Difference between FERA and FEMA?
Posted on October 01 2020
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We all know that Foreign Exchange Regulation Act (FERA) is a regulation which was passed by the Indian Parliament in 1973 and it came into action on 1St of January, 1974. FERA introduced strict regulations on transactions involving foreign exchange and controlled the import and export of currency.
Several years back; there was a black market for buying and selling foreign currency in India. Eventually the government accomplished that FERA rules were perhaps an obstacle to the economic liberalization. Thereafter FERA was abolished by the government and replaced by the Foreign Exchange Management Act (FEMA), which liberalized foreign exchange con trolls and detached many restrictions on foreign investment.
FEMA therefore came into action. The aims being to improve and co operate laws that are related to the transactions of the foreign exchange and encourage an orderly maintenance and development, of the foreign exchange market in India.
Interestingly the concept of Non-Resident under FERA is not the same as that which the Income Tax Act defines. Unlike the Income Tax Act, under FERA, it is the intention of a person to be in India or outside India that is considered to be the most important factor in determining their residential status.
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