Skip to content

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

Ravi Menon, a person resident in India, wishes to remit funds abroad for the purchase of a flat in London. Which of the following best describes the position under FEMA, 1999 and the rules framed under it?

A resident individual may remit funds abroad within the Liberalised Remittance Scheme limit per financial year for permitted current or capital account transactions, including buying property overseas. FEMA does not ban such remittances, and it needs no court approval or company status for individuals.

  1. AAny remittance abroad is prohibited for a resident individual under FEMA
  2. BA resident individual may remit within the Liberalised Remittance Scheme limit per financial year for permitted current or capital account transactions, including property purchase abroadCorrect
  3. CPrior approval of the Supreme Court is needed for every such remittance
  4. DOnly companies, not individuals, may make capital account remittances abroad

Explanation

Under the Liberalised Remittance Scheme, a resident individual may freely remit up to the prescribed limit (USD 250,000) per financial year for permitted current or capital account transactions, which include acquiring immovable property abroad. Option A is wrong as remittances are permitted within limits. Court approval and the company-only restriction have no basis in FEMA.

Did you get it right without looking?

One question tells you little. A timed set on The Foreign Exchange Management Act, 1999 shows your real accuracy, how long you take and where you lose marks.

Practise The Foreign Exchange Management Act, 1999Free diagnostic mock

More The Foreign Exchange Management Act, 1999 questions