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FOREIGN EXCHANGE CURRENT ACCOUNT TRANSACTIONS

FEMA - Foreign Exchange Management - By: - Mr.M. GOVINDARAJAN - Dated:- 4-1-2016 Last Replied Date:- 6-1-2016 - Section 2(j) of Foreign Exchange Management Act, 1999 ( Act for short) defines the term current account transaction as a transaction other than a capital account transaction and without prejudice to the generality of the foregoing such transaction includes- Payments due in connection with foreign trade, other current business, services and short term banking and credit facilities in t .....

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t from 01.06.2010. Transactions which are prohibited Rule 3 provides that the drawal of foreign exchange by any person for the following purposes is prohibited: Remittance out of lottery winning; Remittances of income from racing/riding etc., or any other hobby; Remittance for purchase of lottery tickets, banned/prescribed magazines, football pools, sweepstakes etc., Payment of commission on exports made towards equity investment in Joint Ventures/Wholly owned subsidiaries abroad of India compan .....

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by RBI subject to such terms and conditions as it may consider necessary to stipulate by general or special order). Transactions requiring prior approval of Government of India Rule 4 provides that no person shall draw foreign exchange for the following transactions without prior approval of the Government of India: Cultural tours; Advertisement in foreign print media for the purposes other than promotion of tourism, foreign investments and international bidding (exceeding US $ 10,000) by a Sta .....

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ship of sports activity abroad by a person other than international/national/state level sports bodies, if the amount involved exceed US $ 100000; Remittance for membership of P&I Club. This rule is not applicable for the payments made out of funds held in Resident Foreign Currency Account of the remitter. Transactions requiring prior approval of RBI For individuals Any individual can avail foreign exchange facility for the following purposes within the limit of US$ 250000 (Rule 5)- Private .....

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ransaction exceeds US$ 250000 the prior approval of RBI is required. The individual may avail of exchange for an amount in excess of the limit prescribed under the Liberalized Remittance Scheme for the following transactions: Emigration; Expenses in connection with medical treatment abroad; Studies abroad, if it is required by a country of emigration, medical institute offering treatment or the university respectively. If an individual remits any amount under the Liberalized Remittance Scheme in .....

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limit prescribed under the Liberalized Remittance Scheme for the purposes mentioned above. For persons other than individual The following remittances by persons other than individuals shall require prior approval of RBI: Donations exceeding 1% of their foreign exchange earnings during the previous three financial years or USD 5000000 whichever is less for- Creation of Chairs in reputed educational institutes; Contribution to funds (not being an investment fund) promoted by educational institut .....

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