Foreign Exchange Management Act, 1999 (FEMA) is the legislation that governs foreign currency transactions in and out of India. The main aim of FEMA is to facilitate cross-border trade, the balance of payments, promote the orderly development of fair trade, and ensure effective compliance with relevant laws.
Every Indian Resident company that has made a Foreign Direct Investment (FDI) in the preceding year, including the current year, must submit the Foreign Liabilities and Assets (FLA) Return. If no such investment is made, then the company is not under any obligation to submit the FLA. Such a return must be submitted every year.
Annual Performance Report is submitted by those Indian Party or Resident Individual who has made an Overseas Direct Investment (ODI). Annual Performance Report is provided in Form ODI Part II to the AD bank in respect of Joint Venture, Wholly Owned Subsidiaries (WOS) outside India on or before 31st December every year.
Borrowers need to report to the RBI regarding all ECB transactions via an AD Category-I Bank in the form of ‘ECB 2 Return’ every month.
An Indian organization enjoying the benefit of receiving investment from abroad for the issue of shares or other qualified securities under the FDI Scheme needs to report the subtleties of the amount of consideration to the concerned Regional Office of the Reserve Bank via its AD category I bank within 30 days from the date of issue of offers.
The Indian company that receives foreign investment and allots shares against such investment should file such allotment with the RBI. The company must provide details of allotment in the Form FC- GPR (Foreign Currency – Gross Provisional Return) within 30 days of allotment to the RBI.
This form must be filed by the shareholder resident outside India or resident Indian when they transfer the shares of the Indian company from a resident to non-resident Indian or vice versa. The form FC- TRS (Foreign Currency Transfer) is submitted along with the Form FC- GPR to the authorized dealer bank, who in turn submits to the RBI.
Any Indian resident individual or Indian party who is willing to invest in the overseas market needs to submit Form ODI. At the point when they get a share certificate or some other documentary proof of investment in the outside JV/WOS as a proof of investment and present the equivalent to the assigned AD within 30 days.
Resident Individuals are permitted to freely invest in movable assets outside India. Presently Indian residents can make overseas investments for an amount up to US$ 250,000 per Financial Year. Such investment can be made for acquiring shares, bonds, and even placement of foreign exchange deposits. It may be noted that investments are not permitted for speculative transactions such as trading in foreign currencies, horse racing, betting, etc.
Investments can also be made in Joint Ventures / Wholly Owned Companies. Remittance is also permissible for current account transactions such as the education or medical expenses of any family member or friend and for making legitimate gifts to friends or relatives.
Indian Companies / LLPs / Registered Partnerships are permitted to freely invest in equity & debt outside India up to the limit prescribed under Foreign Exchange Regulations.
Under the Foreign Exchange Management Act, 1999 [FEMA] NRI’s non-repatriable current income like rent, dividend, pension, interest on NRO deposits, etc. credited in the NRO account is now fully repatriable subject to payment/deduction of appropriate tax. Such facilities are also granted to NRIs who do not maintain an NRO account.
A Non-Resident Indian [NRI] as also a Person of Indian Origin [PIO] can also remit up to US$ 1 million per Financial Year out of balance held in the NRO account. Such balance in NRO accounts eligible for repatriation could have been sale proceeds of immovable property; assets acquired by way of Inheritance/legacy; an NRO deposit with a bank or a firm or a company; Provident Fund balance or superannuation benefits; the amount of claim or maturity proceeds of an insurance policy; sale proceeds of shares, securities; Balances held with Partnership or Proprietorship Firms, etc.
The remittance is allowed for any legitimate purpose or for the sheer reason of repatriation outside India.
Even after returning to India for permanent settlement, NRIs continue to enjoy many investment incentives under the Foreign Exchange Management Act,1999, and tax concessions under the Income-tax Act,1961.
FEMA treats returnee NRIs almost at par with NRIs as regards their foreign currency accounts in India and assets held abroad.
Under the Income Tax Act, 1961 also, "Not Ordinarily Resident", returnee NRIs continue to enjoy tax exemptions and tax concessions almost at par with NRIs for 2 to 3 years. They also enjoy the benefits of the Dual Tax Treaty, wherever applicable.
Price available on requestRequest A Quote