Page 218 - DMGT401Business Environment

Unit 9: Foreign Exchange Management

(e) The definition is 'inclusive', i.e., besides of aforesaid expenses, any expenditure that Notes
is not a 'capital account transaction' will be a current account transaction. For examples,
expenditure incurred on oneself own expenses on foreign travel, education, and
medical care are covered as 'current account transaction' not specified above.
(f) Any person may sell or withdraw foreign exchange to or from an authorised person
if such sale or drawl is a current account transaction.

Foreign Currency/Security/Property by Resident

A person resident in India may hold, own transfer or invest in foreign currency, foreign security
or any immovable property situated outside India, if such currency, security or property was
acquired, held or owned by such person when he was residing outside India or inherited from
a person who was residing outside India [section 6 (4)].

Indian Currency/Security/Property by Non-resident

A person residing outside India may hold, own transfer or invest in Indian currency, security or
any immovable property situated in India if such currency, security or property was acquired,
held or owned by such person when he was residing in India or inherited from a person who
was residing in India. [section 6 (4)].

Restrictions on Branches, Offices of Non-residents

The RBI may prohibit, restrict or regulate establishment of branch, office or other place of
business by a person residing outside India; for carrying on any activity relating to such branch,
office or other place of business. [Section 6 (6)]

9.2.8 Enforcement and Penalties

Directorate of Enforcement

The Directorate of Enforcement has been formed to ensure that the provisions of the Act are
adhered to. In the Directorate of Enforcement, an Additional Director, a special Director and
Assistant Directors of Enforcement are appointed by the Central Govt. under section 36.
These officers can investigate contraventions of FEMA. They have powers similar to those
conferred on Income Tax authorities under the Income Tax Act. These powers can be exercised
subject to limitations laid down under Income Tax Act. (Section 37).
The following powers are available under the Income Tax Act - powers to requisition books of
accounts etc., power to call for information, power to inspect registers of companies [Sections
131 to 136 of Income Tax Act].

Penalties under the Act

An Adjudicating Authority appointed by the Central Government under FEMA can impose
penalties for violating any provision of the Act or contravention of any rule, regulation, direction
or order issued under the power conferred by the Act.

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