Fema
Niyati Shah (88 Points)
17 December 2016
if a person is abroad for many years and has not transferred resident saving to nro. what are the consequences
Abhinav
(CA)
(397 Points)
Replied 01 February 2017
This in principally is a is a violation of FEMA Deposit Regulations. You should advise your client to immediately re-designate accounts to NRO. Also, update NRI status in all investments in India.
Penalty as per FEMA is three times of amount if it is quantifiable else a flat penalty of INR 2 lacs.
Practically speaking, there are thousands of NRIs who still hold resident accounts partly due to ignorance and partly due to lack of enforcement of legal provisions. I have not come across a case of penalty levied for this breach.
Ask client if he has carried out any big transaciton in contravention of FEMA - like purchasing agricultural property, or trading in shares through resident demat (and not PIS) account - in such case, it is advisable to write to RBI admitting the violation - if RBI feels it is a fit case for compounding, you can pay a small fee and regularise the transaction.
Kindly refer to this post for more clarity on this subject: https://www.abhinavgulechha.com/fema-contravention/
Thanks!
CAclubindia
