In exercise of the powers conferred by sub-section (2) of Section 6,
sub-section (2) of Section 47 of the Foreign Exchange Management Act 1999 (42
of 1999), the Reserve Bank of India makes, in consultation with the Central
Government, following regulations relating to capital account transactions,
namely : (i) These Regulations may
be called the "Foreign Exchange Management (Permissible Capital Account
Transactions) Regulations, 2000". (ii) They shall come into
force on the 1st day of June, 2000. In these Regulations,
unless the context requires otherwise, - (a) 'Act' means, the
Foreign Exchange Management Act, 1999 (42 of 1999); (b) "Drawal"
means drawal of foreign exchange from an authorised person and includes opening
of Letter of Credit or use of International Credit Card or International
Debit Card or ATM card or any other thing by whatever name called which has the
effect of creating foreign exchange liability. (c) 'Schedule' means a
schedule to these Regulations; (d) 'Transferable
Development Rights' means certificates issued in respect of category of land
acquired for public purpose either by Central or State Government in
consideration of surrender of land by the owner without monetary compensation,
which are transferable in part or whole; [1][(da) 'Derivative'
means a financial contract, to be settled at a future date, whose value is
derived from one or more financial, or non-financial variables.] (e) The words and
expressions used but not defined in these Regulations shall have the same
meanings respectively assigned to them in the Act. (1) Capital account
transactions of a person may be classified under the following heads, namely. (A) transactions,
specified in Schedule I, of a person resident
In India; (B) transactions,
specified in Schedule II, of a person resident
outside India. (2) Subject to the
provisions of the Act or the rules or regulations or direction or orders made
or issued thereunder, any person may sell or draw foreign exchange to or from
an authorised person for a capital account transaction specified in the
Schedules; Provided that the transaction
is within the limit , if any, specified in the regulations relevant to the
transaction. Save as otherwise
provided in the Act, rules or regulations made thereunder, (a) no person shall
undertake or sell or draw foreign exchange to or from an authorised person for
any capital account transaction, [2][PROVIDED that- (a) subject to the
provisions of the Act or the rules or regulations or directions or orders made
or issued thereunder, a resident individual may, draw from an authorized person
foreign exchange not exceeding USD 250,000 per financial year or such amount as
decided by Reserve Bank from time to time for a capital account transaction
specified in Schedule I. Explanation: Drawal
of foreign exchange as per item number 1 of Schedule III to Foreign Exchange
Management (Current Account Transactions) Rules, 2000 dated 3rd May, 2000 as
amended from time to time, shall be subsumed within the limit under proviso (a)
above. (b) Where the drawal of
foreign exchange by a resident individual for any capital account transaction
specified in Schedule I exceeds USD 250,000 per financial year, or as decided
by Reserve Bank from time to time as the case may be, the limit specified in
the regulations relevant to the transaction shall apply with respect to such
drawal. PROVIDED FURTHER that
no part of the foreign exchange of USD 250,000, drawn under proviso: (a) shall be used for
remittance directly or indirectly to countries notified as non-cooperative
countries and territories by Financial Action Task Force (FATF) from time to
time and communicated by the Reserve Bank of India to all concerned.] (b) no person resident
outside India shall make investment in India , in any form, in any company or
partnership firm or proprietary concern or any entity, whether incorporated or
not, which is engaged or proposes to engage - (i) in the business of
chit fund, or (ii) as Nidhi Company , or (iii) in agricultural or
plantation activities or (iv) in real estate
business, or construction of farm houses or (v) in trading in
Transferable Development Rights (TDRs). [3][(i) For the purpose
of this regulation, "real estate business" shall not include
development of townships, construction of residential /commercial premises,
roads or bridges and Real Estate Investment Trusts (REITs) registered and
regulated under the SEBI (REITs) Regulations 2014.] [4][(ii) The Registrar
of Chits or an officer authorised by the state Government in this behalf, may,
in consultation with the State Government concerned, permit any chit fund to
accept subscription from Non-resident Indians. Non-resident Indians shall be
eligible to subscribe, through banking channel and on non-repatriation basis,
to such chit funds, without limit subject to the conditions stipulated by the
Reserve Bank of India from time to time.] (a) [5][No person resident
in India shall undertake any capital account transaction which is not
permissible in terms of Order S.O. 1549(E) dated April 21, 2017, as
amended from time to time, of the Government of India, Ministry of External
Affairs, with any person who is, a citizen of or a resident of Democratic
People's Republic of Korea, or an entity incorporated or otherwise, in
Democratic People's Republic of Korea, until further orders, unless there is
specific approval from the Central Government to carry on any transaction. (b) The existing
investment transactions, with any person who is, a citizen of or resident of
Democratic People's Republic of Korea, or an entity incorporated or otherwise
in Democratic People's Republic of Korea, or any existing representative office
or other assets possessed in Democratic People's Republic of Korea, by a person
resident in India, which is not permissible in terms of Order S.O. 1549(E)
dated April 21, 2017, as amended from time to time, of the Government of India,
