1.	(P)	Section 2( u )( ii ), Foreign Exchange Management Act, 1999  defines the term “person” and  this includes  a Hindu Undivided Family.  Section 2(v) defines “person resident in India”  and Section 2(w) defines “person resident  outside India” Now said definitions cover an individual as also a person or body corporate registered or incorporated in India or office branch or agency controlled by a person resident in India or otherwise.
	(A)	None of the definitions cover / lay down guidelines for determining residential status of a Hindu Undivided Family.
	(R)	“Appropriate clause should be added for determining the residential status of Hindu Undivided Family.”
2.	(P)	Section 6(4) of  Foreign Exchange Management Act, 1999  :
		“A person resident in India may hold, own, transfer or invest in foreign currency, foreign security or any immovable property situated outside India if such currency, security or property was acquired, held or owned by such person when he was resident outside India or inherited from a person who was resident outside India.”
	(A)	Whereas first part of the Section permits an NRI who has returned to India for settlement “ transfer of or investment in foreign assets”; second part stipulates a condition that “ such foreign asset was owned when the person was resident outside India”.
		Simply speaking the section  requires ownership of an asset before the   NRI’s return to India for settlement, which in turn restricts transfer of existing asset and/or investment in a new asset as every transfer results into ceasation of an  old asset and creation of a new asset. Similarly, investment also results in creation of  a new asset.
	(R)	As the intention of the Statute is to facilitate transfer and also permit new investments, the  section should be redrafted removing the anomaly . “6(4) A person resident in India may hold, own, transfer or invest in foreign currency, foreign security or any immovable property situated outside India if such currency, security or property was acquired, held or owned by such person when he was resident outside India or acquired out of transfer proceeds of any such asset or reinvestment thereof or inherited from a person who was resident outside India.”
3.	(P)	Section 6(5) of Foreign Exchange Management Act, 1999 - the Act Provides :
		“A person Resident outside India may hold, own, transfer or invest in Indian currency, security or any immovable property situated in India if such currency, security or property was acquired, held or owned by such person when he was resident in India or inherited from a person who was resident in India.”
	(A)	Whereas first part of the Section permits a resident who has become a non- resident  “ transfer or investment in assets in India”; second part stipulates a condition that “ such asset was owned when the person was resident in India”.
		Simply speaking the section  requires ownership of  assets before the person left India. Which in turn restricts transfer of existing asset and/or investment in a new asset as any transfer results into cessation of an  old asset and creation of a new asset. Similarly, investment also results in creation of  a new asset.
	(R)	Section 6(5) be drafted as under :
		“Section 6(5)  A person Resident Outside India may hold, own, transfer or invest in Indian currency, security or any immovable property situated in India if such currency, security or property was acquired, held or owned by such person when he was resident in India or acquired out of transfer proceeds of any such asset or reinvestment thereof or  inherited from a person who was resident in India.”
4.	(P)	Para-3 of Schedule-I – Non Resident (External) Rupee Account Scheme of Foreign Exchange Management (Deposit) Regulations, 2000, enumerates permissible credits to a NR(E) account..
	(A)	Although the Schedule contains a paragraph regarding credits covered under general permission granted by Reserve Bank of India, these suggestions are made on account of importance & multiplicity of transactions by NRIs & also enumeration of other examples of generally permitted credits.
		This credits do not include:
		i)	Sale proceeds of shares and debentures acquired under the direct investment scheme or under the portfolio investment scheme on repatriation basis as provided vide Reg. 11 of Foreign Exchange Management ( Transfer or Issue of Security by a person resident outside India ) Regulations, 2000 or provisions of FERA, 1973 and
		ii)	Sale proceeds to the extent of cost of acquisition of immovable property as provided vide Reg. 6 of Foreign Exchange Management. ( Acquisition and transfer of immovable property in India ) regulations, 2000 or provisions of FERA, 1973.
	(R)	Following be inserted in Para 3 of Schedule 1, of Foreign Exchange Management (Deposit) Regulations, 2000 under the head
		“ Permitted Credits”
		“Subject to payment of tax, Sale proceeds of shares and debentures acquired under the direct investment scheme or under the portfolio investment scheme on repatriation basis as provided by Foreign Exchange Management. ( Transfer or Issue of Security by a person resident outside India ) Regulations, 2000 or provisions of FERA, 1973 and sale proceeds to the extent of cost of acquisition    of immovable property as provided by Foreign Exchange Management. (Acquisition and transfer of immovable property in India ) regulations, 2000 or provisions of FERA, 1973.”
5.	(P)	Para-4 of Schedule-I – Non Resident (External) Rupee Account Scheme of Foreign Exchange Management (Deposit) Regulations, 2000, enumerates various permissible debits.
