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Therewereseveralissues withthisact,like-
Law violators weretreatedascriminal offenders (insteadofcivil offenders)
Widepower onthehandofEnforcement Directorate(E.D)toarrestanyperson,
seizeanydocument(Corporateworldfoundthemselvesatthemercy ofE.D.!)
Controleverythingthatwasspecified,relatingtoforeign exchange, aimed
atminimizing dealingsinforexandforeign securities, etc.
FERAwas too strict on regulating theforeign
exchanges, that acted like anobstacleinforeign
trade,and had becomeincompatiblewith thepro-
liberalizationpolicies of government.
Under FEMA a person, who has been residing in India formore than
182 days, will be considered a Resident!
We are permitted by RBI to buyforex from Post Officesin the form of postal/
money orders! Easy availability in the time of emergency requirements!
Capital Account transactions are those transactions which alter the assets and
liabilities of a person buying/ selling of foreign securities, borrowing/ lending
of loans, purchase/ sale of immovable properties etc and all these being
across national boundaries!
NO restrictions on forex transaction for repayment of loans important to know!
Current Account transactions are those other than capital and are mostly
personal in nature like remittances for living expenses for studies/ medical
treatment abroad, foreign travel, foreign business etc.
Current Account transactions are
categorized into three explicitly drawn out
categories which spell out the transactions
allowed and not allowed -
(i) those which are prohibited by FEMA,
(ii) those which require Central
Governments permission,
(iii) and those which require RBIs
permission.
1.Forex cant be drawn for making payment
to any person in Nepal or Bhutan! Use Rupees!
2.Remitting lottery winnings outside India.
Remitting any income from winning in any
races/ horse races/ hobbies etc.
3.You cant remit any money outside India
for the purchase of lottery tickets, or banned
magazines, sweepstakes, betting etc.
4.You cant draw forex for making payments
on any Call Back Services on telephone calls
call back is when you call and then immediately
get a call back being routed through the
telephone services of a company where
charges are lower.
1.Drawal of forex for taking cultural tours
outside India.
2.If state government or its undertakings
advertise in foreign print media (for any
purpose other than promotion of tourism,
investments exceeding USD 10,000) then
CG approval needed!
3.Remittance of prize money, sponsorship
of sporting activities abroad by persons other
than sporting bodies if the amount being
remitted exceeds USD 1,00,000.
Foreign exchangemeans foreign currency and includes :-:
1. All deposits, credits and balances payable in any foreign
currency and any drafts, travellers cheques, letters of credit and
bills of exchange expressed or drawn in Indian currency but
payable in any foreign currency.
2. Any instrument payable at the option of the drawee or the
holder thereof or any other party, either in Indian currency or in
foreign currency or partly in one and partly in the other.
Foreign securitymeans any security created or issued outside
India and any security, the principal of or the interest on which is
payable in any foreign currency or is payable outside India.
Indian currencymeans the currency which is expressed or drawn
in Indian rupees but does not include special bank notes and
special one rupee notes issued under section 28A of the Reserve
Bank of India Act, 1934. Such Rupee One notes are issued by the
Ministry of Finance.
Indian Customs Watersmeans water extending into the sea
upto a distance of 12 nautical miles measured from the
appropriate base line on the coast of India and includes any bay,
gulf, harbour, creek or tidal river.
Money changermeans a person for the time being authorized under
section 7 to deal in foreign exchange.