorise any person to be known as authorised person to deal in foreign exchange or in foreign securities, as an authorised dealer, money changer or off-shore banking unit or in any other manner as it deems fit37. (2) An authorisation under this section shall be in writing and shall be subject to the conditions laid down therein. (3) An authorisation granted under sub-section (1) may be revoked by the Reserve Bank at any time if the Reserve Bank is satisfied that— (a) it is in public interest so to do; or (b) the authorised person has failed to comply with the condition subject to which the authorisation was granted or has contravened any of the provisions of the Act or any rule, regulation, notification, direction or order made thereunder: Provided that no such authorisation shall be revoked on any ground referred to in clause (b) unless the authorised person has been given a reasonable opportunity of making a representation in the matter. (4) An authorised person shall, in all his dealings in foreign exchange or foreign security, comply with such general or special directions or orders as the Reserve Bank may, from time to time, think fit to give, and, except with the previous permission of the Reserve Bank, an authorised person shall not engage in any transaction involving any foreign exchange or foreign security which is not in conformity with the terms of his authorisation under this section38. (5) An authorised person shall, before undertaking any transaction in foreign exchange on behalf of any person, require that person to make such declaration and to give such information as will reasonably satisfy him that the transaction will not involve, and is not designed for the purpose of 36. See FEM (Possession and Retention of Foreign Currency) Regulations, 2015. (See Division Three) 37. See Master Direction : Money Transfer Service Scheme (MTSS) [No. 1/2016-17, dated 22-2-2017]; Money Changing Activities [No. 3/2015-16, dated 1-1-2016]. (See Division Five) 38. See Hedging of Commodity Price Risk and Freight Risk in Overseas Markets (Reserve Bank) Directions, 2018. (See Division Three)

S. 12

FOREIGN EXCHANGE MANAGEMENT ACT, 1999

2.12

any contravention or evasion of the provisions of this Act or of any rule, regulation, notification, direction or order made thereunder, and where the said person refuses to comply with any such requirement or makes only unsatisfactory compliance therewith, the authorised person shall refuse in writing to undertake the transaction and shall, if he has reason to believe that any such contravention or evasion as aforesaid is contemplated by the person, report the matter to the Reserve Bank. (6) Any person, other than an authorised person, who has acquired or purchased foreign exchange for any purpose mentioned in the declaration made by him to authorised person under sub-section (5) does not use it for such purpose or does not surrender it to authorised person within the specified period or uses the foreign exchange so acquired or purchased for any other purpose for which purchase or acquisition of foreign exchange is not permissible under the provisions of the Act or the rules or regulations or direction or order made thereunder shall be deemed to have committed contravention of the provisions of the Act for the purpose of this section39. Reserve Bank’s powers to issue directions to authorised person.40 11. (1) The Reserve Bank may, for the purpose of securing compliance with the provisions of this Act and of any rules, regulations, notifications or directions made thereunder, give to the authorised persons any direction in regard to making of payment or the doing or desist from doing any act relating to foreign exchange or foreign security. (2) The Reserve Bank may, for the purpose of ensuring the compliance with the provisions of this Act or of any rule, regulation, notification, direction or order made thereunder, direct any authorised person to furnish such information, in such manner, as it deems fit. (3) Where any authorised person contravenes any direction given by the Reserve Bank under this Act or fails to file any return as directed by the Reserve Bank, the Reserve Bank may, after giving reasonable opportunity of being heard, impose on the authorised person a penalty which may extend to ten thousand rupees and in the case of continuing contravention with an additional penalty which may extend to two thousand rupees for every day during which such contravention continues. Power of Reserve Bank to inspect authorised person. 12. (1) The Reserve Bank may, at any time, cause an inspection to be made, by any officer of the Reserve Bank specially authorised in writing by the Reserve Bank in this behalf, of the business of any authorised person as may appear to it to be necessary or expedient for the purpose of— (a) verifying the correctness of any statement, information or particulars furnished to the Reserve Bank; (b) obtaining any information or particulars which such authorised person has failed to furnish on being called upon to do so; (c) securing compliance with the provisions of this Act or of any rules, regulations, directions or orders made thereunder. (2) It shall be the duty of every authorised person, and where such person is a company or a firm, every director, partner or other officer of such company or firm, as the case may be, to produce to any officer making an inspection under sub-section (1), such books, accounts and other documents 39. See FEM (Realisation, Repatriation and Surrender of Foreign Exchange) Regulations, 2015. (See Division Three) 40. See Hedging of Commodity Price Risk and Freight Risk in Overseas Markets (Reserve Bank) Directions, 2018. (See Division Three) See Master Direction : Opening and Maintenance of Rupee/Foreign Currency Vostro Accounts of Non-resident Exchange Houses [No. 2/2015-16, dated 1-1-2016]; Liberalized Remittance Scheme [No. 7/2015-16, dated 1-1-2016]. (See Division Five)

