In this article, we’ll get to know how GroomTax is acing the FEMA Consultants area and who are the best FEMA Consultants in India in 2022 but before that let’s just develop an understanding of what exactly FEMA is. The governmental agency that consolidates and updates legislation governing foreign exchange in India is known by the full name FEMA, which stands for “Foreign Exchange Management Act.” “Enabling external trade and payments and supporting the orderly development and preservation of the foreign currency market in India” was the FEMA act’s principal goal. The Foreign Exchange Regulation Act (FERA) of 1973 was replaced by FEMA, which was passed by the Indian Parliament in its winter 1999 session. To manage international commerce and exchange operations, the RBI proposed FEMA in 1999. The formal directive stated that FEMA will “consolidate and revise the foreign exchange (forex) law with the purpose of facilitating external trade and payments and for fostering the orderly development and preservation of foreign exchange market in India.” The first of June 2000 marked the official implementation of the Foreign Exchange Management Act. The Prevention of Money Laundering Act (PMLA) of 2002 was made possible by the entrance of the currency market in India, which the RBI now governs. FEMA was primarily implemented in India in order to de-regulate and establish an open economy. Best FEMA Consultants in India are often the ones to adhere to all the guidelines.
Objectives of FEMA
* Facilitating international trade and payments was the primary reason FEMA was implemented in India. FEMA was also developed in order to support the orderly growth and upkeep of the Indian currency market.
* All foreign exchange transactions in India must follow the rules and processes outlined by FEMA. Current Account Transactions and Capital Account Transactions are the two categories into which these foreign exchange transactions have been divided.
* According to the FEMA Act, the balance of payment is a record of transactions involving commodities, services, and assets between citizens of several nations. Capital Account and Current Account make up the majority of its divisions.
* All financial transactions are included in the capital account, whereas commerce in goods is included in the current account. Current Account transactions are those that include money moving into and out of a country or countries over the course of a year as a result of trading or providing goods, services, and income.
* An economy’s health is shown by the current account. As was already established, the balance of payments consists of both current and capital accounts; the capital account, which represents the movement of capital in the economy due to capital receipts and expenditures, makes up the remaining portion of the balance of payments. The capital account recognises both domestic and foreign investment in domestic assets.
Services of FEMA
We offer our broad perspective in the following FEMA advice services that we provide since our FEMA consultants have carved out their own distinct niche in the field of FEMA Consultancy. Here are a few services of FEMA:-
– Consultations for foreign exchange-related transactions
– Help with common issues affecting the interpretation of FEMA regulation
– Services for inward investment advisory.
– Consulting services for international investments.
– Aid in litigation and advocacy before authorities
– Help open liaison, branch, and project offices both inside and outside of India.
– Services for an expert business licence, such as CDSCO License and IE Code, etc.
– Services for filing annual returns.
– Assistance and certification with business valuation
– Help with submitting specific forms, such as FCGPR, FCTRS, etc.
Applicability of FEMA Act
The Foreign Exchange Management Act (FEMA) is applicable to all of India as well as to organisations and offices abroad (which are owned or managed by an Indian Citizen). The Enforcement Directorate is the name of FEMA’s headquarters, which is located in New Delhi. FEMA is applicable to:
– Foreign exchange.
– Foreign security
– Exporting goods or services from India to a nation outside of India.
– Importation of commodities and/or services from countries other than India.
– Securities as outlined in the 1994 Public Debt Act.
– Any form of purchase, sale, or exchange (i.e. Transfer).
– Services in banking, finance, and insurance.
– Any foreign corporation when at least 60% of the ownership is held by an NRI (Non-Resident Indian).
– Any Indian national living inside or outside the country (NRI).
According to the FEMA Act, the current account transactions have been divided into three categories, namely:
– Transactions that FEMA forbids,
– The Central Government must approve the deal,
– The RBI must approve the transaction.
Prohibition on Drawal of Foreign Exchange
– Any payment received as a result of winning the lottery.
– Any payments made from winnings from racing, riding, etc.
– Any payments made to purchase lottery tickets, football pools, sweepstakes, magazines that are prohibited or prescribed, etc.
– Commissions on exports are paid in exchange for equity investments by Indian companies in joint ventures and foreign wholly owned subsidiaries.
Penalties Under FEMA
There are a few things that we should keep in mind in order to avoid any penalties under FEMA. Any person who violates the terms of FEMA or any rule, direction, regulation, order, or notification issued thereunder is subject to a fine of up to Rs. 2 lakh, which is equal to three times the amount of the violation. For each day that the violation persists, the offender will be subject to a further penalty of up to Rs. 5,000 in the case of a continuing violation.