Foreign Exchange Management Act (FEMA)

The Foreign Exchange Management Act, 1999 (FEMA, Act No. 42 of 1999) is the Indian statute that governs dealing in foreign exchange, payments between residents and non-residents, and cross-border capital flows. It came into force on 1 June 2000, repealed the Foreign Exchange Regulation Act, 1973 , and is administered by the Reserve Bank of India and the Ministry of Finance.

The Act’s long title states its purpose as “facilitating external trade and payments and for promoting the orderly development and maintenance of foreign exchange market in India”. Its operative rules sit outside the Act. Section 5 frees current account drawals subject to rules the Central Government makes. Section 6 makes capital account drawals subject to RBI regulations for debt instruments and to Central Government rules for non-debt instruments, a split in force since 15 October 2019. RBI’s Foreign Exchange Department publishes those instruments with Master Directions addressed to authorised dealer banks.

For an Indian investor, FEMA sets the outer limits on every cross-border position. The Liberalised Remittance Scheme caps what a resident can send abroad at USD 250,000 a financial year. The NRE , NRO and FCNR(B) schemes decide whether a non-resident’s Indian money can go back out, and the Non-debt Instruments Rules 2019 decide how a foreign portfolio investor or an NRI may buy Indian shares and mutual fund units. Tax runs alongside: the Income-tax Act 2025 uses FEMA’s residence test for NRE interest and collects TCS on LRS remittances.

Enforcement is civil by default. Section 13 sets a penalty of up to three times the sum involved, the Directorate of Enforcement investigates, and most contraventions can be settled by compounding under the Foreign Exchange (Compounding Proceedings) Rules, 2024. Criminal liability attaches only to foreign assets acquired in contravention of the Act above a prescribed threshold, under section 13(1C) inserted in 2015.

Enactment and the repeal of FERA 1973

FEMA received the President’s assent on 29 December 1999 and came into force on 1 June 2000 under notification G.S.R. 371(E), dated 1 May 2000. Section 49(1) repealed the Foreign Exchange Regulation Act, 1973 (46 of 1973) and dissolved the FERA Appellate Board on the same date.

The Statement of Objects and Reasons, signed by Finance Minister Yashwant Sinha on 27 July 1998, records that FERA was reviewed in 1993 and that an RBI Task Force “submitted its report in 1994 recommending substantial changes”. FEMA makes a current account drawal permissible under section 5 unless the Central Government restricts it, and makes a contravention a civil matter punished by a monetary penalty after adjudication under section 13.

Section 49(3) allowed courts to take cognizance of FERA offences for two years after 1 June 2000, and section 49(4) kept offences committed under FERA governed by FERA. Proceedings begun before the repeal therefore ran to their end under the old law.

The Act has been amended four times, according to the consolidated text on India Code as on 1 June 2026: by the Finance Act 2015 (20 of 2015), the Finance Act 2016 (28 of 2016), the Finance Act 2017 (7 of 2017) and the International Financial Services Centres Authority Act, 2019 (50 of 2019). The 2015 amendments did the most: the debt and non-debt split, the foreign-asset offences in section 13(1A) to (1D), and the seizure power in section 37A.

Structure of the Act

FEMA has seven chapters, with sections numbered 1 to 49. Eight sections (20, 22, 24, 25, 26, 29, 30 and 31) were omitted by section 165 of the Finance Act 2017, the amendment that also moved FEMA appeals to the SAFEMA tribunal, and three were inserted (14A, 37A and 44A), so 44 sections are in force.

Source: The Foreign Exchange Management Act, 1999, consolidated text on India Code as on 1 June 2026.

Section 1(2) and (3) extend the Act to the whole of India, to branches and agencies outside India owned or controlled by a person resident in India, and to any contravention committed outside India by a person to whom the Act applies.

The residence test in section 2(v)

FEMA residence is a separate test from income-tax residence, and several outcomes in this article depend on it. Under section 2(v)(i), an individual is a person resident in India if they resided in India for “more than one hundred and eighty-two days during the course of the preceding financial year”. Two exclusions apply:

• a person who has gone out of India, or stays outside, for employment, for carrying on business or a vocation outside India, or with the intention of staying outside India for an uncertain period, is not resident even if the 182 days were met;
• a person who has come to India for a reason other than employment, business or an intention to stay for an uncertain period is not resident.

