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Commentaries
As amended upto 6th December, 2019
54 Records
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1 . FEMA - OVERVIEW
1.1 Background of FEMA
1.2 FEMA in changed situation
1.3 Overall scheme of FEMA
1.4 Spread of provisions of FEMA
2 . AUTHORISED PERSON UNDER FEMA
2.1 Who is authorized person
2.2 Authorised Money Changers (AMC)
2.3 Offshore Banking Units in SEZ
2.4 Instructions to authorised persons
2.5 Inter-Bank Dealings
2.6 Outward Remittance services by non- bank entities through Authorized Dealer (Category I) banks in India
3 . ACCOUNTS IN INDIA BY PERSON RESIDENT OUT OF INDIA
3.1 Background
3.2 Accounts in India by a person resident outside India
4 . ACCOUNTS OF INDIAN RESIDENTS IN FOREIGN CURRENCY
4.1 Background
4.2 Opening, holding and maintaining foreign currency accounts by a person resident in India
4.3 Foreign Currency Accounts that can be held outside India
4.4 Other provisions relating to FC account of person resident in India
5 . RECEIPT AND PAYMENT IN FOREIGN EXCHANGE
5.1 Manner of receipt of exchange
5.2 Manner of payment in foreign exchange
5.3 Money Transfer Service Scheme
5.4 Online payment Gateways
5.5 Making payment in Indian Rupees in some transactions
6 . REALISATION, REPATRIATION AND SURRENDER OF FOREIGN EXCHANGE
6.1 Statutory provisions
6.2 Duty of persons to realise foreign exchange due
6.3 Manner of repatriation
6.4 Provisions not applicable to foreign currency of Nepal and Bhutan
7 . MONEY CHANGING ACTIVITIES
7.1 Background
7.2 License for Money Changing Activity
7.3 Operational Instructions for money changing
7.4 Foreign currency balances with FFMC
7.5 Registers and Books of Account of Money-changing Business
7.6 Reporting to RBI and record to be maintained
8 . MONEY TRANSFER SERVICE SCHEME (MTSS)
8.1 Background
8.2 Money Transfer Service Scheme (MTSS) for inward remittance
8.3 Authorisation to Indian Agents by RBI
8.4 Guidelines for approval of Overseas Principals
8.5 Appointment of Sub Agents by Indian Agents
8.6 Guidelines for renewal of permission (authorization) of existing Indian Agents
8.7 Other provisions relating to MTSS
8.8 Reporting to RBI
9 . POSSESSION AND RETENTION OF FOREIGN CURRENCY
9.1 Restrictions on holding currency
9.2 Possession of foreign exchange by a person resident in India but not permanently resident therein
10 . EXPORT AND IMPORT OF CURRENCY OR CURRENCY NOTES
10.1 Background
11 . REMITTANCES ON CURRENT ACCOUNT
11.1 Background
11.2 Release of Foreign Exchange by Authorised Dealers
11.3 Restrictions on certain current account transactions
11.4 International Credit Cards/International Debit Cards/Store value cards etc. by Authorised Dealers in India
11.5 Remittance facilities for residents other than travellers
11.6 Issue of Guarantee to non-resident service provider
11.7 Procedures to be followed by Authorised Persons
12 . LIBERALISED REMITTANCE SCHEME (LRS)
12.1 Background
12.2 Liberalised Remittance Scheme (LRS) of USD 2,50,000 for resident individuals
12.3 Documentation by the remitter for availment of LRS
12.4 Facility to grant loan in rupees to NRI/OCI close relative under the Scheme
12.5 Operational instructions to Authorised Persons
12.6 Reporting to RBI
13 . EXPORT OF GOODS AND SERVICES
13.1 Regulation of export of goods and services
13.2 Realization and repatriation of proceeds of export of goods/software/services
13.3 Counter-Trade Arrangement through Escrow Account which permits Set off of amounts payable and receivable
13.4 Exports to neighbouring countries by road, rail or river
13.5 Forfaiting for financing export receivables
13.6 Project Exports and Service Exports
13.7 EDF/SOFTEX Procedure for exports
13.8 Receipt of advance against exports
13.9 Setting up of Offices abroad and acquisition of immovable property for Overseas Offices
13.10 Consignment Exports
13.11 Special Economic Zones (SEZs)
13.12 Extension of time for realization of export proceeds
13.13 Set off of export receivables against import payables
13.14 Exporters' Caution List
13.15 Issue of Guarantees to exporters by an Authorised Dealer
13.16 Issuance of Electronic Bank Realisation Certificate (eBRC)
13.17 Agency commission on exports
13.18 Refund of export proceeds
14 . IMPORT OF GOODS AND SERVICES
14.1 Background
14.2 General Guidelines for Imports
14.3 Import of Foreign Exchange/Indian Rupees
14.4 Advance Remittances for imports
