Question: What Is Current Account Transaction Under FEMA?

What type of transactions are covered under Schedule 1 of FEMA?

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..

What is difference between current account and capital account?

The current account represents a country’s net income over a period of time, while the capital account records the net change of assets and liabilities during a particular year. … The sum of the current account and capital account reflected in the balance of payments will always be zero.

What is the limit of current account?

FeaturesRegular Current AccountAverage Quarterly Balance (AQB)₹ 10,000/- (only Non-Metro locations)Operational Limit for Cash Deposit @Non-Home Branch (per day)₹ 10,000/-Cash Withdrawal Limit @ Home BranchFreeCash Withdrawal Limit @ Non Home BranchNo free limit Charges @ ₹ 2/- per ₹ 1,000/-, minimum ₹ 50/- txn17 more rows

What is the official reserve account?

The official reserve account, a subdivision of the capital account, is the foreign currency and securities held by the government, usually by its central bank, and is used to balance the payments from year to year. … The official reserves increases when there is a trade surplus and decreases when there is a deficit.

Which transaction is prohibited under liberalized remittance?

In terms of Section 5 of the FEMA, persons resident in India 1 are free to buy or sell foreign exchange for any current account transaction except for those transactions for which drawal of foreign exchange has been prohibited by Central Government, such as remittance out of lottery winnings; remittance of income from …

Which transactions are permitted without any approval under FEMA 1999?

The AD bank may undertake the remittance transaction without RBI’s permission for all residual current account transactions which are not prohibited/ restricted transactions under Schedule I, II or III of FEM (CAT) Rules, 2000, as amended or are defined in FEMA 1999.

What do you mean by current account transaction and capital account transaction under FEMA?

Section 2(j) of FEMA states that ‘Current Account Transaction’ means a transaction. other than a capital account transaction. It includes following – ♦ Payment due in connection with foreign trade, other current business, services. and short term banking and credit facilities in the ordinary course of business.

What are current transactions?

Current transfers are current account transactions in which a resident entity in one nation provides a nonresident entity with an economic value, such as a real resource or financial item, without receiving something of economic value in exchange.

What is a current account transaction?

Current Account Transaction is a transaction other than a capital account transaction and includes: Payment due in connection with foreign trade, other current business, services and short term banking and credit facilities in the ordinary course of business.

What are FEMA guidelines?

Introduction. Foreign Exchange Management Act or in short (FEMA) is an act that provides guidelines for the free flow of foreign exchange in India. It has brought a new management regime of foreign exchange consistent with the emerging frame work of the World Trade Organisation (WTO).

Who can make rules under FEMA?

As per Section 1(2) of FCRA, 2010, the provisions of the act applies to: Whole of India. Citizens of India outside India; and. Associate Branches or subsidiaries, outside India, of companies or bodies corporate, registered or incorporated in India.

What are capital account transactions under FEMA?

However, the definition of capital account transaction is itself very subjective and involves any transactions which alters the “assets” or “liabilities” including “contingent liabilities” of residents outside India and non-residents in India.