Sample Read
I-7
CONTENTS PAGE
CONTENTS PAGE
Division Heads
I-5-I-6
List of Basic Notifications
I-21-I-28
List of Amending Notifications
I-29-I-49
List of Notifications
I-51-I-94
List of Notifications Issued under Prevention of Money-Laundering Act
I-95-I-107
List of Master Directions
I-109-I-110
List of FDI Circulars and Press Notes
I-111-I-112
List of Prescribed Forms
I-113-I-118 DIVISION ONE
FEMA GLOSSARY 1.1
Glossary of Important Definitions
1.3
DIVISION TWO
FOREIGN EXCHANGE MANAGEMENT ACT, 1999 CHAPTER I PRELIMINARY
1.
Short title, extent, application and commencement
2.3
2.
Definitions
2.3 CHAPTER II REGULATION AND MANAGEMENT OF FOREIGN EXCHANGE
3.
Dealing in foreign exchange, etc.
2.6
4.
Holding of foreign exchange, etc.
2.7
5.
Current account transactions
2.7
6.
Capital account transactions
2.7
7.
Export of goods and services
2.10
8.
Realisation and repatriation of foreign exchange
2.10
9.
Exemption from realisation and repatriation in certain cases
2.10
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CONTENTS
I-8 PAGE
CHAPTER III AUTHORISED PERSON
10. 11. 12.
Authorised person Reserve Bank s powers to issue directions to authorised person Power of Reserve Bank to inspect authorised person
2.11 2.12 2.12
CHAPTER IV CONTRAVENTION AND PENALTIES
13. 14. 14A. 15.
Penalties Enforcement of the orders of Adjudicating Authority Power to recover arrears of penalty Power to compound contravention
2.13 2.14 2.15 2.15
CHAPTER V ADJUDICATION AND APPEAL
16. 17. 18. 19. 20. 21. 22.
Appointment of Adjudicating Authority Appeal to Special Director (Appeals) Appellate Tribunal Appeal to Appellate Tribunal [Omitted by the Finance Act, 2017, w.e.f. 26-5-2017] Qualifications for appointment of Special Director (Appeals) [Omitted by the Finance Act, 2017, w.e.f. 26-5-2017]
2.15 2.16 2.17 2.17 2.18 2.18 2.19
23. 24. 25. 26. 27. 28.
Terms and conditions of service of Special Director (Appeals) [Omitted by the Finance Act, 2017, w.e.f. 26-5-2017] [Omitted by the Finance Act, 2017, w.e.f. 26-5-2017] [Omitted by the Finance Act, 2017, w.e.f. 26-5-2017] Staff of Special Director (Appeals) Procedure and powers of Appellate Tribunal and Special Director (Appeals) [Omitted by the Finance Act, 2017, w.e.f. 26-5-2017] [Omitted by the Finance Act, 2017, w.e.f. 26-5-2017] [Omitted by the Finance Act, 2017, w.e.f. 26-5-2017] Right of appellant to take assistance of legal practitioner or Chartered Accountant and of Government, to appoint presenting officers Officers and employees, etc., to be public servant Civil court not to have jurisdiction Appeal to High Court
2.19 2.19 2.19 2.19 2.20
29. 30. 31. 32.
33. 34. 35.
2.20 2.21 2.21 2.21
2.21 2.21 2.21 2.22
CHAPTER VI DIRECTORATE OF ENFORCEMENT
36. 37.
Directorate of Enforcement Power of search, seizure, etc.
2.22 2.22
I-9
CONTENTS PAGE
37A. 38.
Special provisions relating to assets held outside India in contravention of section 4 Empowering other officers
2.23 2.23
CHAPTER VII MISCELLANEOUS
39. 40. 41. 42. 43. 44. 44A. 45. 46. 47. 48. 49.
Presumption as to documents in certain cases Suspension of operation of this Act Power of Central Government to give directions Contravention by companies Death or insolvency in certain cases Bar of legal proceedings Powers of Reserve Bank not to apply to International Financial Services Centre Removal of difficulties Power to make rules Power to make regulations Rules and regulations to be laid before Parliament Repeal and saving
2.24 2.24 2.25 2.25 2.25 2.25 2.25 2.26 2.26 2.27 2.28 2.28
DIVISION THREE
RULES & REGULATIONS UNDER FEMA LIST OF RULES AND REGULATIONS
3.1 3.2 3.3 3.4 3.5/6 3.7 3.8 3.9 3.10 3.11 3.12 3.13
Foreign Exchange Management (Encashment of Draft, Cheque, Instrument and Payment of Interest) Rules, 2000 Foreign Exchange (Authentication of Documents) Rules, 2000 Foreign Exchange Management (Current Account Transactions) Rules, 2000 Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules, 2000 Foreign Exchange Management (Permissible Capital Account Transactions) Regulations, 2000 Foreign Exchange Management (Issue of Security in India by a Branch, Office or Agency of a Person Resident outside India) Regulations, 2000 Foreign Exchange Management (Borrowing and Lending) Regulations, 2018 Foreign Exchange Management (Deposit) Regulations, 2016 Foreign Exchange Management (Export and Import of Currency) Regulations, 2015 Foreign Exchange Management (Guarantees) Regulations, 2000 Foreign Exchange Management (Realisation, Repatriation and Surrender of Foreign Exchange) Regulations, 2015 Foreign Exchange Management (Foreign Currency Accounts by a Person Resident in India) Regulations, 2015
3.3 3.5 3.6 3.15 3.22 3.30 3.31 3.41 3.59 3.62 3.67 3.70
CONTENTS
I-10 PAGE
3.14 3.15 3.16 3.17 3.18 3.19 3.20 3.21 3.22 3.23 3.24 3.25 3.26 3.27 3.28 3.29 3.30 3.31 3.32 3.33 3.34 3.35 3.36 3.37 3.38 3.39 3.40
Foreign Exchange Management (Possession and Retention of Foreign Currency) Regulations, 2015 Foreign Exchange Management (Insurance) Regulations, 2015 Foreign Exchange Management (Remittance of Assets) Regulations, 2016 Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2023 Foreign Exchange Management (Non-debt Instruments) Rules, 2019 Foreign Exchange Management (Debt Instruments) Regulations, 2019 Foreign Exchange Management (Mode of Payment and Reporting of Non-debt Instruments) Regulations, 2019 Foreign Exchange Management (Establishment in India of a Branch Office or a Liaison Office or a Project Office or any other Place of Business) Regulations, 2016 Foreign Exchange Management (Export of Goods and Services) Regulations, 2015 Foreign Exchange Management (Foreign Exchange Derivative Contracts) Regulations, 2000 Currency Futures (Reserve Bank) Directions, 2008 Appellate Tribunal for Foreign Exchange (Recruitment, Salary & Allowances & Other Conditions of Service of Chairperson & Members) Rules, 2000 Foreign Exchange Management (Offshore Banking Unit) Regulations, 2002 Foreign Exchange Management [Withdrawal of General Permission to Overseas Corporate Bodies (OCBs)] Regulations, 2003 Foreign Exchange Management (Crystallization of Inoperative Foreign Currency Deposits) Regulations, 2014 Foreign Exchange Management (International Financial Services Centre) Regulations, 2015 Foreign Exchange Management (Regularization of Assets held Abroad by a Person Resident in India) Regulations, 2015 Foreign Exchange Management (Cross Border Merger) Regulations, 2018 Currency Futures in International Financial Services Centre (Reserve Bank) Directions, 2020 Currency Options in International Financial Services Centre (Reserve Bank) Directions, 2020 Foreign Exchange Management (Margin for Derivative Contracts) Regulations, 2020 Foreign Exchange Management (Overseas Investment) Rules, 2022 Foreign Exchange Management (Overseas Investment) Regulations, 2022 Reserve Bank of India (Unhedged Foreign Currency Exposure) Directions, 2022 Foreign Exchange Management (Hedging of Commodity Price Risk and Freight Risk in Overseas Markets) Directions, 2022 Reserve Bank of India (Margin for Derivative Contracts) Directions, 2024 Foreign Exchange (Compounding Proceedings) Rules, 2024