14.5 Interest on Import Bills
14.6 Receipt of Import Bills/Documents
14.7 Evidence of Imports
14.8 Import of Gold
14.9 Import Factoring
14.10 Merchanting Trade
14.11 Processing of import related payments through Online Payment Gateway Service Providers (OPGSPs)
14.12 Settlement of Import transactions in currencies not having a direct exchange rate
15 . PROJECT EXPORTS AND SERVICE EXPORTS
15.1 Background
15.2 Borrowing from overseas bank for project exports
15.3 Opening of bank account in or out of India for project exports
15.4 Reporting to RBI
16 . FOREIGN EXCHANGE RATES
16.1 Background
16.2 FEDAI
16.3 Generally Accepted Accounting Principles on effects of changes in foreign exchange rates
17 . OVERVIEW OF CAPITAL ACCOUNT TRANSACTIONS
17.1 Capital Account Transaction prohibited unless specifically permitted
17.2 Permissible Capital Account transactions by persons resident of India
17.3 Permissible Capital Account transactions by persons resident outside India
17.4 Cross Border Merger
18 . FOREIGN INVESTMENT IN INDIA
18.1 Introduction
18.2 Investment in India in foreign exchange prohibited unless specifically permitted
18.3 Receiving investment in foreign exchange by Indian firm/entity is prohibited unless specifically permitted
18.4 Permission for making investment by a person resident outside India only as per rules and conditions
18.5 Taxes in India
18.6 Remittances of sale proceeds
18.7 Reporting of FDI to RBI
19 . FDI IN COMPANY
19.1 Equity Investment in Indian company by a person resident outside India
19.2 Participating interest or rights in oil fields by Indian company
19.3 Purchase or sale of equity instruments of an Indian company by a person resident outside India
19.4 Sectors prohibited for FDI
19.5 Permitted sectors, entry routes and sectoral caps for total foreign investment
19.6 Entry routes for total foreign investment in an Indian entity
19.7 Conditions in respect of foreign investment in equity instruments of Indian company
19.8 RBI Instructions on Mode of payment, Remittance of sale proceeds and reporting
19.9 Reporting Requirements specified by RBI
20 . SECTOR WISE FDI POLICY AT A GLANCE
20.1 FDI Policy for various sectors of business/commerce - as amended upto 17-10-2019
21 . FDI - DOWNSTREAM INVESTMENT
21.1 Investment by company incorporated in India which has received FDI
21.2 Provisions in relation to downstream investment
21.3 Guidelines for calculating total foreign investment in case of downstream investment
21.4 Restrictions on investee entity in case of downstream investment
21.5 Transfer of equity instrument of Indian company held by another company which has received foreign investment
21.6 Responsibility of first level Indian company making downstream investment
21.7 Downstream investment made before 13-2-2009
21.8 Reporting Requirements specified by RBI in respect of downstream investment
22 . FDI THROUGH RIGHTS, BONUS, SWEAT EQUITY OR MERGER/AMALGAMATION
22.1 Foreign investment through rights, bonus, merger etc.
22.2 Acquisition through rights issue or bonus issue
22.3 Issue of Employees Stock Options and sweat equity shares to persons resident outside India
22.4 Merger or demerger or amalgamation of Indian companies
23 . FDI - TRANSFER OF SECURITIES
23.1 Transfer of equity instruments of an Indian company by or to a person resident outside India
23.2 Reporting Requirements specified by RBI in respect of transfer of securities
23.3 Pricing guidelines for issue or sale of equity instruments
24 . FDI IN LLP
24.1 Investment by a person resident outside India in LLP
24.2 Investment in a Limited Liability Partnership (LLP)
24.3 RBI Instructions on Mode of payment, Remittance of sale proceeds and reporting for investment in LLP
25 . FDI IN GDR/ADR
25.1 Investment in Depository Receipts issued by foreign depositories
25.2 Issue or transfer of eligible instruments to a foreign depository for the purpose of issuance of depository receipts by eligible person(s)
25.3 Deposit Receipts issued under FCCB 1993 scheme
25.4 Routing of funds raised abroad to India
25.5 Reporting Requirements specified by RBI
26 . INVESTMENT BY NRI OR OCI
26.1 Who is NRI or OCI
26.2 Direct investments by NRI/OCI
26.3 Transfer of equity instruments by NRI or OCI
26.4 Investments by NRI or OCI on repatriation basis
26.5 Investment by NRI or OCI on non-repatriation basis
26.6 Investment in a firm or a proprietary concern by NRI/OCI on non-repatriation basis
