1.28

(i)

The following terms have been defined in Section 2 of FERA 1973:

'Appellate Board'

'authorised dealer'

'bearer certificate'

'certificate of title to a security'

'coupon'

'currency'

'foreign currency'

'foreign exchange'

'foreign security'

'Indian currency'

'Indian customs waters'

'money-changer'

'overseas market'

'owner'

'person resident in India'

'person resident outside India'

'precious stone'

'prescribed'

'Reserve Bank'

'security'

'transfer'

(ii)

The following further clarifications are given in respect of certain terms for a better understanding -

A.

Indian citizens who proceed abroad for business visit, medical treatment, study and such other purposes which do not indicate their intention to stay outside India for an indefinite period will be considered as 'person resident in India' during their temporary absence from India.

B.

By virtue of clauses (c) and (d) of sub-section (1) of Section 73 of the Act, an office or branch situated in India, of any business whether carried on by a body corporate or otherwise i.e. companies, firms, banks or any other organisations, whether Indian or foreign, is treated for all purposes of the Act as 'person resident in India'.

C.

Wherever there is doubt as to the residential status of a person, authorised dealers should make a reference to Reserve Bank with full facts of the case for consideration.

D.

In terms of Reserve Bank Notification No. FERA.7/74-RB dated 1st January 1974, for the purpose of transactions in Indian rupees, Indians, Nepalese and Bhutanese resident in Nepal and Bhutan as well as offices and branches of Indian, Nepalese and Bhutanese firms, companies or other organisations in these two countries are treated as 'person resident in India'.

A.

The implication of the Reserve Bank Notification referred to in D above is that persons resident in Nepal and Bhutan other than those indicated therein for the purpose of transactions in Indian rupees and all persons resident in Nepal and Bhutan for the purpose of transactions in foreign exchange, are treated as 'person resident outside India'.

B.

The term 'non-resident' used in this Manual is synonymous with the term 'person resident outside India'.

For purposes of Sections 9 and 19 of the Act, 'security' includes coupons or warrants representing dividend or interest and life/endowment insurance policies.

'Foreign company' refers to a firm, company or any other organisation incorporated/registered outside India.

'FERA company' refers to a firm, company or any other organisation incorporated/registered in India in which non-resident interest exceeds forty per cent.