3.81 3.83 3.85 3.89 3.91 3.155 3.160 3.167 3.178 3.185 3.193 3.197 3.200 3.202 3.206 3.208 3.210 3.211 3.215 3.217 3.220 3.222 3.236 3.242 3.249 3.253 3.255
ALPHABETICAL LIST OF RULES & REGULATIONS
Appellate Tribunal for Foreign Exchange (Recruitment, Salary & Allowances & Other Conditions of Service of Chairperson & Members) Rules, 2000 u Currency Futures (Reserve Bank) Directions, 2008 u Currency Futures in International Financial Services Centre (Reserve Bank) Directions, 2020 u Currency Options in International Financial Services Centre (Reserve Bank) Directions, 2020 u Foreign Exchange (Authentication of Documents) Rules, 2000 u
3.197 3.193 3.215 3.217 3.5
I-11
CONTENTS PAGE
Foreign Exchange (Compounding Proceedings) Rules, 2024 u Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules, 2000 u Foreign Exchange Management (Borrowing and Lending) Regulations, 2018 u Foreign Exchange Management (Cross Border Merger) Regulations, 2018 u Foreign Exchange Management (Crystallization of Inoperative Foreign Currency Deposits) Regulations, 2014 u Foreign Exchange Management (Current Account Transactions) Rules, 2000 u Foreign Exchange Management (Debt Instruments) Regulations, 2019 u Foreign Exchange Management (Deposit) Regulations, 2016 u Foreign Exchange Management (Encashment of Draft, Cheque, Instrument and Payment of Interest) Rules, 2000 u Foreign Exchange Management (Establishment in India of a Branch Office or a Liaison Office or a Project Office or any other Place of Business) Regulations, 2016 u Foreign Exchange Management (Export and Import of Currency) Regulations, 2015 u Foreign Exchange Management (Export of Goods and Services) Regulations, 2015 u Foreign Exchange Management (Foreign Currency Accounts by a Person Resident in India) Regulations, 2015 u Foreign Exchange Management (Foreign Exchange Derivative Contracts) Regulations, 2000 u Foreign Exchange Management (Guarantees) Regulations, 2000 u Foreign Exchange Management (Hedging of Commodity Price Risk and Freight Risk in Overseas Markets) Directions, 2022 u Foreign Exchange Management (Insurance) Regulations, 2015 u Foreign Exchange Management (International Financial Services Centre) Regulations, 2015 u Foreign Exchange Management (Issue of Security in India by a Branch, Office or Agency of a Person Resident outside India) Regulations, 2000 u Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2023 u Foreign Exchange Management (Margin for Derivative Contracts) Regulations, 2020 u Foreign Exchange Management (Mode of Payment and Reporting of Non-debt Instruments) Regulations, 2019 u Foreign Exchange Management (Non-debt Instruments) Rules, 2019 u Foreign Exchange Management (Offshore Banking Unit) Regulations, 2002 u Foreign Exchange Management (Overseas Investment) Rules, 2022 u Foreign Exchange Management (Overseas Investment) Regulations, 2022 u Foreign Exchange Management (Permissible Capital Account Transactions) Regulations, 2000 u Foreign Exchange Management (Possession and Retention of Foreign Currency) Regulations, 2015 u Foreign Exchange Management (Realisation, Repatriation and Surrender of Foreign Exchange) Regulations, 2015 u Foreign Exchange Management (Regularization of Assets held Abroad by a Person Resident in India) Regulations, 2015 u Foreign Exchange Management (Remittance of Assets) Regulations, 2016 u
3.255 3.15 3.31 3.211 3.206 3.6 3.155 3.41 3.3 3.167 3.59 3.178 3.70 3.185 3.62 3.249 3.83 3.208 3.30 3.89 3.220 3.160 3.91 3.200 3.222 3.236 3.26 3.81 3.67 3.210 3.85
CONTENTS
I-12 PAGE
Foreign Exchange Management [Withdrawal of General Permission to Overseas Corporate Bodies (OCBs)] Regulations, 2003 u Reserve Bank of India (Unhedged Foreign Currency Exposure) Directions, 2022 u Reserve Bank of India (Margin for Derivative Contracts) Directions, 2024 u
3.202 3.242 3.253
CHRONOLOGICAL LIST OF RULES & REGULATIONS CENTRAL GOVERNMENT
GSR 379(E), dated 3-5-2000 - Foreign Exchange Management (Encashment of Draft, Cheque, Instrument and Payment of Interest) Rules, 2000 u GSR 380(E), dated 3-5-2000 - Foreign Exchange (Authentication of Documents) Rules, 2000 u GSR 381(E), dated 3-5-2000 - Foreign Exchange Management (Current Account Transactions) Rules, 2000 u GSR 382(E), dated 3-5-2000 - Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules, 2000 u GSR 677(E), dated 28-8-2000 - Appellate Tribunal for Foreign Exchange (Recruitment, Salary and Allowances and other Conditions of Service of Chairperson and Members) Rules, 2000 u S.O. No. 3732(E), dated 17-10-2019 - Foreign Exchange Management (Non-debt Instruments) Rules, 2019 u GSR 646(E), dated 22-8-2022 - Foreign Exchange Management (Overseas Investment) Rules, 2022 u GSR 566(E), dated 12-9-2024 - Foreign Exchange (Compounding Proceedings) Rules, 2024 RBI u FEMA 1/2000-RB, dated 3-5-2000 - Foreign Exchange Management (Permissible Capital Account Transactions) Regulations, 2000 u FEMA 2/2000-RB, dated 3-5-2000 - Foreign Exchange Management (Issue of Security in India by a Branch, Office or Agency of a Person Resident outside India) Regulations, 2000 u FEMA 3(R)/2018-RB, dated 17-12-2018 - Foreign Exchange Management (Borrowing and Lending) Regulations, 2018 u FEMA 5(R)/2016-RB, dated 1-4-2016 - Foreign Exchange Management (Deposit) Regulations, 2016 u FEMA 6(R)/2015-RB, dated 29-12-2015 - Foreign Exchange Management (Export and Import of Currency) Regulations, 2015 u FEMA 8/2000-RB, dated 3-5-2000 - Foreign Exchange Management (Guarantees) Regulations, 2000 u FEMA 9(R)/2015-RB, dated 29-12-2015 - Foreign Exchange Management (Realisation, Repatriation and Surrender of Foreign Exchange) Regulations, 2015 u FEMA 10(R)/2015-RB, dated 21-1-2016 - Foreign Exchange Management (Foreign Currency Accounts by a Person Resident in India) Regulations, 2015 u
