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A key difference between FERA and FEMA is that the former regulated the foreign trade while the later encouraged it. DIFFERENCES. CHANGES / PROGRESSION FROM FERA TO FEMA – A STEP AHEAD. Similarities. The similarities between FERA and FEMA are as follows. Difference between FERA and FEMA (Foreign Exchange Regulation Act and Foreign Exchange Management Act). Article shared by. FERA (Foreign Exchange.

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The economic policy of liberalisation was first time introduced in India in the diffreence that opened gates for foreign investment in many sectors. Imprisonment is prescribed only when one fails to pay the penalty.

This statute was enacted in The act is so elaborate and exhaustive such that it covers all citizens of India who are living inside or outside India. Conversely, the punishment for violating the provisions of FEMA is a monetary penalty, which may turn into imprisonment if the fine is not paid on time. The basis for betwwen residential status in both acts shows significant levels of differences.

PAN of the Business. The Diffeence was passed in at a time when there was acute shortage of foreign exchange in the country. There is minimal uncertainty the execution of these legal pointers is equally essential for just about every society.

It ended up being a prerequisite in FERA to collect the consent of RBI with respect to this reversal of capital relating outside surgeries is possibly possible.

Difference between FERA and FEMA – Difference Between

It specifically deals with possession and retention of foreign currency and includes all kinds of foreign securities and immovable property. It extends to the whole of India. It introduced resident ship in place of citizenship. This act is a civil law and the contraventions of the Act provide for arrest only in exceptional cases. Moreover, any agency that is managed by a resident of India is also subjected to requirements of FEMA.


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Under FEMA the difference of penalty has been considerably decreased to three times the amount involved. The definition of Authorized person has been widened to include banks, money changes, off shore banking Units etc.

Difference Between FERA and FEMA

FERA is a non-compoundable offense, which means that the complainant cannot enter into a compromise and drop the case against the accused. After you affirm that the Indian legislation, you may possibly have to understand just two phrases have been found proper directly here that may be extremely complicated commonly known whilst both the FERA and FEMA. Some of them are restrictive, and some has widened the scope.

However, FEMA is a compoundable violation where the accused can choose to agree with the accused and drop the charges.

On the other hand, contravening the provisions of FERA results to jail term with no requirement of monetary charges.

FEMA is much simple, and consist of only 49 sections. The act was formulated and implemented in As per this law; a person who is living in India from last 6 months can be considered as an Indian. For FERA, the citizenship of a person is the basis for deciding the residential status of the person. The act came into force, to regulate inflow and outflow of foreign currency, foreign payments, securities and purchase of fixed assets by the foreigners. FEMA do not view outflow of foreign exchange as an evil act however it rather works to factor it out to manage the process of foreign exchange.

FERA and FEMA | Foreign Exchange Management Act (FEMA) | Areas of Law | Law Library | AdvocateKhoj

You Might Also Like: Get News Alerts from Taxmann. Click below to re-subscribe. Now, the restrictions on withdrawal of Foreign Exchange for the purpose of current Account Tema, has been removed.


The Reserve Bank of India and central government would continue to be the regulatory bodies. On one flip side hand, FEMA represents Foreign Exchange Management Act that has been passed because of statement in Indian Parliament from the national government inside the yr of It was formulated and implemented to increase efficiency and effectiveness in the foreign exchange market.

FERA was mainly formulated to deal with deep crunch of foreign exchange post world war II and hence was a rigid piece of legislation which have left all the businesspeople and Indian citizens at the mercy of Enforcement Directorate as violence of FERA was considered a criminal act and there were major penalties associated with it. Press Releases Blog Posts.

Difference between FERA and FEMA

FEMA had beteen the need of the hour to support the pro- liberalisation policies of the Government of India. You have ferq the notification on recent updates. The main involving those 2 terminologies is the main aim as FERA has been manufactured in a bid to guard and forestall abuse of overseas alternative. A person has to obtain permission of RBI with regard to transfer of funds related to external operations.

This is exactly the reason why a conversation will likely be found inside the subsequent hints to complicated their own meaning and forms.