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Section 3, Foreign Exchange Mgt. Act 1999: Dealing in foreign exchange

Section 3 (Dealing in foreign exchange, etc) under Chapter II (Regulation and Management of Foreign Exchange) of the Foreign Exchange Management Act 1999 (FEMA)

❝Save as otherwise provided in this Act, rules or regulations made thereunder, or with the general or special permission of the Reserve Bank, no person shall—
 (a) deal in or transfer any foreign exchange or foreign security to any person not being an authorised person;
 (b) make any payment to or for the credit of any person resident outside India in any manner;
 (c) receive otherwise through an authorised person, any payment by order or on behalf of any person resident outside India in any manner.

Explanation.—For the purpose of this clause, where any person in, or resident in, India receives any payment by order or on behalf of any person resident outside India through any other person (including an authorised person) without a corresponding inward remittance from any place outside India, then, such person shall be deemed to have received such payment otherwise than through an authorised person;

(d) enter into any financial transaction in India as consideration for or in association with acquisition or creation or transfer of a right to acquire, any asset outside India by any person.

Explanation.—For the purpose of this clause, “financial transaction” means making any payment to, or for the credit of any person, or receiving any payment for, by order or on behalf of any person, or drawing, issuing or negotiating any bill of exchange or promissory note, or transferring any security or acknowledging any debt.❞




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Notes:

The Foreign Exchange Management Act, 1999 was amended by:
- the Finance Act, 2015 (Act No. 20 of 2015);
- the Finance Act, 2016 (Act No. 28 of 2016);
- the Finance Act, 2017 (Act No. 07 of 2017).

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