FEMA

Types of Bank Account Which a Foreigner can Maintain In India

Fema / RBI - Following are the types of Bank account which a foreigner can maintain in India: ♦ Non – Resident External Rupee Account (NRE). ♦ Non- Resident Ordinarily Account (NRO). ♦ Foreign Currency (Non – Resident) Account Bank (FCNR (B)). ♦ Non – Resident (Non Repatriable) Rupee Deposit Accounts (NRNR Accounts). ♦ Special Non- Res...

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Setting up foreign Company In India !!!- A complete Guide

Fema / RBI - INCORPORATION OF COMPANY BY FOREIGN NATIONALS? Incorporation of Company by Foreign Nationals/Non Resident Indian/Overseas Citizen Of India (OCI) is a cumbersome process and subject to Regulatory approvals. The laws which here are of concern are: 1. Companies Act, 2013 2. Foreign Exchange Management Act, 1999. FEMA PERSPECTIVE Starting poi...

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Can A Foreign National Start A Business In India Without Being A Resident?

Fema / RBI - A Foreign National can start a business in India without being a Resident and one can setup up a new business in India in any of the following ways: A. Limited Company (Private Limited/Public Limited Company) B. Limited Liability Partnership (LLP) C. Branch Office or Liaison/Representative Office, Project Office A. LIMITED COMPANY A non-r...

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Analysis of Compounding Orders under FEMA

Fema / RBI - ANALYSIS OF COMPOUNDING ORDERS ISSUED BY AUTHORITY YEAR 2020  1) Transfer or Issue of Security by a Person Resident Outside India (Inbound Investment) (FEMA 20/2000-RB), Taking on record transfer of shares from resident to non-resident. Applicant M/s W. Hunger Hydraulics India Private Limited Compounding Application Number C.A. No. 126/2...

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Issue of rights shares: Acquisition after renunciation of rights by PROI shall be subject to pricing guidelines

Fema / RBI - Foreign investments into India to acquire equity instruments of an Indian company are primarily regulated in terms of the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 (NDI Rules). ‘Equity Instruments’ means equity shares, convertible debentures, preference shares and share warrants issued by an Indian company...

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ROC & RBI Compliance list for Branch Office of foreign companies

Fema / RBI - MCA/ROC COMPLIANCE 1. Financial Year :- We need to determine F.Y. of the BO. This can be same as that is followed by the Company in its country of incorporation 2. Prepare Financial Statements and file form with MCA :- Within six months of closure of Financial Year. 3. Annual Return with MCA :- Within […]...

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RBI extends FLA 2020 due date to 31st July 2020

Fema / RBI - Submission of annual return on FLA through the web-based FLAIR portal for financial year 2019-20 has been started. Entities which are filing FLA return for the first time/ with revised UIN (Unique identification number) are required to register themselves first for generating login credentials and they can file FLA return. However, the en...

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Relax FEMA compliance due to COVID-19 pandemic: ICSI

Fema / RBI - ICSI made a representation to RBI GOvernor requesting Relaxation from compliance with provisions of Foreign Exchange Management Act, 1999 (FEMA) due to the COVID-19 pandemic. Text of the Same is as follows:- Institute of Company Secretaries of India ICSI:PFP: 2020 April 16, 2020 Shri Shaktikanta Das Governor Reserve Bank of India Central ...

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Investments by NRIs as FDI and in stock changes

Fema / RBI - Non-Resident Indians (NRIs) can invest in India as per the following regulation of Foreign Exchange Management (Transfer or issue of Security by a person resident outside India) Regulations, 2000 dated May 3, 2000 as amended from time to time: i. As per Regulations 5(1), NRIs may invest in shares/Compulsorily Convertible Preference Shares...

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Draft ‘Fugitive Economic Offenders Bill, 2017’ -Govt invite comments

Fema / RBI - It is widely felt that the spectre of high-value economic offenders absconding from India to defy the legal process seriously undermines the rule of law in India. It is, therefore, felt necessary to provide an effective, expeditious and constitutionally permissible deterrent to ensure that such actions are curbed....

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FERA Offence Liability depends on Role in Company Affairs & Not on Mere Designation or Status: SC

Shailendra Swarup Vs The Deputy Director (Supreme Court of India) - Shailendra Swarup Vs Deputy Director (Supreme Court of India) Section 68 of FERA, 1973 deals with Offences by companies. Section 68(1) provides that every person who, at the time of the contravention was committed, was in charge of, and was responsible to, the company for the conduct of business of ...

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HC: No evidentiary value of statement which was retracted later

Manak Kala Vs Union of India & Anr. (Delhi High Court) - Assessee could not be held guilty for violation of provisions of Section 9(1)(b) of FERA, on the sole basis of the statement of Sh. Ashish Jain, which was retracted later on as none of the orders of the authorities, namely, the Adjudicating Authority, the Appellate Authority or the Tribunal refer to...

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SC held provisions of Section 45(1) of PMLA provision Imposing Twin Condition for granting Bail as unconstitutional

Nikesh Tarachand Shah Vs. Union Of India & Anr. (Supreme Court of India) - SC held that Section 45(1) of the Prevention of Money Laundering Act, 2002, insofar as it imposes two further conditions for release on bail, to be unconstitutional as it violates Articles 14 and 21 of the Constitution of India. ...

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PML Act, 2002 Provisions cannot be invoked Retrospectively

M/s Obulapuram Mining Company Pvt Ltd Vs Joint Director (Karnataka High Court) - By consent of the learned advocates appearing for the parties, all these writ petitions are taken up for hearing together, as similar questions of law are involved in these writ petitions, in order to avoid a conflicting judicial opinion. We are also informed that facts are, almost, identical....

