Income Tax

FEMA/RBI Regulations

Overview of FEMA

FEMA stands for Foreign Exchange Management Act, 1999, which is governed by RBI (Reserve Bank of India) through various Rules, Regulations, Notifications, Circulars, Directions etc. As, the name signifies, FEMA is a law in relation to foreign exchange transactions. However, more precisely, FEMA is in relation to current account and capital account transactions undertaken by Person Resident in India and Person Resident Outside India. Hence, the key words of FEMA law are:

As per the provisions of FEMA, all current account transactions are allowed unless restricted, and all capital account transactions are restricted unless allowed. Hence, in general, FEMA is mainly about capital account transactions. In this regard, Reserve Bank of India has issued various regulations, which governs: