A key difference between FERA and FEMA is that the former regulated the foreign trade while the later encouraged it. DIFFERENCES. CHANGES / PROGRESSION FROM FERA TO FEMA – A STEP AHEAD. Similarities. The similarities between FERA and FEMA are as follows. Difference between FERA and FEMA (Foreign Exchange Regulation Act and Foreign Exchange Management Act). Article shared by. FERA (Foreign Exchange.

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Differences Between FERA and FEMA

You Might Also Like: The laws has develop to be crucial to its administration of overseas instead of its own regulation. It promotes more liberal form of betwewn.

Moreover, any offence under FERA was a criminal offence liable to imprisonment. Tuesday 1 Jan It is consistent with full current account convertibility and contains provisions for progressive liberalisation of capital account transactions. Any attempt to act against the provisions of FEMA attracts a monetary penalty, which may change to imprisonment if the accused fails to pay the financial penalty on time.

This statute was enacted in It applies general asset management rules in foreign exchange management and aims at optimizing it rather than maximizing it.

It classified the foreign exchange transactions in two categories, viz. Foreign Exchange Regulation Act was formulated and implemented when the country was experiencing challenges in its foreign exchange reserves. FEMA is considered to be a flexible act that incorporates other dfiference towards the management and control of the foreign exchange market. All About Income Tax Act.

Contravening the provision of FERA may result in imprisonment. The main purpose of FERA was going to protect and deterrence of mishandling of overseas alternative. The accused was considered guilty as soon as the lawsuit was filed and he had to prove that he is innocent. Therefore, all the citizens of dicference country, inside or outside India are covered under this act. 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.


Presumption of extra territorial jurisdiction as envisaged in section 1 of FERA has been retained.

What are the differences between FERA and FEMA?

The Foreign Exchange Management Act is an extension of the earlier foreign exchange regulation act. On one opposite element, the FEMA is made for that primary intention of aiding the surface trade along with capital. It provides power to the Reserve Bank for specifying, inconsultation with the central government, the classes of capital account transactions and limits to which exchange is admissible for bteween transactions.

The differrnce purpose with the monthly bill was supposed to unite and amend the action vulnerable to overseas having the principle to how straight-forward the advancement of outdoors funds and trades in compliance with all the preservation and enhancement of overseas alternative current market in India.

FERA consisted of 81 sections, and was more complex. The act came into force, to regulate difderence and outflow of foreign currency, foreign payments, securities and purchase of fixed assets by the foreigners. In contrast violation of FEMA is a compoundable offence and the charges can be removed. For a person to be subjected to the provisions of foreign exchange management act, he or she must stay in India for more than six months.

The main objective of the act is to facilitate foreign trade and to encourage systematic development and maintenance of forex market in the country. Notify me of followup comments via betewen. However, FEMA is a compoundable violation where the accused can choose to agree fear the accused and drop the charges. FEMA had become the need of the hour to support the pro- liberalisation policies of the Government of India.


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A person has to obtain permission of RBI with regard to transfer of funds related to external operations. The Scope and Objective of FEMA was mainly to diffference the laws related to foreign exchangeto facilitate external trade and payments and to develop the foreign exchange market in India. FEMA is more human and natural in nature and removed all kinds of restrictions on withdrawal of foreign exchange.

How to pass your CA final exams in first attempt – Here’re some tips for your CA final exam preparation. FEMA is much simple, and consist diifference only 49 sections.

The economic policy of liberalisation was first time introduced in India in the year that opened gates for foreign investment in many sectors. Violation and Punishment FERA is a non-compoundable offense, which means that the complainant cannot enter into a compromise and drop the case against the accused. It aims to promote foreign trade, foreign payments and to increase size of foreign exchange reserve in the country.

Difference Between FERA and FEMA

Foreign exchange position was satisfactory. PAN of the Business. Under FEMA the quantum of penalty has been considerably decreased to three times the amount involved. User assumes all risk of use, damage, or injury. The definition of Authorized person has been widened to include banks, money changes, off shore banking Units etc. The act was formulated and implemented in