Beruflich Dokumente
Kultur Dokumente
PRESENTERS:
YATINDER SAGAR (020) RATNDEEP (024) DEEPAK KUMAR (009) SURABH DATTA (XXX) BHASKAR (XXX)
ABSTRACT
The government of India has formulated the Foreign Exchange Management Act (FEMA), which relates to the foreign direct investment in the country. Foreign Exchange Management Act (FEMA) has helped the country by encouraging external payment and trade.
To revise and unite all the laws that relate to foreign exchange. To promote foreign payments and trade in the country. To encourage the orderly maintenance and development of the foreign exchange market in India
In 1999, the Indian government formulated the Foreign Exchange Management Act (FEMA). On the 1st of June, 2000, FEMA came into force replacing the FERA, which was formulated in 1973. Extensive economic reforms were undertaken in India in the early 1990s. In FEMA is that there is no imprisonment prescribed for contraventions of the law, not even as an alternative punishment and for the blatant and deliberate of violations.
All current account transactions are free. However, Central government can impose restrictions .
Capital accounts transactions are permitted to the extent specified by RBI regulations . RBI controls management of foreign exchange. RBI authorizes Authorized persons to deal in foreign exchange. RBI issues directions to such persons u/s.11 These directions are issued through AP(DIR) circulars. Authorized Persons (Directions)
The Reserve Bank of India and central government would continue to be the regulatory bodies. Presumption of extra territorial jurisdiction as envisaged in section (1) of FERA has been retained. The Directorate of Enforcement continues to be the agency for enforcement of the provisions of the law such as conducting search and seizure
DIFFERENCES
FERA
FEMA
PROVISIONS
FERA consisted of 81 sections, and was more complex. Presumption of negative intention
FEATURES
Presumptions of Mens Rea and (Mens Rea ) and joining hands in abatement have been excluded in offence (abatement) existed in FERA FEMA
Terms like Capital Account Transaction, current account Transaction person, service etc., have been defined in detail in FEMA
Terms like Capital Account NEW TERMS IN Transaction, current Account Transaction, person, service etc. FEMA were not defined in FERA.
DEFINITION OF Definition of "Authorized Person" in AUTHORIZED FERA was a narrow one PERSON
The definition of Authorized person has been widened to include banks, money changes, off shore banking Units etc.
Sr. No
DIFFERENCES
FERA
FEMA
There was a big difference in the definition of "Resident", under FERA, and Income Tax Act.
A person who qualifies to be a resident under the income Tax Act, 1961 will also be considered a resident under FEMA but not necessarily same in opposite case.
PUNISHMENT
Any offence under FERA, was a criminal offence , punishable with imprisonment as per code of criminal procedure, 1973
Offence is considered to be a civil offence only punishable with some amount of money as a penalty. Imprisonment is prescribed only when one fails to pay the penalty.
QUANTUM OF PENALTY.
The monetary penalty payable under FERA, was nearly the five times the amount involved.
Under FEMA the quantum of penalty has been considerably decreased to three times the amount involved. The appellate authority under FEMA is the special Director ( Appeals) Appeal against the order of Adjudicating Authorities and special Director (appeals) lies before "Appellate Tribunal for Foreign Exchange." An appeal from an order of Appellate Tribunal would lie to the High Court.
APPEAL
An appeal against the order of "Adjudicating office", before " Foreign Exchange Regulation Appellate Board went before High Court
Sr. No
DIFFERENCES
FERA
FEMA
FERA did not contain any express provision on the right of on impleaded person to take legal assistance
FEMA expressly recognizes the right of appellant to take assistance of legal practitioner or chartered accountant (32)
10
POWER OF SEARCH FERA conferred wide powers on a The scope and power of search AND SEIZE police officer not below the rank of and seizure has been curtailed to a Deputy Superintendent of Police a great extent to make a search
Authorized Person: Authorized under the Act to deal in foreign exchange Capital account transaction: Alters the assets or liability Currency: Currency notes, Money order, cheque, drafts etc Currency Notes: Coin and bank notes Currency Account Transaction: Transactions other than capital account transactions Indian Currency: Indian rupees
Foreign Currency: Other than Indian currency Foreign Exchange: Means foreign currency Foreign Security: Security expressed in foreign currency Import: Goods and services from outside to India Security: Shares, Stock etc as defined in the Public Debt Act of 1994
Repatriate to India: Realized foreign exchange to India Service: Banking, Financing, insurance etc
Person of Indian Origin (PIO): Citizen of country other then Bangladesh and Pakistan, if Any time held Indian passport or Either of his parents or grandparents was citizen of India The Person is spouse of an Indian citizen
The FEMA, is applicablea) To the whole of India. b) Any Branch, office and agency, which is situated outside India, but is owned or controlled by a person resident in India. Broadly speaking FEMA, covers, three different types of categories, and deals differently with them. These categories are: a) Person b) Person Resident In India c) Person Resident Outside India
PERSON
For the purpose of provisions, a person shall include any of the following:
1. 2. 3. 4. 5. 6. 7.
