Tax India ›› Indian Law ›› Business/Commercial Law ›› Foreign Exchange Management Act, 1999
Important provisions From FEMA
Relenant Provisions Of Exchange Control Manual For The Purpose Of FEMA
Some of the relevant provisions of Exchange Control Manual under FEMA, which are still existing are:
- Refund Of Inward Remittances
If a request is made from the overseas for cancellation of Inward Remittances, Authorised Dealers may do so without referring to Reserve Bank, if refunds is not to compensate for a loss.
- Application For Remittances In Foreign Currency
- A person firm or bank may apply to an Authorised Dealer for remittances in any foreign currency to a beneficiary abroad.
- Application should be made in FORM -A1, if the purpose of remittance is import of goods into India.
- For any other purpose in Form -A2
- The Authorised Dealer may sell the foreign Exchange applied for if he think fit provided it is within his powers, and the purpose of remittance is an approved one.
- Mode Of Payment Of Rupees Against Sale Of Foreign Exchange
In case of sale of foreign Exchange or remittance foreign Exchange amounting to Rs. 20,000 or more the payment received by the Authorised Dealer, from the applicant should be through a crossed cheque drawn on the applicant bank account or on the bank account of the Firm/ Company. Payment can also be accepted in the form of a Banker's cheque / Pay Order / Demand Draft.
Receipt of Payment in cash in case of such sale of foreign Exchange or remittance in foreign Exchange is strictly prohibited.
However where purpose of sale of foreign exchange is for travel abroad for business etc, cash may be received by Authorised Dealer from Applicant upto Rs. 50,000/-
Where the rupee equivalent for drawing foreign exchange exceeds Rs. 50,000 either for any single installment or for more than one installment recokned--- together for a single journey / visit it should be paid by the traveler by means of a gross cheque / demand draft/ pay order as stated above.
- Travellers Cheque Negotiable Only In India
Rupee Travellers cheque cannot be encashed outside India, if they are issued solely for use within India. In such a case they cannot be taken or sent out of India.
Reimbursements should be strictly refused where such travellers cheques have been encashed outside India.
- Reimbursement Outside India
Rupee Travellers cheque, which are issued by authorised dealers, encashable outside India, may be reimbursed by Authorised Dealers or by their selling Agent.
- Import Of Foreign Currency Notes
When the stock of foreign currency notes with Authorised Dealer is not adequate for meeting their normal business requirement they could import foreign currency notes from their overseas branches or correspondents.
- Reconversion Of Indian Currency
- Foreign currency may be sold against Indian Rupees held by persons who are not resident of India but are passing through or leaving India after a visit, at the time of their departure from India.
- For this purpose, a Bank or Encashment certificate issued by Authorised Dealer, exchange bureau or Authorised Money changer in form BCI, ECF OR ECR, is required to show that the rupee had been acquired by sale of foreign Exchange to an Authorised Dealer or money changer in India.
- Such a certificate is valid for such reconversion i.e. a period of three months is not over from the date of sale of the foreign currency by the traveller.
- Rates Of Exchange
Authorised dealers and their Exchange bureau may buy from and sell to public foreign currency notes and coins at rates of exchange determined by market conditions. Dealings in foreign currency notes and coins between authorised dealers and between authorised dealers and money changers would also be at rates determined by market conditions.
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