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Members cannot be appointed part-time to Fema Tribunal

Union Of India And Others Vs S. Srinivasan (Supreme Court of India) - Rule 2 (1) (b) provides the qualification to be a Member. Needless to say, the same is in total accord with the Act. The first proviso to Rule 5 introduces part time Member. We have held that the said proviso, as far as it introduces the concept of part time Member, is contrary to the provision cont...

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No approval to open offices in India to foreign law firms/companies or foreign lawyers : RBI

Notification No. RBI/2020-21/69 A.P. (DIR Series) Circular No. 07 - (23/11/2020) - AD Category – I banks are directed by RBI to not to grant any approval to foreign law firms/companies or foreign lawyers to open any branch office, project office, liaison office or other place of business in India under FEMA for the purpose of practicing legal profession in India....

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Banks to Publish summary of FEMA Compounding Orders on their website instead of Orders

RBI/2020-21/67 A.P. (DIR Series) Circular No. 06 - (17/11/2020) - On a review and in partial modification of earlier instructions it has been decided that in respect of the Compounding Orders passed on or after March 01, 2020 a summary information, instead of the Compounding Orders, shall be published on the Bank’s website in the following format:...

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RBI discontinues 17 types of FEMA Returns/Reports

RBI decided to discontinue the 17 returns/reports as listed under under Foreign Exchange Management Act, 1999 which includes Report on Category-wise transaction where the amount exceeds USD 5000 per transaction...

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Foreign Exchange Management (Margin for Derivative Contracts) Regulations, 2020

Notification No. FEMA. 399/RB-2020. - (23/10/2020) - i) These regulations may be called the Foreign Exchange Management (Margin for Derivative Contracts) Regulations, 2020. ii) They shall come into force from the date of their publication in the Gazette of India....

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EDPMS Module for Caution/De-caution Listing of Exporters – Review

RBI/2020-2021/50 A.P. (DIR Series) Circular No.03 - (09/10/2020) - Under the revised procedure, an exporter would be caution-listed by the Reserve Bank based on the recommendations of the AD bank concerned, depending upon the exporters track record with the AD bank and investigative agencies....

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Recent Posts in "FEMA"

No approval to open offices in India to foreign law firms/companies or foreign lawyers : RBI

Notification No. RBI/2020-21/69 A.P. (DIR Series) Circular No. 07 (23/11/2020)

AD Category – I banks are directed by RBI to not to grant any approval to foreign law firms/companies or foreign lawyers to open any branch office, project office, liaison office or other place of business in India under FEMA for the purpose of practicing legal profession in India....

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Banks to Publish summary of FEMA Compounding Orders on their website instead of Orders

RBI/2020-21/67 A.P. (DIR Series) Circular No. 06 (17/11/2020)

On a review and in partial modification of earlier instructions it has been decided that in respect of the Compounding Orders passed on or after March 01, 2020 a summary information, instead of the Compounding Orders, shall be published on the Bank’s website in the following format:...

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RBI discontinues 17 types of FEMA Returns/Reports

RBI decided to discontinue the 17 returns/reports as listed under under Foreign Exchange Management Act, 1999 which includes Report on Category-wise transaction where the amount exceeds USD 5000 per transaction...

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Types of Bank Account Which a Foreigner can Maintain In India

Following are the types of Bank account which a foreigner can maintain in India: ♦ Non – Resident External Rupee Account (NRE). ♦ Non- Resident Ordinarily Account (NRO). ♦ Foreign Currency (Non – Resident) Account Bank (FCNR (B)). ♦ Non – Resident (Non Repatriable) Rupee Deposit Accounts (NRNR Accounts). ♦ Special Non- Res...

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Posted Under: Fema / RBI |

Setting up foreign Company In India !!!- A complete Guide

INCORPORATION OF COMPANY BY FOREIGN NATIONALS? Incorporation of Company by Foreign Nationals/Non Resident Indian/Overseas Citizen Of India (OCI) is a cumbersome process and subject to Regulatory approvals. The laws which here are of concern are: 1. Companies Act, 2013 2. Foreign Exchange Management Act, 1999. FEMA PERSPECTIVE Starting poi...

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Posted Under: Fema / RBI |

Foreign Exchange Management (Margin for Derivative Contracts) Regulations, 2020

Notification No. FEMA. 399/RB-2020. (23/10/2020)

i) These regulations may be called the Foreign Exchange Management (Margin for Derivative Contracts) Regulations, 2020. ii) They shall come into force from the date of their publication in the Gazette of India....

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Can A Foreign National Start A Business In India Without Being A Resident?

A Foreign National can start a business in India without being a Resident and one can setup up a new business in India in any of the following ways: A. Limited Company (Private Limited/Public Limited Company) B. Limited Liability Partnership (LLP) C. Branch Office or Liaison/Representative Office, Project Office A. LIMITED COMPANY A non-r...

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Posted Under: Fema / RBI |

Analysis of Compounding Orders under FEMA

ANALYSIS OF COMPOUNDING ORDERS ISSUED BY AUTHORITY YEAR 2020  1) Transfer or Issue of Security by a Person Resident Outside India (Inbound Investment) (FEMA 20/2000-RB), Taking on record transfer of shares from resident to non-resident. Applicant M/s W. Hunger Hydraulics India Private Limited Compounding Application Number C.A. No. 126/2...

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Posted Under: Fema / RBI |

Issue of rights shares: Acquisition after renunciation of rights by PROI shall be subject to pricing guidelines

Foreign investments into India to acquire equity instruments of an Indian company are primarily regulated in terms of the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 (NDI Rules). ‘Equity Instruments’ means equity shares, convertible debentures, preference shares and share warrants issued by an Indian company...