2.13

PENALTIES

S. 13

in his custody or power and to furnish any statement or information relating to the affairs of such person, company or firm as the said officer may require within such time and in such manner as the said officer may direct. CHAPTER IV CONTRAVENTION AND PENALTIES

Penalties.

13. (1) If any person contravenes any provision of this Act, or contravenes any rule, regulation, notification, direction or order issued in exercise of the powers under this Act, or contravenes any condition subject to which an authorisation is issued by the Reserve Bank, he shall, upon adjudication, be liable to a penalty up to thrice the sum involved in such contravention where such amount is quantifiable, or up to two lakh rupees where the amount is not quantifiable, and where such contravention is a continuing one, further penalty which may extend to five thousand rupees for every day after the first day during which the contravention continues. [(1A) If any person is found to have acquired any foreign exchange, foreign security or immovable property, situated outside India, of the aggregate value exceeding the threshold prescribed under the proviso to sub-section (1) of section 37A, he shall be liable to a penalty up to three times the sum involved in such contravention and confiscation of the value equivalent, situated in India, the foreign exchange, foreign security or immovable property.

(1B) If the Adjudicating Authority, in a proceeding under sub-section (1A) deems fits, he may, after recording the reasons in writing, recommend for the initiation of prosecution and if the Director of Enforcement is satisfied, he may, after recording the reasons in writing, may direct prosecution by filing a Criminal Complaint against the guilty person by an officer not below the rank of Assistant Director. (1C) If any person is found to have acquired any foreign exchange, foreign security or immovable property, situated outside India, of the aggregate value exceeding the threshold prescribed under the proviso to sub-section (1) of section 37A, he shall be, in addition to the penalty imposed under sub-section (1A), punishable with imprisonment for a term which may extend to five years and with fine. (1D) No court shall take cognizance of an offence under sub-section (1C) of section 13 except as on complaint in writing by an officer not below the rank of Assistant Director referred to in sub-section (1B).] (2) Any Adjudicating Authority adjudging any contravention under sub-section (1), may, if he thinks fit in addition to any penalty which he may impose for such contravention direct that any currency, security or any other money or property in respect of which the contravention has taken place shall be confiscated to the Central Government and further direct that the foreign exchange holdings, if any of the persons committing the contraventions or any part thereof, shall be brought back into India or shall be retained outside India in accordance with the directions made in this behalf. Explanation.—For the purposes of this sub-section, “property” in respect of which contravention has taken place, shall include— (a) deposits in a bank, where the said property is converted into such deposits; (b) Indian currency, where the said property is converted into that currency; and (c) any other property which has resulted out of the conversion of that property. 41. See Master Direction : Compounding of contraventions under FEMA, 1999 [No. 4/2015-16, dated 1-1-2016]. (See Division Five) 42. Sub-sections (1A) to (1D) inserted by the Finance Act, 2015, w.e.f. 9-9-2015.

