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

Meera, an Indian citizen, went to Dubai on 1 June for a three-month short visit to attend a trade fair and returned to India on 31 August. Her home, business and family are in Mumbai. Under FEMA, 1999, what is her status for the purposes of the Act?

Meera remains a person resident in India. FEMA looks at the purpose and intention of leaving India: only going abroad for employment, business or an indefinite period makes a person non-resident. A short visit to a trade fair does not change her status.

  1. APerson resident outside India, because she was abroad for a trade fair
  2. BPerson resident in India, because she left India only for a temporary visit and her stay was not for employment, business or an indefinite periodCorrect
  3. CNon-resident Indian, because she was outside India on the date of the trade fair
  4. DPerson resident outside India, because she stayed abroad for more than 60 days

Explanation

Under FEMA, residence depends on staying in India for more than 182 days in the preceding financial year in the old test, but the current definition looks at the person's intention: a person who goes out of India for employment, business or any purpose indicating an uncertain period of stay is non-resident. A short trade-fair visit does not indicate this, so Meera remains a resident. The 60-day option comes from the Income-tax rules and does not apply.

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