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Foreign Exchange Management Act

  • IASbaba
  • December 3, 2022
  • 0
Economics
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In news: Actor Vijay Devarakonda appeared before Enforcement Directorate in connection with the Foreign Exchange Management Act (FEMA) investigation for producing the recent multilingual movie, ‘Liger’ which had a cameo by boxing legend Mike Tyson.

Foreign Exchange Management Act (FEMA)

  • It is an act of Parliament of India
  • Introduced in 1999 to replace the draconian FERA (Foreign Exchange Regulation Act).
  • FEMA outlines the formalities and procedures for the dealings of all foreign exchange transactions in India.
  • These foreign exchange transactions have been classified into two categories — Capital Account Transactions and Current Account Transactions.
  • This act makes offences related to foreign exchange civil offenses.
  • It also paved the way for the introduction of the Prevention of Money Laundering Act 2002.
  • Principles – all current account transactions are permitted unless expressly prohibited and all Capital account transactions are prohibited unless expressly permitted.
  • To give effect to the provisions of the Act the Government of India have made Foreign Exchange Management (Current Account transactions) Rules 2000 under Section 5 read with Section 46 of the Act.

Aim

  • to facilitate external trade and payments
  • to assist orderly development and maintenance of the Indian forex market
  • to liberalise the Indian economy

Source: TOI

Previous Year Questions

Q.1) With reference to the ‘Prohibition of Benami Property Transactions Act, 1988 (PBPT Act), consider the following statements: (2017)

  1. A property transaction is not treated as a benami transaction if the owner of the property is not aware of the transaction.
  2. Properties held benami are liable for confiscation by the Government.
  3. The Act provides for three authorities for investigations but does not provide for any appellate mechanism.

Which of the statements .given above is/are correct?

  1. 1only
  2. 2 only
  3. 1 and 3 only
  4. 2 and 3 only

 

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