Section 2(v)(ii) to (iv) add any person or body corporate registered or incorporated in India, an office or branch in India owned or controlled by a non-resident, and an office or branch outside India owned or controlled by a resident. Section 2(w) defines a person resident outside India as anyone who is not resident in India.

The first exclusion decides the departure case. A person who has gone out of India for employment outside India falls outside section 2(v)(i) by the terms of that exclusion, so the day count in the preceding financial year does not make them resident. The Income-tax Act 2025 applies its own residence rules, so the FEMA and income-tax statuses can differ in a given year, and the NRE interest exemption follows the FEMA status, as the non-resident accounts section below explains.

Current account transactions and the 2000 Rules

A current account transaction is, by section 2(j), any transaction other than a capital account transaction. The definition expressly includes payments for foreign trade, services and short-term credit; interest on loans and net income from investments; remittances for the living expenses of parents, spouse and children abroad; and expenses for their foreign travel, education and medical care.

Section 5 lets “any person” sell or draw foreign exchange from an authorised person for a current account transaction, subject to restrictions the Central Government imposes “in public interest and in consultation with the Reserve Bank”. Those restrictions are the Foreign Exchange Management (Current Account Transactions) Rules, 2000, notified on 3 May 2000 and in force from 1 June 2000. They sort current account drawals into three schedules.

Source: Foreign Exchange Management (Current Account Transactions) Rules, 2000, RBI consolidated text updated to 30 June 2023; Schedule III as substituted by G.S.R. 426(E) dated 26 May 2015.

Schedule III works in step with the LRS. Its USD 250,000 ceiling is reduced by whatever the individual has already remitted under the LRS in the same financial year, so the two are one budget, not two. A proviso lets emigration, medical treatment and studies exceed the ceiling where the country of emigration, the hospital or the university requires a larger sum. Rule 3 also bars drawal of foreign exchange for travel to Nepal or Bhutan, or for a transaction with a resident of either country, though RBI may exempt the latter.

Exports sit under section 7, which requires a declaration of the full export value, and section 8, which requires a resident to whom foreign exchange is due to “realise and repatriate” it within the period RBI specifies. From 1 October 2026 those duties are worked out in the Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026 (FEMA 23(R)/2026-RB, dated 13 January 2026), which superseded the 2015 export regulations.

Capital account transactions: the debt and non-debt split

A capital account transaction, under section 2(e), is one “which alters the assets or liabilities, including contingent liabilities, outside India of persons resident in India or assets or liabilities in India of persons resident outside India”. Buying a US share, lending to a foreign subsidiary, an NRI buying Indian equity and an Indian company raising an external commercial borrowing all qualify.

Section 6(1) allows any person to draw foreign exchange for a capital account transaction, but only within the permission given under section 6(2) or 6(2A). Since 15 October 2019, when the amendments made by sections 139, 143 and 144 of the Finance Act 2015 took effect, those powers have been divided:

Source: FEMA sections 6, 46 and 47 as amended by the Finance Act 2015 with effect from 15 October 2019.

Section 6(3), the old list of capital account transactions RBI could regulate, was omitted on the same date. Section 47(3) kept RBI’s earlier capital account regulations alive until the Central Government amends or rescinds them. Several pre-2019 RBI regulations remain on RBI’s published list.

The first proviso to section 6(2) bars RBI and the Central Government from restricting drawal of foreign exchange for amortisation of loans or depreciation of direct investments in the ordinary course of business. Section 6(4) and 6(5) protect assets acquired before a change of residence: a resident may keep foreign currency, securities or property acquired while non-resident or inherited from a non-resident, and a non-resident may keep Indian assets acquired while resident or inherited from a resident.

Non-debt Instruments Rules 2019

The Non-debt Instruments Rules, notified as S.O. 3732(E) on 17 October 2019, superseded the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2017 and the 2018 regulations on immovable property in India. They carry the sector caps and entry routes for foreign direct investment , the limits for foreign portfolio investors, and the schemes under which NRIs and OCI cardholders buy Indian shares and units.

