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FEMA 2000 means Foreign exchange management Act 2000. Foreign exchange management act 2000
is very helpful law for development of foreign exchange market in India. It was passed in 1999 and
came into effect from June 1, 2000 to entire country. After this foreign exchange regulation act ( FERA
) 1973 was closed . FEMA was most suitable for India corporate sector instead of FERA because almost
all strict regulations of FERA were removed in FEMA .
Objectives of FEMA
1. Main objective of apply FEMA is to reduce the restriction on foreign exchange . Now , any offense in
foreign exchange will be civil offense not criminal offense .
2. This law's main objective is to increase the flow of foreign exchange in India. Now , under this law ,
you can bring foreign currency in India without any legal barrier .
According to section 3 of FEMA 2000 ," only authorized person under the govt. terms can deal in
foreign exchange in India . "
According to section 4 of FEMA 2000, " All persons which are provided authority only can hold or
purchase foreign exchange in India or outside India."
According to section 5 of FEMA 2000 ," There is no restriction regarding sale or deal foreign
exchange , if it is a current account transaction ."
The following transaction are deemed current account transactions under FEMA :-
a) Expenses in connection with foreign travel , education and medical care of parents , spouse and
children ( Any body now can send the foreign currency in India for above expenses under current
account )
Under section six ," RBI will fix the limit of foreign exchange transactions relating to capital account
after discussion with Indian govt. "
According to section 7 of FEMA 2000 , " It is the duty of exporter to declare the true and correct detail
of goods which , he have to sell the market outside India and must send complete report to RBI .
RBI can also make rules and regulations for realization of amount earned from foreign country.
• RBI can revoke the authorisation granted to any person at any time in public interest .
• If authorized person will be done contravention the rules of RBI , he will be liable to pay up to
Rs. 10000 penalty and Rs. 2000 for every day during which such contravention continue .
Section 13 to 15
If any body or person contravenes the rules and regulation of FEMA 2000 or RBI direction , he will be
liable to a penalty three times of sum involved in contravention .
If contravention will continue , then he will pay upto Rs. 5000 per day during the time of
contravention .
According to section 18, " Central govt. can appoint adjudicating authority who can give the
punishment of civil imprisonment of maximum six months if case is less than one crore . If demanded
value is more than one crore then punishment of imprisonment may be of three years . the person
can appeal to special director against the decisions of adjudicating officer . He can also appeal in
appellate tribunal and also in high court with the sixty days of communication of order .
fema 2000, india, legal policy