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Posted Under: Fema / RBI |

Know Person Resident Outside India & NRI under FEMA

Know Person Resident Outside India (PROI) and Non-Resident Indian (NRI) under FEMA Pursuant to the amendments to Foreign Exchange Management Act, 1999 (‘FEMA’) through Finance Act, 2015, recently, the Ministry of Finance notified the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 (“the Nondebt Instruments Rules”) v...

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Posted Under: Fema / RBI |

Classification of Debt & Non-Debt Instruments under FEMA

The Ministry of Finance, Government of India has now classified instruments issued under Foreign Exchange Management Act, 1999 (FEMA) as debt and non-debt instruments and has notified the rules/ regulations in this regard. The Finance Act of 2015 had proposed certain amendments to the Foreign Exchange Management Act, 1999. The Central Gov...

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Posted Under: Fema / RBI |

EDPMS Module for Caution/De-caution Listing of Exporters – Review

RBI/2020-2021/50 A.P. (DIR Series) Circular No.03 (09/10/2020)

Under the revised procedure, an exporter would be caution-listed by the Reserve Bank based on the recommendations of the AD bank concerned, depending upon the exporters track record with the AD bank and investigative agencies....

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Overseas Direct Investments-Ready Reckoner of Regulation-Quick Insight

Introduction: Overseas Direct Investments (ODI) in the Indian Context means, any capital outflows / investments made by Indian residents in a foreign country but does not include portfolio investment. As more companies involve themselves with foreign investments, the importance of the Foreign Exchange Management Act (FEMA) regulations an...

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Posted Under: Fema / RBI |

FDI under NDI Rules i.e. Foreign Exchange Management (Non-debt Instruments) Rules, 2019

For a country where capital is not readily available, Foreign Direct Investment (FDI) has been an important source of funds for companies. Under FDI, overseas money, either by an individual or entity, is invested in an Indian company FDI in India is regulated by the Foreign Exchange Management Act, 1999 (FEMA) and the master circular/ [&h...

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Posted Under: Fema / RBI |

‘FDI’ reporting timelines on FIRMS Portal

Every company having Foreign Direct Investment (FDI), is required to report Reserve Bank of India (RBI). Herein, we are not describing and defining FDI and the same can be find in another article. The RBI, in the First Bi-monthly Monetary Policy Review dated April 5, 2018 announced that, with the objective of integrating the extant [&hell...

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Posted Under: Fema / RBI |

Liberalised Remittance Scheme & section 206C TCS provisions

In this article, an attempt is made as to how to comply with provisions related to TCS of section 206C1G(a) of Income Tax Act 1961 in respect of remittance under LRS....

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Posted Under: Fema / RBI |

Compounding of Contraventions/offences under FEMA, 1999

Replacing Foreign Exchange Regulation Act, 1974 (FERA) with Foreign Exchange Management Act, 1999 (FEMA) was a welcome move giving abundant opportunity and confidence to Indian Business, to go global fearlessly, by liberalizing the laws and taking out the draconian portion of law with relaxing provisions. It took more than 50 years to rea...

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Posted Under: Fema / RBI |

Central Government now empowered to specify classes of permissible capital account transactions in respect of Non- Debt Instruments

Amendment through the Finance Act of 2015 The Finance Act of 2015 had proposed certain amendments to the Foreign Exchange Management Act, 1999 (“FEMA”). The Central Government (CG), vide sections 138 to 144 of Finance Act 2015, brought changes to FEMA. The said changes were not notified for long time. However, after a long delay, [&he...

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Posted Under: Fema / RBI |

SOP for Filing of FCGPR by a professional

Standard Operating Procedure (SOP) for Filing of FCGPR by a professional FCGPR Stands for Foreign Contribution Gross Provisional Return. It is the form issued by RBI under Foreign Exchange Management Act, 1999 and it has to be filed for issue of capital instruments by an Indian Company to a preson resident outside India. When the [&hellip...

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Posted Under: Fema / RBI |

ROC & RBI Compliance list for Branch Office of foreign companies

MCA/ROC COMPLIANCE 1. Financial Year :- We need to determine F.Y. of the BO. This can be same as that is followed by the Company in its country of incorporation 2. Prepare Financial Statements and file form with MCA :- Within six months of closure of Financial Year. 3. Annual Return with MCA :- Within […]...

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Posted Under: Fema / RBI |

Indian Businesses with ODI await clarifications – Are regulators listening?

Indian Businesses with Overseas Direct Investment (ODI) await clarifications – Are the regulators listening? Indian entrepreneurs found the outlet to tap into the foreign markets and mark their presence in foreign lands, thanks to liberalization brought in by Foreign Exchange Management Act 1999 (FEMA), allowing much-needed relaxation. ...

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Posted Under: Fema / RBI |

Discover four factors that influence the value of the US dollar

The US dollar is the most popular currency worldwide. Its rate is affected by several key factors. Here is an overview of these correlations. US Dollar Rate and the Four Factors That Affect It No other currency beats the US Dollar. It is used for most international transactions. Travelers and traders exchange other currencies to […...

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Posted Under: Fema / RBI |

Valuation under Companies, Income Tax & FEMA Act

Valuation under different Acts i.e. the Companies Act, 2013, Income Tax Act, 1961 and Foreign Exchange Management Act, 1999 Till the introduction of the Companies Act, 2013 (Act 2013), the valuation of shares, assets, net worth of companies etc. was conducted by Chartered Accountants or as prescribed by other laws such as the Foreign Exch...

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Posted Under: Fema / RBI |

Guide – Setting Up Liaison Office In India

Foreign investors or Foreign companies can open a liaison office in India for promoting and facilitating the parent company business activities and can act as best communication channel between the foreign parent company and Indian company....