3.3 3.5 3.6 3.15 3.197 3.91 3.222 3.255
3.26 3.30 3.31 3.41 3.59 3.62 3.67 3.70
u
FEMA 10A/2014-RB, dated 21-3-2014 - Foreign Exchange Management (Crystallization of Inoperative Foreign Currency Deposits) Regulations, 2014
3.206
u
FEMA 11(R)/2015-RB, dated 29-12-2015 - Foreign Exchange Management (Possession and Retention of Foreign Currency) Regulations, 2015
3.81
u
FEMA 12(R)/2015-RB, dated 29-12-2015 - Foreign Exchange Management (Insurance) Regulations, 2015
3.83
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CONTENTS PAGE
FEMA 13(R)/2016-RB, dated 1-4-2016 - Foreign Exchange Management (Remittance of Assets) Regulations, 2016 u FEMA 14(R)/2023-RB, dated 20-12-2023 - Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2023 u FEMA 22(R)/2016-RB, dated 31-3-2016 - Foreign Exchange Management (Establishment in India of a Branch Office or a Liaison Office or a Project Office or any other Place of Business) Regulations, 2016 u FEMA 23(R)/2015-RB, dated 12-1-2016 - Foreign Exchange Management (Export of Goods and Services) Regulations, 2015 u FEMA 25/2000-RB, dated 3-5-2000 - Foreign Exchange Management (Foreign Exchange Derivative Contracts) Regulations, 2000 u FEMA 71/2002-RB, dated 7-9-2002 - Foreign Exchange Management (Offshore Banking Unit) Regulations, 2002 u FEMA 101/2003-RB, dated 3-10-2003 - Foreign Exchange Management [Withdrawal of General Permission to Overseas Corporate Bodies (OCBs)] Regulations, 2003 u FEMA 339/2015-RB, dated 2-3-2015 - Foreign Exchange Management (International Financial Services Centre) Regulations, 2015 u FEMA 348/2015-RB, dated 25-9-2015 - Foreign Exchange Management (Regularization of Assets held Abroad by a Person Resident in India) Regulations, 2015 u FEMA 389/2018-RB, dated 20-3-2018 - Foreign Exchange Management (Cross Border Merger) Regulations, 2018 u FEMA 395/2019-RB, dated 17-10-2019 - Foreign Exchange Management (Mode of Payment and Reporting of Non-debt Instruments) Regulations, 2019 u FEMA 396/2019-RB, dated 17-10-2019 - Foreign Exchange Management (Debt Instruments) Regulations, 2019 u FEMA 399/2020-RB, dated 23-10-2020 - Foreign Exchange Management (Margin for Derivative Contracts) Regulations, 2020 u FED 1/DG(SG)-2008, dated 6-8-2008 - Currency Futures (Reserve Bank) Directions, 2008 u FMRD.FMD.01/ED(TRS)-2020, dated 20-1-2020 - Currency Futures in International Financial Services Centre (Reserve Bank) Directions, 2020 u FMRD.FMD.02/ED(TRS)-2020, dated 20-1-2020 - Currency Options in International Financial Services Centre (Reserve Bank) Directions, 2020 u FEMA 400/2022-RB, dated 22-8-2022 - Foreign Exchange Management (Overseas Investment) Regulations, 2022 u DOR. MRG.77/00-00-007/2022-23, dated 11-10-2022 - Reserve Bank of India (Unhedged Foreign Currency Exposure) Directions, 2022 u A.P. (DIR Series) (2022-23) Circular No. 21, dated 12-12-2022 - Foreign Exchange Management (Hedging of Commodity Price Risk and Freight Risk in Overseas Markets) Directions, 2022 u
u
Reserve Bank of India (Margin for Derivative Contracts) Directions, 2024
3.85 3.89
3.167 3.178 3.185 3.200 3.202 3.208 3.210 3.211 3.160 3.155 3.220 3.193 3.215 3.217 3.236 3.242 3.249 3.253
DIVISION FOUR
NOTIFICATIONS UNDER FEMA 4.1 4.2
Notification under section 1(4) of FEMA/Enforcement of Amendments to provisions of FEMA Notification under section 2(h) of FEMA
4.3 4.4
CONTENTS
I-14 PAGE
4.3 4.4 4.5 4.6 4.7 4.8 4.9 4.10 4.11 4.12 4.13 4.14 4.15 4.16
Notification under section 2(za) of FEMA Notifications under section 3 of FEMA Notification under section 6 of FEMA Orders under section 16 of FEMA Notification under section 17 of FEMA Notification under section 18 of FEMA Notification under section 19 of FEMA Notifications under section 36 of FEMA Notifications under section 37A of FEMA Notification under section 38 of FEMA Notification under section 40 of RBI Act Notification under section 47 of FEMA Notification under section 50 of FEMA Removal of Difficulties Order
4.5 4.6 4.9 4.10 4.12 4.14 4.15 4.16 4.18 4.19 4.20 4.21 4.22 4.24
DIVISION FIVE
MASTER DIRECTIONS 5.1 5.2 5.3 5.4 5.5 5.6 5.7 5.8 5.9 5.10 5.11 5.12 5.13 5.14 5.15 5.16 5.17 5.18 5.19
Master Direction on Risk Management and Inter-Bank Dealings Master Direction on Opening and Maintenance of Rupee/Foreign Currency Vostro Accounts of Non-resident Exchange Houses Master Direction on Money Changing Activities Master Direction on Compounding of Contraventions under FEMA, 1999 Master Direction on External Commercial Borrowings, Trade Credits and Structured Obligations Master Direction on Borrowing and Lending transactions in Indian Rupee between Persons Resident in India and Non-Resident Indians/Persons of Indian Origin Master Direction on Liberalised Remittance Scheme (LRS) Master Direction on other Remittance Facilities Master Direction on Insurance Master Direction on Establishment of Branch Office (BO)/Liaison Office (LO)/Project Office (PO) or any other place of business in India by foreign entities Master Direction on Foreign Investment in India Master Direction on Acquisition or Transfer of Immovable Property under Foreign Exchange Management Act, 1999 Master Direction on Remittance of Assets Master Direction on Deposits and Accounts Master Direction on Overseas Investment Master Direction on Export of Goods and Services Master Direction on Import of Goods and Services Master Direction on Reporting under Foreign Exchange Management Act, 1999 Master Direction on Miscellaneous
5.3 5.34 5.44 5.62 5.78 5.98 5.105 5.120 5.143 5.150 5.164 5.201 5.210 5.214 5.235 5.253 5.287 5.312 5.412
I-15
CONTENTS PAGE
5.20
Master Direction on Money Transfer Service Scheme (MTSS)
5.418
5.21
Master Direction on Foreign Exchange Management (Hedging of Commodity Price Risk and Freight Risk in Overseas Markets) Directions, 2022
5.427
DIVISION SIX
