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CMA Final · Corporate and Economic Laws · Foreign Exchange Management Act, 1999

Mehta Exports Ltd, resident in India, has foreign exchange due to it for goods exported to a buyer in Germany. Under Section 8 of FEMA, what is the company's obligation?

The company must take all reasonable steps to realise and repatriate the foreign exchange to India. The period and manner are specified by the Reserve Bank, not fixed in the Act, and the obligation applies unless the Act provides otherwise.

  1. AIt may keep the amount abroad indefinitely as the Act sets no time limit
  2. BIt must take all reasonable steps to realise and repatriate the amount to India within the period and in the manner specified by the Reserve BankCorrect
  3. CIt must repatriate the amount within a period fixed in the Act itself, irrespective of the Reserve Bank
  4. DIt must repatriate only if the Central Government issues a specific notice

Explanation

Section 8 requires a resident person to whom foreign exchange is due or has accrued to take all reasonable steps to realise and repatriate it to India within the period and in the manner specified by the Reserve Bank. The Act itself does not fix the period; the Reserve Bank does.

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