Basics for Forex Derivatives
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Free sample — 8 of 70 rapid-fire Q&A cards.
When was the LRS introduced and at what initial ceiling?
In February 2004, with a ceiling of US$ 25,000.
What is the current LRS limit per resident individual per financial year?
US$ 2,50,000 (or equivalent).
Which Act provides the framework within which LRS operates?
The Foreign Exchange Management Act, 1999 (FEMA).
Under which FEMA section is a capital account transaction defined?
Section 2(e).
Under which FEMA section is a current account transaction defined?
Section 2(j).
What is a capital account transaction under Sec. 2(e)?
A transaction that alters assets/liabilities (including contingent) outside India of residents, or in India of non-residents.
What is the memory hook distinguishing the two transaction types?
Capital ALTERS, Current FLOWS.
What does FEMA Sec. 4 prohibit?
A resident from acquiring, holding, owning, possessing or transferring foreign exchange, security or immovable property outside India, unless acquired while a non-resident or specifically permitted.
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