lecture-39 - Learning Objectives LESSON 39: FEMA AND TRADE...

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Learning Objectives After reading the lesson, you will be able to know about the: · The brief outline of Fema · The brief outline of Trade and Copyrights Act Introduction Today, we will discuss the two Acts as outlined above in brief just to give you an idea as to the purpose of these Acts and the brief introduction of these Acts. Let us first talk about FEMA FEMA (Foreign Exchange Management Act) The Foreign Exchange Management Act (FEMA) is a law to replace the draconian Foreign Exchange Regulation Act, 1973. Any offense under FERA was a criminal offense liable to imprisonment, whereas FEMA seeks to make offenses relating to foreign exchange civil offenses. Unlike other laws where everything is permitted unless specifically prohibited, under FERA nothing was permitted unless specifically permitted. Hence the tenor and tone of the Act was very drastic. It provided for imprisonment of even a very minor offense. Under FERA, a person was presumed guilty unless he proved himself innocent whereas under other laws, a person is presumed innocent unless he is proven guilty. With liberalization, a need was felt to remove the drastic measures of FERA and replace them by a set of liberal foreign exchange management regulations. Therefore FEMA was enacted to replace FERA. FEMA extends to the whole of India. It applies to all branches, offices and agencies outside India owned or controlled by a person resident in India and also to any contravention there under committed outside India by any person to whom this Act applies. FEMA contains definitions of certain terms, which have been used throughout the Act. The meaning of these terms may differ under other laws or under common language. But for the purposes of FEMA, the terms will signify the meaning as defined there under. Let us take up some of the more impor- tant ones. “Authorized person” means an authorized dealer, money changer, off-shore banking unit or any other person for the time being authorized to deal in foreign exchange or foreign securities; “Capital Account Transaction” means a transaction which alters the assets or liabilities, including contingent liabilities, outside India of persons resident in India or assets or liabilities in India of persons resident outside India, and includes transactions by way of giving guarantees or surety for any debt, obligation or other liability of (1) a person resident outside India or (2) of a person resident in India and owed to a person resident outside India. “Currency” includes all currency notes, postal notes, postal orders, money orders, cheques, drafts, travelers cheques, letters of credit, bills of exchange and promissory notes, credit cards or such other similar instruments, as may be notified by the Reserve Bank; “Currency Notes” means and includes cash in the form of coins and bank notes; “Current Account Transaction” means a transaction other than a capital account transaction and includes :-i. Payments due in connection with foreign trade, other current business,
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lecture-39 - Learning Objectives LESSON 39: FEMA AND TRADE...

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