S. 14

FOREIGN EXCHANGE MANAGEMENT ACT, 1999

2.14

Enforcement of the orders of Adjudicating Authority. 14. (1) Subject to the provisions of sub-section (2) of section 19, if any person fails to make full payment of the penalty imposed on him under section 13 within a period of ninety days from the date on which the notice for payment of such penalty is served on him, he shall be liable to civil imprisonment under this section. (2) No order for the arrest and detention in civil prison of a defaulter shall be made unless the Adjudicating Authority has issued and served a notice upon the defaulter calling upon him to appear before him on the date specified in the notice and to show cause why he should not be committed to the civil prison, and unless the Adjudicating Authority, for reasons in writing, is satisfied— (a) that the defaulter, with the object or effect of obstructing the recovery of penalty, has after the issue of notice by the Adjudicating Authority, dishonestly transferred, concealed, or removed any part of his property, or (b) that the defaulter has, or has had since the issuing of notice by the Adjudicating Authority, the means to pay the arrears or some substantial part thereof and refuses or neglects or has refused or neglected to pay the same. (3) Notwithstanding anything contained in sub-section (1), a warrant for the arrest of the defaulter may be issued by the Adjudicating Authority if the Adjudicating Authority is satisfied, by affidavit or otherwise, that with the object or effect of delaying the execution of the certificate the defaulter is likely to abscond or leave the local limits of the jurisdiction of the Adjudicating Authority. (4) Where appearance is not made pursuant to a notice issued and served under sub-section (1), the Adjudicating Authority may issue a warrant for the arrest of the defaulter. (5) A warrant of arrest issued by the Adjudicating Authority under sub-section (3) or sub-section (4) may also be executed by any other Adjudicating Authority within whose jurisdiction the defaulter may for the time being be found. (6) Every person arrested in pursuance of a warrant of arrest under this section shall be brought before the Adjudicating Authority issuing the warrant as soon as practicable and in any event within twenty-four hours of his arrest (exclusive of the time required for the journey): Provided that, if the defaulter pays the amount entered in the warrant of arrest as due and the costs of the arrest to the officer arresting him, such officer shall at once release him. Explanation.—For the purposes of this sub-section, where the defaulter is a Hindu undivided family, the karta thereof shall be deemed to be the defaulter. (7) When a defaulter appears before the Adjudicating Authority pursuant to a notice to show cause or is brought before the Adjudicating Authority under this section, the Adjudicating Authority shall give the defaulter an opportunity showing cause why he should not be committed to the civil prison. (8) Pending the conclusion of the inquiry, the Adjudicating Authority may, in his discretion, order the defaulter to be detained in the custody of such officer as the Adjudicating Authority may think fit or release him on his furnishing the security to the satisfaction of the Adjudicating Authority for his appearance as and when required. (9) Upon the conclusion of the inquiry, the Adjudicating Authority may make an order for the detention of the defaulter in the civil prison and shall in that event cause him to be arrested if he is not already under arrest: Provided that in order to give a defaulter an opportunity of satisfying the arrears, the Adjudicating Authority may, before making the order of detention, leave the defaulter in the custody of the officer arresting him or of any other officer for a specified period not exceeding fifteen days, or release him on his furnishing security to the satisfaction of the Adjudicating Authority for his appearance at the expiration of the specified period if the arrears are not satisfied.

2.15

APPOINTMENT OF ADJUDICATING AUTHORITY

S. 16

(10) When the Adjudicating Authority does not make an order of detention under sub-section (9), he shall, if the defaulter is under arrest, direct his release. (11) Every person detained in the civil prison in execution of the certificate may be so detained,— (a) where the certificate is for a demand of an amount exceeding rupees one crore, up to three years, and (b) in any other case, up to six months: Provided that he shall be released from such detention on the amount mentioned in the warrant for his detention being paid to the officer-in-charge of the civil prison. (12) A defaulter released from detention under this section shall not, merely by reason of his release, be discharged from his liability for the arrears, but he shall not be liable to be arrested under the certificate in execution of which he was detained in the civil prison. (13) A detention order may be executed at any place in India in the manner provided for the execution of warrant of arrest under the Code of Criminal Procedure, 1973 (2 of 1974). 43

[Power to recover arrears of penalty.

