Skip to content

CS Executive · Setting Up of Business, Industrial and Labour Laws · Setting up of Business outside India and Issues Relating thereto

Rohan, a resident Indian, wants to know the general rule for a person who sells or draws foreign exchange to or from an authorised person for a capital account transaction under FEMA, 1999 (Section 6). Which statement correctly states the rule?

Under Section 6(1) of FEMA, any person may sell or draw foreign exchange to or from an authorised person for a capital account transaction, subject to the classes, limits and conditions specified by the Reserve Bank and the Central Government. It is a permitted activity within regulation, not a prohibition.

  1. AAny person may do so, subject to the permissions, limits and conditions specified under the ActCorrect
  2. BOnly the Central Government may draw foreign exchange for such transactions
  3. CSuch transactions are absolutely prohibited unless a court orders otherwise
  4. DOnly companies, and not individuals, may do so

Explanation

Section 6(1) says any person may sell or draw foreign exchange to or from an authorised person for a capital account transaction, subject to sub-section (2) and the classes, limits and conditions specified. It is neither a blanket prohibition nor restricted to companies or the Government.

Did you get it right without looking?

One question tells you little. A timed set on Setting up of Business outside India and Issues Relating thereto shows your real accuracy, how long you take and where you lose marks.

Practise Setting up of Business outside India and Issues Relating theretoFree diagnostic mock

More Setting up of Business outside India and Issues Relating thereto questions