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

Arjun, an Indian citizen, left India in April 2025 for a three-year employment contract with a firm in Singapore. Under FEMA, 1999, what is his status as a 'person resident in India' for the relevant period?

Arjun is a person resident outside India. Under FEMA, a person who leaves India for taking up employment abroad, or for a purpose showing an intention to stay outside India for an uncertain period, ceases to be resident. Citizenship and the old 182-day test do not decide residence.

  1. AResident, since he is an Indian citizen
  2. BResident, if he stayed in India for 182 days in the preceding financial year
  3. CNot resident, since he left India for taking up employment outside IndiaCorrect
  4. DResident, until he has stayed abroad for ten years

Explanation

Under FEMA section 2(v), a person who goes out of India for taking up employment outside India, or for any purpose indicating an intention to stay outside India for an uncertain period, is not a person resident in India. Citizenship does not decide residence under FEMA. The 182-day test is the old rule and is no longer applicable; the test is now based on purpose and intention.

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