	(A)	Although the Schedule contains a paragraph regarding debits covered under general permission granted by Reserve Bank of India, these suggestions are made on account of importance & multiplicity of transactions by NRIs & also enumeration of other examples of generally permitted debits.
		This debits do not include :
		In the case of an individual account holder a gift to any person resident / non resident or any charitable trust in India recognized under the Income Tax Act, 1961 as specifically provided in Para 6 of Schedule 4 pertaining to Non- Resident (Non Repatriable) Rupee Deposit Scheme.
	(R)	Following be inserted in Para 4  under the head
		“ Permitted Debits
		In the case of individual account holder, amount gifted to any resident / non – resident or to any Charitable Trust in India recognized under the Income – tax Act, 1961. “
6.	(P)	Para-9 (g) of Schedule-I – Non Resident (External) Rupee Account Scheme of Foreign Exchange Management (Deposit) Regulations, 2000, provides: “Tax Exemption – Income from interest on balances standing to the credit of NRE accounts is exempt from income-tax. Likewise balances held in such accounts are exempt from Wealth Tax.”

	(A)	Under the Wealth Tax Act, 1957 bank balances  are not taxable wealth at all and not being subject matter of tax, can not be made exempt to Wealth Tax.
	(R)	This para therefore should be redrafted as under:   “Tax Exemption – Income from interest on balances standing to the credit of NRE accounts is exempt from income-tax.   Whereas balances held in such accounts are not liable to Wealth Tax.”
7.	(P)	Schedule 4 of Foreign Exchange Management (Deposit) Regulations, 2000 pertaining  to Non Resident (Non-Repatriable) Rupee Deposits Scheme enumerates various features of said deposits.
	(A)	However the Scheme is silent about
		1.	Manner of payment of interest i.e. quarterly or half yearly.
		2.	Tax exemption,
		3.	Operation by Power of Attorney, and
		4.	Change of Status.
	(R)	Appropriate changes should be made by insertion of appropriate paragraphs e.g. for change of Resident Status following para be inserted
		“ Change of Resident status of Account Holder:
		NRNR accounts should be re-designated as Resident accounts immediately upon return of account holder to India for taking up employment, or for carrying on business or vocation or for any other purpose indicating his intention to stay in India for an uncertain period.”
8.	(P)	Regulation 5(1)(b) of  Foreign Exchange Management ( Acquisition and Transfer of Immovable Property Outside India.) Regulations. 2000 provides :-
		“Acquisition and Transfer of Immovable Property Outside India.
		5.	(1)		A person resident in India may acquire immovable property outside India;
			(2)		by way of purchase out of foreign exchange held in Resident Foreign Currency (RFC) account maintained in accordance with the Foreign Exchange Management (Foreign Currency accounts by a person resident in India) Regulations, 2000”
	(A)	Said regulations do not permit and provide for utilization of  funds./balances held outside India for acquisition of an immovable property outside India as permitted vide provisions of Section 6(4) of the Act to this extent, the regulations restrict the permission granted by Section 6(4) of  the Act.
	(R)	The said regulation be amended as :
		“Acquisition and Transfer of Immovable Property Outside India.
		5.	(1)		A person resident in India may acquire immovable property outside India;-
			(2)		by way of purchase out of foreign exchange held in Resident Foreign Currency (RFC) account maintained in accordance with the Foreign Exchange Management (Foreign Currency accounts by a person resident in India) Regulations, 2000 or out of foreign exchange held outside India under the provisions of Section 6(4) of Foreign Exchange Management Act, 1999.”
9.	(P)	Regulation 5  of Foreign Exchange Management (Foreign Currency Accounts by a Person Resident in India) Regulations, 2000, provides for opening, holding and maintaining a Resident Foreign Currency Account.
		Whereas Para 7 of Schedule 1 of Foreign Exchange Management (Deposit) Regulations, 2000, allows transfer of balances held in NRE account to RFC Account providing:
		7		NRE Accounts should be redesignated as resident accounts or the funds held in these accounts may be transferred to the RFC accounts ( if the account holder is eligible for maintaining RFC  account )  at the option of the account holder immediately upon the return of the account holder to India for taking up employment or for carrying on business or vacation or for any other purpose indicating intention to stay in India for an uncertain period…“
		Similarly Para 10 of Schedule 2 of said Regulations provide for transfer of balances held in FCNR(B) Account to RFC Account.
	(A)	However, aforesaid Regulation 5 pertaining to RFC Account ; Enumerated credits do not include Transfer of balances held in NRE account and FCNR(B) account to RFC account  upon NRI’s return to India for permanent settlement.
	(R)	Sub regulation 5(e) & (f) be inserted as under :
		“5.(e) Balances held in NRE Accounts at the option of the account holder upon return to India for taking up employment or for carrying on business or vocation or for any other purpose indicating intention to stay in India for an uncertain period.”