Two provisions show how the rules move. An entity of a country that shares a land border with India, or an investment whose beneficial owner is situated in or is a citizen of such a country, may invest only under the Government route. And insurance companies moved to 100 per cent foreign investment under the automatic route by the Foreign Exchange Management (Non-debt Instruments) (Second Amendment) Rules, 2026, S.O. 2186(E) dated 2 May 2026; the Life Insurance Corporation of India stays at 20 per cent automatic under an entry inserted by S.O. 1802(E) of 12 April 2022.

Overseas Investment Rules 2022

Section 4 bars a resident from acquiring or holding foreign exchange, foreign securities or immovable property outside India “save as otherwise provided in this Act”. The Overseas Investment Rules, Regulations and Directions, 2022, in effect from 22 August 2022, are the main exception: they govern overseas direct investment by Indian companies and overseas portfolio investment and property purchase by resident individuals. An individual funds those investments through the LRS, which is how the USD 250,000 cap reaches a resident buying US-listed shares or units of a foreign fund. Indian international mutual funds are not LRS remittances by the investor; they invest abroad within a separate industry-wide overseas investment ceiling (see overseas investment cap for mutual funds ).

RBI regulations and Central Government rules in force

FEMA itself is short; the operative detail sits in rules under section 46 and regulations under section 47. RBI’s published list, fetched on 22 October 2026, includes the following instruments that most often touch an investor or a returning NRI.

Source: RBI, FEMA Regulations and Rules pages, and the notifications named. The 2026 Guarantees and Authorised Persons Regulations commence on publication in the Official Gazette; the gazette dates could not be confirmed at a primary source, so only the RBI notification dates are stated here.

RBI’s list on 22 October 2026 still showed the superseded Export of Goods and Services Regulations, 2015 beside their 2026 replacement. Regulation 1(2) of the 2026 text settles the point: the new regulations apply from 1 October 2026.

Authorised persons

Section 3(a) bars any person from dealing in or transferring foreign exchange or a foreign security to anyone other than an authorised person. Section 10 empowers RBI to authorise, in writing and revocably, authorised dealers, money changers, offshore banking units and others. A bank buying dollars for a student’s fees is acting as an authorised dealer; a person who buys dollars from an unlicensed dealer commits the section 3(a) contravention that only the Directorate of Enforcement can compound.

The Foreign Exchange Management (Authorised Persons) Regulations, 2026 (FEMA 401/2026-RB, dated 30 April 2026) reorganised the system:

• RBI now considers fresh authorisation only in three categories: AD Category-I, AD Category-II and AD Category-III, with applications made through RBI’s PRAVAAH portal to the regional office.
• Fresh applications to become a Full Fledged Money Changer are no longer considered, except those already under process when the regulations came into force.
• Money-changing reaches the retail customer through the Forex Correspondent Scheme in Chapter VI, under which an AD Category-I or AD Category-II entity appoints Forex Correspondents as its agents on a principal-agent model.
• An applicant whose authorisation is rejected or revoked may appeal, and the Appellate Authority passes a reasoned order within 60 calendar days of receiving the appeal.

Section 10(5) requires the authorised person to take a declaration from the customer that the foreign exchange will be used for the stated purpose, and section 10(6) treats use for another purpose as a contravention by the customer. Section 11(3) lets RBI penalise an authorised person up to Rs 10,000, plus Rs 2,000 a day for a continuing contravention, for breaching its directions.

Liberalised Remittance Scheme

The Liberalised Remittance Scheme lets a resident individual remit up to USD 250,000 per financial year (April to March) for any permitted current or capital account transaction, or a combination of both. RBI introduced it on 4 February 2004 by A.P. (DIR Series) Circular No. 64, read with G.S.R. 207(E) of 23 March 2004, and runs it today under Master Direction FED No. 7/2015-16, updated as on 6 September 2024.

Source: RBI Master Direction, Liberalised Remittance Scheme, para A.2.

The limit has been cut once: from USD 200,000 to USD 75,000 on 14 August 2013. It took two steps over the following 21 months to reach the present USD 250,000.

Who may use it

The scheme is open to every resident individual, minors included, with Form A2 countersigned by the natural guardian for a minor. It is not available to corporates, partnership firms, Hindu undivided families or trusts. Family members may club their limits for a current account purpose, but not for a capital account transaction unless they are co-owners of the investment. A Permanent Account Number has been mandatory for every LRS remittance since A.P. (DIR Series) Circular No. 32 of 19 June 2018.