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Posted Under: Fema / RBI |

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 [...

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Posted Under: Fema / RBI |

New Company Vs Branch Office by Foreign Company

Foreign company can commence business in India either by : 1) Opening a new Company in India and 2) Opening a Branch office in India. The procedural & documentation requirement along with our recommendation summarized below OPENING NEW COMPANY IN INDIA:–  To start business in India a New Private Limited Company can be formed in...

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Posted Under: Fema / RBI |

Compounding of Offence under FEMA, 1999

1. Relevant Section- Section 15 of the FEMA 1999 2. Maximum time of application-Within 180 days from the date of contravention under section 13 of FEMA 1999 3. Adjudicating Authority-RBI 4. Section 13 of the FEMA- General penalties under FEMA- if any person contravenes any provisions of FEMA, Rules, Regulations, Notifications, Direction o...

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Posted Under: Fema / RBI |

FCGPR under FEMA/RBI

1. Relevant Provision  Schedule 1 to Foreign Exchange Management (Transfer or issue of security by a person resident outside India) Regulations. 2. When these provisions attract? In case if investee company receiving FDI for issue of shares 3. Timelines Within 180 days of receipt of foreign investment and requires filling of FCGPR with R...

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Posted Under: Fema / RBI |

Students going abroad : FEMA aspect

Over the past five years India has become not only the world’s second-largest sending market – after only China – but also one of the fastest-growing sources of outbound students. Now, there are many provisions of FEMA which is applicable to students going abroad such as their Residential status, Remittance facilities, Educational l...

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Posted Under: Fema / RBI |

What is residential status under Foreign Exchange Management Act, 1999

Determining the residential status is the starting point to understand the: – The extent to which a person is regulated for cross border transactions; –The extent of the Income-tax liability. Two laws were residential status is most relevant are Income-tax Act, 1961 (ITA) and Foreign Exchange and Management Act, 1999 (FEMA). We often ...

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Posted Under: Fema / RBI |

Foreign Exchange Management (Export and Import of Currency) (Amendment) Regulations, 2020

F. No. FEMA 6 (R)/ (2)/2020-RB (11/08/2020)

Reserve Bank’s power to permit export or import of currency: Notwithstanding anything contained in these regulations, the Reserve Bank may, on an application made to it and on being satisfied that it is necessary to do so, allow any person to take or send out of India to any country or bring into India from any country currency notes of...

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Foreign Collaboration- General Permission Route

FCGPR is required to be filed with the RBI for issue of shares through Bonus/Right issue by an Indian company to a person resident outside India/body corporate incorporated outside India. Website: https://firms.rbi.org.in/firms/ Due date for filling: Within 30 days from the date of issue of shares TYPE OF REGISTRATION: Entity User Registr...

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Posted Under: Fema / RBI |

FERA Offence Liability depends on Role in Company Affairs & Not on Mere Designation or Status: SC

Shailendra Swarup Vs The Deputy Director (Supreme Court of India)

Shailendra Swarup Vs Deputy Director (Supreme Court of India) Section 68 of FERA, 1973 deals with Offences by companies. Section 68(1) provides that every person who, at the time of the contravention was committed, was in charge of, and was responsible to, the company for the conduct of business of the company as well as […]...

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Issue of Convertible Notes by an Indian Start-up Company

Start-ups eco system is always dynamic and volatile. They are always in search of the innovative funding and that also in a cost effective manner. In order to promote start-ups, government always comes out with innovative initiatives either they give exemption from regulatory requirements or provide cost effective funding. One of the step...

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Posted Under: Fema / RBI |

Raising of Funds Through Compulsorily Convertible Debentures

Broadly any company issuing Compulsorily Convertible Debentures (CCD) will be required to comply following laws in India, which are as under: 1. Companies Act 2013 2. Foreign Exchange Management Act ( FEMA) 3. Income Tax Act, 1961. The overview of some of the provision of above laws to be taken into consideration before choosing CCDs as i...

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Posted Under: Fema / RBI |

Comparison between Liaison Office, Project Office & Branch Office

Liaison Office Companies incorporated outside India can open ‘Liaison Office’ (also known as representative office) in India. Liaison office is a place of business to act as a channel of communication between the principal place of business or Head Office.  The Liaison office can undertake only liaison activities, it is not allow...

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Posted Under: Fema / RBI |

Determining residential status as per FEMA Law and “major accounts” that can be opened in India by Non-resident Indians

Determining residential status as per FEMA Law and the ‘major accounts’ that can be opened in India by Non-resident Indians When a resident Indian gains non-resident Indian status, it is mandatory by the law to change the residential status in the bank accounts. FEMA rules for NRIs do not allow holding a savings bank account...

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Posted Under: Fema / RBI |

Freely Convertible Currency

‘FREELY CONVERTIBLE CURRENCY’ is not defined in Foreign Exchange Management Act, 1999 [‘FEMA Act’], however it seems that it has been borrowed in Indian Act from Articles of Agreement of the International Monetary Fund [‘Fund’] of United Nation and bye laws thereof; ARTICLE XXX (F) OF ARTICLES OF AGREEMENT OF THE INT...

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Posted Under: Fema / RBI |

Hurry up!!! Last date to file FLA RETURN is 31ST July, 2020!!

FLA is Return on Foreign Liabilities and Assets which is governed by FEMA, 1999. The RBI has started a web-based system online reporting portal – Foreign Liabilities and Assets Information Reporting (FLAIR) for submission of foreign liabilities and assets (FLA) return. Applicability of FLA return Following entities are required to file ...

