Immovable Property

• Residents can hold immovable property abroad if acquired as a NR or inherited from a NR

• No more holding permission for NR holding immovable property in India, if they had got them while as residents or inherited from a resident

• Certain countries’ nationals cannot hold property in India and they will not qualify as Persons of India Origin

Immovable Property

• Non-Indian citizens and non-Indian origin people need permission to buy / hold immovable property in India - even if approved, repatriation will not be allowed on sale by RBI.

• Almost all provisions of Sec. 31 of FERA have been built into FEMA

• the Act mentions about the Residential status and does away with Citizenship basis

EXPORTER IMPORTER

BENEFICIARY REMITTER

TRADE AND PAYMENT

Contract

Payment as per Contract terms

Supplies Goods / Services as per Contract terms

EXPORTER IMPORTER

REMITTING BANK COLLECTING BANK

SENDS ADVICE OF PAYMENT

ACTUAL PAYMENT SETTLEMENT

NOSTRO A/C - RB

DE

BIT

S

NO

ST

RO

A/C

CR

ED

ITS

FOREX PRINCIPLES

• CURRENCY ALWAYS MOVES TO THE COUNTRY OF ITS ORIGIN

• EXPORT, IMPORTS ARE OUTCOME OF THE THEORY OF COMARAIVE ADVANTAGE

• FOREX TRANSACTIONS SETTLED THROUGH NOSTRO ,VOSTRO, LORO ACCOUNTS

Methods of Payments

• Advance Payment• COD system• Documentary collection• Letter of Credit• International Credit Cards

FEMA -INTRODUCTION

• SHIFT FROM REGULATORY FRAMEWORK

• DECONTROL

• REMOVE RIGOURS AND IRRATIONALITIES OF F.E.R.A.

AIM• CONSOLIDATE AND AMEND LAW

RELATING TO FOREIGN EXCHANGE

• FACILITATE EXTERNAL TRADE AND PAYMENTS

• PROMOTE ORDERLY DEVELOPMENT AND MAINTENANCE OF FOREX MARKET IN INDIA

APPLICATION

WHOLE OF INDIA ALL BRANCHES ,OFFICES AND AGENCIES OUTSIDE INDIA

OWNED OR CONTROLED BY A RESIDENT INDIAN

ANY CONTRAVENTION COMITTED OUTSIDE INDIA BY SUCH PERSONS

DISTINCTION

• FERA REGULATED AND CONTROLLED

• FEMA FACILITATES AND MANAGES EXTERNAL TRADE AND PAYMENTS

• FERA WAS PROHIBITORY• FEMA IS POSTIVE :FREES CURRENT

ACCOUNT TRANSACTIONS

FERA /FEMA VIOLATION

• FERA : CRIMINAL IN NATURE• FEMA : CIVIL IN NATURE

– ED NOW ONLY INVESTIGATING AGENCY

– THE BURDEN OF PROOF NOW LIES ON THE AUTHORITIES

– PENALTY : THRICE THE SUM INVOLVED IF QUANTIFIABLE OR

– Rs 2 Lacs if not quantifiable

TRANSITION

SUNSET PERIOD STARTS TWO YEARS FROM

JUNE 01 ,2000

The FEMA, is applicable- To the whole of India. 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) Personb)Person Resident In Indiac) Person Resident Outside India

To Whom Act is Applicable ?

For the purpose of provisions, a person shall include any of the following:

1. An individual2. A Hindu Undivided family3. A company4. A Firm5. An association of persons or a body of individuals,

whether incorporated or not,6. Every artificial judicial person, not falling within

any of the preceding sub clauses, and 7. Any agency, office or branch owned or controlled

by such person.

A. Person

1. 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

2. Any person or body corporate registered or incorporated in India, or

3. An office, branch or agency in India owned or controlled by a person resident outside India, or

4. An office, branch or agency outside India owned or controlled by a person resident in India.

B. Person resident in India

Non-Residents Under FEMA

• A Resident is defined as one who has stayed in India for > 182 in a financial year; Who doesn’t fulfil this condition is a Non-resident.

• Exceptions:– Those who have gone abroad on employment or– For pursuing business or vocation or – For any other purpose staying abroad indicating

circumstances of indefinite stay there