FEMA Compliance is the Foreign Exchange Management Act, which amends and regulates foreign exchange intending to carry out external trade & payments in India. It was introduced in 1999 to replace FERA (Foreign Exchange Regulation Act) and to align India's foreign exchange regulations concerning the Liberalization of the economy. That said, the former was brought into existence to streamline cross-cultural trade and solidify foreign trade and Investment, followed by international transactions.
FEMA plays a significant role in ensuring the effective utilisation of Foreign Exchange resources while overseeing unauthorised transactions. As a result, within FEMA, the non-residents of India need to comply with the rules and regulations to carry out foreign-exchange transactions seamlessly.
In non-compliance, you can be subjected to penalties and fines, which might put you in legal trouble if not adhered to. Therefore, you should comply with the rules and regulations to conduct international business smoothly.
FEMA Regulations RBI
The Foreign Exchange Management Act comprises guidelines issued by the RBI, which empower them to comply with the specified instructions regarding payments or any activities associated with foreign exchange. The Reserve Bank of India has the authority to take action based on the following factors that necessitate-
- To ensure adherence to the Act's provisions, the Reserve Bank of India (RBI) directs the authority to issue rules, regulations, or directions, summoning authorised individuals to provide the requested information.
- If a person with authority disobeys the ruling of the Reserve Bank of India (as per the Act) and does not file the required returns after being given a chance to present their case, they may face a penalty of ten thousand rupees. In addition, if they violate any other ruling, they may be subject to an extra penalty of up to two thousand rupees per day for as long as the violation persists.
Therefore, you must comply with the FEMA RBI regulations to ensure effective implementation.