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Posted Under: Fema / RBI |

Prior RBI approval on change in management/control of NBFC

Requirement for obtaining prior approval of RBI in cases of acquisition/ transfer of control of Non-Banking Financial Companies (NBFCs) As per the RBI Notification DNBS (PD) CC.No.376/03.10.001/2013-14 and Notification No. DNBS(PD) 275/GM(AM)-2014 dated May 26, 2014 Prior approval of RBI is to be taken when there is change in management/ ...

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Posted Under: Fema / RBI |

Investment into non-debt instruments by person resident outside india

♦ Introduction to foreign investment in India and ITS regulations India has sought to liberalise its economy and has continuously opened up most of its industrial and business sectors to foreign investment since 1991 Foreign investment in India is principally governed by the Foreign Exchange Management Act 1999 (FEMA) and the regulation...

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Posted Under: Fema / RBI |

Key considerations for NRI investments in India & Indian Taxation

India continues to be an attractive destination for the investors, including non-resident Indians (NRIs). Investments made by NRIs are generally treated as ‘foreign investment’ from the Indian foreign exchange regulations perspective. These regulations have been liberalized over the years and have facilitated remittances from overseas...

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Posted Under: Fema / RBI |

Foreign Liabilities & Assets (FLA Return) Under FEMA 1999

Annual return on Foreign Liabilities and Assets has been notified under FEMA 1999 and it is required to be submitted by all the India resident companies which have received FDI and/ or made overseas investment in any of the previous year(s), including current year by July 15 every year. Non-filing of the return before due date will be tre...

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Posted Under: Fema / RBI |

Overseas Direct Investment – Brief Analysis

Meaning Overseas Direct investment means investments outside India, either under the Automatic Route or the Approval Route: -by way of contribution to the capital or -subscription to the Memorandum of a foreign entity or -by way of purchase of existing shares of a foreign entity either by market purchase or private placement or through st...

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Posted Under: Fema / RBI |

Opening, Holding & Maintaining a Foreign Currency Account outside India

Introduction: Globalisation refers to the integration of markets in the global economy, leading to the increased interconnectedness of national economies.  Markets where globalisation is particularly significant include financial markets, such as capital markets, money and credit markets, and insurance markets, commodity market...

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Posted Under: Fema / RBI |

Legal Framework of Investment in India

The following are the various legal entities vide which business can be started in India 1. INDIAN COMPANY The following are the models to set up business as an Indian company- Joint Venture Wholly Owned Subsidiary N.B. :- The JV/Wholly Owned Subsidiary is set up as (i) Private Limited or (ii) Public Limited Company, as […]...

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Posted Under: Fema / RBI |

Foreign Currency & Indian Currency Bank Accounts-Legal Substance

As Indian economy is adopting its pace with globalisation and digitisation, different spices of accounts suited for the intended economical/personal purpose has to be devised. Hence to cater and nourish these thought processes, Foreign Exchange Management (Deposit Regulations), 2016 has brought in various provisions and guidelines with re...

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Posted Under: Fema / RBI |

Subsidiary Company Vs Liaison office

India has been growing at a rapid pace to transform into one of the largest and fastest growing market, with having access to some of the best human resources in the world. There are many options through which one can start business in India. Setting up Subsidiary or Liaison Office in India can be one […]...

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Posted Under: Fema / RBI |

RBI extends FLA 2020 due date to 31st July 2020

Submission of annual return on FLA through the web-based FLAIR portal for financial year 2019-20 has been started. Entities which are filing FLA return for the first time/ with revised UIN (Unique identification number) are required to register themselves first for generating login credentials and they can file FLA return. However, the en...

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Posted Under: Fema / RBI |

Acquisition & Transfer of Immovable Property In India : Fema & International Taxation Perspective

Acquisition And Transfer of Immovable Property In India: FEMA and International Taxation Perspective ACQUISITION AND TRANSFER OF IMMOVABLE PROPERTY – A NRI or an OCI may acquire immovable property in India other than an agricultural land or farm house or plantation property. POI as a category is no longer eligible to acquire immovab...

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Posted Under: Fema / RBI |

Liberalised Remittance Scheme: Detailed Analysis With Tax Perspective

LIBERALISED REMITTANCE SCHEME (LRS) FEMA is a policy law which is drafted loosely and its principles keep on changing as individuals keep on changing and there are multiple notifications and rules which can apply to particular transaction. However we advise in such manner in order to avoid unnecessary litigaton. BRIEF INTRODUCTION: LRS is...

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Posted Under: Fema / RBI |

FLA Return: Annual Return on Foreign Liabilities & Assets

In this editorial author shall discuss about FLA. Whenever we talk about FLA many questions came into mind like: Which Companies are required to file FLA? What is due date for FLA?   It’s an Annual Return on Foreign Liabilities and Assets (FLA) is required to be filed by Indian Company and LLP. I. Who is […]...

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Posted Under: Fema / RBI |

Allotment of shares to Foreign Investor under FDI Regime

Article contains Checklist For Allotment of Shares With Respect To Companies Act,2013 and Checklist for Post Allotment Compliance With Respect To Reserve Bank Of India Act, 1934. This is a checklist of documents and procedure required to allot foreign shares to an Indian company after receiving FDI in India. Checklist For Allotment of Sha...

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Posted Under: Fema / RBI |

Procedure of establishment of Branch/Liaison Office in India

Registration of Branch of a Foreign Company A. Overview of Branch of a Foreign Company: Any Foreign Body Corporate (incorporated outside India) /Firm/AOI (Association of Individuals) who wants to expand their business in India and wants to reach the Indian Customers, then it may be done by establishing a Liaison Office (LO)/ Branch Office...

