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Foreign Exchange Regulations

Foreign Exchange Regulations

The exchange control regulations have been liberalised over the years to facilitate the inflow and outflow of funds from India. The changes have been introduced on a continuous basis in line with the government policy of economic liberalisation. Still, in few cases, specific approvals are required from the regulatory authorities for foreign exchange transactions/remittances.

These regulations in India are governed by the Foreign Exchange Management Act (“FEMA”) and the Regulations thereunder. The apex exchange control authority in India is the Reserve Bank of India (RBI) which regulates the law and is responsible for all key approvals.

FEMA is not only applicable to all parts of India but is also applicable to all branches, offices and agencies outside India which are owned or controlled by a person resident in India. It regulates all aspects of foreign exchange and has direct implications on external trade and payments.

FEMA is an important legislation which impacts foreign nationals who are working in India and also Indians who have gone outside India. It is important to be compliant with the exchange control regulations.

Key service offerings: 

KPMG in India offers the following services with regard to the payroll functions:

  • Advise on the type of bank accounts that can be opened by a foreign national in India 
  • Advise on whether a foreign national can invest in immovable properties, shares etc. in India 
  • Advise on the procedure for remittance of salary outside India and other incomes like rent, interest etc. earned in India.
  • Advise on the repatriation outside India of the sales proceeds of shares, immovable properties, etc. 
  • Advise on foreign exchange regulations in respect of assets acquired outside India before visiting India 
  • Advise on the procedure for obtaining a Person of Indian Origin card/Overseas Citizenship of India 
  • Advise on setting up a liaison office  
  • Advise with regard to preparation of letters seeking approval/permission from the exchange control authorities.  

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