MEMORANDUM OF INSTRUCTIONS PEM : Memorandum of Instructions on Project Exports and Service Exports u ACM : Memorandum of procedure for channelling transactions through Asian Clearing Union (ACU) u
6.3 6.68
u
GIM : Revised Instructions under GIM
6.89
u
LIM
6.94
: Revised Instructions under LIM
DIVISION SEVEN
FOREIGN CONTRIBUTIONS 7.1
Foreign Contribution (Regulation) Act, 2010
7.3
7.2
Foreign Contribution (Regulation) Rules, 2011
7.26
7.3
Foreign Contribution (Acceptance or Retention of Gifts or Presentations) Rules, 2012
7.67
7.4
Notifications issued under Foreign Contribution (Regulation) Act, 2010
7.69
7.5
Guidelines issued under section 36(1)(a) of the Banking Regulation Act, 1949 Implementation of the Provisions of Foreign Contribution (Regulation) Act, 2010
7.78
7.6
Guidelines for consideration of proposals for acceptance of foreign hospitality under the Foreign Contribution (Regulation) Act, 2010
7.84
7.7
Standard Operating Procedure (SOP) to open and operate the FCRA Account as provided under section 17(1) of the amended Foreign Contribution (Regulation) Act, 2010 with SBI, New Delhi Main Branch in terms of FCRA (Amendment) Act, 2020
7.93
7.8
Advisory for Compliance by FCRA NGOs/Associations with the Amended Provisions in FCRA, 2010 and FCRR, 2011
7.96
7.9
FAQs on FCRA, 2010
7.98
7.10
Advisory to NGOs on Foreign Funding
7.119
7.11
FCRA Account
7.120
7.12
Unique ID of NGOs Receiving Foreign Contribution
7.126
7.13
Charters
7.127
7.14
Submission of applications for revision of orders under section 32 of the Foreign Contribution (Regulation) Act, 2010, read with rule 20 of the Foreign Contribution (Regulation) Rules, 2011
7.135
7.15
Introduction of Foreign Contribution (Regulation) Act (FCRA) related transaction code in NEFT and RTGS Systems
7.137
7.16
Extension of the validity of FCRA registration certificates
7.139
7.17
Denial/Refusal of Applications of Registration and Renewal - Reasons for Denial/Refusal
7.140
7.18
Public Notices
7.143
7.19
Case Laws Digest
7.150
CONTENTS
I-16 PAGE
DIVISION EIGHT
PREVENTION OF MONEY LAUNDERING 8.1 8.2 8.3
8.4 8.5 8.6
8.7
8.8
8.9 8.10 8.11 8.12 8.13 8.14
Prevention of Money Laundering Act, 2002 Notifications Prevention of Money-Laundering (the Manner of Forwarding a Copy of the Order of Provisional Attachment of Property along with the Material, and Copy of the Reasons along with the Material in Respect of Survey, to the Adjudicating Authority and its Period of Retention) Rules, 2005 Prevention of Money-Laundering (Receipt and Management of Confiscated Properties) Rules, 2005 Prevention of Money-Laundering (Maintenance of Records) Rules, 2005 Prevention of Money-Laundering (Forms, Search and Seizure or Freezing and the Manner of Forwarding the Reasons and Material to the Adjudicating Authority, Impounding and Custody of Records and the Period of Retention) Rules, 2005 Prevention of Money-Laundering (the Forms and the Manner of Forwarding a Copy of Order of Arrest of a Person along with the Material to the Adjudicating Authority and its Period of Retention) Rules, 2005 Prevention of Money-Laundering (the Manner of Forwarding a Copy of the Order of Retention of Seized Property along with the Material to the Adjudicating Authority and the Period of its Retention) Rules, 2005 Prevention of Money-Laundering (Manner of Receiving the Records Authenticated outside India) Rules, 2005 Prevention of Money-Laundering (Appeal) Rules, 2005 Adjudicating Authority (Procedure) Regulations, 2013 Prevention of Money-Laundering (Appointment and Conditions of Service of Chairperson and Members of Appellate Tribunal) Rules, 2007 Prevention of Money-Laundering (Appointment and Conditions of Service of Chairperson and Members of Adjudicating Authorities) Rules, 2007 Prevention of Money-Laundering (Issuance of Provisional Attachment Order) Rules, 2013
8.3 8.56
8.94 8.99 8.102
8.134
8.145
8.149 8.153 8.154 8.157 8.171 8.177 8.180
8.15
Prevention of Money-Laundering (Taking Possession of Attached or Frozen Properties Confirmed by the Adjudicating Authority) Rules, 2013
8.182
8.16
Prevention of Money-Laundering (Restoration of Property) Rules, 2016
8.188
DIVISION NINE
EURO ISSUE AND ISSUE OF FOREIGN CURRENCY CONVERTIBLE BONDS/ORDINARY SHARES THROUGH DEPOSITORY RECEIPT MECHANISM/ISSUE OF FOREIGN CURRENCY EXCHANGE BONDS 9.1 9.2 9.3
Euro Issue Issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depositary Receipt Mechanism) Scheme, 1993 Issue of Foreign Currency Exchangeable Bonds Scheme, 2008
9.3 9.33 9.49
I-17
CONTENTS PAGE
9.4 9.5
Depository Receipts Scheme, 2014 Companies (Issue of Global Depository Receipts) Rules, 2014
9.52 9.56
DIVISION TEN
ALLIED ACTS/RULES AND GUIDELINES 10.1 10.2 10.3 10.4 10.5 10.6 10.7 10.8 10.9 10.10
Foreign Trade (Development and Regulation) Act, 1992 Foreign Trade (Regulation) Rules, 1993 Foreign Trade (Exemption from Application of Rules in certain Cases) Order, 1993 Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 Smugglers and Foreign Exchange Manipulators (Appellate Tribunal for Forfeited Property) Rules, 1977 Appellate Tribunal for Forfeited Property (Procedure) Rules, 1986 Appellate Tribunal for Forfeited Property (Fees) Rules, 1987 Smugglers and Foreign Exchange Manipulators (Receipt, Management and Disposal of Forfeited Property) Rules, 2006 Safeguard Measures (Quantitative Restrictions) Rules, 2012
10.3 10.20 10.28 10.33 10.40 10.51 10.60 10.68 10.69 10.75
DIVISION ELEVEN
FOREIGN DIRECT INVESTMENT POLICY 11.1 11.2
Consolidated Foreign Direct Investment Policy Circulars issued in 2017-25
11.3 11.73
DIVISION TWELVE
TRIBUNAL, APPELLATE TRIBUNAL AND OTHER AUTHORITIES 12.1 12.2 12.3
Tribunals Reforms Act, 2021 Relevant sections of Finance Act, 2017 Tribunal (Conditions of Service) Rules, 2021
12.3 12.20 12.24
DIVISION THIRTEEN
FEMA & FDI READY RECKONER Acronyms used in FEMA & FDI CHAPTER 1 : FEMA - Overview CHAPTER 2 : Authorised Person CHAPTER 3 : Accounts in India by person resident out of India CHAPTER 4 : Accounts of Indian residents in Foreign Currency CHAPTER 5 : Receipt and payment in foreign exchange CHAPTER 6 : Realisation, repatriation and surrender of foreign exchange CHAPTER 7 : Money Changing Activities CHAPTER 8 : Money Transfer Service Scheme (MTSS) CHAPTER 9 : Possession and Retention of Foreign Currency *See Volume 2.
