Treatise on FEMA Law and Practice

Volume 1

Prologue

Historical Background and evolution of FEMA

General Principles

Particular Principles

THE FOREIGN EXCHANGE MANAGEMENT ACT, 1999

Preamble

CHAPTER I

PRELIMINARY

1. Short title, extent, application and commencement

2. Definitions

CHAPTER II

REGULATION AND MANAGEMENT OF 

FOREIGN EXCHANGE

3. Dealing in Foreign Exchange, etc.

4. Holding of Foreign Exchange, etc.

5. Current Account Transactions

6. Capital Account Transactions

7. Export of Goods and Services

8. Realisation and Repatriation of Foreign Exchange

9. Exemption from realisation and repatriation in certain cases

CHAPTER III

AUTHORISED PERSON

10. Authorised person

11. Reserve Bank’s powers to issue directions to authorised person

12. Power of Reserve Bank to inspect authorised person

CHAPTER IV

CONTRAVENTION AND PENALTIES

13. Penalties

14. Enforcement of the orders of Adjudicating Authority

14A. Power to recover arrears of penalty

15. Power to compound contravention

CHAPTER V

ADJUDICATION AND APPEAL

16. Appointment of Adjudicating Authority

17. Appeal to Special Director (Appeals)

18. Appellate Tribunal

19. Appeal to Appellate Tribunal

20. [Omitted]

21. Qualifications for appointment of Special Director (Appeals)

22. [Omitted]

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

24. [Omitted]

25. [Omitted]

 

26. [Omitted]

27. Staff of Special Director (Appeals)

28. Procedure and powers of Appellate Tribunal and Special Director (Appeals)

29. [Omitted]

30. [Omitted]

31. [Omitted]

32. Right of appellant to take assistance of legal practitioner or chartered accountant and of Government to appoint presenting officers

33. Officers and employees, etc. to be public servant

34. Civil court not to have jurisdiction

35. Appeal to High Court

CHAPTER VI

DIRECTORATE OF ENFORCEMENT

36. Directorate of Enforcement

37. Power of search, seizure, etc.

37A. Special provisions relating to assets held outside India in contravention of section 4

38. Empowering other officers

CHAPTER VII

MISCELLANEOUS

39. Presumption as to documents in certain cases

40. Suspension of operation of this Act

41. Power of Central Government to give directions

42. Offences by companies

43. Death or insolvency in certain cases

44. Bar of legal proceedings

44A. Powers of Reserve Bank not to apply to International Financial Services Centre

45. Removal of difficulties

 

46. Power to make rules

47. Power to make regulations

48. Rules and regulations to be laid before Parliament

49. Repeal and saving

SUBJECT INDEX

Volume 2

PART 1

DEFINITIONS: WORDS & PHRASES

1.1 Definitions: Words & Phrases

PART 2

STATUTORY PROVISIONS

2.1 Foreign Exchange Management Act, 1999

2.2 Foreign Exchange Regulation Act, 1973

PART 3

COMPARATIVE TABLE OF SECTIONS

3.1 Table of Comparative Sections: FEMA 1999 v FERA 1973

3.2 Table of Comparative Sections: FERA 1973 v FEMA 1999

PART 4

RULES UNDER FEMA

4.1 Foreign Exchange Management (Encashment of Draft, Cheque, Instrument and Payment of Interest) Rules, 2000

4.2 Foreign Exchange (Authentication of Documents) Rules, 2000

4.3 Foreign Exchange Management (Current Account Transactions) Rules, 2000

4.4 Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules, 2000

4.5 Foreign Exchange (Compounding Proceedings) Rules, 2000

4.6 Appellate Tribunal for Foreign Exchange (Recruitment, Salary and Allowances and Other Conditions of Service of Chairperson and Members) Rules, 2000

4.7 Foreign Exchange Management (Non-debt Instruments) Rules, 2019

4.8 Foreign Exchange Management (Overseas Investment) Rules, 2022

PART 5

FEMA REGULATIONS

Sl. No. Notification No. Heading

5.1 FEMA 1/2000-RB, dated 3-5-2000 Foreign Exchange Management (Permissible Capital Account Transactions) Regulations, 2000

5.2 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

5.3 FEMA.3(R)/2018-RB, dated 17-12-2018 Foreign Exchange Management (Borrowing and Lending) Regulations, 2018

5.4 FEMA 5(R)/2016-RB, dated 1-4-2016 Foreign Exchange Management (Deposit) Regulations, 2016

5.5 FEMA 6(R)/2015-RB, dated 29-12-2015 Foreign Exchange Management (Export and Import of Currency) Regulations, 2015

5.6 FEMA 8/2000-RB, dated 3-5-2000 Foreign Exchange Management (Guarantees) Regulations, 2000

5.7 FEMA 9(R)/2015-RB, dated 29-12-2015 Foreign Exchange Management (Realisation, Repatriation and Surrender of Foreign Exchange) Regulations, 2015

