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December 2025Q. 2(c)5 marksSyllabus 2022
(c)XYZ Pvt. Ltd., a startup based in Bengaluru, inadvertently committed a contravention other than Section 3(a) of the Foreign Exchange Management Act, 1999 (FEMA), involving a sum of ₹ 3.2 crore and now wishes to voluntarily rectify this mistake under the Foreign Exchange (Compounding Proceedings) Rules, 2024. Which RBI officer will act as the Compounding Authority for this case ? What key factors will be considered by the Compounding Authority while determining the compounding amount for XYZ Pvt. Ltd. ?
As per the Foreign Exchange (Compounding Proceedings) Rules, 2024, the Reserve Bank of India designates compounding authorities based on the sum involved in the contravention (excluding Section 3(a) violations):
a)Assistant General Manager: Does not exceed sixty lakh rupees
b)Deputy General Manager: Above sixty lakh rupees but does not exceed two and a half crore rupees
c)General Manager: Above two and a half crore rupees but does not exceed five crore rupees
d)Chief General Manager: Above five crore rupees As per the Compounding Rules, based on his rank and based on the sums involved / the monetary limit of 3.2 crores, the General Manager will be the compounding authority for dealing with the contravention.
Procedure for Compounding
•On receipt of an application, the Reserve Bank shall examine the application based on the documents and submissions made in the application and assess whether contravention can be compounded in accordance with the Foreign Exchange Management (Compounding Proceedings) Rules, 2024and, if so, the sum involved in the contravention.
•The Compounding Authority may call for any information, or any other documents relevant to the compounding proceedings. In case the contravener fails to submit the additional information/documents called for within the specified period, the application for compounding shall be liable to be returned.
•The following factors, which are only indicative, shall be taken into consideration for the purpose of passing compounding order and determining amount on payment of which contravention shall be compounded:
a.Undue gains i.e., the amount of gain of unfair advantage, wherever quantifiable, made as a result of the contravention (or) economic benefits accruing to the contravener from delayed compliance or compliance avoided; b. the amount of loss caused to any authority/ exchequer as a result of the contravention; c. the repetitive nature of the contravention, the track record and/or history of non-compliance of the contravener; d. contravener’s conduct in undertaking the transaction and in disclosure of full facts in the application and submissions made during the personal hearing; and any other factor as considered relevant and appropriate.
Source: ICSI Guideline Answers, December 2025, Q. 2(c) (Syllabus 2022).
June 2026Q. 4(a)5 marksSyllabus 2022
(a)Rohit, a resident individual in India, remitted USD 1,80,000 in June 2025 towards his daughter’s tuition fees in Canada under the Liberalised Remittance Scheme (LRS). In September 2025, he remitted USD 40,000 towards maintenance expenses for his son studying in Australia. In January 2026, Rohit proposes to remit USD 60,000 as a gift to his brother residing in the United States.
The Authorised Dealer (AD) bank refuses to process the last remittance without perior approval of the Reserve Bank of India (RBI). Rohit argues that each remittance falls under a separate permissible category (studies abroad, maintenance of relatives abroad and gift) and therefore each should independently qualify up to USD 2,50,000. Advise whether the AD bank is correct in refusing the remittance. Give reasons with reference to the Liberalised Remittance Scheme provisions under the Foreign Exchange Management Act, 1999.
Under the Liberalised Remittance Scheme (LRS), Authorised Dealers may freely allow remittances by resident individuals up to USD 2, 50,000 per Financial Year (April-March) for any permitted current or capital account transaction or a combination of both.
The limit of USD 2,50,000 per Financial Year (FY) under the Scheme also includes/subsumes remittances for current account transactions (viz. private visit; gift/donation; going abroad on employment; emigration; maintenance of relatives abroad; business trip; medical treatment abroad; studies abroad) available to resident individuals. Release of foreign exchange exceeding USD 2,50,000, requires prior permission from the Reserve Bank of India.