Ministry of External Affairs shall be closed/liquidated/disposed/settled within
a period of 180 days from the date of issue of this Notification, unless there
is specific approval from the Central Government to continue beyond that
period.] The payment for
investment shall be made by remittance from abroad through normal banking
channels or by debit to an account of the investor maintained with an
authorised person in India in accordance with the regulations made by the
Reserve Bank under the Act. Every person selling
or drawing foreign exchange to or from an authorised person for a capital
account transaction shall furnish to the Reserve Bank , a declaration in the
form and within the time specified in the regulations relevant to the
transaction. SCHEDULE I [See
Regulation 3 (1) (A)] Classes of
capital account transactions of Persons resident in India (a) Investment by a
person resident in India in foreign securities: (b) Foreign currency
loans raised in India and abroad by a person resident in India (c) Transfer of immovable
property outside India by a person resident in India (d) Guarantees issued by
a person resident in India in favour of a person resident outside India (e) Export, import and
holding of currency/currency notes (f) Loans and overdrafts
(borrowings) by a person resident in India from a person resident outside India (g) Maintenance of
foreign currency accounts in India and outside India by a person resident in
India (h) Taking out of
insurance policy by a person resident in India from an insurance company
outside India (i) Loans and overdrafts
by a person resident in India to a person resident outside India (j) Remittance outside
India of capital assets of a person resident in India (k) [6][Undertake derivative
contracts] SCHEDULE II [See
Regulation 3 (1) (B)] Classes of
capital account transactions of persons resident outside India (a) Investment in India
by a person resident outside India, that is to say, (i) issue of security by
a body corporate or an entity in India and investment therein by a person
resident outside India; and (ii) investment by way of
contribution by a person resident outside India to the capital of a firm or a
proprietorship concern or an association of persons in India. (b) Acquisition and
transfer of immovable property in India by a person resident outside India. (c) Guarantee by a person
resident outside India in favour of, or on behalf of, a person resident in
India. (d) Import and export of
currency/currency notes into/from India by a person resident outside India. (e) Deposits between a
person resident in India and a person resident outside India. (f) Foreign currency
accounts in India of a person resident outside India. (g) Remittance outside
India of capital assets in India of a person resident outside India. (h) [7][Undertake derivative
contracts] [1] Inserted by the
Foreign Exchange Management (Permissible Capital Account Transactions)
(Amendment) Regulations, 2019 vide Notification No. GSR162(E) dated 26.02.2019. [2] Substituted by the
Foreign Exchange Management (Permissible Capital Account Transactions) (Third
Amendment) Regulations, 2015 vide Notification No. FEMA-341/2015-RB dated
26.05.2015 for the following : - "[PROVIDED
that - (a)
subject to the provisions of the Act or the rules or regulations or directions
or orders made or issued there under, a resident individual may draw from an
authorized person foreign exchange not exceeding USD 125000 per financial year
or such amount as may be decided by Reserve Bank from time to time for a
capital account transaction specified in Schedule I. Explanation:
Drawal of foreign exchange by resident individuals towards remittances of gift
or donations as per item Nos. 3 and 4 of Schedule III to Foreign Exchange
Management (Current Account Transactions) Rules, 2000 dated 3rd May, 2000, as
amended from time to time, shall be subsumed within the limit under proviso (a)
above. (b)
Where the drawal of foreign exchange by a resident individual for any capital
account transaction specified in Schedule I exceeds USD 125000 per financial
year, or as decided by Reserve Bank from time to time, as the case may be, the
limit specified in the regulations relevant to the transaction shall apply with
respect to such drawal. PROVIDED
FURTHER that no part of the foreign exchange of USD 125000 drawn under proviso
(a) shall be used for remittance directly or indirectly to countries notified
as non-co-operative countries and territories by Financial Action Task Force
(FATF) from time to time and communicated by the Reserve Bank of India to all
concerned.]" [3] Substituted by the
Foreign Exchange Management (Permissible Capital Account Transactions) ( Fourth
Amendment) Regulations, 2015 vide Notification No. FEMA-345/2015-RB dated
16.11.2015 for the following : - "[(i)]
Explanation: For the purpose of this regulation, "real estate
business" shall not include development of townships, construction of
residential/commercial premises, roads or bridges." [4] Inserted by the
Foreign Exchange Management (Permissible Capital Account Transactions) (Second
Amendment) Regulations, 2015 vide Notification No. FEMA-337/2015-RB dated
02.03.2015. [5] Inserted by the
Foreign Exchange Management (Permissible Capital Account Transactions) (First
Amendment) Regulations, 2019 vide Notification No. GSR198(E) dated 07.03.2019. [6] Substituted by the
Foreign Exchange Management (Permissible Capital Account Transactions)
(Amendment) Regulations, 2019 vide Notification No. GSR162(E) dated 26.02.2019
for the following:- "(k) Sale and purchase
of foreign exchange derivatives in India and abroad and commodity derivatives
abroad by a person resident in India." [7] Inserted by the
Foreign Exchange Management (Permissible Capital Account Transactions)
(Amendment) Regulations, 2019 vide Notification No. GSR162(E) dated 26.02.2019.FOREIGN EXCHANGE MANAGEMENT (PERMISSIBLE CAPITAL ACCOUNT
TRANSACTIONS) REGULATIONS, 2000
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