26.7 Repatriation of income and sale proceeds of assets held abroad by NRIs who have returned to India for permanent settlement and repatriation of income and sale proceeds of assets
27 . FDI IN STARTUP COMPANY
27.1 What is a 'Startup company'
27.2 Issue of Convertible Notes by an Indian startup company
27.3 Procedure for receipt and repayment of Convertible Notes issued by an Indian startup company
27.4 Reporting Requirements as specified by RBI
28 . INVESTMENT BY FOREIGN PORTFOLIO INVESTOR
28.1 FPI Investment in Indian companies
28.2 Avenues for Investment by Foreign Portfolio Investor (FPI)
28.3 Purchase or sale of securities other than equity instruments by FPIs
28.4 Mode of payment for purchases and remittance of sale proceeds
28.5 Transfer of equity instruments of an Indian company by FPI
28.6 RBI Instructions on Mode of payment, Remittance of sale proceeds and reporting
28.7 Reporting Requirements specified by RBI
29 . FDI IN INVESTMENT VEHICLE
29.1 Investment by person resident outside India in units in investment vehicle
29.2 Investment by a person resident outside India in an Investment Vehicle
29.3 RBI Instructions on Mode of payment, Remittance of sale proceeds and reporting for investments by Investment Vehicle
29.4 Reporting Requirements specified by RBI for investment made by investment vehicle
30 . FDI BY FVCI
30.1 Investment by FVCI
30.2 Transfer of equity instruments of an Indian company by or to a FVCI
30.3 Permissible Investment by a Foreign Venture Capital Investor (FVCI)
30.4 RBI Instructions on Mode of payment, Remittance of sale proceeds and reporting
31 . FDI - INVESTMENT IN SECURITIES BY FUNDS, FOREIGN CENTRAL BANK ETC.
31.1 Investment in securities by other non-resident investors
31.2 Transfer of securities by other non-resident investors
31.3 RBI Instructions on Mode of payment, Remittance of sale proceeds and reporting
32 . INVESTMENT BY INDIAN ENTITY IN JV/WOS ABROAD
32.1 Indian investment out of India
32.2 Overseas investment by Indian party in global environment
32.3 Automatic Route for direct investment abroad
32.4 Method of Funding of foreign investment under automatic route
32.5 Investment in equity of companies registered overseas/rated debt instruments under automatic route
32.6 Investment abroad under approval route
32.7 Investments in energy and natural resources sector under approval route
32.8 Overseas investments by proprietorship concerns and registered Trust/Society only under approval route
32.9 Post investment changes/additional investment (or financial commitment) in existing JV/WOS
32.10 Restructuring of the balance sheet of the overseas entity involving write off of capital and receivables
32.11 Acquisition of a foreign company through bidding or tender procedure
32.12 Obligations of Indian Party (IP) and Resident Individual (RI)
32.13 Monitoring by AD Bank of reports
32.14 Transfer by way of sale of shares of a JV/WOS
32.15 Transfer by way of sale of shares of a JV/WOS involving write off of the investment (or financial commitment)
32.16 Pledge of shares of Joint Venture (JV), Wholly Owned Subsidiary (WOS) and Step Down Subsidiary (SDS)
32.17 Rollover of guarantees given for overseas investment
32.18 Creation of charge on domestic and foreign assets
32.19 Overseas Direct Investments by resident individuals
32.20 Hedging of overseas direct investments
32.21 Opening of Foreign Currency Account abroad by an Indian Party for overseas direct investment
32.22 Other investments in foreign securities
32.23 Issue of Indian Depository Receipts (IDRs)
32.24 Maintenance of collateral by FIIs for transactions in derivative segment-opening of demat accounts by Clearing Corporations and Clearing Members
32.25 Operational Instructions to Authorised Dealer Banks
32.26 Forms and instructions for reporting
33 . GUARANTEES
33.1 Background
33.2 Restriction on obtaining overseas guarantee by companies
33.3 Guarantees which may be given by an authorised dealer
33.4 Guarantees by persons other than an authorised dealer
34 . INSURANCE
34.1 Background
34.2 Restrictions on General/Health/Life Insurance policies from Insurers outside India
34.3 General/Health Insurance from insurers in India
34.4 Life Insurance from insurers in India
35 . BORROWING AND LENDING IN FOREIGN CURRENCY
35.1 Borrowing and Lending in foreign currency by an Authorised Dealer
35.2 Borrowing and Lending in Foreign currency by persons other than authorised dealer
