Dear Traders, I agree Ramdass.
The legal framework for administration of foreign exchange transactions in India is provided by the Foreign Exchange Management Act, 1999. Under the Act, freedom has been granted for buying and selling of foreign exchange for undertaking current account transactions. The Government has issued Foreign Exchange Management (Current Account Transactions) Rules,2000 which have been notified vide Notifications GSR. 381(E) dated May 3, 2000, S.O. 301(E) dated March 30, 2001 and GSR.608(E) dated September 13, 2004 as amended from time to time. The last amendment to the G.S.R is vide Notification No., G.S.R. No.412 (E) dated July 11, 2006.
Under the Foreign Exchange Management Act, 1999 (FEMA) [which replaced FERA], which has come into force with effect from June 1, 2000, all transactions involving foreign exchange have been classified either as Capital or Current Account transactions. All transactions undertaken by a resident that do not alter his assets or liabilities outside India are current account transactions. In terms of Section 5 of the FEMA, persons resident in India are free to buy or sell foreign exchange for any current account transaction except for those transactions for which drawal of foreign exchange has been prohibited by Central Government, vide its Notification referred to above. A copy of the Notification is available in the Official Gazette as well as an annexure to our Master Circular on Miscellaneous Remittances available at our website
www.mastercirculars.rbi.org.in.
These details are available on the Reserve Banks website as well as with the authorised dealers and regional offices of the Foreign Exchange Department of Reserve Bank. This FAQ attempts to answer all such questions in simple language.
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II. Liberalised Remittance Scheme of USD 200,000.
31. What is the Liberalised Remittance Scheme of USD 200,000?
This is a facility extended to all resident individuals under which, they may freely remit upto USD 200,000 per financial year for any permissible current or capital account transaction or a combination of both.
32. What are the purpose/s for which remittance can be made under the Scheme?
This facility is available for making remittance/s for any permissible current or capital account transaction or a combination of both. It is not available for purposes specifically prohibited (Schedule I) or regulated by the Government of India (Schedule II) of Foreign Exchange Management (Current Account Transactions) Rules, 2000.
33. Who is eligible to avail of this Liberalised Remittance Facility?
The facility is available to resident individuals only.
34. Provide an illustrative list of capital account transactions permitted under the scheme?
The remittance under the Scheme is available to the resident individuals for any permitted current or capital account transactions or a combination of both. Under the Scheme, resident individuals can acquire and hold immovable property or shares or debt instruments or any other assets outside India, without prior approval of the Reserve Bank. Individuals can also open, maintain and hold foreign currency accounts with banks outside India. However, it is clarified that remittance from India for margins or margin calls to overseas exchanges / overseas counterparty are not allowed under the Scheme.