Foreign Exchange Management Act, 1999 (FEMA) Consultancy Services

The Foreign Exchange Management Act (FEMA) is a 1999 Indian law “to consolidate and amend the law relating to foreign exchange with the objective of facilitating external trade and payments and for promoting the orderly development and maintenance of foreign exchange market in India”. Whenever a Foreign Investor invests in India or A Indian Investor invest outside, he needs to comply with regulations framed under FEMA by Directorate of foreign trade and Reserve Bank of India.

S.K Patodia & Associates Provide following services to its clients related to FEMA in pre Business Set up phase

Foreign direct investment (FDI) is a direct investment into production or business in a country by an individual or company of another country, either by buying a company in the target country or by expanding operations of an existing business in that country. We plan FDI for our client by understanding client’s business and determining ways through which Investment can be done in India. Also there are various sectors in which FDI is restricted upto a certain level. WE understand our client’s nature of business and help determining level of FDI in particular Sector.

• Every manufacturer of dutiable goods.
• First and second stage dealers desiring to issue Cenvatable invoice.
• Persons holding warehouses for storing non‐duty paid goods.

“Service Tax” is a tax imposed by Government of India on services provided in India. Every service provider, providing services chargeable to service tax is required to obtain service tax registration number once his turnover exceed INR 9 Lakhs . After the recent amendment in law, service tax is charged on all services except the services in the negative list of services. The current rate is 12.36% on gross value of the service, the breakup is as follows-

This service involve analysing various modes through which investment can be brought in India, be it equity, debt. While determine the entry modes special emphasis is kept on to choose mode which attracts least compliances and allows easy repatriation of funds from India to Investor’s home country. Here again RBI, through FEMA has prescribes different sets of compliances for respective entry modes and exit modes. We assist our client in all the related compliances.

There are various restricted sectors, which require prior approval of apex bank of India before establishing business in India. We assist our client in determining whether the sector in which he wishes to invest requires prior approval of Reserve Bank of India and if required we obtain such permission on behalf of our client.

As prescribed by FEMA the price of the shares subscribed by Foreign Investor of Indian Company should be based on

• SEBI guidelines in case of listed companies.
• not less than fair value of shares determined by a SEBI registered Merchant Banker or a Chartered Accountant as per the Discounted Free Cash Flow Method (DCF) in case of unlisted companies

S.K Patodia & Associates being a Chartered Account firm is eligible for such valuation of shares.

Every communication of individual and corporate with RBI has to route thrugh authorised agents appointed by Reserve bank of India. In order to avoid our client’s problem of coordinating with these authorised agents for any communication with RBI, we provide representational services to our clients, where we represent our client before authorised agents for any communication with RBI.

When a foreign Investor intends to being funds to India by way of Debt, instead of equity, then again a different set of guideline has been prescribed by Reserve Bank of India through Foreign Exchange Management Act. We ensure that our client complies with all the guideline and prescribed rules while infusing debt funds to his company\organisation.