Are you seeking expert guidance on navigating the complexities of cross-border transactions under FEMA (Foreign Exchange Management Act, 1999)? Look no further than Harchandani & Associates, your trusted partner for comprehensive FEMA advisory and consultancy services in Ahmedabad, India. At Harchandani & Associates, we specialize in providing strategic solutions tailored to meet your specific FEMA-related needs. Our seasoned team of Chartered Accountants possesses in-depth knowledge and extensive experience in handling a wide spectrum of FEMA matters, ensuring compliance and facilitating seamless transactions.
Our FEMA services include, but are not limited to:FEMA (Foreign Exchange Management Act, 1999) replaced the old FERA (1973). FERA was a criminal law treating all violations as cognizable offences. FEMA is a civil law where violations are treated as civil offences with monetary penalties (generally 3x the sum involved), with criminal prosecution reserved only for severe contraventions. FEMA's objective is to facilitate external trade, payments, and the orderly development of the foreign exchange market in India.
LRS allows resident individuals to remit up to USD 250,000 per financial year for any permissible transaction — overseas education, travel, medical treatment, maintenance of relatives abroad, and investment in foreign shares or property. LRS applies to individuals only, not companies. Remittances above USD 250,000 per year require prior RBI approval. Since Budget 2023, TCS of 20% applies on LRS remittances above ₹7 lakh (except education and medical travel).
Foreign investment is permitted through two routes: Automatic Route (no prior government approval, up to sectoral caps) and Government Route (requiring Ministry approval). The investor receives shares priced at fair market value per SEBI/RBI guidelines. The Indian company must report the FDI to RBI within 30 days via Form FC-GPR. Ongoing compliance includes annual FLA returns and FCTRS on transfer of shares.
FEMA compounding is a voluntary process where a person proactively approaches RBI (or FEMA Adjudicating Authority) to settle a contravention and pay a compounding fee in lieu of litigation. It is advisable for bonafide errors — delayed FDI reporting, incorrect share pricing, or missing LRS documentation — to regularise the position before it escalates to criminal referral. Compounding provides certainty of penalty and definitively closes the matter.
Yes. An Indian resident can purchase immovable property outside India under LRS using the USD 250,000 annual limit per person. For joint purchase, each co-buyer can utilise their own LRS limit. Rental income and sale proceeds may be retained abroad or repatriated to India. Purchase of property in certain restricted countries and using borrowed Indian funds for overseas property are prohibited. CA guidance is essential to structure the transaction correctly.