Ever wondered how foreign currency is regulated in India? Sure, it is legal to keep foreign current in India, but up to a certain limit. And you should know that all of it is governed by the Foreign Exchange Management Act (FEMA) of 1999. Before FEMA, there was the FERA (Foreign Exchange Regulation Act) of 1973, which was more about conserving foreign exchange, you know? Under FEMA, transactions are split into Capital Accounts and Current Accounts, helping us know what’s allowed and what’s not. So, let’s dive deep and understand the details of this whole foreign currency scene for the general public. Here we go.
But What Exactly is Foreign Exchange?
Simply put, foreign exchange is any money that’s not Indian Rupees. This includes banknotes, coins, deposits, credit balances, traveler’s cheques, and demand drafts in foreign currency, you know? Basically, if it’s money and it’s not INR or Rupee, it’s foreign exchange.
How Much Foreign Currency Can You Hold?
Here’s where it gets interesting. According to the Foreign Exchange Management (Possession and Retention of Foreign Currency) Regulations, 2000, you can hold up to USD 2,000 worth of foreign currency at any time without anyone’s permission. This doesn’t apply to banks or authorized money changers who deal with foreign currency as their business. And if it’s foreign coins? No limits there!
Though, just like any other rule out there, sure there are a few exceptions to this one as well. You see, if you earned foreign currency for services abroad, received it as a gift, or brought it back from a trip, you might be able to hold more than USD 2,000. Though, just make sure you’re within limits when you return to India.
Bringing Foreign Currency into India? Here’s What You Need to Know
When you’re coming back to India, you can bring up to USD 10,000 without declaring it. But, if you’re carrying more than USD 5,000 in just notes or the total is over USD 10,000, you’ll need to fill out a Currency Declaration Form at customs, that’s how it goes.
Heading Abroad? Know Your Limits
Traveling out of India? You can take up to USD 3,000 in notes or coins. Anything more should be in traveler’s cheques or stored value cards. Though, special rules apply to certain countries. For instance, to Iraq and Libya, you can take up to USD 5,000, and to Iran, Russia, and CIS countries, you can carry up to USD 250,000 in currency notes.
What To Do With Foreign Currency After Your Trip
After a foreign trip, you should surrender any unspent foreign exchange within 180 days. However, you can keep up to USD 2,000 for future use, either as notes or traveler’s cheques, or deposit it in a Resident Foreign Currency (Domestic) Account. And there’s no limit on keeping foreign coins.
And What’s The Cost of Violating Rules?
Breaking these rules can be costly. If you’re caught with more foreign currency than allowed, or if you’re involved in unauthorized transactions, the fines can be up to three times the amount in question. If the amount can’t be determined, the fine could be up to INR 2 lakhs, you know? And make sure you know that serious offenses, like smuggling, fall under the COFEPOSA Act, 1974, which has even tougher penalties.
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