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CA Intermediate · Corporate and Other Laws · The Foreign Exchange Management Act, 1999

Arjun, an Indian citizen, left India in April 2024 for employment in Singapore with no intention to return soon. Under FEMA's definition, how is his status to be determined for foreign exchange purposes?

Arjun is a person resident outside India. FEMA tests residence by period of stay and purpose of going abroad, not by citizenship or passport. A person who has gone out of India for employment or an indefinite stay abroad is treated as resident outside India.

  1. AHe remains a person resident in India because he is a citizen
  2. BHe is a person resident outside India, as FEMA residence depends on stay and intention for employment abroad rather than citizenshipCorrect
  3. CHe is resident in India for ever as FEMA has no concept of non-residence
  4. DHis status depends only on his passport

Explanation

FEMA defines a person resident in India by stay of more than 182 days in the preceding financial year and by purpose, not citizenship. A person who leaves India for employment abroad, or for an indefinite stay, is treated as resident outside India. Citizenship and passport are irrelevant tests.

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