An individual A Hindu Undivided family A company A Firm An association of persons or a body of individuals, whether incorporated or not, Every artificial judicial person, not falling within any of the preceding sub clauses, and Any agency, office or branch owned or controlled by such person.
2.
3.
4.
A person who has been residing in India for more than 182 days, in the last financial year. This means if a person has to be assessed, as to whether he is person resident in India, for any offence committed in August 2001, then he should be residing in India for more than 182 days during April 2000 to March 2001 Any person or body corporate registered or incorporated in India, or An office, branch or agency in India owned or controlled by a person resident outside India, or An office, branch or agency outside India owned or controlled by a person resident in India.
INCLUDES Transfer/issue of security/foreign security Borrowings/rupees/deposits/lending of forex Dealings in immovable property Export/import/holding of currency or currency notes
PROHIBITION
Rules & regulations made thereunder No person shall undertake or sell or draw foreign exchange to or from an AP for any CAT. No PROI shall make investment in India, in any form, which is engaged or purposes to engage :- In the business of chit fund - As Nidhi company - In agricultural or plantation activities - In real estate business, or construction, - In trading in transferable development rights.
SCHEDULE-II Classes of CAT of PROI Investment in india by a PROI- issue of security in india and investment therein by a PROI.
Foreign currency loans raised in india Foreign currency accounts in india of and abroad by a PRI. a PROI. Transfer of immovable property outside india by a PRI Acquisition and transfer of immovable property in india by a PROI.
Guarantees issued by a PRI in favour Guarantee by a PROI in favour of, or of a PROI. on behalf of, a PRI.
Loans and drafts by a PRI to a PROI. Deposits between a PRI and a PROI.
Remittance outside india of capital assets of a PRI. Import, export and holdings of currency/currency notes. Remittance outside india of capital assets in india of a PROI. Import and export of currency/currency notes into /from india by a PROI.
PROVISIONS
PROVISIONS IN SECTIONS
Section 3
Make any payment to or for the credit of any person resident outside India in any manner
Receive otherwise through an authorized person, any payment by order or on behalf of any person resident outside India in any manner Enter into any financial transaction in India for acquisition or creation or transfer of a right to acquire, any asset outside India by any person
PROVISIONS IN SECTIONS
SECTION 4 Restrains any person resident in India from acquiring, holding, owning, possessing or transferring any foreign exchange, foreign security or any immovable property situated outside India except as specifically provided in the Act.
SECTION 5 deals with current account transaction Any person may sell or draw foreign exchange to or from an authorized person if such sale or drawl is a current account transaction SECTION 6 - deals with capital account transactions. This section allows a person to draw or sell foreign exchange from or to an authorized person for a capital account transaction.
PROVISIONS IN SECTIONS
SECTION 7 - deals with export of goods and services. Every exporter is required to furnish to the RBI or any other authority, a declaration etc. etc. regarding full export value. SECTIONS 8 and 9 Casts the responsibility on the persons resident in India who have any amount of foreign exchange due or accrued in their favor to get same realized and repatriated to India within the specific period and the manner specified by RBI. SECTION 10 duties of authorized person. deals with duties and liabilities of the Authorized persons authorized dealer, money changer, off shore banking unit or any other person for the time being authorized to deal in foreign exchange or foreign securities.
PROVISIONS IN SECTIONS
SECTION 11 and 12 Powers of reserve bank The reserve bank is empowered to order inspection of the business of any authorized person for any of following reasons: Verifying the correctness of any statements, information or particular
a) b)
c)
PROVISIONS IN SECTIONS
SECTION 13 Any contravention, under FEMA, may invite following kinds of penalties: If, the amount against which offence is quantities, then penalty will be "THRICE" the sum involved in contravention.
Where the amount cannot be quantified the penalty may be imposed up to two lakh rupees.
If, the contravention is continuing everyday, then Rs. Five Thousand for every day after the first day during which the contravention continues.
Further in addition to the penalty, any currency, security or other money or property involved in the contravention may also be confiscated.
PROVISIONS IN SECTIONS
SECTION 14 If a person fails to make full payment of the penalty imposed with in a period of 90 days, he shall be liable to civil imprisonment. SECTION 15 Empowers the Directorate of Enforcement and Officers of the Reserve Bank of India as may be authorized by the central Govt. in this behalf to compound the offences. SECTION 16 Empowers the central Govt. to appoint the as many adjudicating authorities as it may think fit for holding enquiries. SECTION 17 Empowers the central Govt. to appoint one or more special Directors to hear the appeals against the orders of the Adjudicating Authorities.
