The Foreign Exchange Management Act, 1999

(1) This Act may be called the ForeignExchange Management Act, 1999. (2) It extends to the whole of India. (3) It shall also apply to all branches, offices and agencies outside India owned or controlled by aperson resident in India and also to any contravention thereunder committed outside India by any personto whom this Act applies. (4) It shall come into force on such date1as the Central Government may, by notification in theOfficial Gazette, appoint: Provided that different dates may be appointed for different provisions of this Act and any referencein any such provision to the commencement of this Act shall be construed as a reference to the cominginto force of that provision.

In this Act, unless the context otherwise requires,-- (a) Adjudicating Authority means an officer authorised under sub-section (1) of section 16; 1[(b) Appellate Tribunal means the Appellate Tribunal referred to in section 18;] (c) authorised person means an authorised dealer, money changer, off-shore banking unit orany other person for the time being authorised under sub-section (1) of section 10 to deal in foreignexchange or foreign securities; 2[(cc) Authorised Officer means an officer of the Directorate of Enforcement authorised by theCentral Government under section 37A;] (d) Bench means a Bench of the Appellate Tribunal; (e) capital account transaction means a transaction which alters the assets or liabilities, includingcontingent liabilities, outside India of persons resident in India or assets or liabilities in India ofpersons resident outside India, and includes transactions referred to in sub-section (3) of section 6; (f) Chairperson means the Chairperson of the Appellate Tribunal; (g) chartered accountant shall have the meaning assigned to it in clause (b) of sub-section (1) ofsection 2 of the Chartered Accountants Act, 1949 (38 of 1949); 2[(gg) Competent Authority means the Authority appointed by the Central Government undersub-section (2) of section 37A;] (h) currency includes all currency notes, postal notes, postal orders, money orders, cheques,drafts, travellers cheques, letters of credit, bills of exchange and promissory notes, credit cards or suchother similar instruments, as may be notified by the Reserve Bank; (i) currency notes means and includes cash in the form of coins and bank notes; (j) current account transaction means a transaction other than a capital account transaction andwithout prejudice to the generality of the foregoing such transaction includes,-- (i) payments due in connection with foreign trade, other current business, services, andshort-term banking and credit facilities in the ordinary course of business, (ii) payments due as interest on loans and as net income from investments, (iii) remittances for living expenses of parents, spouse and children residing abroad, and (iv) expenses in connection with foreign travel, education and medical care of parents, spouseand children; (k) Director of Enforcement means the Director of Enforcement appointed under sub-section (1)of section 36; (l) export, with its grammatical variations and cognate expressions, means-- (i) the taking out of India to a place outside India any goods, (ii) provision of services from India to any person outside India; (m) foreign currency means any currency other than Indian currency; (n) foreign exchange means foreign currency and includes,-- (i) deposits, credits and balances payable in any foreign currency, (ii) drafts, travellers cheques, letters of credit or bills of exchange, expressed or drawn in Indiancurrency but payable in any foreign currency, (iii) drafts, travellers cheques, letters of credit or bills of exchange drawn by banks, institutionsor persons outside India, but payable in Indian currency; (o) foreign security means any security, in the form of shares, stocks, bonds, debentures or anyother instrument denominated or expressed in foreign currency and includes securities expressed inforeign currency, but where redemption or any form of return such as interest or dividends is payable inIndian currency; (p) import, with its grammatical variations and cognate expressions, means bringing into Indiaany goods or services; (q) Indian currency means currency which is expressed or drawn in Indian rupees but does notinclude special bank notes and special one rupee notes issued under section 28A of the Reserve Bank ofIndia Act, 1934 (2 of 1934); (r) legal practitioner shall have the meaning assigned to it in clause (i) of sub-section (1) ofsection 2 of the Advocates Act, 1961 (25 of 1961); (s) Member means a Member of the Appellate Tribunal and includes the Chairperson thereof; (t) notify means to notify in the Official Gazette and the expression notification shall beconstrued accordingly; (u) person includes-- (i) an individual, (ii) a Hindu undivided family, (iii) a company, (iv) a firm, (v) an association of persons or a body of individuals, whether incorporated or not, (vi) every artificial juridical person, not falling within any of the preceding sub-clauses, and (vii) any agency, office or branch owned or controlled by such person; (v) person resident in India means-- (i) a person residing in India for more than one hundred and eighty-two days during thecourse of the preceding financial year but does not include-- (A) a person who has gone out of India or who stays outside India, in either case-- (a) for or on taking up employment outside India, or (b) for carrying on outside India a business or vocation outside India, or (c) for any other purpose, in such circumstances as would indicate his intention tostay outside India for an uncertain period; (B) a person who has come to or stays in India, in either case, otherwise than-- (a) for or on taking up employment in India, or (b) for carrying on in India a business or vocation in India, or (c) for any other purpose, in such circumstances as would indicate his intention tostay in India for an uncertain period; (ii) any person or body corporate registered or incorporated in India, (iii) an office, branch or agency in India owned or controlled by a person resident outsideIndia, (iv) an office, branch or agency outside India owned or controlled by a person resident inIndia; (w) person resident outside India means a person who is not resident in India; (x) prescribed means prescribed by rules made under this Act; (y) repatriate to India means bringing into India the realised foreign exchange and-- (i) the selling of such foreign exchange to an authorised person in India in exchange forrupees, or (ii) the holding of realised amount in an account with an authorised person in India to theextent notified by the Reserve Bank, and includes use of the realised amount for discharge of a debt or liability denominated in foreignexchange and the expression repatriation shall be construed accordingly; (z) Reserve Bank means the Reserve Bank of India constituted under sub-section (1) of section 3of the Reserve Bank of India Act, 1934 (2 of 1934); (za) security means shares, stocks, bonds and debentures, Government securities as defined in thePublic Debt Act, 1944 (18 of 1944), savings certificates to which the Government Savings CertificatesAct, 1959 (46 of 1959) applies, deposit receipts in respect of deposits of securities and units of the UnitTrust of India established under sub-section (1) of section 3 of the Unit Trust of India Act, 1963(52 of 1963)* or of any mutual fund and includes certificates of title to securities, but does not includebills of exchange or promissory notes other than Government promissory notes or any other instrumentswhich may be notified by the Reserve Bank as security for the purposes of this Act; (zb) service means service of any description which is made available to potential users andincludes the provision of facilities in connection with banking, financing, insurance, medical assistance,legal assistance, chit fund, real estate, transport, processing, supply of electrical or other energy,boarding or lodging or both, entertainment, amusement or the purveying of news or other information,but does not include the rendering of any service free of charge or under a contract of personal service ; (zc) Special Director (Appeals) means an officer appointed under 3[section 17]; (zd) specify means to specify by regulations made under this Act and the expression specifiedshall be construed accordingly; (ze) transfer includes sale, purchase, exchange, mortgage, pledge, gift, loan or any other form oftransfer of right, title, possession or lien.

