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

Kavita, a resident individual, receives a gift of foreign currency notes from a relative who is visiting from the USA. She asks whether she may hold it. Under FEMA, 1999, which statement is correct?

A resident may hold foreign currency received as a gift from a person resident outside India, as permitted under FEMA regulations and within prescribed limits. It need not be surrendered immediately, and holding it is not an offence, nor is authorised dealer status needed.

  1. AShe must surrender it within one day to an authorised person without exception
  2. BA person resident in India may hold foreign currency or foreign exchange as permitted under FEMA regulations, such as received as a gift or inherited from a person who was resident outside India, within the prescribed limitsCorrect
  3. CShe may hold it only if she is an authorised dealer
  4. DReceipt of any foreign exchange by a resident is a criminal offence

Explanation

Under Section 9, a resident may hold, own, transfer or invest in foreign currency received as a gift, inheritance or in certain other permitted ways, subject to the regulations and limits. Thus it is not an offence nor requires compulsory immediate surrender or authorised-dealer status.

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