13.v* 13.3* 13.11* 13.18* 13.32* 13.43* 13.47* 13.50* 13.62* 13.67*
CONTENTS
I-18 PAGE
CHAPTER 10 : CHAPTER 11 : CHAPTER 12 : CHAPTER 13 : CHAPTER 14 : CHAPTER 15 : CHAPTER 16 : CHAPTER 17 : CHAPTER 18 : CHAPTER 19 : CHAPTER 20 : CHAPTER 21 : CHAPTER 22 : CHAPTER 23 : CHAPTER 24 : CHAPTER 25 : CHAPTER 26 : CHAPTER 27 : CHAPTER 28 : CHAPTER 29 : CHAPTER 30 : CHAPTER 31 : CHAPTER 32 : CHAPTER 33 : CHAPTER 34 : CHAPTER 35 : CHAPTER 36 : CHAPTER 37 : CHAPTER 38 : CHAPTER 39 : CHAPTER 40 : CHAPTER 41 : CHAPTER 42 : CHAPTER 43 : CHAPTER 44 : CHAPTER 45 : CHAPTER 46 : CHAPTER 47 : CHAPTER 48 :
*See Volume 2.
Export and Import of Currency or Currency Notes Remittances on current account Liberalised Remittance Scheme (LRS) Export of Goods and Services Import of Goods and Services Project exports and service exports Foreign exchange rates Overview of capital account transactions Foreign Investment in India FDI in Indian company Sector-wise FDI Policy at a glance FDI - Downstream investment i.e. indirect investment FDI through rights, bonus, sweat equity or merger/amalgamation FDI - Transfer of securities FDI in LLP FDI in GDR/ADR Investment by NRI or OCI FDI in startup company Investment by Foreign Portfolio Investor FDI in investment vehicle FDI by FVCI FDI - Investment in securities by Funds, Foreign Central Bank etc. Overseas Investment by Indian entity Guarantees Insurance Borrowing and Lending in foreign currency Borrowing and lending in Indian Rupees Foreign Investment in Debt Instruments External Commercial Borrowings Trade Credit (TC) and Structured Obligations Acquisition and transfer of immovable property in India Acquisition and transfer of immovable property outside India Remittance of Assets Branch/LO/Project Office in India by foreign entities Indian Depository Receipts Risk Management and Inter-Bank Dealings Vostro Account for International Trading Industrial Policy of Government of India Enforcement of FEMA
13.69* 13.73* 13.88* 13.101* 13.140* 13.163* 13.165* 13.172* 13.177* 13.186* 13.208* 13.217* 13.224* 13.230* 13.245* 13.248* 13.255* 13.269* 13.272* 13.279* 13.282* 13.285* 13.287* 13.328* 13.333* 13.341* 13.346* 13.353* 13.364* 13.380* 13.387* 13.393* 13.396* 13.400* 13.416* 13.423* 13.429* 13.434* 13.440*
I-19
CONTENTS PAGE
CHAPTER 49 : Penalties under FEMA CHAPTER 50 : Appeals under FEMA CHAPTER 51 : Compounding of Contraventions under FEMA CHAPTER 52 : Prevention of Money Laundering Act CHAPTER 53 : Foreign Contribution (Regulation) Act (FCRA) CHAPTER 54 : COFEPOSA, 1974 CHAPTER 55 : International Financial Services Centre (IFSC) SUBJECT INDEX
13.443* 13.449* 13.452* 13.464* 13.502* 13.531* 13.543* 13.560*
DIVISION FOURTEEN
FEMA CASE LAWS DIGEST 14.1 14.2
FEMA 1999 Foreign Exchange Regulation Act, 1973
14.3* 14.31*
DIVISION FIFTEEN
RBI s CIRCULARS & CLARIFICATIONS (2000-2025) 15.1 List of RBI s Circulars & Clarifications (2000-2025) 15.2 Text of Relevant Circulars & Clarifications (2000-2025) APPENDIX I
15.3* 15.170*
u Relevant Provisions of Exchange Control Manual APPENDIX II
A1-A101*
u Foreign Exchange Regulation Act, 1973 APPENDIX III u FEDAI Rules
A103-A135* A137-A155*
APPENDIX IV u Asian Clearing Union (Procedure) Rules
SUBJECT INDEX
*See Volume 2.
A157-A161* i-xlvii
3.3 FOREIGN EXCHANGE MANAGEMENT (CURRENT ACCOUNT TRANSACTIONS) RULES, 2000* GSR 381(E), dated 3-5-2000 - In exercise of the powers conferred by section 5 and sub-section (1) and clause (a) of sub-section (2) of section 46 of the Foreign Exchange Management Act, 1999, and in consultation with the Reserve Bank, the Central Government having considered it necessary in the public interest, makes the following rules, namely :— Short title and commencement. 1. (1) These rules may be called the Foreign Exchange Management (Current Account Transactions) Rules, 2000. (2) They shall come into effect on the 1st day of June, 2000. Definitions. 2. In these rules, unless the context otherwise requires,— (a) “Act” means the Foreign Exchange Management Act, 1999 (42 of 1999); (b) “Drawal” means drawal of foreign exchange from an authorised person and includes opening of Letter of Credit or use of International Credit Card or International Debit Card or ATM Card or any other thing by whatever name called which has the effect of creating foreign exchange liability; (c) “Schedule” means a schedule appended to these rules; (d) the words and expressions not defined in these rules but defined in the Act shall have the same meanings respectively assigned to them in the Act. Prohibition on drawal of Foreign Exchange. 3. Drawal of foreign exchange by any person for the following purpose is prohibited, namely : (a) a transaction specified in the Schedule I; or (b) a travel to Nepal and/or Bhutan; or (c) a transaction with a person resident in Nepal or Bhutan : Provided that the prohibition in clause (c) may be exempted by RBI subject to such terms and conditions as it may consider necessary to stipulate by special or general order. Prior approval of Government of India. 4.
No person shall draw foreign exchange for a transaction included in the Schedule II without prior approval of the Government of India :
*MASTER DIRECTIONS : Liberalized Remittance Scheme (LRS) [No. 7/2015-16, dated 1-1-2016]; Other Remittance Facilities [No. 8/2015-16, dated 1-1-2016]; Export of Goods & Services [No. 16/2015-16, dated 1-1-2016] and Import of Goods and Services [No. 17/2016-17, dated 1-1-2016].