14A. (1) Save as otherwise provided in this Act, the Adjudicating Authority may, by order in writing, authorise an officer of Enforcement not below the rank of Assistant Director to recover any arrears of penalty from any person who fails to make full payment of penalty imposed on him under section 13 within the period of ninety days from the date on which the notice for payment of such penalty is served on him. (2) The officer referred to in sub-section (1) shall exercise all the like powers which are conferred on the income-tax authority in relation to recovery of tax under the Income-tax Act, 1961 (43 of 1961) and the procedure laid down under the Second Schedule to the said Act shall mutatis mutandis apply in relation to recovery of arrears of penalty under this Act.] Power to compound contravention.44 15. (1) Any contravention under section 13 may, on an application made by the person committing such contravention, be compounded within one hundred and eighty days from the date of receipt of application by the Director of Enforcement or such other officers of the Directorate of Enforcement and Officers of the Reserve Bank as may be authorised in this behalf by the Central Government in such manner as may be prescribed45. (2) Where a contravention has been compounded under sub-section (1), no proceeding or further proceeding, as the case may be, shall be initiated or continued, as the case may be, against the person committing such contravention under that section, in respect of the contravention so compounded. CHAPTER V ADJUDICATION AND APPEAL

Appointment of Adjudicating Authority. 16. (1) For the purpose of adjudication under section 13, the Central Government may, by an order published in the Official Gazette46, appoint as many officers of the Central Government as it may

43. Inserted by the Finance Act, 2016, w.e.f. 22-11-2016. 44. See Master Direction : Compounding of contraventions under FEMA, 1999 [No. 4/2015-16, dated 1-1-2016]. (See Division Five) 45. See FE (Compounding Proceedings) Rules, 2000. (See Division Three) See Master Direction : Compounding of contraventions under FEMA, 1999 [No. 4/2015-16, dated 1-1-2016]. (See Division Five) 46. See Notification No. SO 1155(E), dated 26-12-2000. (See Division Four)

S. 17

FOREIGN EXCHANGE MANAGEMENT ACT, 1999

2.16

think fit, as the Adjudicating Authorities for holding an inquiry in the manner prescribed after giving the person alleged to have committed contravention under section 13, against whom a complaint has been made under sub-section (3) (hereinafter in this section referred to as the said person) a reasonable opportunity of being heard for the purpose of imposing any penalty: Provided that where the Adjudicating Authority is of opinion that the said person is likely to abscond or is likely to evade in any manner, the payment of penalty, if levied, it may direct the said person to furnish a bond or guarantee for such amount and subject to such conditions as it may deem fit. (2) The Central Government shall, while appointing the Adjudicating Authorities under sub-section (1), also specify in the order published in the Official Gazette, their respective jurisdictions. (3) No Adjudicating Authority shall hold an enquiry under sub-section (1) except upon a complaint in writing made by any officer authorized by a general or special order47 by the Central Government. (4) The said person may appear either in person or take the assistance of a legal practitioner or a chartered accountant of his choice for presenting his case before the Adjudicating Authority. (5) Every Adjudicating Authority shall have the same powers of a civil court which are conferred on the Appellate Tribunal under sub-section (2) of section 28 and— (a) all proceedings before it shall be deemed to be judicial proceedings within the meaning of sections 193 and 228 of the Indian Penal Code (45 of 1860); (b) shall be deemed to be a civil court for the purposes of sections 345 and 346 of the Code of Criminal Procedure, 1973 (2 of 1974). (6) Every Adjudicating Authority shall deal with the complaint under sub-section (2) as expeditiously as possible and endeavour shall be made to dispose of the complaint finally within one year from the date of receipt of the complaint: Provided that where the complaint cannot be disposed of within the said period, the Adjudicating Authority shall record periodically the reasons in writing for not disposing of the complaint within the said period. Appeal to Special Director (Appeals). 17. (1) The Central Government shall, by notification48, appoint one or more Special Directors (Appeals) to hear appeals against the orders of the Adjudicating Authorities under this section and shall also specify in the said notification the matter and places in relation to which the Special Director (Appeals) may exercise jurisdiction. (2) Any person aggrieved by an order made by the Adjudicating Authority, being an Assistant Director of Enforcement or a Deputy Director of Enforcement, may prefer an appeal to the Special Director (Appeals). (3) Every appeal under sub-section (1) shall be filed within forty-five days from the date on which the copy of the order made by the Adjudicating Authority is received by the aggrieved person and it shall be in such form, verified in such manner and be accompanied by such fee as may be prescribed49: Provided that the Special Director (Appeals) may entertain an appeal after the expiry of the said period of forty-five days, if he is satisfied that there was sufficient cause for not filing it within that period.

