Current & Capital Account Transactions are governed by the provisions of the Foreign Exchange Management Act, 1999.
1. Meaning of Current Account Transactions.
Current account transaction means a transaction other than a capital account transaction and includes:
- payments due in relation to foreign trade, other current business, services, and short-term banking and credit facilities in the ordinary course of business,
- payments due on account of interest on loans and as net income from investments,
- remittances for living expenses of spouse, parents and children residing abroad, and
- expenses for foreign travel, education and medical care of parents, spouse and children;
2. Permissible Current Account transactions.
Permissible transactions for Individuals:
Individuals may avail foreign exchange facility for the following purposes within the limit of USD 2,50,000 only. Prior approval of the Reserve Bank of India is required for any additional remittance in excess of the said limit for the following purposes. However, a person other than an individual may also avail of foreign exchange facility, mutatis mutandis, within the limit prescribed under the said Liberalised Remittance Scheme for the purposes mentioned hereinbelow:
- Private visits to any country (except Nepal and Bhutan).
- Gift or donation.
- Going abroad for employment.
- Emigration.
The facility may be availed for an amount above the limit prescribed under the Liberalised Remittance Scheme if it is so required by a country of emigration.
- Maintenance of close relatives abroad.
- Business travel, or to attend a conference or specialised training or for meeting medical expenses, or check-up abroad, or for accompanying as attendant to a patient going abroad for medical treatment/check-up.
- Expenses for medical treatment abroad.
The facility may be availed for an amount above the limit prescribed under the Liberalised Remittance Scheme if it is so required medical institute offering treatment.
- Studies abroad.
The facility may be availed for an amount above the limit prescribed under the Liberalised Remittance Scheme if it is so required the university.
- Any other current account transaction
Note:
The following persons may make remittance up to his net salary (after deduction of taxes, contribution to provident fund and other deductions):
-A person who is resident but not permanently resident in India and is a citizen of a foreign State other than Pakistan; or
– A person who is resident but not permanently resident in India and is a citizen of India, who is on deputation to the office or branch of a foreign company or subsidiary or joint venture in India of such foreign company
Explanation:
A person resident in India on account of employment or deputation of a specified duration (irrespective of length thereof) or for a specific job or assignments, the duration of which is not more than 3 years, is a resident but not permanently resident.
Permissible transactions for other than Individuals:
The following remittances by persons other than individuals require prior approval of the Reserve Bank of India:
-Donations exceeding 1% (one percent) of their foreign exchange earnings during the previous three financial years or USD 5,000,000, whichever is less, for—
Creation of Chairs in reputed educational institutes,
Contribution to funds (other than investment fund) promoted by educational institutes; and
Contribution to a technical institution or body or association in the field of activity of the donor Company.
-Commission, per transaction, to agents abroad for sale of residential flats or commercial plots in India exceeding USD 25,000 or five per cent of the inward remittance whichever is more.
-Remittances exceeding USD 10,000,000 per project for any consultancy services in respect of infrastructure projects and USD 1,000,000 per project, for other consultancy services procured from outside India.
Explanation:
For the purposes of this sub-paragraph, the expression “infrastructure” shall mean as defined in Explanation to para 1(iv)(A)(a) of Schedule I of FEMA Notification 3/2000-RB, dated the May 3, 2000.
-Remittances exceeding 5% 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.
3. Conditions on Current Account Transactions
If an individual remits any amount under the said Liberalised Remittance Scheme in a financial year, then the applicable limit for such individual would be reduced from USD 250,000 (US Dollars Two Hundred and Fifty Thousand Only) by the amount so remitted.
4. Meaning of Capital Account Transactions.
Capital account transaction means a transaction which alters the assets or liabilities, including contingent liabilities, outside India of persons resident in India or assets or liabilities in India of persons resident outside India. Capital Account Transactions are classified into two types, i.e., By Person resident in India and By person resident outside India. The permissible Capital Account Transactions are mentioned in Schedule to the Foreign Exchange Management (Permissible Capital Account transactions) Regulations, 2000
5. Permissible Capital Account transactions.
Classes of Capital Account Transactions of Persons resident in India:
- Investment by a person resident in India in foreign securities.
- Foreign currency loans raised in India and abroad by a person resident in India.
- Transfer of immovable property outside India by a person resident in India.
- Guarantees issued by a person resident in India in favour of a person resident outside India.
- Export, import and holding of currency / currency notes.
- Loans and overdrafts (borrowings) by a person resident in India from a person resident outside India.
- Maintenance of foreign currency accounts in India and outside India by a person resident in India.
- Taking out of insurance policy by a person resident in India from an insurance company outside India.
- Loans and overdrafts by a person resident in India to a person resident outside India.
- Remittance outside India of capital assets of a person resident in India.
- Undertake derivative contracts
Classes of Capital Account Transactions of Persons resident Outside India
- Investment in India by a person resident outside India, that is to say,
issue of security by a body corporate or an entity in India and investment therein by a person resident outside India; and
investment by way of contribution by a person resident outside India to the capital of a firm or a proprietorship concern or an association of persons in India.
- Acquisition and transfer of immovable property in India by a person resident outside India.
- Guarantee by a person resident outside India in favour of, or on behalf of, a person resident in India.
- Import and export of currency / currency notes into / from India by a person resident outside India.
- Deposits between a person resident in India and a person resident outside India.
- Foreign currency accounts in India of a person resident outside India.
- Remittance outside India of capital assets in India of a person resident outside India.
- Undertake derivative contracts
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12 December 2023 
