Capital account transactions
Section 6 of the Foreign Exchange Management Act, 1999 deals with capital account transactions. Subject to the provisions of sub-section (2), any person may sell or draw foreign exchange to or from an authorised person for a capital account transaction. The Act came into force on 01 Jun 2000.
(1) Subject to the provisions of sub-section (2), any person may sell or draw foreign exchange to or from an authorised person for a capital account transaction.
(2) The Reserve Bank may, in consultation with the Central Government, specify--
1[(a) any class or classes of capital account transactions, involving debt instruments, which are permissible;]
(b) the limit up to which foreign exchange shall be admissible for such transactions:
2[(c) any conditions which may be placed on such transactions;]
3[Provided that the Reserve Bank or the Central Government shall not impose any restrictions on the drawal of foreign exchange for payment due on account of amortisation of loans or for depreciation of direct investments in the ordinary course of business.]
4[(2A) The Central Government may, in consultation with the Reserve Bank, prescribe--
(a) any class or classes of capital account transactions, not involving debt instruments, which are permissible;
(b) the limit up to which foreign exchange shall be admissible for such transactions; and
(c) any conditions which may be placed on such transactions.]
5 * * * *
(4) A person resident in India may hold, own, transfer or invest in foreign currency, foreign security or any immovable property situated outside India if such currency, security or property was acquired, held or owned by such person when he was resident outside India or inherited from a person who was resident outside India.
(5) 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.
(6) Without prejudice to the provisions of this section, the Reserve Bank may, by regulation, prohibit, restrict, or regulate establishment in India of a branch, office or other place of business by a person resident outside India, for carrying on any activity relating to such branch, office or other place of business.
6[(7) For the purposes of this section, the term “debt instruments” shall mean, such instruments as may be determined by the Central Government in consultation with the Reserve Bank.]
Section 6, The Foreign Exchange Management Act, 1999 (Act 42 of 1999).
Cross-references
Extracted from the operative text of the enactments themselves. Every destination below exists in our corpus.
Referred to by 3
Related judgements & precedents
These are some judgments that construed this section, and hold precedence value. They hold authority on how to read, interpret and use this section.
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Vijay Karia v. Prysmian Cavi E Sistemi SRL
Court's Decision & Legal Precedent
Enforcement of a New York Convention award under Arbitration Act s.48 cannot be refused merely because the underlying transaction allegedly violated FEMA s.6 capital-account regulations. FEMA is not a s.48(2) public-policy bar; the enforcement court does not sit in appeal, and alleged FEMA breach is for the FEMA authorities. Use Judgement order-12.pdf (2020-02-13), not same-date order-11 ROP.
On this section: Alleged FEMA s.6 capital-account contravention is for FEMA authorities; it does not by itself void a foreign award.
The holding above is the ratio decidendi as extracted from the judgment by eCourts India, reproduced unaltered — it is a rendering of the court's reasoning, not a substitute for its words. Read the order itself before relying on it.
Judgments citing this section
These may be obiter dicta or a precedent, for you to study. These are the judgments where this section is quoted.
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… It appears from the record that the Commissioner of Customs as per the provisions of Section 113(d), (e) and (h) read with Section 118(b) of the Customs Act, 1962 read with Section 6(3) of Foreign Exchange Management Act, 1999, passed a further order-in-original dated 22 October, 2010 which was also on the similar terms as in the terms of the order dated 30 January, 2008. 7. The petitioner being aggrieved by the order-in-original passed by the Commissioner of Customs, filed an appeal before …
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… Order(s) dated 05.06.2020 and the Communication(s) dated 03.09.2020 of the respondent no. 1, proceeding with the inquiry against the petitioner under the Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules, 2000 (hereinafter referred to as the 'Adjudication Rules') on the alleged violation of Section 6(6) of the Foreign Exchange Management Act, 1999 (hereinafter referred to as the 'FEMA') read with Regulation 3 of the Foreign Exchange Management (Establishment in India of a branch office or a liaison office or a project office or any other place of business) Regulations, 2000 (hereinafter referred to as the 'Place …
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… It is next contended that the put option deed also does not comply with the requirements under the Foreign Exchange Management Regulations, in as much as assured returns were prohibited under the said regulations. It is further contended that under section 3 and 6 of the Foreign Exchange Management act 1999 (for short FEMA), the subject transaction qualifies as a 'capital account transaction'and the Reserve Bank of India (for short 'the RBI') was empowered to restrict and regulate such transactions as per the provisions of the FEMA. Hence FEMA 20 regulations would be …
Made under this section, and citing it
7 instruments state that it was made under this provision — the power to make it comes from here, so a change to any of them changes what this section requires in practice. Newest first.
- the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2017.Regulation 2017
- the Foreign Exchange Management (Acquisition and transfer of immovable property outside India) Regulations, 2015.Regulation 2016
- the Foreign Exchange Management (Deposit) Regulations, 2016.Regulation 2016
- the Foreign Exchange Management (Establishment in India of a branch office or a liaison office or a project office or any other place of business) Regulations, 2016.Regulation 2016
- Foreign Exchange Management (Export and Import of Currency) Regulations, 2015.Regulation 2015
- the Foreign Exchange Management (Crystallization of Inoperative Foreign Currency Deposits) Regulations, 2014.Regulation 2014
- Foreign Exchange Management (Withdrawal of General Permission to Overseas Corporate Bodies (OCBs)) Regulations, 2003.Regulation 2003
Another 2 instruments name this provision in its title or its text without being made under it.
Questions about Section 6
What have the courts held on Section 6 of the Foreign Exchange Management Act?
Vijay Karia v. Prysmian Cavi E Sistemi SRL (13 Feb 2020) is the leading judgment on this section among those set out below: Alleged FEMA s.6 capital-account contravention is for FEMA authorities; it does not by itself void a foreign award.
How do I find court cases under Section 6 of the Foreign Exchange Management Act?
In judgments and charge sheets this section is written several ways, and each form finds a different set of orders. These search the full text of every order eCourtsIndia holds, best matches first: Fema 6, section 6 Fema, section 6 of the Foreign Exchange Management Act. People searching for it also type section 6 of foreign exchange management act and section 6 6 of foreign exchange management act 1999. Each opens the full list of orders on eCourtsIndia, where it can be narrowed by court, year and outcome. 1 reported judgment on this section is set out on this page, beginning with Vijay Karia v. Prysmian Cavi E Sistemi SRL (13 Feb 2020).
What should I read with Section 6 of the Foreign Exchange Management Act, and has it changed?
3 other provisions in this corpus refer back to it. The rules and notifications made under it are where it actually bites, and there are 7: most recently the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2017. (2017), then the Foreign Exchange Management (Acquisition and transfer of immovable property outside India) Regulations, 2015. (2016), and 5 more.
When did Section 6 of the Foreign Exchange Management Act come into force?
Section 6 of the Foreign Exchange Management Act, cited as Fema 6, came into force on 01 Jun 2000, having been enacted on 29 Dec 1999. It is in force as at the date shown on this page.
Other sections of this Act
- 2. Definitions1265 words
- 14. Enforcement of the orders of Adjudicating Authority837 words
- 13. Penalties496 words
- 10. Authorised person489 words
- 49. Repeal and saving475 words
- 19. Appeal to Appellate Tribunal465 words
Source and method. Compiled from the enactments of Parliament and of the State legislatures as published on India Code, and republished together with commentary and other original matter under section 52(1)(q)(ii) of the Copyright Act, 1957. Structured, cross-referenced and maintained by eCourtsIndia. Text as in force on 14 Oct 2026. This page is not a substitute for legal advice.