47. See Notification No. SO 1157(E), dated 26-12-2000 and SO 4990(E), dated 27-9-2018. (See Division Four) 48. See Notification No. SO 373(E), dated 5-2-2016. (See Division Four) 49. See FEM (Adjudication Proceedings and Appeal) Rules, 2000. (See Division Three)

2.17

APPEAL TO APPELLATE TRIBUNAL

S. 19

(4) On receipt of an appeal under sub-section (1), the Special Director (Appeals) may after giving the parties to the appeal an opportunity of being heard, pass such order thereon as he thinks fit confirming, modifying or setting aside the order appealed against. (5) The Special Director (Appeals) shall send a copy of every order made by him to the parties to appeal and to the concerned Adjudicating Authority. (6) The Special Director (Appeals) shall have the same powers of a civil court which are conferred on the Appellate Tribunal under sub-section (2) of section 28 and— (a) all proceedings before him shall be deemed to be judicial proceedings within the meaning of sections 193 and 228 of the Indian Penal Code (45 of 1860); (b) shall be deemed to be a civil court for the purposes of sections 345 and 346 of the Code of Criminal Procedure, 1973 (2 of 1974). 50

[Appellate Tribunal.

18. The Appellate Tribunal constituted under sub-section (1) of section 12 of the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 (13 of 1976), shall, on and from the commencement of Part XIV of Chapter VI of the Finance Act, 2017, be the Appellate Tribunal for the purposes of this Act and the said Appellate Tribunal shall exercise the jurisdiction, powers and authority conferred on it by or under this Act.] Appeal to Appellate Tribunal. 19. (1) Save as provided in sub-section (2), the Central Government or any person aggrieved by an order made by an Adjudicating Authority, other than those referred to in sub-section (1) of section 17, or the Special Director (Appeals), may prefer an appeal to the Appellate Tribunal: Provided that any person appealing against the order of the Adjudicating Authority or the Special Director (Appeals) levying any penalty, shall while filing the appeal, deposit the amount of such penalty with such authority as may be notified51 by the Central Government: Provided further that where in any particular case, the Appellate Tribunal is of the opinion that the deposit of such penalty would cause undue hardship to such person, the Appellate Tribunal may dispense with such deposit subject to such conditions as it may deem fit to impose so as to safeguard the realisation of penalty. (2) Every appeal under sub-section (1) shall be filed within a period of forty-five days from the date on which a copy of the order made by the Adjudicating Authority or the Special Director (Appeals) is received by the aggrieved person or by the Central Government and it shall be in such form, verified in such manner and be accompanied by such fee as may be prescribed52: Provided that the Appellate Tribunal may entertain an appeal after the expiry of the said period of forty-five days if it is satisfied that there was sufficient cause for not filing it within that period. (3) On receipt of an appeal under sub-section (1), the Appellate Tribunal may, after giving the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit, confirming, modifying or setting aside the order appealed against. 50. Substituted by the Finance Act, 2017, w.e.f. 26-5-2017. Prior to its substitution, section 18, as amended by the Finance Act, 2015, w.e.f. 9-9-2015, read as under : “18. Establishment of Appellate Tribunal.—The Central Government shall, by notification*, establish an Appellate Tribunal to be known as the Appellate Tribunal for Foreign Exchange to hear appeals against the orders of the Adjudicating Authorities, Competent Authorities and the Special Director (Appeals) under this Act.” *See Notification No. SO 531(E), dated 1-6-2000. (See Division Four) 51. See Notification No. SO 537(E), dated 1-6-2000. (See Division Four) 52. See FEM (Adjudication Proceedings and Appeal) Rules, 2000. (See Division Three)

