Core concepts
- 01FEMA regulates external trade & payments; replaced FERA in 1999.
- 02Current account transactions generally permitted (Sec 5); capital account regulated.
- 03Authorised Persons: AD-Cat I/II/III, Full-Fledged Money Changers.
- 04Resident in India (Sec 2(v)): >182 days in preceding FY (subject to purpose-based exceptions).
- 05RBI is the regulator; Enforcement Directorate handles violations.
Flowchart summary
FEMA Transactions | Current A/c (Sec 5) -- generally free; some need RBI permission Capital A/c (Sec 6) -- RBI regulated (FDI, ECB, ODI, real estate) | Compounding (Sec 15) by RBI for civil contraventions
Exam-critical pointers
- ⭐FEMA is civil law; FERA was criminal — fundamental shift.
- ⭐FDI in India: automatic vs approval route; sectoral caps vary.
- ⭐LRS limit: USD 250,000 per FY per resident individual.
- ⭐Penalty: up to 3 times the sum involved (Sec 13). Compounding allowed.
Make it click