What is a capital account transaction? State the provisions of FEMA with respect to regulation of such transactions.

(ii) Gifts remittance exceeding US Dollars 5/000 per beneficiary per annum
(gift contemplated here is gift made to family members or relatives).
(iii) Donations exceeding US Dollars 5/000 per annum per beneficiary (the
donations contemplated here are donations to charitable/educational!
religious/ cultural organisations).
( iv) Exchange facilities exceeding US Dollars 5,(XX) for persons going abroad for employment
(v) Remittance for maintenance of close relatives abroad exceeding US Dollars
5/000 per year per recipient.
(vi) Release of foreign exchange exceeding US Dollars 25/000 to a person for
business travel or attending a conference or for maintenance expenses of a
patient going abroad for medical treatment, etc.
(vii) Release of exchange for studies abroad exceeding the estimate from the
institution abroad or US Dollars 30/000 whichever is higher.
(viii) Commission to agents abroad for sale of residential plots/ commercial plots
in India exceeding 5 per cent of the inward remittance.
(ix) Remittance of royalty and payment of lump sum fees under technical
collaboration agreement which is not registered with Reserve Bank.
(x) Remittance for use and/or purchase of trade mark in India. The maximum
amount of royalty payable on this account can not exceed 1 per cent of net sales
(earlier 1 per cent of gross sales) and 2 per cent of exports [ET, 4th Jan. 2002]

Capital Account Transactions

~ 17. What is a capital account transaction? State the provisions of FEMA with respect to regulation of such transactions.

.9L1l.5 .

Capital Account Transactions
Capital account transactions relate to movement of capital. These include transactions
in property and investments and lending and borrowing money.
Capital account transaction is defined in Section 2 (e) as a transaction which alters the assets or liabilities outside India of persons resident in India or assets or liabilities in India of persons resident outside India.
Regulation of Capital Account Transactions (Section 6)
Section 6 provides that the Reserve Bank may, in consultation with the Central Government, specify the permissible capital account transactions and the limits up to which foreign exchange will be allowed for such transactions. Sub-section (3) of Section 6 empowers tl1.e Reserve Bank to make regulations to prohibit or restrict or regulate the following:
(a) transfer or issue of any foreign security by a person resident in India;
(b) transfer or issue of security by a person resident outside India;
(c) transfer or issue of any security or foreign security by any branch, office or
agency in India of a person resident outside India;
(d) any borrowing or lending in foreign exchange in whatever form or by
whatever nam~ called;