FEMA Advisory

With an increase in cross-border transactions, both inbound & outbound, there is a heightened need to understand & ensure compliance with complex, evolving legislations covered under the Foreign Exchange Management Act (FEMA) 1999. We do a systematic analysis of all Forex Transactions of the client and examine the compliance of Foreign Exchange Management Act and provide Forex transaction advisory / FEMA Advisory.

This will enable the company to know if any violations under FEMA are committed. Foreign Exchange laws / Foreign Exchange Management Act are /is one of the most stringent law of the country and are /is subject to changes at rapid pace. As an organization, it is necessary to make sure that all your transactions related to foreign exchanges are in compliance with law and if not, necessary precautionary measures shall be undertaken to rectify the same. Here, we analyse all transactions, inbound & outbound, undertaken during the period under scrutiny from the point of compliance with foreign exchange laws and provide required FEMA Advisory including remedial measures, in case of any deficiency.

WE HELP YOU WITH COMPLIANCES UNDER FOLLOWING HEADS :

FOREIGN DIRECT INVESTMENT

Foreign investors can invest directly in India, either on their own or through joint ventures in virtually all the sectors except in a very small list of activities where foreign investment is prohibited. FDI in majority of the sectors is under automatic route, i.e., allowed without any requirement of seeking regulatory approval prior to such investment. Eligible investors can invest in most of the sectors of Indian Economy on an automatic basis. There are Sectors in which investments has to be made by taking prior approval of Government. Automatic Investment also has to comply with time bound reporting requirements.

LIBERALIZED REMITTANCE SCHEME

The Liberalized Remittance Scheme (LRS) is a facility provided by the RBI for all resident individuals including minors to freely remit upto a certain amount for current and capital account purposes or a combination of both. Hence under the LRS, individuals are allowed to spend money in foreign countries for specific purposes like education, tourism, asset purchase etc. The remittance limit is set for a financial year. Regulations for the scheme are provided under the FEMA Act 1999.

OVERSEAS DIRECT INVESTMENT

Direct investment outside India means investments, either under the Automatic Route or the Approval Route, by way of contribution to the capital or subscription to the Memorandum of a foreign entity or by way of purchase of existing shares of a foreign entity either by market purchase or private placement or through stock exchange, signifying a long-term interest in the foreign entity (JV or WOS). Automatic Investment also has to comply with time bound reporting requirements.

EXTERNAL COMMERCIAL BORROWING

External Commercial Borrowings (ECBs) includes commercial bank loans, buyers’ credit, suppliers’ credit, securitized instruments such as Floating Rate Notes and Fixed Rate Bonds etc., credit from official export credit agencies and commercial borrowings from Multilateral Financial Institutions. ECBs are being permitted by the Government as a source of finance for Indian Corporate for expansion of existing capacity as well as for fresh investment.

FOREIGN LIABILITIES & ASSETS RETURN (FLA)

An Indian company which has received FDI or an LLP which has received investment by way of capital contribution in the previous year(s) including the current year, should submit form FLA to the Reserve Bank on or before the 15th day of July of each year.

The annual return on Foreign Liabilities and Assets (FLA) is required to be submitted by the following entities which have received FDI (foreign direct investment) and / or made FDI abroad (i.e. overseas investment) in the previous year(s) including the current year i.e. who holds foreign assets or / and liabilities in their balance sheets;

• A Company within the meaning of section 1(4) of the Companies Act, 2013
• A Limited Liability Partnership (LLP) registered under the Limited Liability Partnership Act, 2008
• Others [include SEBI registered Alternative Investment Funds (AIFs), Partnership Firms, Public Private Partnerships (PPP) etc.

COMPOUNDING OF CONTRAVENTIONS

We offer all kinds of Consultancy and Compliances Services in relation to Compounding of offences under FEMA. We have empanelled various experts to provide the expert advisory and Compliances services for Compounding of offences under FEMA. The services that we offer includes the following:

• Completing all the relevant compliances before compounding application
• Drafting of documents for submission to RBI
• Making application to RBI for compounding of offences
• Advising on matters relating to compounding of offences
• Liaisoning with AD Bank and RBI in relation to Compounding of offence

ANNUAL PERFORMANCE REPORT

(a) Filling of APR is mandatory for investment made outside India by  resident individual + resident non individual (both) for investment in Joint venture (JV) + Wholly owned subsidy (WOS) both Outside India.  Resident non individual is known as Indian Party (IP)

(b) Separate APR to be filed for each JV + each WOS (both) under FEMA, 1999.

(c) Non filling of APR up to December 31st every year be treated as violation under FEMA, 1999.

(d) Exceptionally maximum penalty @ 300% to be levied on amount of investment made in JV + WOS (both)

(e) Generally maximum penalty to be levied as computed under Foreign Exchange (Compounding Proceedings) Rules, 2000.