3.6
3.7
PROHIBITION ON DRAWAL OF FOREIGN EXCHANGE
Sch. I
Provided that this rule shall not apply where the payment is made out of funds held in Resident Foreign Currency (RFC) Account 1[***] of the remitter. 1a [Prior approval of Reserve Bank. 5. Every drawal of foreign exchange for transactions included in Schedule III shall be governed as provided therein: Provided that this rule shall not apply where the payment is made out of funds held in Resident Foreign Currency (RFC) Account of the remitter.] 2 [6. (1) Nothing contained in rule 4 or rule 5 shall apply to drawal made out of funds held in Exchange Earners’ Foreign Currency (EEFC) account of the remitter. (2) Notwithstanding anything contained in sub-rule (1), restrictions imposed under rule 4 or rule 5 shall continue to apply where the drawal of foreign exchange from the Exchange Earners’ Foreign Currency (EEFC) account is for the purpose specified in items 10* and 11 of Schedule II, or items 3, 4, 11, 16* and 17 of Schedule III as the case may be.] 3 [Use of International Credit Card while outside India. 7. Nothing contained in rule 5 shall apply to the use of International Credit Card for making payment by a person towards meeting expenses while such person is on a visit outside India.] SCHEDULE I 4
[Transactions which are prohibited] (See Rule 3)
1. Remittance out of lottery winnings. 2. Remittance of income from racing/riding, etc., or any other hobby. 3. Remittance for purchase of lottery tickets, banned/prescribed magazines, football pools, sweepstakes etc. 4. Payment of commission on exports made towards equity investment in Joint Ventures/Wholly Owned Subsidiaries abroad of Indian companies. 5. Remittance of dividend by any company to which the requirement of dividend balancing is applicable. 5 [6. Payment of commission on exports under Rupee State Credit Route, except commission up to 10% of invoice value of exports of tea and tobacco.] 7. Payment related to “Call Back Services” of telephones. 8. Remittance of interest income on funds held in Non-resident Special Rupee Scheme a/c. 1. Words “or Exchange Earners’ Foreign Currency (EEFC) Account” omitted by the FEM (Current Account Transactions) (Amendment) Rules, 2001, w.e.f. 30-3-2001. 1a. Substituted by the FEM (Current Account Transactions) Amendment Rules, 2015, w.e.f. 26-5-2015. Prior to its substitution, rule 5, as amended by the FEM (Current Account Transactions) (Amendment) Rules, 2001, w.e.f. 30-3-2001, read as under : “5. Prior approval of Reserve Bank.—No person shall draw foreign exchange for a transaction included in the Schedule III without prior approval of the Reserve Bank : Provided that this rule shall not apply where the payment is made out of funds held in Resident Foreign Currency (RFC) Account of the remitter.” 2. Inserted by the FEM (Current Account Transactions) (Amendment) Rules, 2001, w.e.f. 30-3-2001. 3. Inserted by Notification No. GSR 472(E), dated 30-6-2023, w.r.e.f. 16-5-2023. Earlier, rule 7 was inserted by the FEM (Current Account Transactions) (Amendment) Rules, 2003, w.e.f. 15-1-2003 and later on omitted by the FEM (Current Account Transactions) (Amendment) Rules, 2023, w.e.f. 16-5-2023. For clarification on amendment see Annex to this Rules. 4. Inserted by the FEM (Current Account Transactions) (Amendment) Rules, 2005, w.e.f. 27-7-2005. 5. Substituted by the FEM (Current Account Transactions) (Second Amendment) Rules, 2003, w.e.f. 1-5-2003. *‘10’ & ‘16’ need to be omitted.
Sch. II
CURRENT ACCOUNT TRANSACTIONS RULES, 2000
3.8
SCHEDULE II 6
[Transactions which require prior approval of the Central Government] (See Rule 4)
Purpose of Remittance 1. Cultural Tours
2. 7[Advertisement in foreign print media for the purposes other than promotion of tourism, foreign investments and international bidding (exceeding US$ 10,000) by a State Government and its Public Sector Undertakings. 3. Remittance of freight of vessel charted by a PSU 4. Payment of import 8[through ocean transport] by a Govt. Department or a PSU on c.i.f. basis 5. Multi-modal transport operators making remittance to their agents abroad 9 [6. Remittance of hiring charges of transponders by (a) TV Channels (b) Internet service providers 7. Remittance of container detention charges exceeding the rate prescribed by Director General of Shipping 8. 10[***] 9. Remittance of prize money/sponsorship of sports activity abroad by a person other than International/National/State Level sports bodies, if the amount involved exceeds US $ 100,000 10. 11[***] 11. Remittance for membership of P & I Club
Ministry/Department of Govt. of India whose approval is required Ministry of Human Resources Development (Department of Education and Culture) Ministry of Finance, Department of Economic Affairs]
Ministry of Surface Transport (Chartering Wing) Ministry of Surface Transport (Chartering Wing) (i.e., other than f.o.b. and f.a.s. basis) Registration Certificate from the Director General of Shipping Ministry of Information and Broadcasting Ministry of Communication and Information Technology] Ministry of Surface Transport (Director General of Shipping) [***] Ministry of Human Resource Development (Department of Youth Affairs and Sports) 10
Ministry of Finance (Insurance Division)
6. Inserted by the FEM (Current Account Transactions) (Amendment) Rules, 2005, w.e.f. 27-7-2005. 7. Item 2 substituted by the FEM (Current Account Transactions) (Amendment) Rules, 2001, w.e.f. 30-3-2001. Earlier item 2 was amended by the FEM (Current Account Transactions) (Amendment) Rules, 2000, w.e.f. 9-8-2000. 8. Inserted by the FEM (Current Account Transactions) (Fourth Amendment) Rules, 2003, w.e.f. 27-10-2003. 9. Inserted by the FEM (Current Account Transactions) (Amendment) Rules, 2004, w.e.f. 13-9-2004. Prior to its insertion, item 6 was omitted by the FEM (Current Account Transactions) (Amendment) Rules, 2002, w.e.f. 22-10-2002. 10. Omitted by the FEM (Current Account Transactions) (Amendment) Rules, 2010, w.r.e.f. 16-12-2009. Prior to its omission, item 8 read as under : “8. Remittances under technical collaboration agreements Ministry of Industry and where payment of royalty exceeds 5% on local sales and Commerce” 8% on exports and lump sum payment exceeds US $ 2 million 11. Omitted by the FEM (Current Account Transactions) (Amendment) Rules, 2004, w.e.f. 13-9-2004.
3.9
PRIOR APPROVAL OF RESERVE BANK 12
Sch. III
[SCHEDULE III
(See rule 5) Facilities for individuals 1. Individuals can avail of foreign exchange facility for the following purposes within the limit of USD 2,50,000 only. Any additional remittance in excess of the said limit for the following purposes shall require prior approval of the Reserve Bank of India : (i) Private visits to any country (except Nepal and Bhutan). (ii) Gift or donation. (iii) Going abroad for employment. (iv) Emigration. (v) Maintenance of close relatives abroad. (vi) Travel for business, or attending a conference or specialised training or for meeting expenses for meeting medical expenses, or check-up abroad, or for accompanying as attendant to a patient going abroad for medical treatment/check-up. (vii) Expenses in connection with medical treatment abroad. (viii) Studies abroad. (ix) Any other current account transaction: Provided that for the purposes mentioned at item numbers (iv), (vii) and (viii), the individual may avail of exchange facility for an amount in excess of the limit prescribed under the Liberalised Remittance Scheme as provided in regulation 4 to FEMA Notification 1/2000-RB, dated the 3rd May, 2000 (hereinafter referred to as the said Liberalised Remittance Scheme) if it is so required by a country of emigration, medical institute offering treatment or the university, respectively: Provided further that if an individual remits any amount under the said Liberalised Remittance Scheme in a financial year, then the applicable limit for such individual would be reduced from USD 250,000 (US Dollars Two Hundred and Fifty Thousand Only) by the amount so remitted: Provided also that for a person who is resident but not permanently resident in India and— (a) is a citizen of a foreign State other than Pakistan; or (b) is a citizen of India, who is on deputation to the office or branch of a foreign company or subsidiary or joint venture in India of such foreign company, may make remittance up to his net salary (after deduction of taxes, contribution to provident fund and other deductions). Explanation: For the purpose of this item, a person resident in India on account of his employment or deputation of a specified duration (irrespective of length thereof) or for a specific job or assignments, the duration of which does not exceed three years, is a resident but not permanently resident:
12. Substituted by the FEM (Current Account Transactions) Amendment Rules, 2015, w.e.f. 26-5-2015. Earlier, Schedule III was amended by the FEM (Current Account Transactions) (Amendment) Rules, 2009, w.r.e.f. 30-4-2007, FEM (Current Account Transactions) (Amendment) Rules, 2009, w.r.e.f. 20-12-2006, FEM (Current Account Transactions) (Amendment) Rules, 2006, w.e.f. 10-7-2006, FEM (Current Account Transactions) (Amendment) Rules, 2004, w.e.f. 13-9-2004, FEM (Current Account Transactions) (Second Amendment) Rules, 2003, w.e.f. 1-5-2003, FEM (Current Account Transactions) (Third Amendment) Rules, 2003, w.e.f. 5-9-2003, FEM (Current Account Transactions) (Amendment) Rules, 2002, w.e.f. 22-10-2002, FEM (Current Account Transactions) (Second Amendment) Rules, 2002, w.e.f. 17-12-2002 and FEM (Current Account Transactions) (Amendment) Rules, 2001, w.e.f. 30-3-2001.