Permitted and barred uses

Permitted capital account uses under para A.6 of the Master Direction are a foreign currency account with a bank abroad; immovable property abroad, overseas direct investment and overseas portfolio investment under the Overseas Investment Rules, Regulations and Directions 2022; and loans, including rupee loans to NRI relatives as defined in the Companies Act 2013. Schedule III current account purposes, from travel to studies abroad, draw on the same USD 250,000.

The Master Direction bars three uses outright:

1. remittances for margins or margin calls to overseas exchanges or overseas counterparties;
2. capital account remittances to countries the Financial Action Task Force identifies as non-cooperative;
3. remittances to individuals or entities identified as posing a significant risk of committing acts of terrorism.

Foreign exchange bought under the LRS and not spent or reinvested must be repatriated and surrendered within 180 days, under regulation 7 of the Foreign Exchange Management (Realisation, Repatriation and Surrender of Foreign Exchange) Regulations, 2015.

Remittances to GIFT City

Since A.P. (DIR Series) Circular No. 15 of 10 July 2024, authorised persons may send LRS remittances to International Financial Services Centres in India, such as GIFT City , for all permissible purposes. That covers financial products regulated under the IFSCA Act 2019 inside the IFSC, and onward current or capital account transactions in other jurisdictions through a foreign currency account held in the IFSC. A resident may not settle domestic transactions with other residents through that IFSC account. Section 44A, inserted by the IFSCA Act with effect from 1 October 2020, moves RBI’s FEMA powers over financial products and institutions in an IFSC to the International Financial Services Centres Authority.

TCS on LRS remittances from 1 April 2026

Tax collected at source on LRS remittances is levied by the Income-tax Act, not by FEMA, but it is collected by the same authorised dealer at the same moment. From 1 April 2026 the charging provision is section 394(1), Serial No. 7, of the Income-tax Act 2025, as amended by section 85 of the Finance Act 2026 (Act No. 4 of 2026). Section 206C(1G) of the Income-tax Act 1961 governed remittances made before that date.

Source: Income-tax Act 2025, s.394(1) Table, Sl. Nos. 7 and 8, and s.394(4); Finance Act 2026, s.85(e) and (f), in force from 1 April 2026 under s.1(2)(a).

Two mechanics follow from the text. The authorised dealer does not collect on an amount on which the tour operator has already collected under Serial No. 8 (section 394(4)(a)). No TCS is collected where the remitter is already liable to deduct tax at source on the payment and has done so (section 394(5)).

The Serial No. 7 entry reads “an amount or aggregate of the amounts exceeding ten lakh rupees”. The table does not itself state whether the rate applies to the whole remittance or only to the part above Rs 10 lakh, and CBDT guidance on that point under the 2025 Act could not be confirmed at a primary source, so no worked TCS amount is stated here. The computed figure appears on the bank’s TCS certificate. How to track TCS on foreign remittance covers the credit in Form 26AS and the return.

Non-resident accounts: NRE, NRO and FCNR(B)

The Foreign Exchange Management (Deposit) Regulations, 2016 (FEMA 5(R)/2016-RB, dated 1 April 2016, amended up to 29 June 2026) set out three account schemes for people resident outside India. They differ in who may open them, the currency they are held in, and how their interest is taxed, and the NRO account carries a repatriation cap.

Source: FEMA 5(R)/2016-RB; FEMA 13(R)/2016-RB, regulation 4(2); Income-tax Act 2025, Schedule IV. The schedules of the Deposit Regulations, which set out permitted credits, repatriability, FCNR(B) tenor and permitted currencies scheme by scheme, could not be read at the primary source, so those terms are not stated here.

The USD 1 million NRO limit

Regulation 4(2) of the Foreign Exchange Management (Remittance of Assets) Regulations, 2016 lets a non-resident Indian or a person of Indian origin remit “an amount, not exceeding USD 1,000,000 (US Dollar One million only) per financial year” out of NRO balances, the sale proceeds of assets, or assets acquired by inheritance or legacy, on documentary evidence. The same limit covers money received under a deed of settlement by a parent or relative that takes effect on the settlor’s death. Anything above USD 1 million in a financial year needs RBI approval. The limit is per person, so a couple with separate NRO accounts each has one. The repatriation of mutual fund redemption proceeds from an NRO-funded folio runs through this limit.

