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

Meera, a resident Indian, wants to open a foreign currency account abroad while on a short business trip. Under FEMA, 1999, which of the following statements about her residence status for FEMA purposes is correct?

Under FEMA, a person resident in India is one who lives in India for employment, business, vocation or any purpose showing intention to stay for an uncertain period. Citizenship and the 182-day test are not the criteria, so a short business trip abroad does not make Meera a non-resident.

  1. AResidence under FEMA is decided only by citizenship, so Meera is always a resident
  2. BA person is resident in India if she stayed in India for more than 182 days in the preceding financial year, or meets the other prescribed tests, and the earlier 'ROR/RNOR' classification of Income-tax law applies unchanged
  3. CUnder FEMA, a person resident in India is one who has come to or stayed in India for a purpose indicating intention to stay for an uncertain period, and a short trip abroad does not by itself make her a non-residentCorrect
  4. DResidence is decided by place of incorporation for individuals as well as companies

Explanation

FEMA defines a person resident in India by the nature and purpose of stay (intention to stay for an uncertain period or employment, business, vocation) and not merely by citizenship. The old 182-day test was removed; the Income-tax categories ROR/RNOR do not apply. A short business trip abroad does not change Meera's status.

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