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Context:

The Enforcement Directorate (ED) initiated a search against George Soros' Open Society Foundation (OSF) over alleged violations of the Foreign Exchange Management Act (FEMA).

About FEMA

The Foreign Exchange Management Act (FEMA) was enacted in 1999 to manage foreign exchange. It replaced the Foreign Exchange Regulation Act (FERA) of 1973.

Key Differences from FERA

• FERA was regulatory and control-oriented, while FEMA is managerial and facilitative.
• FERA imposed criminal penalties, whereas FEMA adopted civil penalties, making compliance less punitive.
• FEMA provides more freedom in current account transactions and specific regulations for capital account transactions, supporting economic growth.

The Foreign Exchange Management Act (FEMA) falls under the purview of the Ministry of Finance, specifically the Department of Economic Affairs.

FEMA applies to the whole of India and extends to Indian entities abroad, managed by the RBI with the Enforcement Directorate in New Delhi handling investigations. It regulates:

• Acquisition, holding, owning, possessing, or transferring foreign exchange, foreign security, or immovable property outside India, restricted under Section 4.
• Capital account transactions, governed by Section 6, allowing transactions like FDI and ECB with RBI regulations.
• Export and import of goods and services, with exporters required to declare full value under Section 7.

Penalties and Compliance

Penalties under FEMA are civil, governed by Section 13, with provisions for:

• Penalties up to three times the sum involved in the contravention or Rs. 200,000 if unquantifiable.
• Continuing violations attract further penalties of Rs. 5,000 per day.

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Source:

THE HINDU

https://t.me/+hJqMV1O0se03Njk9