By Dr. Anup P. Shah, Chartered Accountant
INTRODUCTION
One of the common questions which a newly qualified CA / Lawyer often asks is “How does one Study FEMA?” The Foreign Exchange Management Act, 1999 (FEMA) has been around since 1999 and before that it existed as the Foreign Exchange Regulation Act, 1973 (FERA). In spite of such a long lineage, this question refuses to die down.
A
possible reason for this confusion could be the multiple sources of
legislations which one comes across when dealing with FEMA. In addition,
there are different agencies which one encounters under this law.
Through this article let us examine the hierarchy of FEMA and the
various types of legislations one encounters when dealing with foreign
exchange transactions in India!
CENTRAL ACT
The
Foreign Exchange Management Act, 1999 is a Central Statute of the
Parliament and is the supreme statute when it comes to regulating all
foreign transactions in India. The Preamble to the Act states that it is
a law relating to foreign exchange with the objective of facilitating
external trade and payments and for promoting the orderly development
and maintenance of the foreign exchange market in India. It applies to
the whole of India and even to an office, branch or agency abroad which
is owned or controlled by a person resident in India.
Three important decisions have examined the fabric