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Posted Under: Fema / RBI |

How can a Non Resident Start Business in India & Legal Compliances?

Why is India a preferred destination for foreign investment? India is currently one of the fastest economy in the world. Foreign investors have been bullish on financial services, IT, pharma and FMCG. Private banks are preferred over public banks due to superior margin, asset quality resilience and higher capitalization. With manufacturin...

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Posted Under: Fema / RBI |

Foreign Exchange Management (Mode of Payment and Reporting of Non-Debt Instruments) (Amendment) Regulations, 2020 

Notification No. FEMA. 395(1)/2020-RB (15/06/2020)

(i) These Regulations may be called the Foreign Exchange Management (Mode of Payment and Reporting of Non-Debt Instruments) (Amendment) Regulations, 2020. (ii) They shall come into force from the date of their publication in the Official Gazette....

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Brief about NRE Account and NRO Account

Article explains about Non- Resident (External) Rupee Account Scheme – NRE Account and Non-Resident Ordinary Rupee Account Scheme – NRO Account. Particulars Non- Resident (External) Rupee Account Scheme – NRE Account (Schedule – 1) Non-Resident Ordinary Rupee Account Scheme – NRO Account (Schedule – 3) Eligibility A. Non-resid...

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Posted Under: Fema / RBI |

Types of Foreign Currency Account opened by Resident Individuals

In India, a Resident Individual can maintain 3 types of Foreign Currency (FC) Accounts for putting through the bona fide transactions.. -Exchange Earners Foreign Currency (EEFC) Account -Resident Foreign Currency (Domestic) [RFC(D)] Account -Resident Foreign Currency (RFC) Account Q 1. Define Foreign Currency Account (FC Account)? Ans: Th...

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Posted Under: Fema / RBI |

Raising of Funds through External Commercial Borrowings (ECB)

What is ECB: External Commercial Borrowings are commercial loans raised by eligible resident entities from recognised non-resident. The ECB has been classified in category Foreign Denomination ECB: Loan raised in any freely convertible Foreign Currency INR Denomination ECB: Loan raised in INR Method of raising ECB: ECB can be accessed und...

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Posted Under: Fema / RBI |

Annual Return on Foreign Liabilities & Assets (FLA Return)

FLA Return is described as Foreign Liabilities And Assets Return which is required to be submitted by all the Indian Companies which have received Foreign Direct Investment (FDI) or made Overseas Investment abroad in the previous year(s) including the current year i.e. who holds foreign Assets or Liabilities in their Balance Sheets....

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Posted Under: Fema / RBI |

Types of Account Maintained By Non-Resident In India (Part-2)

In the continuance of the Types of Account Maintained By Non-Resident (Part-1) FOREIGN CURRENCY (NON-RESIDENT) ACCOUNT (BANKS) SCHEME [FCNR (B) A/C]: Q 1. Who can open FCNR (B) A/C? Ans: 1. Any Non-Resident Indian (NRI) & Person of Indian Origin (PIO) without any approval of the RBI with Authorised Bank. 2. Individuals/Entities of Pa...

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Posted Under: Fema / RBI |

Types of Account Maintained By Non-Resident (Part-1)

If any person who is Non-Resident wants to do bona fide transactions in India, then they have to open some special kind of accounts according to the procedure prescribed by Reserve Bank of India (RBI). Types of account which can be opened by a Non-Resident in India:- 1. Non-Resident (External) Rupee Account Scheme [NRE A/c] […]...

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Posted Under: Fema / RBI |

RBI Master Direction for Issue and Pricing of shares by Private Sector Bank

Relevant Provisions: Section 35A of the Banking Regulations Act, 1934, where the RBI has the power to issue any direction. Applicability: The provisions of these Directions shall apply to all the Private Banks licensed by the RBI to operate in India. Private Sector Banks: Means Banks licensed to operate in India under the Banking Regulati...

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Posted Under: Fema / RBI |

Non Resident Investing in a Indian Company – FCGPR Compliance

Non Resident Investing in a Indian Company-Compliance under FCGPR – Whether he can use his NRO Account? Present Case: A private limited is incorporated in India. Mr. X who is in US and US citizen has an NRO account in India. He wants to transfer his money from his NRO account to the company for […]...

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Posted Under: Fema / RBI |

Residential Status-FEMA Interpretation

DEFINITIONS RESIDENT & NON- RESIDENT Section 2 (v): Person Resident in India Means— (i)             a person residing in India for more than one hundred and eighty-two days during the course of the preceding financial year but does not include— (A) a person who has gone out of India or who […]...

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Posted Under: Fema / RBI |

Branch Office Set Up Process In Hungary

SETTING UP A BRANCH OFFICE IN HUNGARY  Hungary is a beautiful Country located in Central Europe. Budapest being it’s capital city, it offers good opportunities to foreign companies to set up their business in Hungary. The major advantage of doing business in Hungary in addition to its prime location, is that its Government has set [&he...

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Posted Under: Fema / RBI |

Overseas Direct Investment- Basic concepts

In this article, we have tried to focus on the basic concepts that will enlighten about achieving the technical know- how and the provisions before making such Investment....

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Posted Under: Fema / RBI |

Study on Valuation & Valuer under Companies Act, SEBI & FEMA

In order to have a uniformity in the recognition of organisation of valuers and the process of valuation of various assets of the organisation, the MCA has introduced for the valuation of any property, stocks, shares, debentures, securities or goodwill or any other assets or net worth of a company or its liabilities....

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Posted Under: Fema / RBI |

Compounding of Contraventions Under FEMA

INTRODUCTION: There are various laws in India and amended time to time for the benefits of stakeholders. As a result most of the people by mistake contravene various provisions of law. So Government has provided compounding of offence under FEMA to make default good. A person suo-moto accepts its contravention and apply for compounding of...