Save as otherwise provided in this Act, rules or regulationsmade thereunder, or with the general or special permission of the Reserve Bank, no person shall-- (a) deal in or transfer any foreign exchange or foreign security to any person not being anauthorised person; (b) make any payment to or for the credit of any person resident outside India in any manner; (c) receive otherwise through an authorised person, any payment by order or on behalf of anyperson resident outside India in any manner. Explanation.--For the purpose of this clause, where any person in, or resident in, India receivesany payment by order or on behalf of any person resident outside India through any other person(including an authorised person) without a corresponding inward remittance from any place outsideIndia, then, such person shall be deemed to have received such payment otherwise than through anauthorised person; (d) enter into any financial transaction in India as consideration for or in association withacquisition or creation or transfer of a right to acquire, any asset outside India by any person. Explanation.--For the purpose of this clause, "financial transaction" means making any paymentto, or for the credit of any person, or receiving any payment for, by order or on behalf of any person,or drawing, issuing or negotiating any bill of exchange or promissory note, or transferring anysecurity or acknowledging any debt.

Save as otherwise provided in this Act, no person resident inIndia shall acquire, hold, own, possess or transfer any foreign exchange, foreign security or anyimmovable property situated outside India.

Any person may sell or draw foreign exchange to or from anauthorised person if such sale or drawal is a current account transaction: Provided that the Central Government may, in public interest and in consultation with the ReserveBank, impose such reasonable restrictions for current account transactions as may be prescribed.