Foreign Exchange Management Act is the most complex topic within the financial domain. Likewise, it’s also the domain that consists of most facilities. Thus, in this article, we are going to discuss all that you need to know about FEMA guidelines.
What is FEMA Act?
FEMA is a short for “Foreign Exchange Management”. It’s an official act under the rule of Foreign exchange. It’s an authority whose responsibility is to draft and watch over laws that regulate foreign exchange in India.
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“Facilitating external Trade and payments and promoting the orderly development and maintenance of foreign exchange market in India” is FEMA’s official responsibility. While the act once had a different name – FERA – the motto of FEMA remains the same.
What is the official definition of FEMA?
When RBI proposed to establish FEMA, it specified that this act will establish and change laws related to foreign exchange. The purpose of this is to aid with external trade and payments and promotion of foreign exchange market in India. However, It wasn’t until the year 2000 that this act finally saw its introduction.
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Objectives of FEMA Act
The FEMA consultants, in this official statement, say the following are the primary objectives of FEMA act:
- Enabling trade and payments from outside India
- And thus, Promoting the development of India’s foreign exchange market
- And, drafting the conditions and procedures for all forex transactions. In simple terms, creating rules and regulations of several FEMA certifications.
What are the different features of FEMA act?
FEMA certification is an umbrella term given to several authorizations issued under the FEMA act. From those, we can extrapolate its different features:
- Forex Registration is a mandatory authorization to engage with forex trading. Through FEMA act, RBI has the power to put restrictions on those with FEMA registrations. Therefore, every year, these registered entities must provide the information about their forex transaction to RBI.
- As per FEMA aw, Indian residents now have the permission to carry out forex transactions, forex securities or owning immovable properties on foreign lands. However, It’s only allowed if the Indian national was outside India when he/she when carrying out such businesses.
- FEMA compliance cover remittances and forex transactions. These include entrepreneurs and individuals moving money in or out of India. Furthermore, It also covers the currency exchange services that individuals require when travelling to foreign countries.
- FEMA further has regulations with the following concerns:
- Authentication of documents
- Authentication of current account transactions
- Adjudication proceedings
- Appeals
- Compound proceedings
- Borrowing and lending in forex
- and, permissible capital account transactions, among others.
Conclusion
As you can see, Foreign Exchange Management covers a lot of regulatory domains that are particularly concerned with foreign exchange.
Therefore, through this blog, our FEMA consultants have provided as much information that can be provided to you on these matters.
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Needless to say, what you see here doesn’t consist of complete information pertaining to the forex act. If you wish to dive deeper, you must consult with FEMA consultants. They can tell about the precise information you need to manage your foreign exchange business.
If you need any further assistance on this matter, consult with Registrationwala.
Here is everything that you need to know about FEMA Registration. For further details, consult with Registrationwala.