In the present case, Rohit has already remitted USD 1,80,000 towards tuition fees and USD 40,000 towards maintenance of his son abroad, making a total remittance of USD 2,20,000 during the Financial Year. Therefore, the remaining balance available to him under the LRS is USD 30,000 out of the prescribed limit of USD 2,50,000. If Rohit now remits USD 60,000 as a gift, his total remittances for the Financial Year would amount to USD 2,80,000, which exceeds the permissible limit of USD 2,50,000 under the Scheme.
The scheme specifically provides that release of foreign exchange exceeding USD 2,50,000 requires prior permission of the Reserve Bank of India. Rohit’s contention that each category has a separate limit is incorrect. The limit is aggregate per Financial Year, irrespective of the number or nature of transactions, whether current account or capital account, or a combination thereof.
Therefore, the Authorised Dealer bank is correct in refusing to process the remittance of USD 60,000 without prior approval of the RBI. Rohit may remit only USD 30,000 within the LRS limit during the relevant Financial Year, and for any amount exceeding that, he must obtain prior permission from the Reserve Bank of India.
Source: ICSI Guideline Answers, June 2026, Q. 4(a) (Syllabus 2022).
June 2025Q. 2(b)5 marksSyllabus 2022
(b)Whether following remittances by persons other than individuals require prior approval of the Reserve Bank of India under Liberalized Remittance Scheme :
(i)Vikram Associates, a partnership firm in India wants to remit USD 2,000,000 for consultancy services procured from outside India for a project other than infrastructure Project.
(ii)Lakshay & Co., a partnership firm wants to remit USD 9,000,000 for consultancy services procured from outside India for an infrastructure project.
(iii)Mayank Pvt. Ltd., a Real Estate Company in India want to remit commission of USD 25,000 to an agent outside India for selling a residential flat in India for which he has remitted USD 400,000 in India
(iv)PQR Pvt. Ltd., a Real Estate Company in India want to remit commission of USD 25,000 to an agent outside India for selling a Commercial plot in India for which he has remitted USD 2,000,000 in India
(v)Navya Ltd., an Indian company wants to remit USD 100,000 to a company outside India towards reimbursement of pre-incorporation expenses for investment of USD 2,000,000 in its company which is fully brought into India.
(i)Remittances exceeding USD 1,000,000 per project for any consultancy services in respect of a project other than infrastructure project require prior approval of RBI. In this case, prior approval of Reserve Bank of India is required as remittance is USD 2,000,000 which exceeds the prescribed limit.
(ii)Remittances exceeding USD 10,000,000 per project for any consultancy services in respect of an infrastructure project require Prior approval of Reserve Bank of India. So, in this case no prior approval of Reserve Bank of India is required as it is within the limit.
(iii)Commission, per transaction, to agents abroad for sale of residential flats or commercial plots in India exceeding USD 25,000 or five percent of the inward remittance whichever is more require prior approval of Reserve Bank of India. In this case, 5% of inward remittance is USD 20000 which is within the limit. So, no prior approval of Reserve Bank of India is required.
(iv)Commission, per transaction, to agents abroad for sale of residential flats or commercial plots in India exceeding USD 25,000 or five percent of the inward remittance whichever is more require prior approval of RBI. In this case, 5% of inward remittance is USD 100000 which exceeds the prescribed limit. So, prior approval of Reserve Bank of India is required.
(v)Remittances exceeding five per cent of investment brought into India or USD 100,000 whichever is higher, by an entity in India by way of reimbursement of pre-incorporation expenses requires prior permission of Reserve Bank of India. In this case, 5% of investment brought into India is USD 100,000 which is within the limit. So, no prior approval of Reserve Bank of India is required.
(1+1+1+1+1=Total 5 Mark)
Source: ICSI Guideline Answers, June 2025, Q. 2(b) (Syllabus 2022).
December 2024Q. 2(b)(i)5 marks for the whole sub-partSyllabus 2022
(b)Explain and justify the following cases of ‘Resident Individuals’ under Foreign Exchange and Management Act, 1999 :
(i)Tushar Mehta wishes to remit a sum of USD 50,000 as gift to his daughter in France.
Whether he can do so ?