NRE interest and the FEMA residence test

Under the Income-tax Act 1961 NRE interest was exempt by section 10(4)(ii). Under the 2025 Act it is Schedule IV, Serial No. 1, which excludes “any income by way of interest” on an NRE account for an individual who is “a resident outside India as defined in section 2(w) of the Foreign Exchange Management Act, 1999”, or who has RBI permission to maintain the account. The exemption therefore follows FEMA residence under sections 2(v) and 2(w), not residence under the Income-tax Act, so for an individual whose status changes during a year, the FEMA test decides whether NRE interest remains excluded.

Interest on an NRO account is taxable, and an NRI’s mutual fund redemptions bear TDS under the 2025 Act’s provisions for payments to non-residents, which TDS for NRI mutual fund investors explains, with DTAA relief where a treaty applies.

NRI and foreign portfolio investment in Indian securities

Purchases of Indian shares and mutual fund units by non-residents are capital account transactions in non-debt instruments, so the Non-debt Instruments Rules 2019 govern them, with SEBI rules governing the market side.

• NRIs and OCI cardholders buy listed shares on a stock exchange on a repatriation basis through an NRE account, or on a non-repatriation basis through an NRO account. Zerodha’s NRI PIS account and non-PIS account are a broker’s implementation of the two routes. Mutual fund units are bought through the NRE route or the NRO route , and repatriability follows the funding account.
• Foreign portfolio investors register with SEBI under the SEBI (Foreign Portfolio Investors) Regulations, 2019, and invest within the FPI limits in the Non-debt Instruments Rules; debt investment by FPIs falls under RBI’s Debt Instruments Regulations.
• Residents investing abroad use the Overseas Investment Rules 2022 and the LRS, or buy an Indian international fund , which needs no LRS remittance by the investor.

A US or Canadian resident faces a separate constraint unrelated to FEMA: some AMCs restrict subscriptions from US and Canadian residents because of FATCA reporting. The FEMA compliance guide for NRI mutual fund investors sets out the account, KYC and repatriation steps in order.

Contraventions and penalties

Section 13(1) is the general penalty. A person who contravenes the Act, a rule, a regulation, a notification, a direction, an order, or a condition of an authorisation “shall, upon adjudication, be liable to a penalty up to thrice the sum involved in such contravention where such amount is quantifiable, or up to two lakh rupees where the amount is not quantifiable, and where such contravention is a continuing one, further penalty which may extend to five thousand rupees for every day after the first day during which the contravention continues”. Under section 13(2) the Adjudicating Authority may also confiscate the currency, security or property involved and direct foreign exchange holdings to be brought back to India.

The Finance Act 2015 added a separate regime for foreign assets acquired in contravention of the Act, in force from 9 September 2015:

Source: FEMA sections 13 and 37A, inserted by sections 140 and 142 of the Finance Act 2015. The monetary threshold below which no seizure is made is prescribed by rules under section 46(2)(gg); it could not be confirmed at a primary source, so no figure is stated here.

Two enforcement provisions back the penalty. Section 14 allows civil imprisonment if a penalty is not paid within 90 days of the notice: detention of up to three years where the demand exceeds Rs 1 crore and up to six months in any other case. Section 14A, inserted by the Finance Act 2016, lets an officer not below Assistant Director recover arrears with the powers of a tax recovery officer under the Second Schedule to the Income-tax Act 1961.

The Directorate of Enforcement, established under section 36, investigates contraventions under section 37 with the powers of an income-tax authority. The same agency administers the Prevention of Money Laundering Act, 2002 , and rule 9(c) of the 2024 Compounding Rules routes FEMA cases it suspects involve money laundering or terror financing to adjudication rather than settlement.

Compounding under the 2024 Rules

Compounding settles a contravention for a sum fixed by the compounding authority, and once that sum is paid section 15(2) bars any further proceedings for it. Section 15(1) requires the application to be compounded within 180 days of receipt. The procedure is in the Foreign Exchange (Compounding Proceedings) Rules, 2024, notified as G.S.R. 566(E) on 12 September 2024 in supersession of the 2000 Rules, and in RBI’s Master Direction on compounding, FED Master Direction No. 04/2025-26 dated 22 April 2025.