35.3 Non-resident guarantee for domestic fund based and non-fund based facilities
35.4 Facility of Credit Enhancement
36 . BORROWING AND LENDING IN INDIAN RUPEES
36.1 Background
36.2 Persons Resident in India borrowing in INR from NRIs/OCI
36.3 Method of Funding
36.4 Reporting Requirements
36.5 Lending by authorised dealers in INR to NRI
36.6 Lending in INR by an authorised dealer or a housing finance institution to NRI/OCI for housing purpose
36.7 INR loans by Indian body corporate to its NRI/OCI employees
36.8 INR Loans to NRI by Resident Individual
36.9 Change of status of borrower/lender from person resident in India to person resident outside India
36.10 Overdraft by Authorised Dealer to its Branches/Correspondent Banks/Head Office outside India
37 . FOREIGN INVESTMENT IN DEBT INSTRUMENTS
37.1 RBI Regulations for foreign investment in debt instruments
37.2 Restriction on investment in debt instruments by a person resident outside India
37.3 Restriction on receiving investment in debt instruments
37.4 Merger or demerger or amalgamation or arrangement of Indian companies
37.5 Remittance of sale proceeds of debt instruments
37.6 General Permission for making investment in debt instruments by a person resident outside India
37.7 Mode of Payment for purchase of debt instruments
37.8 Permission for Sale of Debt instruments
37.9 Remittance/credit of sale/maturity proceeds of debt instruments
38 . EXTERNAL COMMERCIAL BORROWINGS
38.1 Background
38.2 Framework of ECB
38.3 Issuance of Guarantee, etc. by Indian banks and Financial Institutions
38.4 Parking of ECB proceeds abroad or in India
38.5 Procedure of raising ECB for automatic route and approval route
38.6 Powers delegated to AD Category I banks to deal with ECB cases
38.7 ECB facility for Oil Marketing Companies
38.8 ECB facility for Startups
38.9 Borrowing by Entities under Investigation
38.10 ECB by entities under restructuring/ECB facility for refinancing stressed assets
39 . TRADE CREDIT (TC) AND STRUCTURED OBLIGATIONS
39.1 Background
39.2 What is 'Trade Credit'
39.3 Security for Trade Credit
39.4 Reporting requirements for Trade Credit
39.5 Non-resident guarantee for domestic fund based and non-fund based facilities
39.6 Facility of Credit Enhancement
40 . ACQUISITION AND TRANSFER OF PROPERTY IN INDIA
40.1 Background
40.2 Joint acquisition by the spouse of a NRI or an OCI even if spouse is person non-resident and not NRI/OCI
40.3 Acquisition of immovable property for carrying on a permitted activity
40.4 Mortgage of property acquired to authorised dealer as security
40.5 Person of Pakistan or Bangladesh or Sri Lanka or Afghanistan or China or Iran or Hong Kong or Macau or Nepal or Bhutan or Korea can only take property on lease for upto five years
40.6 Purchase or sale of immovable property by Foreign Embassies or Diplomats or Consulate Generals
40.7 Acquisition of immovable property by a long-term visa holder
40.8 Repatriation of sale proceeds of immovable property
40.9 Sale of immovable property by foreign lender if Indian borrower makes default in ECB
40.10 Prohibition on transfer of immovable property in India by person resident out of India
40.11 Transfer of immovable property by person resident outside India
40.12 Prohibition on acquisition or transfer of immovable property in India by citizens of certain countries
40.13 Transactions in immovable properties only through banking channels and on payment of taxes
41 . ACQUISITION AND TRANSFER OF IMMOVABLE PROPERTY OUT OF INDIA
41.1 Background
41.2 Acquisition and Transfer of Immovable Property outside India by a person resident in India
42 . REMITTANCE OF ASSETS
42.1 Background
42.2 Remittance of assets permissible under FEMA
42.3 Remittance of assets requiring RBI approval
42.4 Income-tax payment before remittance of assets
43 . BRANCH/LO/PROJECT OFFICE IN INDIA BY FOREIGN ENTITIES
43.1 Background
43.2 Criteria for opening branch office in India by foreign entities
43.3 Procedure for applying for BO/LO and grant of approval by authorised bank
43.4 Opening of bank account by BO/LO/PO
43.5 Annual Activity Certificate by BO/LO/PO
43.6 Extension of validity period of the approval of LO and PO
43.7 Registration with police authorities in case of applicants from specified countries
43.8 Application for additional offices and activities
43.9 Activities that can be carried out by BO/LO of foreign entity in India
