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CS Executive · Economic, Commercial and Intellectual Property Laws · Foreign Direct Investments - Regulations and Policy

Under FEMA, 1999, Sunrise Pharma Ltd receives money from a foreign investor's agent in India, through a local intermediary, with no corresponding inward remittance from outside India. How is this treated under section 3?

Such receipt is deemed to be received otherwise than through an authorised person. The Explanation to section 3(c) says that where payment on behalf of a person resident outside India is received through another person without a corresponding inward remittance from abroad, it is treated as not routed through an authorised person.

  1. ADeemed to be received otherwise than through an authorised personCorrect
  2. BTreated as a valid receipt through an authorised person
  3. CTreated as a capital account transaction needing no permission
  4. DExempt because an intermediary was involved

Explanation

Section 3(c) bars receiving, otherwise than through an authorised person, any payment by order or on behalf of a person resident outside India. Its Explanation deems a payment received through any other person, including an authorised person, without a corresponding inward remittance from outside India to be received otherwise than through an authorised person. Involving an intermediary therefore gives no exemption.

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