Forex violations could attract three times fine under FEMA

Foreign Exchange Management Act (FEMA) came into force on December 29, 1999. The Act contained a set of rules and regulations that empowered the Reserve Bank of India by giving the apex bank more control over foreign exchanges and transactions. FEMA also helped the government of India align the exchanges with the foreign trade policy in India. FEMA was a revamped version of the Foreign Exchange Regulation Act (FERA) of 1973. FERA, which came into effect from January 1947 aimed at regulating the financial exchange and securities and was implemented at a time when the forex reserves of India were low. With time and after the introduction of the post-liberalisation policies by the government, Parliament decided to transform and make amendments to the existing foreign exchange law. Hence, FERA was replaced by FEMA in 1999. The main objective of the Act was to facilitate external trade and payment in India. In addition to this, FEMA also aided the maintenance of foreign exchange markets in India and fostered an orderly development in the transactions pertaining to the market. The Act gives power to the Central government to keep a check on the flow of payments between two parties separated by international borders of the country. FERA was considered as a draconian law as it gave enormous power to the Enforcement Directorate (ED) in the case of foreign exchange violations. The ED officials could even arrest and raid any premises without a warrant. Any violation under FERA was a criminal offence and it attracted imprisonment. However, under FEMA the violation of foreign exchange laws was punishable with fine. Violation of FEMA attracts a penalty upto three times of the total sum involved. In a case where the sum is not quantifiable then the penalty is set at Rs 2 lakh. The Enforcement Directorate keeps a watch on the violations of foreign exchange guidelines as laid out under FEMA and in case of any violation the authorities can restrict the transactions for the parties involved. The parties involved, if found to be continuing the forex transactions after imposition of restrictions, can be fined Rs 5,000 per day. Read all the Latest News , Trending News ,  Cricket News , Bollywood News , India News and Entertainment News here. Follow us on Facebook, Twitter and Instagram.