Under Liberalised Remittance Scheme, any resident individual may remit up-to USD 2, 50,000 in one financial year as gift to a person residing outside India or as donation to an organization outside India.
In light of the above, Tushar Mehta can remit a sum of USD 50,000 as gift to his daughter in France.
Source: ICSI Guideline Answers, December 2024, Q. 2(b)(i) (Syllabus 2022).
December 2024Q. 2(b)(ii)5 marks for the whole sub-partSyllabus 2022
(b)Explain and justify the following cases of ‘Resident Individuals’ under Foreign Exchange and Management Act, 1999 :
(ii)Deepa, a young girl aged 22 years, wishes to go to Poland for a private visit and she wishes to obtain USD 2,75,000/- for her private visit. Can she obtain ?
Under Liberalised Remittance Scheme, for private visits abroad, other than to Nepal and Bhutan, any resident Individual can obtain foreign exchange up to aggregate amount of USD 2, 50,000 from an Authorized Dealer (AD) or FFMC, in any one financial year, irrespective of the number of visits undertaken during the year.
Further, all tour related expenses including cost of rail/ road/ water transportation: cost of Euro rail: passes / tickets, etc. outside India and overseas hotel/ lodging expenses shall be subsumed under the LRS limit. The tour operator can collect this amount either in Indian Rupees or in Foreign Currency for the resident traveller.
Hence, Deepa cannot obtain a sum of USD 275,000 from any Authorized Dealer (AD) or FFMC in any one FY (April- March). She can obtain only a sum of USD 2,50,000.
Source: ICSI Guideline Answers, December 2024, Q. 2(b)(ii) (Syllabus 2022).
December 2024Q. 2(b)(iii)5 marks for the whole sub-partSyllabus 2022
(b)Explain and justify the following cases of ‘Resident Individuals’ under Foreign Exchange and Management Act, 1999 :
(iii)Akanksha, a software engineer is going for an employment in Budapest, requires a sum of USD 99,000 for her settlement abroad. Does she require prior approval of Reserve Bank of India ?
Under Liberalised Remittance Scheme, Person going abroad for employment can draw foreign exchange up to USD 2, 50,000 per financial year from any Authorized Dealer in India.
Akanksha, who is a software Engineer, going for an employment in Budapest can acquire USD 99,000 from any authorized dealer in India without the prior approval of Reserve Bank of India.
Source: ICSI Guideline Answers, December 2024, Q. 2(b)(iii) (Syllabus 2022).
December 2024Q. 2(b)(iv)5 marks for the whole sub-partSyllabus 2022
(b)Explain and justify the following cases of ‘Resident Individuals’ under Foreign Exchange and Management Act, 1999 :
(iv)Sandeep Sharma VP in a Domestic Indian company is going to visit the company plant location in New York for 30 days. He estimated a sum of USD 3,00,000 as expenditure.
This is his first visit during the FY 2024-2025. Can he do so ?
Under Liberalised Remittance Scheme, Visits by Individuals in connection with attending of International Conference, seminar, specialized apprentice training etc. are treated as business visits. For business trip to foreign countries, Individuals can avail of foreign exchange up to USD 2,50,000 in one financial year irrespective of the visits undertaken during the year.
In view of the above, Sandeep can acquire USD 250000 only.
Source: ICSI Guideline Answers, December 2024, Q. 2(b)(iv) (Syllabus 2022).
December 2024Q. 2(b)(v)5 marks for the whole sub-partSyllabus 2022
(b)Explain and justify the following cases of ‘Resident Individuals’ under Foreign Exchange and Management Act, 1999 :
(v)Parents of General Manager Sushant Agarwal from Delhi, is residing in Germany.
He seeks your consultancy in sending a sum of USD 2,02,500 to his parents for their maintenance ?
Under Liberalised Remittance Scheme, resident Individual can remit up-to USD 2, 50,000 per financial year towards maintenance of relatives. ‘Relative’ as defined U/s 2 (77) of the Companies Act, 2013 abroad.
