FEMA Archives - Neeraj Bhagat & Co.

August 25, 2021 / FEMA

Foreign Account Tax Compliance Act (FATCA)

The seeds of financial crisis were sown long back when the interest rates were fiercely low with very lenient lending norms leading to creation of housing price bubble in U.S. The bubble bursted and the period of 2007-2009 marked as an epic financial collapse leaving people jobless and their investments worthless. With the unemployment rates soaring high and hovering financial crisis, the government aimed to boost the economy. It was then the Foreign Account Tax Compliance Act (FACTA) was introduced …

July 8, 2021 / FEMA

Penalties under FEMA

Foreign Exchange management Act, 1999 (FEMA) was passed on 29^th December 1999 in Parliament replacing the Foreign Exchange Regulation Act (FERA). The new regime is made consistent with the framework laid down by the World Trade Organisation. FEMA enabled all cross border trades & payments and promotes orderly development of foreign exchange market in India.

Section 13 of FEMA lays down the Penal provisions. As per Section 13(1), if any person contravenes any provision or any rule, regulation, notification, …

July 1, 2021 / FEMA

Compounding of contraventions under FEMA by RBI

The Foreign Exchange Management Act, 1999 (FEMA) is an act of the Parliament of India to consolidate and amend the laws relating to foreign exchange with the objective of facilitating external trade & payments and promoting the orderly development and maintenance of foreign exchange market in India.

Section 15 of Foreign Exchange Management Act (FEMA), 1999 empowers Reserve Bank of India to compound any contravention made under Section 13 of FEMA, 1999 except the contraventions under section 3(a).

Compounding refers …

June 23, 2021 / FEMA

Export of Services and Implications under GST/ FEMA

The term Export generally refers to Exports of Goods but that reference is a passé now. Export of Services is the emerging trend as it widens the scope of exports, bringing in the diversification and increasing India’s Foreign Exchange Earnings. The Indian Economy has witnessed a major boost in the last decade in the services sector.

India has emerged as the fastest growing nation in global services trade. It remained among the top 10 trading countries in commercial services in …

April 8, 2021 / FEMA

FEMA and GST implications on Export of Goods

An Export in International Trade means Goods and Services produced in one country and sold to buyers in another country (Foreign buyer). India’s Exports & Imports complete the term International Trade and together it decides the country’s Trade Balance. When the country’s export exceeds the imports it leads to Trade Surplus, however it accounts to Trade Deficit when the country’s imports are more than the exports.

With an objective to spur economic growth and cross border trade, it’s imperative to …

January 1, 2021 / FEMA

Overseas direct investment without remittance of funds from India

An investment outside India can be done by an Indian party or an individual or (single or in association with another resident individual or with an ‘Indian Party’). All resident individuals, including minors, are allowed to freely remit up to USD 250,000 per financial year.

An Indian Party can make overseas direct investment in any bonafide activity. However, Real estate and banking business are the prohibited sectors for overseas direct investment. But, Indian banks operating in India can set up …

May 6, 2020 / FEMA

FDI in E-commerce

The Indian retail industry has emerged as one of the most dynamic and fast-paced industries due to the entry of several new players. It is not only a form of business but more a mode of earning of livelihood for tens of millions of people in the Country. India’s e-commerce market has witnessed a phenomenal growth in the past recent years and is still flourishing. Foreign Direct Investment in E-Commerce in India can lead to an influx of capital, further …

April 28, 2020 / FEMA

RBI guidelines for opening various bank accounts outside India

Many Indian companies have opened subsidiaries abroad when all that they required was a collection bank account. This is often felt necessary for the purpose of collecting payments from customers either through bank transfers or through online transactions.

Reserve Bank of India, strangely, is positively inclined towards Indians opening companies abroad but does not seem inclined to encourage Indians to open collection accounts in foreign banks.

RBI regulates opening of bank accounts outside India,in terms of section 9 of the …

April 23, 2020 / FEMA

Setting up subsidiary outside India

With the advent of Globalization, more and more Indian companies are interested in doing business outside India. They want to set-up a branch office or a subsidiary abroad. There are multiple benefits of doing so such as cost reduction because they save on import duty, ease of doing business, building an international brand etc.

Overseas investment in wholly owned subsidiaries or joint ventures has been recognized as important avenues for promoting global business by Indian entrepreneurs.

Broadly there are two …