The Foreign Exchange Management Act, 1999 (FEMA) seeks to bring the law on thesubject up to date keeping in view the changed environment. This Act “aims at consolidating and amending the law relating to Foreign Exchange with the objective of facilitating external trade and payments are for promoting the orderly development and maintenance of foreign exchange markets in India”. The important features noticed in the new Act as compared with the previous one are:
1 The seriousness of non-compliance with the regulation is diluted. It is legal and no criminal consequence.
2 The nature of current account and capital account transactions has been clearly defined.
3 The new enactment is positive in the sense that all current account transactions not otherwise restricted can be freely carried on.
4 The definitions of residents and non-residents take into account the duration of their stay in India, as in the case of Income Tax Act.
For the implementation of various provisions of FEMA, the Central Government has issued notifications notifying various rules formed under the Act. The Central Bank of India issued several regulations relating to FEMA, most of them relating to capital account transactions.
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