S. 21

FOREIGN EXCHANGE MANAGEMENT ACT, 1999

2.18

(4) The Appellate Tribunal shall send a copy of every order made by it to the parties to the appeal and to the concerned Adjudicating Authority or the Special Director (Appeals), as the case may be. (5) The appeal filed before the Appellate Tribunal under sub-section (1) shall be dealt with by it as expeditiously as possible and endeavour shall be made by it to dispose of the appeal finally within one hundred and eighty days from the date of receipt of the appeal: Provided that where any appeal could not be disposed of within the said period of one hundred and eighty days, the Appellate Tribunal shall record its reasons in writing for not disposing of the appeal within the said period. (6) The Appellate Tribunal may, for the purpose of examining the legality, propriety or correctness of any order made by the Adjudicating Authority under section 16 in relation to any proceeding, on its own motion or otherwise, call for the records of such proceedings and make such order in the case as it thinks fit. Composition of Appellate Tribunal. 20. 53[***] 54

[Qualifications for appointment of Special Director (Appeals).

21. A person shall not be qualified for appointment as a Special Director (Appeals) unless he— (a) has been a member of the Indian Legal Service and has held a post in Grade I of that Service; or (b) has been a member of the Indian Revenue Service and has held a post equivalent to a Joint Secretary to the Government of India.]

53. Omitted by the Finance Act, 2017, w.e.f. 26-5-2017. Prior to its omission, section 20 read as under : “20. Composition of Appellate Tribunal.—(1) The Appellate Tribunal shall consist of a Chairperson and such number of Members as the Central Government may deem fit. (2) Subject to the provisions of this Act,— (a) the jurisdiction of the Appellate Tribunal may be exercised by Benches thereof; (b) a Bench may be constituted by the Chairperson with one or more Members as the Chairperson may deem fit; (c) the Benches of the Appellate Tribunal shall ordinarily sit at New Delhi and at such other places as the Central Government may, in consultation with the Chairperson, notify; (d) the Central Government shall notify the areas in relation to which each Bench of the Appellate Tribunal may exercise jurisdiction. (3) Notwithstanding anything contained in sub-section (2), the Chairperson may transfer a Member from one Bench to another Bench. (4) If at any stage of the hearing of any case or matter it appears to the Chairperson or a Member that the case or matter is of such a nature that it ought to be heard by a Bench consisting of two Members, the case or matter may be transferred by the Chairperson or, as the case may be, referred to him for transfer, to such Bench as the Chairperson may deem fit.” 54. Substituted, ibid. Prior to its substitution, section 21 read as under : “21. Qualifications for appointment of Chairperson, Member and Special Director (Appeals).—(1) A person shall not be qualified for appointment as the Chairperson or a Member unless he— (a) in the case of Chairperson, is or has been, or is qualified to be, a Judge of a High Court; and (b) in the case of a Member, is or has been, or is qualified to be, a District Judge. (2) A person shall not be qualified for appointment as a Special Director (Appeals) unless he— (a) has been a member of the Indian Legal Service and has held a post in Grade I of that Service; or (b) has been a member of the Indian Revenue Service and has held a post equivalent to a Joint Secretary to the Government of India.”

2.19

MEMBER TO ACT AS CHAIRPERSON IN CERTAIN CIRCUMSTANCES

S. 26

Term of office. 22. 55[***] 56

[Terms and conditions of service of Special Director (Appeals).