PROVISIONS IN SECTIONS
SECTION 18 Empowers the central Govt. to establish Appellate Tribunal to hear appeals against the orders of Adjudicating Authorities and special Director. SECTION 19 It makes provisions as regards appeals to Appellate Tribunal. SECTION 20 Composition of Appellate Tribunal. SECTION 21 Qualifications for appointment of Chairperson member and Special Director. SECTION 22 Term of Office. SECTION 23 Terms and Conditions of service. SECTION 24 Vacancies.
PROVISIONS IN SECTIONS
PROVISIONS IN SECTIONS
SECTION 31 Decision to be by majority. SECTION 32 Right of Appellant to take assistance of legal practitioner or CA and of Govt. to appoint presenting officer. SECTION 33 Members, etc to public servants.
SECTION 34
Civil court not to have jurisdiction.
PROVISIONS IN SECTIONS
To comply with RBI directions Not to engage in un authorized transactions Ensure compliance of FEMA provisions
The authorisation shall always be in writing. RBI can revoke the authorisation at any time, if satisfied that It is in public interest The authorised person has failed to comply with the requirements subject to which authorisation was granted Or has contravened any provisions of the Act, rule, regulation, notification, circulars etc. Revocation can be done after giving an opportunity for the dealer for a representation. S. 10(3) For contravention of any direction a penalty of 10000/- may be imposed. If the default is continued penalty of 2000/- per day may be imposed. S. 11 RBI can inspect all record books of the authorised person.
Supporting documents
Remittance
TDS Certificate
APPLICATIONS HAVE TO BE GIVEN TO AUTHORISED DEALER FOR REMITTANCE OF FOREIGN CURRENCY IN INDIA
Separate application forms are prescribed. If a person has to open a foreign currency a/c in India application has to be given to RBI For eg. Remittance upto USD 5000(Small value) can be done by a simple letter specifying all particulars about the applicant without any accompanying papers to the the authorised dealer Separate forms are there for other remittances. E.g. FORM A1 for remittance foreign currency for import of goods to India. Any individual can remit up to USD 25000/ calendar year for holding/ acquiring immovable property abroad, acquiring shares outside India, opening of foreign currency a/c with a Bank outside India. No permission of RBI is required. This is applicable for all current and capital a/cs and a combination of both.
ENFORCEMENT
Enforcement is with enforcement directorate The central government has appointed Directors of Enforcement, Additional directors, Special Director, Deputy Director and Assistant Directors for enforcement of FEMA. S. 36 Powers are similar to Income tax authorities Main powers include inspection and investigation of violations of FEMA provisions. Cheques and other NIS recovered during enforcement will be deposited with RBI. If Indian currency is found, it shall be deposited in a separate a/c in the name of Director of enforcement. The central government will indemnify the enforcement authority for encashing the NIs.
Offenses under FEMA are civil offenses. Central government appoints the adjudicating authority. S.16(1) They conduct enquiry on the complaint received from an authorised person. It should give the verdict within 1 year, if not should state the reason. While adjudicating the case, it acts as a quasi judicial body and has to follow the principles of natural justice. Opportunity should be given to the respondent to represent his case.
AN OFFICER NOT BELOW THE RANK OF ASSISTANT DIRECTOR CAN FILE THE COMPLAINT
The adjudicating authority has got the powers of a civil court The penalty can be upto thrice the sum involved in contravention where the amount is quantifiable. If not, penalty can be up to Rs. 2 lakhs. If the transgression continues all officers in default will be liable to pay 5000/ per day. S. 13(1)
APPEALS
Assist. Director/deputy director to special directors Further appeal lies with Appellate Tribunal for foreign exchange The tribunal consists of chair person and members It sits in Delhi or other places as may be notified Division bench will hear matters above 5 lakhs Jurisdiction of civil court is barred when the matter is pending before the tribunal Second appeal lies to high courts and supreme court
EXAMPLES
Raj Kumar Shivhare was indulged in receiving unauthorized payments worth Rs. 5 crores under instructions from persons living outside India in connection with his illegal cricket betting operation.
FEMA violation by IPL Franchises. Lalit Modi will be interrogated in London by Enforcement Directorate for the foreign investments in the IPL Teams. ED authorities can appoint a Commission to take statement and collect information FEMA violation in 19th CWG in Queen Baton Relay The Directorate has registered an Enforcement Case Information Report under Foreign Exchange Management Act in connection with alleged forex violations of several hundred crores in the Relay held last year in London