		“5.(e) Balances held in NRE Accounts at the option of the account holder upon return to India for taking up employment or for carrying on business or vocation or for any other purpose indicating intention to stay in India for an uncertain period.”
10.	(P)	Regulation 5 of Foreign Exchange Management (Foreign Currency Accounts by a Person Resident in India), Regulations, 2000, provides for opening, holding and maintaining Resident Foreign Currency (RFC) Accounts.
	(A)	These provisions do not specify /  include :
		.01		Eligibility norms / conditions
		.02		Rate of interest
		.03		Provisions regarding loans against funds in such accounts.
		.04		Change of residential  status of account holder i.e. a resident once again becoming a non resident  and
		.05		Tax exemption
	(R)	"Appropriate changes should be made so as to include and / or notify the above.”
11.	(P)	1.		Regulation 5 of Foreign Exchange Management (Foreign Currency Accounts by a Person Resident in India) Regulations, 2000, enumerates various amounts that can be credited to Resident Foreign Currency Account.
		2.		Terms of offer of State Bank of India’s Resurgent India Bonds under para “Repayment on Maturity” states that :
				“If the holder becomes a resident in India before maturity of the RIBs, he has, if eligible, the option of receiving the entire principal amount of the RIBs, on maturity, and the interest earned thereon in USD / GBP / DEM, as the case may be, by credit to a Resident Foreign Currency (RFC) Account, or in non-repatriable Indian rupees.”
		3.		Similarly, terms and conditions of State Bank of India’s India Millennium Deposits under the head “Repayment on Maturity” states that :
				“If the depositor entitled to receive the repayment becomes a resident in India before maturity of the IMDs, he has, if eligible, the option of receiving the entire principal amount of the IMDs, on maturity, and the interest earned thereon in USD / GBP / EUR as the case may be, by credit to a Resident Foreign Currency (RFC) account, or in non-repatriable Indian rupees.”
	(A)	However, aforesaid Regulation 5 does not enumerate said maturity proceeds of  Resurgent India Bonds and India Millennium Deposits as permissible foreign exchange / credits for credit to RFC Account.

	(R)	Sub-regulation 5(g) and (h) be inserted as under :
		“5(g) Entire principal amount of the RIBs, on maturity, and the interest earned thereon in USD / GBP / DEM, as the case may be, incase of eligible holder who has become a resident in India before maturity of the RIBs”
		“5(h) Entire principal amount of the IMDs, on maturity, and the interest earned thereon in USD / GBP / EUR as the case may be incase of eligible depositor who has become a resident in India before maturity of the IMDs,”
12.	(P)	Regulation 9 Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000  deals with transfer of shares and convertible debentures of an Indian company by a person resident outside India.
		Regulation 9(2)(ii) provides that  “A non-resident Indian or an overseas corporate body may transfer by way of sale, the shares or convertible debentures held by him or it to another non-resident Indian or an overseas corporate body only.”
		Whereas Regulation 9 (2) (iii) provides that “ A person resident outside India may transfer any security held by him, to a person resident in India by way of gift.”
		And Schedule I provides for purchase of shares and debentures under the Foreign Direct Investment Scheme.
	(A)	Said Regulations grant general permission for transfer of shares and convertible debentures by a non resident Indian or OCB to another non resident Indian or OCB only. And that there is no general permission for transfer of shares / convertible debentures by way of shares to a person resident in India or in case of listed securities for transfer by way of sale on the floor of a recognized Stock Exchange :
		This seems to be a mistake of omission as Reserve Bank of India in recent individual applications has informed that “specific / renewal permission from RBI or authorized dealer is not required to be obtained by NRI share holders for sale of shares through recognized Stock Exchange in India”.
	(R)	A new clause to be inserted i.e. 9(2)(iv)
		“A non resident Indian or overseas corporate body may transfer by way of sale, the shares or convertible debenture held by him or it on the floor of a recognized Stock Exchange in India at prevailing market price through a registered broker.”
13.	(P)	1.	Regulation 11 of Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000, provides for remittance of sale proceeds pf securities.
		2.	Para 3 of Schedule 3 of said Regulations provide the  rules for remittance / credit of sale / maturity proceeds of shares and / or debentures purchased under the portfolio investment scheme by an NRI / OCB.
		3.	Similar Paras are also included in Schedule 2, 4 and 5 pertaining  respectively, to FII  Portfolio Investment, NRI investment on non-repatriation basis and investment in Other Securities by person resident outside India.
	(A)	Provisions regarding remittance / credit of sale proceeds of shares and debentures purchased by NRIs / OCBs under Schedule I of Foreign Direct Investment Scheme (schedule 1) are missing / not provided.
	(R)