In view of the above, Sushant Agarwal can easily send a sum of USD 2,02,500 to his parents for their maintenance in Germany in one FY (April-March).
Source: ICSI Guideline Answers, December 2024, Q. 2(b)(v) (Syllabus 2022).
December 2023Q. 4A(ii)4 marksSyllabus 2022OR, alternative to Q. 4
(ii)What facilities are available in case of private visits and for emigration under the Liberalized Remittance Scheme (LRS) ?
Private visits : For private visits abroad, other than visit to Nepal and Bhutan, resident individual can obtain foreign exchange up to an aggregate amount of USD 2,50,000, from an Authorised Dealer, in any one financial year, irrespective of the number of visits undertaken during the year.
Further, all tour related expenses including cost of rail/road/water transportation; cost of Euro Rail; passes/tickets, etc. outside India; and overseas hotel/lodging expenses are to be subsumed under the Liberalised Remittance Scheme (USD 2,50,000 per Financial Year). The tour operator can collect this amount either in Indian rupees or in foreign currency from the resident traveller.
Emigration : A person wanting to emigrate can draw foreign exchange from AD Category I bank and AD Category II up to the amount prescribed by the country of emigration or USD 250,000. Remittance of any amount of foreign exchange outside India in excess of this limit may be allowed only towards meeting incidental expenses in the country of immigration and not for earning points or credits to become eligible for immigration by way of overseas investments in government bonds; land; commercial enterprise; etc.
Source: ICSI Guideline Answers, December 2023, Q. 4A(ii) (Syllabus 2022).
June 2026Q. 4A(i)5 marksSyllabus 2022OR, alternative to Q. 4
(i)What is meaning of “remittance of assets” ? Explain the provisions relating to remittance of assets by individuals other than NRIs/PIOs under the Foreign Exchange Management Act, 1999.
‘Remittance of assets’ means remittance outside India of funds in a deposit with a bank/ firm/ company, provident fund balance or superannuation benefits, amount of claim or maturity proceeds of insurance policy, sale proceeds of shares, securities, immovable property or any other asset held in India in accordance with the provisions of the Foreign Exchange Management Act, 1999 (FEMA) or Rules/ Regulations made there under.
Authorised Dealer (AD) may allow remittance of assets by a foreign national where:
(i)The person has retired from employment in India;
(ii)The person has inherited from a person referred to in section 6(5) of the Act;
(iii)The person is a non-resident widow/widower and has inherited assets from her/his deceased spouse who was an Indian national resident in India; The remittance should not exceed USD one million per financial year. This limit, however, will not cover sale proceeds of assets held on repatriation basis. In case the remittance is made in more than one instalment, the remittance of all instalments should be made through the same AD on submission of documentary evidence;
(iv)The remittance is in respect of balances held in a bank account by a foreign student who has completed his/ her studies, provided such balance represents proceeds of remittances received from abroad through normal banking channels or rupee proceeds of foreign exchange brought by such person and sold to an authorised dealer or out of stipend/ scholarship received from the Government or any organisation in India.
Source: ICSI Guideline Answers, June 2026, Q. 4A(i) (Syllabus 2022).
June 2024Q. 2(b)5 marksSyllabus 2022
(b)Vinesh is a person resident outside India. He wishes to acquire the Immovable property in India for carrying on a permitted activity. Explain whether Vinesh can do so under Section 6(5) of the Foreign Exchange and Management Act, 1999 ?
According to Section 6(5) of the Foreign Exchange and Management Act, 1999, 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 Branch or office or any other place of business in India, other than a Liaison office, established by a person resident outside India, may acquire immovable property in India which is necessary for or incidental to the activity carried on in India by such branch or office.
Such a person is required to file with the Reserve bank a declaration in the form IPI (as given in the Master direction on Reporting), not later than 90 days from the date of such acquisition. The immovable property so acquired can be mortgaged to an Authorised Dealer as a security for any borrowing.
In the given case, Mr. Vinesh can do so and he has to file above compliance.
Source: ICSI Guideline Answers, June 2024, Q. 2(b) (Syllabus 2022).