Paragraph 6.2 of the Master Direction says that compounding “is a voluntary process and only for admitted contraventions”. An applicant who disputes the contravention takes the adjudication route instead.

Who compounds and at what level

Source: Foreign Exchange (Compounding Proceedings) Rules, 2024, rule 4.

Contraventions of section 3(a), dealing in foreign exchange with someone who is not an authorised person, go to the Directorate of Enforcement under rule 5, with the deciding officer rising from a Deputy Director for sums of Rs 5 lakh or below to the Director jointly with a Special Director for Rs 1 crore or more. The application fee is Rs 10,000 plus GST under both rules; RBI’s Master Direction notes GST at 18 per cent at present.

Time limits and exclusions

• The order must issue “not later than one hundred and eighty days from the date of receipt of such application” (rule 8(2)).
• The compounded sum must be paid within 15 days of the order (rule 10); if it is not, the application is treated as never made (rule 11).
• A contravention committed within three years of a similar contravention having been compounded cannot be compounded (rules 4(2) and 5(2)).
• Rule 9 excludes five classes: an unquantifiable sum; a section 37A case; a contravention the Directorate of Enforcement considers serious and suspects involves money laundering, terror financing or a threat to sovereignty; a case where the Adjudicating Authority has already imposed a section 13 penalty; and a case needing further investigation to fix the amount.

The computation matrix

Paragraph 5.4 of the Master Direction gives RBI’s guidance matrix for the compounded sum, with the caveat that actual amounts “may sometimes vary”. The matrix sorts contraventions into five rows.

Source: RBI Master Direction, Compounding of Contraventions under FEMA, 1999, FED MD No. 04/2025-26, para 5.4.

The total may not exceed 300 per cent of the sum involved. Where the sum is below Rs 1 lakh, the amount is capped at simple interest at 5 per cent a year for reporting contraventions or 10 per cent for others. For reporting contraventions in row 1, delay is prorated by month, rounded up to the next month.

A worked example on row 1: an Indian company receives Rs 50 lakh of foreign investment and files the required report 27 months late. The sum falls in the Rs 40 lakh to below Rs 1 crore band, so the yearly amount is Rs 7,000. The compounded sum is Rs 10,000 plus Rs 7,000 multiplied by 27/12, which is Rs 10,000 plus Rs 15,750, or Rs 25,750, before the Rs 10,000 application fee and GST. RBI treats this as guidance, and the order can differ.

Adjudication and appeals

A contravention that is not compounded goes to adjudication. Under section 16 the Central Government appoints officers as Adjudicating Authorities by notification in the Official Gazette, and an inquiry starts only on a written complaint by an authorised officer. The appeal path has three tiers.

Source: FEMA sections 16 to 19 and 35; section 18 as substituted by section 165 of the Finance Act 2017 with effect from 26 May 2017.

The forum in the middle row changed in 2017. FEMA originally set up its own Appellate Tribunal for Foreign Exchange. Section 18, as substituted by the Finance Act 2017, makes the Appellate Tribunal constituted under section 12(1) of the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 the Appellate Tribunal for FEMA from 26 May 2017, and sections 20, 22, 24 to 26 and 29 to 31 were omitted on the same date. Section 34 bars civil courts from hearing any matter an Adjudicating Authority, the Special Director (Appeals) or the Appellate Tribunal is empowered to decide.

Corrections to this page

The version of this article published on 16 May 2026 contained errors that the primary documents contradict. They are listed here so that the incorrect statements are not repeated:

• Appellate tribunal. It named the “Appellate Tribunal for Foreign Exchange” as the current appellate body. Since 26 May 2017 the forum is the SAFEMA 1976 Appellate Tribunal (FEMA s.18 as substituted by the Finance Act 2017), with the Special Director (Appeals) as a separate first tier under s.17.
• Compounding and guilt. It said compounding works “without admission of guilt”. RBI’s Master Direction No. 04/2025-26, para 6.2, limits compounding to “admitted contraventions”.
• TCS rate on education and medical remittances. It gave the TCS rate as 5 per cent under the Finance Act 2023 framework. From 1 April 2026 the rate is 2 per cent under s.394 of the Income-tax Act 2025 as amended by s.85 of the Finance Act 2026.
• Section count. It said FEMA has 49 sections. Sections are numbered 1 to 49, but eight are omitted and three inserted, leaving 44 in force.
• External commercial borrowing. It placed ECB within the Non-debt Instruments Rules. Borrowing is a debt instrument and falls under RBI’s regulations under s.6(2), not the Central Government’s non-debt rules.