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Posted Under: Fema / RBI |

Analysis of Foreign Exchange Management (Non debt Instruments) (Second Amendment) Rules 2020

Introduction The Ministry of Finance (Department of Economic Affairs) has notified the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019 dated 17 October 2019 (Principal Rules) in supersession of erstwhile Foreign Exchange Management (Transfer of Issue of Security by a Person Resident outside India) Regulations, 2017 and the ...

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Posted Under: Fema / RBI |

Evolution of Foreign Exchange Regulation in India

Scarcity of Foreign Exchange in India led to its control since the beginning of World War II. Exchange control was introduced in India under the Defence of India Rules on September 3, 1939 on a temporary basis. The statutory power for exchange control was provided by the Foreign Exchange Regulation Act (FERA) of 1947....

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Posted Under: Fema / RBI |

Establishment of Branch/ Liaison/Project Office in India by Foreign Entities

Establishment of Branch Office (BO)/ Liaison Office (LO)/ Project Office (PO) in India by Foreign Entities India has largest and fastest developing market in the world and has finest human resource in the world. India is also promoting foreign entity to setup his BO/LO/PO in India. ♦ Branch Office: Brach office can carry same activities...

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Posted Under: Fema / RBI |

FDI in Startup Companies & Issue of Convertible Notes

Article explains FDI IN STARTUP COMPANIES. It explains General Meaning of Start-up, Legal Meaning of Start-up, Types of Instruments Issued by Start-ups, Convertible Note which can be issued by a start-up. Article further explains conditions to comply for Issue Of Convertible Notes To Person Resident Outside India, Eligible Person For Maki...

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Posted Under: Fema / RBI |

FAQs on Overseas Direct Investment

Q 1. What is direct investment outside India? Ans: Direct investment outside India means investments, either under the Automatic Route or the Approval Route, by way of contribution to the capital or subscription to the Memorandum of a foreign entity or by way of purchase of existing shares of a foreign entity either by market […]...

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Posted Under: Fema / RBI |

Amendments in FDI policy and FEMA due to COVID-19

Foreign equity investments in an Indian company are bound by the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 (‘Rules’) and Foreign Direct Investment (‘FDI’) policy issued by the Ministry of Finance and Ministry of Commerce and Industry respectively (together referred as ‘Government’). As per the said Rules, ...

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Posted Under: Fema / RBI |

Foreign Exchange Management (Non-debt Instruments) (Second Amendment) Rules, 2020

Notification No. S.O. 1374(E) (27/04/2020)

Acquisition after renunciation of rights.- A person resident outside India who has acquired a right  from a person resident in India who has renounced it may acquire equity instruments (other than share warrants) against the said rights as per pricing guidelines specified under rule 21 of these rules...

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Relax FEMA compliance due to COVID-19 pandemic: ICSI

ICSI made a representation to RBI GOvernor requesting Relaxation from compliance with provisions of Foreign Exchange Management Act, 1999 (FEMA) due to the COVID-19 pandemic. Text of the Same is as follows:- Institute of Company Secretaries of India ICSI:PFP: 2020 April 16, 2020 Shri Shaktikanta Das Governor Reserve Bank of India Central ...

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Posted Under: Fema / RBI |

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 c...

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Posted Under: Fema / RBI |

Foreign Exchange Management (Non-debt Instruments) Amendment Rules, 2020

[F. No. 01/05/EM/2019-Part (1)] [S.O. 1278 (E)] (22/04/2020)

Provided that an entity of a country, which shares land border with India or the beneficial owner of an investment into India who is situated in or is a citizen of any such country, shall invest only with the Government approval:...

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Setting up Branch office/ post representative outside India

Indian dynamism, entrepreneurship and enthusiasm is seeking new horizons across the globe. Of course, anyone stepping into a foreign land must take care of the laws, rules and regulations of the host country. Each country is different and keeping abreast of the laws of different countries can indeed be a challenge. Reserve Bank of India [...

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Posted Under: Fema / RBI |

Brief Insight on Overseas Direct Investment (ODI)

Overseas Direct Investment (ODI) by Indian Parties/Resident Individuals Overview Overseas Direct Investment refers to the investments made in the Joint Ventures (JV) and Wholly Owned Subsidiaries (WOS) by way of: – Subscription to the Memorandum of a foreign entity; or – Purchase of existing shares of foreign entity either by ...

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Posted Under: Fema / RBI |

Foreign Currency – Transfer of Shares (FC-TRS)- Points to Remember

FCTRS (Foreign Currency- Transfer of Shares): 1. No fee for filing of form FC-TRS, if filed within 60 days from the date of receipt/date of payment of the amount of consideration otherwise the RBI/ AD Bank may impose the penalty for late filling by way of Late Submission fee (LSF). 2. Onus of filing of […]...

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Posted Under: Fema / RBI |

Valuation under Companies Act, Income Tax Act and FEMA

Article explains Legislative requirements of valuation of Securities and Financial Assets in India under the Companies Act, 2013, The Income tax Act, 1961 and Foreign Exchange Management Act, 1999 and Regulations made there under. The valuation profession has undergone a sea change in recent past especially after the introduction of conce...

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Posted Under: Fema / RBI |

Compounding under FEMA, 1999

Article on Compounding of Contraventions Under Foreign Exchange Management Act (FEMA), 1999 explains Power to compound by Reserve Bank,  Power of Enforcement Directorate to Compound Contraventions under FEMA, Delegation of Powers to Regional Offices, Authorisation to compound the contraventions by FED CO Cell, New Delhi, How to make Appl...

