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

Sundaram Textiles Ltd., an Indian company, exported goods to a buyer in Dubai and received the export proceeds in Indian rupees from an account maintained by the buyer with an authorised dealer in India, which the buyer holds as a non-resident. Who is, for FEMA purposes, a 'person resident outside India' in relation to the buyer?

Under FEMA, a person resident outside India means any person who is not a person resident in India. The definition is residual, so nationality, passport or a mere 183-day test is not the criterion applied.

  1. AA person who is not a person resident in IndiaCorrect
  2. BOnly a person who holds a foreign passport
  3. COnly a person who has never visited India
  4. DA person who stays outside India for more than 183 days only

Explanation

FEMA defines a 'person resident outside India' as a person who is not resident in India. It is a residual definition and does not depend on passport, nationality or a fixed 183-day test alone. The other options add conditions which the Act does not impose.

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