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CS Executive · Economic, Commercial and Intellectual Property Laws · Foreign Direct Investments - Regulations and Policy

Arjun, an Indian resident, wants to know under which provision the Central Government may make rules on the limits of admissibility of foreign exchange for capital account transactions not involving debt instruments. Which section of FEMA, 1999 empowers the Central Government to make rules covering this matter?

Section 46(2)(ab) is the provision. It empowers the Central Government to make rules on permissible classes of capital account transactions under section 6(2A), the limits of admissibility of foreign exchange, and their prohibition, restriction or regulation. Section 47(2)(a) gives the Reserve Bank similar power only for debt instruments.

  1. ASection 47(2)(a), which covers the Reserve Bank's regulations on debt instruments
  2. BSection 46(2)(ab), which covers permissible classes of capital account transactions under section 6(2A)Correct
  3. CSection 46(2)(a), which covers restrictions on current account transactions
  4. DSection 47(2)(c), which covers the period for repatriation of foreign exchange

Explanation

Section 46(2)(ab) lets the Central Government make rules on permissible classes of capital account transactions under section 6(2A), the limits of admissibility of foreign exchange, and prohibition, restriction or regulation of such transactions. Section 47(2)(a) is the Reserve Bank's power for debt instruments only, and 46(2)(a) is for current account.

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