43.10 Remittance of profit/surplus by BO/PO
43.11 Closure of BO/LO/PO
43.12 Transfer of assets of BO/LO/PO
43.13 Other provisions relating to BO/LO/PO
43.14 Reporting to RBI by BO/LO/PO of foreign companies
43.15 Compliances under Company Law on branches of foreign companies
44 . INDIAN DEPOSITORY RECEIPTS
44.1 Foreign company can issue IDR in India
44.2 Issue of IDR
44.3 SEBI Guidelines on IDR
44.4 Listing agreement for IDR
44.5 Obligations of companies which has issued IDR
44.6 FEMA provisions in respect of Issue of IDRs
44.7 Purchase or sale of IDRs
44.8 RBI Instructions on Mode of payment, Remittance of sale proceeds and reporting of IDR
45 . RISK MANAGEMENT AND INTER-BANK DEALINGS
45.1 Background
45.2 Risk Management
45.3 Accounts of Non-Resident Banks
45.4 Inter-bank foreign exchange dealings
45.5 Writing of covered call and put current operation contracts by Indian exporters and importers
45.6 Reports to RBI
46 . VOSTRO ACCOUNT OF NON-RESIDENT EXCHANGE HOUSES
46.1 Background
46.2 General Instructions to AD Category-I banks
46.3 Foreign Currency Drawing Arrangements
47 . INDUSTRIAL POLICY OF GOVERNMENT OF INDIA
47.1 Background
47.2 Micro, small and medium enterprises
48 . ENFORCEMENT OF FEMA
48.1 Enforcement Directorate
48.2 Enforcement powers
49 . PENALTIES UNDER FEMA
49.1 Background
49.2 Penalty that can be imposed under FEMA
49.3 Contravention by Companies/firm
49.4 Proceedings can continue even after death or insolvency
49.5 Procedure for adjudication
49.6 Enforcement of orders of adjudicating authority
49.7 Power to recover arrears of penalty
50 . APPEALS UNDER FEMA
50.1 Background
50.2 Tribunal under FEMA
50.3 Jurisdiction of civil court barred
50.4 Appeal to High Court on question of law
51 . COMPOUNDING OF CONTRAVENTIONS UNDER FEMA
51.1 RBI can compound contraventions under FEM
51.2 Penalty for contravention of FEMA provisions
51.3 Power to RBI Officers to compound contravention by Reserve Bank
51.4 Authorisation to compound the contraventions by FED CO Cell, New Delhi
51.5 Procedure for Application for Compounding
51.6 Conditions for Compounding
51.7 Scope and procedure for compounding
51.8 Issue of the Compounding Order
51.9 Payment of the amount for which contravention is compounded
51.10 Directions to Authorised Dealers
51.11 Reporting requirements
52 . PREVENTION OF MONEY LAUNDERING ACT
52.1 Need for special Act on money laundering
52.2 Implementation of Prevention of Money Laundering Act, 2002
52.3 Scheme of the Prevention of Money Laundering Act
52.4 Provisions for prevention of Money Laundering in the Act
52.5 Definition of 'money laundering'
52.6 Scheduled offence
52.7 Punishment for offence under Prevention of Money Laundering Act
52.8 Obligations of reporting entities to keep record and furnish information
52.9 Keeping records by 'reporting entity' and informing authority
52.10 Director can call for records and information from reporting entity
52.11 No civil liability on reporting entity if they report suspicious transactions
52.12 Procedure for maintenance of records, furnishing of information and verification
52.13 Responsibility of Principal Officer for furnishing of information to Director
52.14 KYC Records of identity of clients by reporting entity
52.15 Guidelines for Anti-Money Laundering, CFT and KYC
52.16 Authorities under the PMLA
52.17 Powers while making inquiry and calling for records
52.18 Appeal to Appellate Tribunal against order of Adjudicating Authority
52.19 Search, seizure, impounding of records
52.20 Retention of seized property
52.21 Receipt, Management and disposal of confiscated properties
52.22 Other provisions
52.23 Interpretation of rules by Central Government
53 . FOREIGN CONTRIBUTION (REGULATION) ACT (FCRA)
53.1 Background
53.2 Foreign Contribution
53.3 Exemptions from restrictions on accepting foreign contribution
53.4 Restrictions on acceptance of foreign hospitality
53.5 Restrictions on social or cultural organisations
53.6 Registration for accepting foreign contribution
53.7 Other provisions of Foreign Contribution Regulation Act
53.8 Offences and penalties
53.9 Powers of Central Government
53.10 Procedures under FCRA
54 . COFEPOSA, 1974
54.1 Background
54.2 Preventive detention
54.3 Communication of detention order to person detained
54.4 Issue of order of detention under COFEPOSA
54.5 Advisory Board under COFEPOSA
54.6 Provisions regarding detention
54.7 SAFEMA