23. The salary and allowances payable to and the other terms and conditions of service of the Special Director (Appeals) shall be such as may be prescribed.] Vacancies. 24. 57[***] Resignation and removal. 25. 58[***] Member to act as Chairperson in certain circumstances. 26. 59[***]

55. Omitted by the Finance Act, 2017, w.e.f. 26-5-2017. Prior to its omission, section 22 read as under : “22. Term of office.—The Chairperson and every other Member shall hold office as such for a term of five years from the date on which he enters upon his office : Provided that no Chairperson or other Member shall hold office as such after he has attained,— (a) in the case of the Chairperson, the age of sixty-five years; (b) in the case of any other Member, the age of sixty-two years.” 56. Substituted, ibid. Prior to its substitution, section 23 read as under : “23. Terms and conditions of service.—The salary and allowances payable to and the other terms and conditions of service of the Chairperson, other Members and the Special Director (Appeals) shall be such as may be prescribed : Provided that neither the salary and allowances nor the other terms and conditions of service of the Chairperson or a Member shall be varied to his disadvantage after appointment.” 57. Omitted, ibid. Prior to its omission, section 24 read as under : “24. Vacancies.—If, for reason other than temporary absence, any vacancy occurs in the office of the Chairperson or a Member, the Central Government shall appoint another person in accordance with the provisions of this Act to fill the vacancy and the proceedings may be continued before the Appellate Tribunal from the stage at which the vacancy is filled.” 58. Omitted, ibid. Prior to its omission, section 25 read as under : “25. Resignation and removal.—(1) The Chairperson or a Member may, by notice in writing under his hand addressed to the Central Government, resign his office : Provided that the Chairperson or a Member shall, unless he is permitted by the Central Government to relinquish his office sooner, continue to hold office until the expiry of three months from the date of receipt of such notice or until a person duly appointed as his successor enters upon his office or until the expiry of term of office, whichever is the earliest. (2) The Chairperson or a Member shall not be removed from his office except by an order by the Central Government on the ground of proved misbehaviour or incapacity after an enquiry made by such person as the President may appoint for this purpose in which the Chairperson or a Member concerned has been informed of the charges against him and given a reasonable opportunity of being heard in respect of such charges.” 59. Omitted, ibid. Prior to its omission, section 26 read as under : “26. Member to act as Chairperson in certain circumstances.—(1) In the event of the occurrence of any vacancy in the office of the Chairperson by reason of his death, resignation or otherwise, the seniormost Member shall act as the Chairperson until the date on which a new Chairperson, appointed in accordance with the provisions of this Act to fill such vacancy, enters upon his office. (2) When the Chairperson is unable to discharge his functions owing to absence, illness or any other cause, the seniormost Member shall discharge the functions of the Chairperson until the date on which the Chairperson resumes his duties.”

S. 28 60

FOREIGN EXCHANGE MANAGEMENT ACT, 1999

2.20

[Staff of Special Director (Appeals).

27. (1) The Central Government shall provide the office of the Special Director (Appeals) with such officers and employees as it may deem fit. (2) The officers and employees of the office of the Special Director (Appeals) shall discharge their functions under the general superintendence of the Special Director (Appeals). (3) The salaries and allowances and other terms and conditions of service of the officers and employees of the office of the Special Director (Appeals) shall be such as may be prescribed.] Procedure and Powers of Appellate Tribunal and Special Director (Appeals) 28. (1) The Appellate Tribunal and the Special Director (Appeals) shall not be bound by the procedure laid down by the Code of Civil Procedure, 1908 (5 of 1908) but shall be guided by the principles of natural justice and, subject to the other provisions of this Act, the Appellate Tribunal and the Special Director (Appeals) shall have powers to regulate its own procedure. (2) The Appellate Tribunal and the Special Director (Appeals) shall have, for the purposes of discharging its functions under this Act, the same powers as are vested in a civil court under the Code of Civil Procedure, 1908 (5 of 1908); while trying a suit, in respect of the following matters, namely:— (a) summoning and enforcing the attendance of any person and examining him on oath; (b) requiring the discovery and production of documents; (c) receiving evidence on affidavits; (d) subject to the provisions of sections 123 and 124 of the Indian Evidence Act, 1872 (1 of 1872) requisitioning any public record or document or copy of such record or document from any office; (e) issuing commissions for the examination of witnesses or documents; (f) reviewing its decisions; (g) dismissing a representation of default or deciding it ex parte ; (h) setting aside any order of dismissal of any representation for default or any order passed by it ex parte ; and (i) any other matter which may be prescribed by the Central Government. (3) An order made by the Appellate Tribunal or the Special Director (Appeals) under this Act shall be executable by the Appellate Tribunal or the Special Director (Appeals) as a decree of civil court and, for this purpose, the Appellate Tribunal and the Special Director (Appeals) shall have all the powers of a civil court. (4) Notwithstanding anything contained in sub-section (3), the Appellate Tribunal or the Special Director (Appeals) may transmit any order made by it to a civil court having local jurisdiction and such civil court shall execute the order as if it were a decree made by that court.