See also

• Reserve Bank of India
• SEBI
• SEBI Act 1992
• Foreign Exchange Regulation Act, 1973
• Directorate of Enforcement
• Prevention of Money Laundering Act, 2002
• Liberalised Remittance Scheme
• Tax collected at source
• How to track TCS on foreign remittance
• Foreign direct investment
• Foreign portfolio investor
• International Financial Services Centres Authority
• GIFT City
• NRE account
• NRO account
• FCNR(B) account
• NRI mutual fund investor, NRE route
• NRI mutual fund investor, NRO route
• NRE route for mutual funds
• NRO route for mutual funds
• How to comply with FEMA as an NRI mutual fund investor
• How to open an NRI mutual fund account
• How to redeem mutual funds as an NRI with repatriation
• PIO and OCI mutual fund rules
• TDS for NRI mutual fund investors
• DTAA relief for NRI mutual fund investors
• FATCA and US or Canada NRI investors
• Zerodha NRI PIS account
• Zerodha NRI non-PIS account
• How to open a Zerodha NRI account
• International mutual funds in India
• Overseas investment cap for mutual funds
• Income-tax Act 2025
• Income tax in India
• Capital gains tax in India
• Permanent Account Number
• Mutual fund
• Mutual funds in India
• National Stock Exchange
• Bombay Stock Exchange

External references

• Reserve Bank of India, FEMA notifications and regulations
• Reserve Bank of India, Master Directions
• India Code, Foreign Exchange Management Act, 1999
• Directorate of Enforcement
• Income-tax Act, 2025, Gazette of India
• Finance Act, 2026, Gazette of India

References

1. The Foreign Exchange Management Act, 1999 (Act No. 42 of 1999), consolidated text as on 1 June 2026, India Code; commencement notification G.S.R. 371(E), 1 May 2000.
2. Foreign Exchange Management (Current Account Transactions) Rules, 2000, notified 3 May 2000; Schedule III substituted by G.S.R. 426(E), 26 May 2015; RBI consolidated text updated to 30 June 2023.
3. Foreign Exchange Management (Non-debt Instruments) Rules, 2019, S.O. 3732(E), 17 October 2019, RBI consolidated text updated to 2 September 2026; (Second Amendment) Rules, 2026, S.O. 2186(E), 2 May 2026.
4. Foreign Exchange (Compounding Proceedings) Rules, 2024, G.S.R. 566(E), 12 September 2024.
5. Reserve Bank of India, Master Direction, Compounding of Contraventions under FEMA, 1999, RBI/FED/2025-26/135, FED Master Direction No. 04/2025-26, 22 April 2025.
6. Reserve Bank of India, Master Direction, Liberalised Remittance Scheme, RBI/FED/2017-18/3, FED Master Direction No. 7/2015-16, updated as on 6 September 2024.
7. Foreign Exchange Management (Deposit) Regulations, 2016, FEMA 5(R)/2016-RB, and (Remittance of Assets) Regulations, 2016, FEMA 13(R)/2016-RB, both 1 April 2016.
8. Foreign Exchange Management (Guarantees) Regulations, 2026, FEMA 8(R)/2026-RB, 6 January 2026; (Export and Import of Goods and Services) Regulations, 2026, FEMA 23(R)/2026-RB, 13 January 2026; (Authorised Persons) Regulations, 2026, FEMA 401/2026-RB, 30 April 2026.
9. Income-tax Act, 2025 (Act No. 30 of 2025), section 394 and Schedule IV; Finance Act, 2026 (Act No. 4 of 2026), sections 1(2)(a) and 85.
10. Finance Act, 2015 (20 of 2015), sections 138 to 144; Finance Act, 2017 (7 of 2017), section 165.