5.8 FEMA 10(R)/ 2015-RB, dated 21-1-2016 Foreign Exchange Management (Foreign Currency Accounts by a Person Resident in India) Regulations, 2015

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

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

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

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

5.13 FEMA 395/2019-RB, dated 17-10-2019 Foreign Exchange Management (Mode of Payment and Reporting of Non-debt Instruments) Regulations, 2019

5.14 FEMA 396/2019-RB, dated 17-10-2019 Foreign Exchange Management (Debt Instruments) Regulations, 2019

5.15 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

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

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

5.18 FEMA 400/2022-RB, dated 22-8-2022 Foreign Exchange Management (Overseas Investment) Regulations, 2022

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

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

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

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

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

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

5.25 FEMA 399/RB-2020, dated 23-10-2020 Foreign Exchange Management (Margin for Derivative Contracts) Regulations, 2020

PART 6

FEMA MASTER DIRECTIONS

Sl. No. Direction No. Heading

6.1 No. 1/2016-17, dated July 5, 2016 Master Direction — Risk Manage-ment and Inter-Bank Dealings

6.2 No. 2/2015-16, dated 1-1-2016 Master Direction — Opening and Maintenance of Rupee/Foreign Currency Vostro Accounts of Non-resident Exchange Houses

6.3 No. 3/2015-16, dated 1-1-2016 Master Direction — Money Changing Activities

6.4 No. 4/2015-16, dated 1-1-2016 Master Direction — Compounding of Contraventions under FEMA, 1999

6.5 No. 5/2018-19, dated 26-3-2019 Master Direction — External Commercial Borrowings, Trade Credits and Structured Obligations

6.6 No. 6/2015-16, dated 1-1- 2016 Master Direction — Borrowing and Lending Transactions in Indian Rupee between Persons Resident in India and Non-Resident Indians/ Persons of Indian Origin

6.7 No. 7/2015-16, dated 1-1-2016 Master Direction — Liberalised Remittance Scheme (LRS)

6.8 No. 8/2015-16, dated 1-1-2016 Master Direction — Other Remittance Facilities

6.9 No. 9/2015-16, dated 1-1-2016 Master Direction — Insurance

6.10 No. 10/2015-16, dated 1-1-2016 Master Direction — Establishment of Branch Office (BO)/Liaison Office (LO)/Project Office (PO) or any Other Place of Business in India by Foreign Entities

6.11 No. 11/2017-18, dated 4-1-2018 Master Direction — Foreign Investment in India

6.12 No. 12/2015-16, dated 1-1-2016 Master Direction — Acquisition or Transfer of Immovable Property under Foreign Exchange Management Act, 1999

[Now, included in FEM (Non-debt Instruments) Rules, 2019: Rules 24-33]

6.13 No. 13/2015-16, dated 1-1-2016 Master Direction — Remittance of Assets

6.14 No. 14/2015-16, dated 1-1-2016 Master Direction — Deposits and Accounts

6.15 No. 12-RBI/2022-2023/110, dated 22-8-2022 Foreign Exchange Management (Overseas Investment) Directions, 2022

6.16 No. 16/2015-16, dated 1-1-2016 Master Direction — Export of Goods and Services

6.17 No. 17/2016-17, dated 1-1-2016 Master Direction — Import of Goods and Services

6.18 No. 18/2015-16, dated 1-1-2016 Master Direction — Reporting under Foreign Exchange Management Act, 1999

6.19 No. 19/2015-16, dated 1-1-2016 Master Direction — Miscellaneous

6.20 No. 1/2016-17, dated 22-2-2017 Master Direction — Money Transfer Service Scheme (MTSS)

PART 7

NOTIFICATIONS UNDER FEMA

Sl. No. Notification No. & Date FEMA

(or other section)

(1) GSR 371(E), dated 1-5-2000 1(4)

(2) S.O. 2454(E), dated 8-9-2015 Finance Act, 2015

S. 138(A)

(3) S.O. 3715(E), dated 15-10-2019 Finance Act, 2015

S. 138(A)

(4) FEMA 15(R)/2015-RB, dated 

29-12-2015 [GSR 1008(E), 

dated 29-12-2015] 2(h)

(5) FEMA 223/2012-RB, dated 7-3-2012 2(za)

(6) FEMA 18(R)/2015-RB, dated 

29-12-2015 [GSR 1009(E), 

dated 29-12-2015] 3

(7) S.O. 3722(E), dated 16-10-2019 6(7)

