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CS Executive · Economic, Commercial and Intellectual Property Laws · Law relating to Foreign Exchange Management

Anand Traders in Surat receives Rs 40 lakh from a person resident outside India. The money comes through a domestic party's bank account, with no corresponding inward remittance from outside India. How does FEMA treat this receipt?

The receipt is deemed to be received otherwise than through an authorised person. Where payment on behalf of a non-resident arrives through another person, even a bank, without a corresponding inward remittance from abroad, section 3(c) treats it as not received through an authorised person.

  1. AIt is treated as received through an authorised person because a bank was used
  2. BIt is deemed to have been received otherwise than through an authorised personCorrect
  3. CIt is exempt because the amount is in rupees
  4. DIt is treated as a lawful receipt if the payer is resident in India

Explanation

The Explanation to section 3(c) says that where a person in India receives a payment by order or on behalf of a person resident outside India through any other person, including an authorised person, without a corresponding inward remittance from outside India, the payment is deemed received otherwise than through an authorised person. Use of a bank does not cure this.

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