60. Substituted by the Finance Act, 2017, w.e.f. 26-5-2017. Prior to its substitution, section 27 read as under : “27. Staff of Appellate Tribunal and Special Director (Appeals).—(1) The Central Government shall provide the Appellate Tribunal and the Special Director (Appeals) with such officers and employees as it may deem fit. (2) The officers and employees of the Appellate Tribunal and office of the Special Director (Appeals) shall discharge their functions under the general superintendence of the Chairperson and the Special Director (Appeals), as the case may be. (3) The salaries and allowances and other conditions of service of the officers and employees of the Appellate Tribunal and office of the Special Director (Appeals) shall be such as may be prescribed.”

Foreign Exchange Management Manual Set of 2 Volumes AUTHOR PUBLISHER DATE OF PUBLICATION EDITION ISBN NO PAGE NO. BINDING TYPE

: TAXMANN : TAXMANN : JANUARY 2022 : 39TH EDITION : 9789393656087 : 3076 : PAPERBACK

Rs. 6295 | USD 150

Description This book consolidates the law relating to foreign exchange in India. The Foreign Exchange Management Act, 1999 (‘FEMA’) aims to facilitate external trade and payments and promote the orderly development and maintenance of foreign exchange markets in India. Though the Reserve Bank of India (‘RBI’) exercises overall control over foreign exchange transactions, enforcement of FEMA has been entrusted to the ‘Directorate of Enforcement’. The RBI frequently issues Rules, Regulations, and Notifications on various matters. Any change in such Rules or policy is communicated during the year through Circulars/Press Releases. Further, the RBI issues the Master Directions to consolidate Instructions on Rules and Regulations framed under various Acts, including foreign exchange transactions. Taxmann’s Foreign Exchange Management Manual is a compendium of Amended, Updated & Annotated text of the following laws: u Foreign Exchange Management Act u Law Relating to Foreign Contributions u Law Relating to Prevention of Money Laundering u Foreign Direct Investment (FDI) Policy What sets this book apart is the unique way of presenting the Annotated, Amended & Updated text of the above Laws along with the following under each Section: u Foreign Exchange Management Act n Relevant Rules & Regulations framed under FEMA n Notifications issued under FEMA n Master Directions n Memorandum of Instructions u Foreign Contributions n Notifications n Relevant Rules & Regulations n Directions n Guidelines n Case Laws Digest u Prevention of Money Laundering Act (PMLA) n Relevant Rules & Regulations n Relevant Notifications n Relevant Directions n EURO Issue, Issue of Foreign Currency Convertible Bonds, Ordinary Shares through Depository Receipt Mechanism, Issue of Foreign Currency Exchange Bonds n Allied Acts/Rules & Guidelines u Foreign Direct Investment (FDI) Policy n Consolidated FDI Policy n Relevant Circulars (2017-2021) n Summary Table of Section-wise FDI Policy u Tribunal, Appellate Tribunal and Other Authorities n Tribunal Reforms Act & Rules n Relevant Sections of the Finance Act, 2017

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