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

Shalini, born in Chennai, left India on 1 June to take up a three-year job in Singapore. She had stayed in India for 300 days in the preceding financial year. Which statement best reflects her status as a person resident in India under FEMA for the year in which she left?

Shalini is not a person resident in India for that year, because FEMA excludes a person who leaves India for employment or another purpose showing an intention to stay abroad for an uncertain period, even if she stayed over 182 days earlier. Citizenship is irrelevant.

  1. AShe is a person resident in India because she stayed over 182 days in the preceding year
  2. BShe remains resident because she is an Indian citizen, whatever her purpose of leaving
  3. CShe is not a resident because FEMA residency depends only on the place of birth
  4. DShe ceases to be a person resident in India, because she left for employment outside India, which indicates an intention to stay abroad for an uncertain periodCorrect

Explanation

FEMA defines a person resident in India as one who has resided in India for more than 182 days in the preceding financial year, but excludes a person who has gone out of India for employment, business or any purpose indicating an intention to stay outside India for an uncertain period. Shalini left for employment, so she is excluded. Option A applies only the day count and misses the exclusion.

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