FEMA Compliances

Understanding FEMA Compliance

 

The Foreign Exchange Management Act (FEMA) serves as a pivotal framework governing the movement of funds between India and other nations since its inception in 1999. This law not only oversees the movement of funds but also delineates critical compliance measures for businesses.

 

Its primary achievements include facilitating international trade, boosting foreign investments, ensuring transparency in global financial dealings, and balancing trade payments. As the world tilts towards globalization and international trade investments surge, adhering to FEMA becomes even more crucial. It helps businesses seamlessly conduct international operations and adeptly handle their regulatory responsibilities.

 

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Eligibility for FEMA Compliance Services

 

Eligible entities for FEMA services include:

– Individuals

– Non-Resident Indians (NRIs)

– Companies

– Foreign Individuals

– High-Value Individuals

– Partnerships or proprietorships

– Foreign Institutional Investors

 

Regulatory Oversight under FEMA

 

The Reserve Bank of India (RBI) stands as the chief regulatory authority overseeing foreign exchange in India. Additionally, the Income Tax Act applies for tax computations on NRI and Company Accounts, while the Companies Act 2013 governs company transactions. Capital instruments fall under the Securities Law (SEBI).

 

FEMA Compliance Services Overview

 

1. Compliance Advisory on ECB: External Commercial Borrowings pertain to loans availed by Public Sector Enterprises and Companies from overseas entities. These often carry a higher interest rate than domestic loans.
2. Acquisition of Immovable Property: Non-residents can purchase property in India under FEMA’s provisions.
3. Exit Options for Foreign Investors: These are exercised when investments don’t yield expected returns, post a mandated lock-in period.
4. Establishing Global Business: Companies can mark their presence globally.
5. NBFC Compliance: Foreign investors must adhere to FEMA rules when investing in a Non-Banking Financial Company.
6. NRI Bank Accounts: NRIs can open different bank accounts, such as FCNR, NRE, and NRO.
7. Business and Share Valuation: This determines a business or share’s actual worth, conducted as per global standards.
8. Loans to NRIs: An NRI can avail loans from Indian entities.
9. NRI Investment Compliance: Investment pathways for NRIs should align with FEMA.
10. Non-Repatriable NRI Investments: These can’t be transferred back to the investor’s home nation.
11. Foreign Investment in India: This encompasses direct foreign investments and their routes.
12. Investment by Overseas Companies: It outlines how foreign companies can invest in India.
13. FEMA Compliance Essentials: A compilation of vital compliances under FEMA.
14. Annual Foreign Liabilities & Assets Return: Indian entities receiving or making foreign investments must annually report these.
15. Annual Performance Report: Entities with overseas investments must submit this annually.
16. Software Company Provisions: Certain privileges and restrictions apply.
17. External Commercial Borrowing: Monthly reports on ECB transactions are mandatory.
18. Single Master Form (SMF): Introduced in 2018, it consolidates multiple reporting forms under one umbrella.
19. Advance Reporting Form: For reporting foreign investments within a month of issuance.
20. Form FC-GPR: To report foreign investments in return for shares.
21. Form FC-TRS: For transferring shares between residents and non-residents.
22. Form ODI: For Indians wanting to invest overseas.

 

Key Features of FEMA Compliance

 

FEMA treats forex-related infractions as civil offenses. Some of its distinct features include:

– Non-applicability to Indians abroad.

– Authority to the government to impose restrictions on certain transactions.

– Categorization of forex transactions into Capital and Current accounts.

 

Penalties under FEMA

 

Entities failing to adhere to FEMA can face penalties, which can be thrice the involved sum or a continuous fine for ongoing non-compliance.

 

Required Documents for FEMA Compliance

 

Necessary documents vary based on the service sought, but generally include incorporation certificates, MOA, AOA, board resolutions, financial statements, shareholding patterns, joint venture agreements, and more.

 

How We Assist

 

– We offer expert guidance on FEMA compliance procedures.

– We monitor your application status with relevant authorities.

– We prioritize your time and resources.

– We extend post-compliance support for RBI and FEMA matters.