Formulation of FEMA : FERA was mainly formulated to deal with deep crunch of foreign exchange post world war II and hence was a rigid piece of legislation which have left all the businesspeople and Indian citizens at the mercy of Enforcement Directorate as violence of FERA was considered a criminal act and there were major penalties associated with it. FERA was set up with main objective of conservation of foreign exchange however FEMA was set up with main objective of management of foreign exchange. FERA was formulated with an assumption that foreign exchange is a scarce resource and hence must be protected and used with great care however FEMA was formulated with assumption that foreign exchange is an asset and must be properly managed. Due Dates GST Compliance Calendar for June - Taxmann The due dates have not been extended per se but relaxation has been provided from levy of interest and late fee for the given period. Get News Alerts from Taxmann.
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Check out this article to know more differences between the two acts. FEMA an act initiated to facilitate external trade and payments and to promote orderly management of the forex market in the country. Foreign exchange position was satisfactory. Approach towards forex transactions Rigid Flexible Basis for determining residential status Citizenship More than 6 months stay in India Violation Criminal offence Civil offence Punishment for contravention Imprisonment Fine or imprisonment if fine not paid in the stipulated time.
It aimed at conserving foreign exchange and its optimum utilisation in the development of the economy. The act applies to the whole country. Therefore, all the citizens of the country, inside or outside India are covered under this act. The main objective of the act is to facilitate foreign trade and to encourage systematic development and maintenance of forex market in the country.
The economic policy of liberalisation was first time introduced in India in the year that opened gates for foreign investment in many sectors. In the year , the Tarapore Committee recommended changes in the present legislation that regulate foreign exchange in the country. Very informative and helpful in understanding the basic difference between the two Acts, well explained, easy to understand.
Your email address will not be published. Save my name, email, and website in this browser for the next time I comment. Violation of FERA is a non-compoundable offence in the eyes of law. In contrast violation of FEMA is a compoundable offence and the charges can be removed. Contravening the provision of FERA may result in imprisonment. Conversely, the punishment for violating the provisions of FEMA is a monetary penalty, which may turn into imprisonment if the fine is not paid on time.
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Differences Between FERA and FEMA
FEMA was introduced by both houses of the parliament in Dec. Later the permission of the president, FEMA has arrived in strength w. June Beneath the FEMA, requirements associated with foreign exchange have been revised and expanded so as to simplify foreign enterprise. The government anticipates that the FEMA will gain affirmative growth in the foreign money market. According to the Section, all non-banking foreign subsidiaries with foreign equity surpassing 40 percent had to secure approval to authenticate distinct tasks, to acquire allowances in subsisting companies, or to obtain entirely or notably each other company. An Amendment to incorporate and improve the law governing specific payments, dealings in foreign exchange and contracts, transactions diffusely influencing the foreign exchange and the import and export of currency, for the maintenance of the foreign exchange reserves of the country and the peculiar utilization thereof in the importance of the economic development of the country.
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The new FERA came into force from 1. Transactions in foreign exchange were absolutely prohibited excepting in certain selected sectors. Every foreign company had to maintain Indian share of 26 percent. No unauthorised person would be allowed to deal in foreign exchange.
Difference Between FERA and FEMA
The Reserve Bank of India and central government would continue to be the regulatory bodies. Presumption of extra territorial jurisdiction as envisaged in section 1 of FERA has been retained. FERA consisted of 81 sections, and was more complex. FEMA is much simple, and consist of only 49 sections. Terms like Capital Account Transaction, current account Transaction person, service etc. The definition of Authorized person has been widened to include banks, money changes, off shore banking Units etc.
What are the differences between FERA and FEMA?
What is FERA? The act came into force, to regulate inflow and outflow of foreign currency, foreign payments, securities and purchase of fixed assets by the foreigners. It aimed at conserving foreign currency and its optimum utilisation for the development of the economy. What is FEMA?