The Classic Partners LLP

FEMA Compliance & Advisory

The Foreign Exchange Management Act, 1999 governs every cross-border rupee — NRI bank accounts, property, investments, remittances, and business transactions. We keep individuals and companies on the right side of FEMA and the RBI.

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What is FEMA?

The Foreign Exchange Management Act, 1999 (FEMA) regulates all foreign exchange transactions in India — who may hold which accounts, what NRIs can invest in, how funds move in and out of India, and what reporting the RBI requires. FEMA residential status is different from income-tax status: it turns on intention and purpose of stay, not just day counts — compare with residential status under the Income Tax Act and see our Non-Resident Indian page for the full framework.

FEMA for Individuals (NRIs & Residents)

Bank accounts: mandatory redesignation to NRO, and eligibility for NRE/FCNR accounts, when you become a non-resident; reconversion on return.
Outward remittances: residents remit under the Liberalised Remittance Scheme; NRIs repatriate via the NRO USD 1 million route.
Immovable property: NRIs/OCIs may buy residential and commercial property but not agricultural land, plantations, or farmhouses.
Investments: NRI investment in shares, mutual funds, and deposits on repatriable or non-repatriable basis under prescribed schedules.
Returning Indians: RFC accounts and asset-holding relaxations — see Returning Indian and recent immigrant services.

FEMA for Businesses

FDI compliance: sectoral caps, pricing guidelines, and reporting of foreign investment (Form FC-GPR, FC-TRS) on RBI's FIRMS portal.
ODI: overseas direct investment structuring and Form ODI reporting for Indian companies investing abroad.
ECB: external commercial borrowing eligibility, end-use rules, and monthly returns.
Export/Import: realisation timelines, EDPMS/IDPMS reconciliation, and write-off approvals.
Annual filings: FLA return for companies with foreign investment or overseas assets.

Compounding and Regularisation

FEMA contraventions — delayed reporting, wrong account usage, unapproved transactions — can be compounded with the RBI rather than litigated. We quantify the contravention, prepare the compounding application, and regularise past positions, alongside any linked tax filings under our international tax services.

Frequently Asked Questions

What does FEMA regulate?

FEMA governs all foreign exchange transactions in India — NRI and resident bank accounts, cross-border remittances, foreign investment into India, Indian investment abroad, property dealings by NRIs/OCIs, and the associated RBI reporting.

How is FEMA residential status different from income tax status?

Income tax status is determined purely by day counts, while FEMA status depends on the purpose and intention of stay — a person leaving India for employment becomes a FEMA non-resident from the date of departure, regardless of days spent in India that year.

Can an NRI continue a resident savings account?

No. On becoming a non-resident, resident savings accounts must be redesignated as NRO accounts; continuing to operate a resident account is a FEMA contravention.

Can NRIs buy agricultural land in India?

No. NRIs and OCIs cannot purchase agricultural land, plantation property, or farmhouses, although they may inherit such property.

What happens if FEMA rules are violated?

Most contraventions can be regularised through RBI's compounding process on payment of a compounding amount; we prepare and file the application and bring the underlying reporting up to date.

Need FEMA clarity for yourself or your business?

From account redesignation to FDI reporting and compounding, our team handles your complete FEMA compliance.