Annex I
CURRENT ACCOUNT TRANSACTIONS RULES, 2000
3.10
Provided also that a person other than an individual may also avail of foreign exchange facility, mutatis mutandis, within the limit prescribed under the said Liberalised Remittance Scheme for the purposes mentioned hereinabove. Facilities for persons other than individual 2. The following remittances by persons other than individuals shall require prior approval of the Reserve Bank of India : (i) Donations exceeding one per cent of their foreign exchange earnings during the previous three financial years or USD 5,000,000, whichever is less, for— (a) creation of Chairs in reputed educational institutes, (b) contribution to funds (not being an investment fund) promoted by educational institutes; and (c) contribution to a technical institution or body or association in the field of activity of the donor Company. (ii) Commission, per transaction, to agents abroad for sale of residential flats or commercial plots in India exceeding USD 25,000 or five per cent of the inward remittance whichever is more. (iii) Remittances exceeding USD 10,000,000 per project for any consultancy services in respect of infrastructure projects and USD 1,000,000 per project, for other consultancy services procured from outside India. Explanation:—For the purposes of this sub-paragraph, the expression “infrastructure” shall mean as defined in Explanation to para 1(iv)(A)(a) of Schedule I of FEMA Notification 3/2000RB, dated the May 3, 2000. (iv) Remittances exceeding five per cent of investment brought into India or USD 100,000 whichever is higher, by an entity in India by way of reimbursement of pre-incorporation expenses. Procedure 3. The procedure for drawal or remit of any foreign exchange under this Schedule shall be the same as applicable for remitting any amount under the said Liberalised Remittance Scheme.] ANNEX I
RBI PRESS RELEASE, DATED 19-5-2023 Part A - Some clarifications on Tax Collection at Source (Not reproduced. Log on to www.taxmann.com) Part B - Clarifications on the Liberalized Remittance Scheme [Rule 7: Omission by FEM (Current Account Transactions) (Amendment) Rules, 2023, w.e.f. 16-5-2023] 1. What is the notification dated 16th May, 2023 amending the FEM (CAT) Rules, 2000? The notification dated 16th May, 2023 omits Rule 7 of the FEM (CAT) Rules, 2000. In effect, it removes the exemption given to the use of international credit cards for meeting his/her expenses by a person when he is abroad. Even earlier, all current account transactions undertaken on international credit cards in India were subject to Rule 5 of the FEM (CAT) Rules and covered under Liberalized Remittance Scheme (LRS). The notification dated 16th May, 2023 does not effect any changes in the use of international credit cards by residents while in India. 2. What is Rule 7 of FEM (CAT) Rules, 2000? Rule 7 of the FEM (CAT) Rules, 2000 exempted the use of international credit cards from the LRS for payments by a person towards meeting expenses while such a person is on a visit outside India.
3.11
CLARIFICATIONS ON LRS
Annex I
3. What was the need for the notification? While on a visit abroad, a person could use international debit cards or other methods or international credit cards for undertaking current account transactions. Payments by debit cards etc. have been treated as LRS even earlier. Due to the exemption under erstwhile Rule 7, expenditures through credit cards were not accounted for under the specified LRS limit, which has led to some individuals exceeding the LRS limits. Data collected from top money remitters under LRS reveals that international credit cards are being issued with limits in excess of the present LRS limit of USD 2,50,000. The differential treatment between debit cards and credit cards needed to be removed in the interest of uniformity and equity in the treatment of modes of drawal of foreign exchange and for capturing total expenditures under LRS for prudent foreign exchange management and to prevent by-passing of LRS limits. RBI had written to the government on more than one occasion, pointing to the need to remove this differential treatment. 4. What modes of expenditure of foreign exchange are covered under FEM (CAT) Rules, 2000? It includes the drawal of foreign exchange from an authorised person and use of an International Credit Card, International Debit Card or ATM Card. All such drawals for the purposes specified in Schedule III (as explained in FAQ 3 above) are eligible for the limit of US$ 2,50,000. 5. What are the purposes under FEM (CAT) Rules, 2000, under which a resident individual can avail of a foreign exchange facility? As per Rule 5 of the FEM (CAT) Rules, 2000, Individuals can avail of a foreign exchange facility for the following purposes, as detailed in Schedule III of the Rules, within the LRS limit of USD 2,50,000 on a financial year basis. Prior approval of the Reserve Bank would be required for remittances exceeding the specified limits.
i. Private visits to any country (except Nepal and Bhutan) ii. Gift or donation iii. Going abroad for employment iv. Emigration v. Maintenance of close relatives abroad vi. Travel for business, attending a conference or specialised training or for meeting expenses for meeting medical expenses, or check-up abroad, or for accompanying as an attendant to a patient going abroad for medical treatment/ check-up vii. Expenses in connection with medical treatment abroad viii. Studies abroad ix. Any other current account transaction The Master Direction of RBI on LRS, available at https://www.rbi.org.in/Scripts/BS ViewMasDirections.aspx?id=10192 may be referred to. 6. Does LRS cover business visits of employees? No. When an employee is being deputed by an entity for any of the above, and the expenses are borne by the latter, such expenses shall be treated as residual current account transactions outside LRS and may be permitted by the AD without any limit, subject to verifying the bona fide of the transaction.