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Posted Under: Fema / RBI |

Transfer of funds from NRO A/c. to NRE A/c. or Remittance Abroad

If you are a Non-Resident Indian (NRI) or a Person of Indian Origin (PIO), you can open, hold and maintain (without permission from the Reserve Bank of India) following types of accounts with an authorised dealer in India i.e. a bank authorised to deal in foreign exchange: a) Non-Resident (Ordinary) Rupee Account – NRO Account […...

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Posted Under: Fema / RBI |

RBI reporting under Single Master Form (SMF)

The Reserve bank of India has announced the new reporting structure for FDI related transactions in which they have combined different reporting into a single combined form i.e. the Single Master Form (‘SMF’) which subsumed all the existing reporting in different forms such as ARF, FCGPR, FCTRS etc. Also, by implementation of this n...

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Posted Under: Fema / RBI |

Foreign Exchange Management (Debt) And (Non-Debt) Regulations, 2019

Foreign Exchange Management (Debt) And (Non-Debt) Regulations, 2019 Read With (Non-Debt) Amendment Regulations, 2019 A STEP TOWARDS STREAMLINING THE INVESTMENT PROCESS IN INDIA To bring in line the changes as proposed in the Finance Act, the Ministry of Finance vide its Notification (S.O. 3732(E)) dated October 17, 2019 notified the Forei...

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Posted Under: Fema / RBI |

Foreign Company in India and Registration

As India is developing country and that too one of the fastest developing country in world, it is normal that other countries wanted to invest in India. India is actually a hub doing business as the cost of production in India is low which ultimately increases the Demand curve of a product or service. With […]...

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Posted Under: Fema / RBI |

Purchase/Sale of Capital Instruments of Indian Company by PROI

Purchase/Sale of Capital Instruments by PROI (Person Resident Outside India) of an Indian company What are Capital Instruments? Capital Instruments’ are equity shares, debentures, preference shares and share warrants issued by an Indian company in regards to Purchase/Sale of Capital Instruments by PROI of an Indian company. Issue by an...

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Posted Under: Fema / RBI |

HC: No evidentiary value of statement which was retracted later

Manak Kala Vs Union of India & Anr. (Delhi High Court)

Assessee could not be held guilty for violation of provisions of Section 9(1)(b) of FERA, on the sole basis of the statement of Sh. Ashish Jain, which was retracted later on as none of the orders of the authorities, namely, the Adjudicating Authority, the Appellate Authority or the Tribunal refer to any cogent material to substantiate the...

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Foreign Asset Management Will Turn Towards India

The Indian regulators of the financial market have changed the landscape of investments, advisory and management fee structure of financial products. Well, I am speaking to that segment of the BFSI industry which is called Mutual Funds and AMC. The way the regulators have brought down the expense ratio and brought transparency in product ...

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Posted Under: Fema / RBI |

RBI-FLA Reporting Though Flair

What is an FLA Return As per Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2017, an Annual Return on Foreign Liabilities and Assets (FLA) is required to be filed by Indian company which has received FDI or made ODI abroad or an LLP which has received investment […]...

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Posted Under: Fema / RBI |

Foreign Exchange Management (Foreign Exchange Derivative Contracts) (First Amendment) Regulations, 2020

Notification No. FEMA.398/RB-2020 (18/02/2020)

i. These Regulations may be called the Foreign Exchange Management (Foreign Exchange Derivative Contracts) (First Amendment) Regulations, 2020. ii. These regulations shall come into force from the date of their publication in the Official Gazette....

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E-FRRO compliance for foreign nationals in India

Under Indian law, the legal rights and the restrictions imposed on foreign nationals depend on whether they are categorized as residents or non-residents. Entry into India generally requires a valid visa granted by an Indian Mission (that is, consulate of the Indian embassy) abroad. Furthermore, foreign nationals who enter India must regi...

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Posted Under: Fema / RBI |

Major bank accounts that can be opened in India by non-residents

What are the major accounts that can be opened in India by a non-resident? Can a Bangladeshi/ Pakistani national or an entity owned/ controlled from Bangladesh/ Pakistan have an account in India?...

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Posted Under: Fema / RBI |

Revised guidelines on Merchanting Trade Transaction by RBI | FEMA

Reverse Bank of India by circular dated January 23, 2020 has issued the revised guidelines of Merchanting Trade Transaction (MTT). The trade is called Merchanting Trade when, the supplier of goods will be resident in one foreign country, the buyer of goods will be resident in another foreign country and the merchant or the intermediary [&...

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Posted Under: Fema / RBI |

Branch Office of foreign company in India- Compliance and Benefits

Article explains What is a Branch Office, What are the benefits of opening the Branch Office, Why Branch Office is not used as a preferred mode by foreign entities for setting up in India, What are the compliances of the Branch Office and Can a Branch Office can be converted into wholly owned subsidiary company? […]...

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Posted Under: Fema / RBI |

RBI Compliances under FEMA Regulations

In this article, i have explained important event based FEMA Compliances under FDI Norms by the Indian entities. All the reporting under FEMA Act, 1999 except specifically stated otherwise, is required to be done through the Single Master Form (SMF) available on the FIRMS platform at https://firms.rbi.org.in. For the purpose of reporting ...

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Posted Under: Fema / RBI |

Foreign Companies- FDI, Name Rules, Notary, Apostillation & Consularisation

Foreign Companies- Few Important Aspects Including FDI, Rules on Names, Notary, Apostillation And Consularisation At the outset, the recent changes w.r.t. the running of business in India, it includes the start-ups are getting recognition, the MSMEs are getting their dues clear due to the stringent payment norms issued by Government of In...

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Posted Under: Fema / RBI |

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