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FEMA, 1999.

The Foreign Exchange Management Act (FEMA) of 1999 was enacted to facilitate external trade and maintain the flow of the foreign exchange market in India, replacing the earlier FERA of 1973. It defines residential status under FEMA, distinguishing between Persons Resident in India (PRI) and Persons Resident Outside India (PROI) based on their duration of stay and purpose of visit. Various examples illustrate how residency status is determined based on specific circumstances and intentions related to employment and vocation.

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11 views15 pages

FEMA, 1999.

The Foreign Exchange Management Act (FEMA) of 1999 was enacted to facilitate external trade and maintain the flow of the foreign exchange market in India, replacing the earlier FERA of 1973. It defines residential status under FEMA, distinguishing between Persons Resident in India (PRI) and Persons Resident Outside India (PROI) based on their duration of stay and purpose of visit. Various examples illustrate how residency status is determined based on specific circumstances and intentions related to employment and vocation.

Uploaded by

Khushi Singhal
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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FOREIGN EXCHANGE MANAGEMENT ACT , 1999

PREAMBLE APPLICABLE Commencement

To facilitate the To maintain the


external trade and flow of forex Whole of India 1st June , 2000
payments market in the
country

The FEMA repealed the FERA , 1973 completely and FERA was replaced by
FEMA , 1999.
RESIDENTIAL STATUS UNDER FEMA

• PRI as per Sec 2(v) means a person residing in India for more than
182 days ( > 182 days ) during the course of preceding F.Y ,
• but does not include :
A person who goes outside
India or stays outside India
for any of the 3 purposes

For any other purpose ,


the circumstances of which
Business / Vocation
Employment outside India indicates his intention to
outside India
stay outside India for an
uncertain period
A person who came to
India & stays in India for
any purpose OTHERWISE
than following 3
purposes

For any purpose , the


Business/ Vocation in circumstances of
Employment in India which indicates his
India
intention to stay in
India
Example 1 :

• Manish went outside India for the 1st time in FY 21-22 for
vacation . Comment on his residential status under FEMA

• Manish shall be regarded as PRI , because in Preceding F.Y (20-


21) he resides in India > 182 days and do not leave India for any
of the 3 purposes .
Example 2
• What if in the previous instance it was vocation instead of
vacation ?

• FEMA – 21-22 – PROI – Although he resides in India > 182 days


during previous FY 20-21 but he is going outside India for
vocation i.e for 1 of the 3 purposes as mentioned in Sec 2(v) of
FEMA, 1999.
Example 3
• Iron Man came to India for 1st time in F.Y 21-22 for vocation and
resides for 200 days . Comment for F.Y 21-22 and 22-23.

• F.Y 21-22 – PROI , because he does not reside in India for more than
182 days in F.Y 20-21

• F.Y 22-23 – PRI , because he resides in India for > 182 days and came
for 1 of the 3 purposes
Example 4
• What if Iron Man came in India for vacation ?

• 21-22 – PROI
• 22-23 – PROI
Example 5
• Ranbir is going out of India for first time in F.Y 21-22 (1.4.21) for MBA of 3
years.

• 21-22 – PRI
• 22-23 – PROI
Example 6
• Angelina , an airhostess of British Airways stayed at Mumbai base for
more than 182 days in FY 20-21 . Comment .

• 21-22 – PROI
• Although her stay in India exceeds 182 days in FY 20-21 , but it was a
compulsive stay and not for employment in India for any of the 3
purposes
Example 7

• Had she been employed by Mumbai branch of British Airways then


she would be considered a PRI
Following persons
are also regarded as
PRI

Any person or body Any office , branch or Any office , agency ,


corporate registered agency in India branch outside India
or incorporated in owned or controlled but owned or
India by PROI controlled by PRI
Example 8
• Korean Co. has a headquarter in Mumbai which controls its Singapore branch .

• Answer –
• Mumbai Branch – PRI
• Singapore Branch – PRI , because it is a branch outside India controlled by
Mumbai HQ which is a PRI .
PROI
• Person Resident Outside India –
• As per Section 2(w) , person resident outside India is any person who is not a
person resident in India

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