Annex II
CURRENT ACCOUNT TRANSACTIONS RULES, 2000
3.12
7. What is Liberalised Remittance Scheme (LRS)? Under the Liberalised Remittance Scheme, all resident individuals, including minors, are allowed to freely remit up to USD 2,50,000 per financial year (April - March) for any permissible current or capital account transaction or a combination of both. Further, resident individuals can avail of foreign exchange facility for the purposes mentioned in Para 1 of Schedule III of FEM (CAT) Rules, 2000 within the limit of USD 2,50,000 only. The Scheme is not available to corporates, partnership firms, HUF, Trusts etc. Under the LRS, in the financial year 2021-22, a total of USD 19.61 billion was remitted, rising from USD 12.68 billion in 2020-21. In 2022-23, it rose to more than USD 24.0 billion, of which overseas travel accounted for more than half. 8. What is a current account transaction? As per FEMA 1999, a “current account transaction” means a transaction other than a capital account transaction and without prejudice to the generality of the foregoing, such transaction includes, (i) payments due in connection with foreign trade, other current business, services, and shortterm banking and credit facilities in the ordinary course of business, (ii) payments due as interest on loans and as net income from investments, (iii) remittances for living expenses of parents, spouse and children residing abroad, and (iv) expenses in connection with foreign travel, education and medical care of parents, spouse and children. ANNEX II
No change in rate of TCS for all purposes under LRS and for overseas travel tour packages, regardless of mode of payment, for amounts up to Rs. 7 lakh per individual per annum Government gives more time for implementation of revised TCS rates and for inclusion of credit card payments in LRS Increased TCS rates to apply from 1st October, 2023 RBI PRESS RELEASE, DATED 28-6-2023 In the Budget this year, certain changes were announced to the system of Tax Collection at Source (TCS) on payments under the Liberalised Remittance Scheme (LRS) and on overseas tour program packages. These were to take effect from 1st July, 2023. It was also announced in March that credit card payments would be brought under the LRS. Numerous comments and suggestions were received which have been carefully considered. In response to the comments and suggestions it has been decided to make suitable changes. Firstly, it has been decided that there will be no change in the rate of TCS for all purposes under LRS and for overseas travel tour packages, regardless of mode of payment, for amounts up to Rs. 7 lakh per individual per annum. It has also been decided to give more time for the implementation of the revised TCS rates and for inclusion of credit card payments in LRS. The changes are detailed below. Sub-section (1G) of section 206C of the Income-tax Act, 1961 (“the Act”) provides for Tax Collection at Source (TCS) on (i) foreign remittance through the Liberalised Remittance Scheme (LRS) and (ii) sale of overseas tour program package. Through the Finance Act, 2023, amendments were carried out in sub-section (1G) of section 206C of the Act. These amendments, inter alia, increased the rate of TCS from 5% to 20% for remittance
3.13
Annex II
NO CHANGE IN RATE OF TCS
under LRS as well as for purchase of overseas tour program package and removed the threshold of Rs. 7 lakh for triggering TCS on LRS. These two changes were not applicable when the remittance is for education or medical purpose. These amendments were to take effect from 1st July, 2023. The Government had notified Foreign Exchange Management (Current Account Transactions) (Amendment) Rules, 2023 vide an e-gazette notification dated 16th May, 2023 to remove the differential treatment for credit cards vis-à-vis other modes of drawal of foreign exchange under LRS. After discussions with various stakeholders, and taking into account comments and suggestions received, the following decisions have been taken: (i) To give adequate time to Banks and Card networks to put in place requisite IT based solutions, the Government has decided to postpone the implementation of its 16th May, 2023 e-gazette notification. This would mean that transactions through International Credit Cards while being overseas would not be counted as LRS and hence would not be subject to TCS. The Press Release dated 19th May, 2023 stands superseded. (ii) Threshold of Rs. 7 Lakh per financial year per individual in clause (i) of sub-section (1G) of section 206C shall be restored for TCS on all categories of LRS payments, through all modes of payment, regardless of the purpose: Thus, for first Rs. 7 Lakh remittance under LRS there shall be no TCS. Beyond this Rs. 7 Lakh threshold, TCS shall be (a) 0.5% (if remittance for education is financed by education loan); (b) 5% (in case of remittance for education/medical treatment); (c) 20% for others.
For purchase of overseas tour program package under clause (ii) of sub-section (1G), the TCS shall continue to apply at the rate of 5% for the first Rs. 7 lakhs per individual per annum; the 20% rate will only apply for expenditure above this limit. (iii) Increased TCS rates to apply from 1st October, 2023: The increase in TCS rates; which were to come into effect from 1st July, 2023 shall now come into effect from 1st October, 2023 with the modification as in (ii) above. Till 30th September, 2023, earlier rates (prior to amendment by the Finance Act, 2023) shall continue to apply. Earlier and new TCS rates are summarised as under: Nature of payment (1)
Earlier rate before Finance Act, 2023
New rate w.e.f. 1st October 2023
(2)
(3)
LRS for education financed by loan
Nil upto Rs. 7 lakh 0.5% above Rs. 7 Lakh
Nil upto Rs. 7 lakh 0.5% above Rs. 7 Lakh
LRS for Medical treatment/ education (other than financed by loan)
Nil upto Rs. 7 lakh 5% above Rs. 7 Lakh
Nil upto Rs. 7 lakh 5% above Rs. 7 Lakh
LRS for other purposes
Nil upto Rs. 7 lakh 5% above Rs. 7 Lakh
Nil upto Rs. 7 lakh 20% above Rs. 7 Lakh
Purchase of Overseas tour program package
5% (without threshold)
5% till Rs. 7 Lakh, 20% thereafter
Note: (i) TCS rate in column two shall continue to apply till 30th September, 2023.
Annex II
CURRENT ACCOUNT TRANSACTIONS RULES, 2000
3.14
(ii) There shall be no TCS on expenditures under LRS under clause (i) of sub-section (1G) for the first Rs. 7 lakh, irrespective of purpose. The necessary changes to the Rules (Foreign Exchange Management (Current Account Transactions) Rules, 2000) are being issued separately. Legislative amendment in this regard shall be proposed in due course. Circular and Frequently Asked Questions (FAQs) shall be issued to clarify various practical issues in implementing this provision.
Foreign Exchange Management Manual with FEMA and FDI Ready Reckoner & FEMA Case Laws Digest AUTHOR : PUBLISHER : DATE OF PUBLICATION : EDITION : ISBN NO : No. of Pages : BINDING TYPE :
Taxmann’s Editorial Board Taxmann December 2025 47th Edition | 2026 9789371269292 3232 Paperback
Rs. 6995 DESCRIPTION Foreign Exchange Management Manual is a comprehensive, two-volume reference that presents India’s foreign exchange law as it operates in practice, by integrating the Foreign Exchange Management Act 1999 (FEMA) with its Rules, Regulations, Notifications, RBI Master Directions, operational instructions, prescribed reporting formats, and interpretive guidance. It is structured to help professionals move efficiently from statutory provisions to transaction-level compliance and precedent. This Edition is positioned as: • Primary Law & Regulatory Compendium (Volume 1) • Practice-focused Reference (Volume 2) comprising a structured FEMA & FDI Ready Reckoner, a sectionwise Case Laws Digest, and a consolidated RBI circulars/clarifications repository This set is designed for users who require precision in legal interpretation along with speed and certainty in execution, including: • Corporate Legal & Secretarial Teams, CFOs, Treasurers • Compliance, Risk & Governance Professionals • Authorised Dealer (AD) Banks, Forex Desks, & Operations Teams • Chartered Accountants, Company Secretaries, Cost Accountants & Audit Teams • Lawyers & Litigators • Consultants & Advisors The Present Publication is the 47th Edition | 2026, amended up to 5th December 2025. This book is edited/ authored by Taxmann’s Editorial Board, with the following noteworthy features: • [Two-volume Law & Practice Architecture] Statutory and regulatory consolidation in Volume 1, complemented by Ready Reckoner, case law digest, and RBI circulars/clarifications in Volume 2 • [Updated Legal Position] Incorporates amendments and regulatory developments up to the stated cut-off date • [Reporting & Operational Utility] Includes reporting frameworks, prescribed returns and practical annexures for execution-level compliance • [FDI/ODI, LRS & Capital Account Coverage] Practical guidance across investment, remittance and capital/current account transaction rules • [Compounding & Enforcement-ready] Covers procedural and documentary requirements relevant to contraventions, compounding and enforcement • [Case Law Digest] Section-wise digests facilitating quick access to judicial interpretation and enforcement trends • [RBI Circulars & Clarifications] Consolidated repository supporting both current and legacy reference • [ECM Reference] Appendix support through Exchange Control Manual extracts and procedural context for legacy matters
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