Context:
Adjudicating Authority under the Foreign Exchange Management Act (FEMA) has issued show cause notices to Byju’s on the Enforcement Directorate’s complaint alleging contraventions involving ₹9,362.35 crores.
About FEMA, 1999:
- Regulatory framework for managing foreign exchange transactions in India.
- Replaced the earlier Foreign Exchange Regulation Act (FERA)
- Primary objective – To help facilitate external trade and payments in India.
- Head office – Enforcement Directorate
- All transactions involving foreign exchange have been classified either as capital or current account transactions.
- Current Account Transactions –
- All transactions undertaken by a resident that do not alter his / her assets or liabilities, including contingent liabilities, outside India are current account transactions.
- Example – payment in connection with foreign trade, expenses in connection with foreign travel, education etc.
- Capital Account Transactions –
- It includes those transactions which are undertaken by a resident of India such that his/her assets or liabilities outside India are altered (either increased or decreased).
- Example – Investment in foreign securities, acquisition of immovable property outside India etc.
- Current Account Transactions –
- Applicability –
- It is applicable to all parts of India.
- It is also equally applicable to the offices and agencies located outside India but managed or owned by an Indian Citizen.
Resident Indians:
- A ‘person resident in India’ is defined in Section 2(v) of FEMA, 1999 as:
- Barring few exceptions, a person residing in India for more than 182 days during the course of the preceding financial year.
- Any person or body corporate registered or incorporated in India.
- An office, branch or agency in India owned or controlled by a person resident outside India.
- An office, branch or agency outside India owned or controlled by a person resident in India.
Must Read: Prevention of Money Laundering Act (PMLA)
Source: The Hindu
Previous Year Question
Consider the following statements with reference to India:
1. According to the ‘Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, the ‘medium enterprises’ are those with investments in plant and machinery between ₹15 crore and ₹25 crore.
2. All bank loans to the Micro, Small and Medium Enterprises qualify under the priority sector.
Which of the statements given above is/are correct?
[UPSC Civil Services Exam – 2023 Prelims]
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Answer: (b)