(8) S.O. 1155(E), dated 26-12-2000 16(1)

(9) S.O. 1157(E), dated 26-12-2000 16(3)

(10) S.O 4990(E), dated 27-9-2018, superseding No. S.O 2564(E), 

dated 30-9-2014 16

(11) S.O. 3958(E), dated 24-9-2021 super-seding S.O. 373(E), dated 5-2-2016 17(1)

(12) S.O. 531(E), dated 1-6-2021 18

(13) S.O. 537(E), dated 1-6-2000 19(1) proviso

(14) S.O. 534(E), dated 1-6-2000, as amended by Notification No. S.O. 1247(E), dated 30-5-2012 and Notification No. S.O. 4794(E), dated 12-9-2018 36(1)

(15) S.O. 536(E), dated 1-6-2000 36(2)

(16) S.O. 797(E), dated 3-7-2003 36(2)

(17) S.O. 1247(E), dated 30-5-2012 36(1)

(18) GSR 701(E), dated 16-9-2015 37A(1)

(19) GSR 702(E), dated 16-9-2015 37A(1)

(20) GSR 10(E), dated 6-1-2016 37A(2)

(21) S.O. 1156(E), dated 26-12-2000 38(1)

(22) S.O. 235(E), dated 27-2-2002 S. 40 of RBI Act, 1934

(23) GSR 626(E) [No. FEMA 123/2004-RB], dated 9-9-2004 47(2)(h)

(24) S.O. 2565(E), dated 30-9-2004 as amended by, Notification No. S.O. 2918(E), dated 14-11-2014 superseding Notification No. S.O. 1966(E), dated 24-8-2012 49(3)(4)(5)

PART 8

IMPORTANT CIRCULARS ISSUED BY RBI

8.1 Important A.P. (DIR Series) Circulars

Significance of A.P. (DIR Series) Circulars

1. New FEMA Regime in force from 1-6-2000

2. Current Account Transactions (CAT) Rules

3. Liberalised Remittance Scheme (“LRS”)

4. External Commercial Borrowing (“ECB”): FEMA 3(R)

5. Hedging and forex derivatives: FEMA-25

6. Insurance in foreign currency: FEMA-12

7. Money Circulation Schemes

8. Evidence of import

9. ADR/GDR/FCCB

10. Investment in overseas markets

11. Deposit Schemes: FEMA-5(R)

12. Foreign Direct Investment (FDI): FEMA 20(R) [Now, Non-debt Instruments Rules, 2019]

13. Foreign Currency Accounts [EEFC/RFC(D)]: FEMA 10(R)

14. Export and import of Currency: FEMA 6(R)

15. Miscellaneous

PART 9

MEMORANDUM OF INSTRUCTIONS

9.1 PEM — Memorandum of Instructions on Project & Service Exports

9.2 ACM — Memorandum of Procedure for Channeling Transactions through Asian Clearing Union

9.3 GIM — Major Changes Effected in the Revised General/ Health Insurance Manual (GIM)

9.4 LIM — Memorandum of Foreign Exchange Management Regulations Relating to Life Insurance in India

PART 10

CONSOLIDATED FDI POLICY

10.1 Consolidated FDI Policy

10.2 Press Notes under FDI Policy

PART 11

EURO ISSUES GUIDELINES, FCCB SCHEME, ETC.

11.1 EURO Issues

11.2 Issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depositary Receipt Mechanism) Scheme, 1993

11.3 Issue of Foreign Currency Exchangeable Bonds Scheme, 2008

11.4 Depository Receipts Scheme, 2014

11.5 Companies (Issue of Global Depository Receipts) Rules, 2014

PART 12

ALLIED ACTS & RULES

12.1 Foreign Contribution (Regulation) Act, 2010

12.2 Foreign Contribution (Regulation) Rules, 2011

12.3 Foreign Contribution (Regulation) Act, 1976

12.4 Foreign Contribution (Regulation) Rules, 1976

12.5 Foreign Trade (Development and Regulation) Act, 1992

12.6 Foreign Trade (Regulation) Rules, 1993

12.7 Foreign Trade (Exemption from Application of Rules in Certain Cases) Order, 1993

12.8 Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974

12. 9 Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976

12.10 Smugglers and Foreign Exchange Manipulators (Appellate Tribunal for Forfeited Property) Rules, 1977

12.11 Appellate Tribunal for Forfeited Property (Procedure) Rules, 1986

12.12 Appellate Tribunal for Forfeited Property (Fees) Rules, 1987

12.13 Smugglers and Foreign Exchange Manipulators (Receipt, Management and Disposal of Forfeited Property) Rules, 2006

12.14 Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015