The Foreign Exchange Management Act (1999) (“FEMA”) has replaced the earlier Foreign Exchange Regulation Act (FERA) in India to deal with cross-border investments, foreign exchange transactions, and transactions between residents and non-residents. FEMA is applicable to India and to all branches, offices, and set-ups outside India which are either owned or controlled by a resident of India or abroad. FEMA regulates all aspects of foreign exchange and has direct implications on external trade and payments.
Service Areas Within FEMA Advisory & Compliance
Incorporation of a Joint Venture (JV) or Wholly Owned Subsidiary (WOS) outside India requiring assistance in areas of capital structure planning, requisite approvals from Reserve Bank of India (RBI), one time and other annual compliances as required under provisions of FEMA.
Support for making inbound investments, complying with guidelines relating to transfer or issue of capital instruments in India through the automatic route as well as approval route. Support in filing single master files integrating the reporting requirements for FDI in India.
Compliances to be made as issued by the Reserve Bank of India (RBI) for the acquisition and transfer of immovable property in India.
Support in making inbound and outbound merger along with the required valuations, getting prior approval from RBI and the miscellaneous compliances as required.
Support in raising external commercial borrowings (ECBs) by complying with all the obligations as required under this Act, both at the time of raising ECB as well as with the monthly reporting.
Filing of FLA return is mandatory and needs to be submitted by all the Indian resident companies which have received FDI and/or made ODI in any of the previous year(s), including the current year. It is to be filed by the companies who hold foreign assets or liabilities in their financial statements as on financial year-end. InCorp’s team of experienced professionals assists in this return filing.
Resident Individuals under FEMA Act can make remittances outside India in a certain permissible capital account up to USD 2,50,000/- per year, subject to fulfillment of few basic conditions. The InCorp team assists with these compliances.
End to end assistance to corporates to set up these offices in India
- Liaison Office (LO) is like a representative office that is set up primarily to explore and understand the business and investment climate in India. It generally acts as a communication channel between the parent company overseas and its present or prospective customers in India.
- Body Corporates incorporated outside India are allowed to set up Branch Offices (BO) which will be engaged in the same activity as that of the Foreign Parent Company.
- Project Office (PO) means a place of business in India to represent the interests of the foreign company executing a project in India.
In case of export or import of goods or services, FEMA compliances need to be checked in various areas like time limit for settlement, advance received/paid, permission for export write off, realization and repatriation of proceeds, etc.
Contraventions made under this Act and related master directions, guidelines can be made applicable for compounding with the concerned regional office of RBI and payment of compounding fees as determined in the compounding order.