Module: General Practice
Q79: According to Section 2(e) of FEMA 1999, which of the following creates a "Capital Account Transaction"?
✅ Correct Answer: B
Option B captures the precise statutory definition.
Concept Definition: A Capital Account Transaction is defined as one that alters: 1. The assets or liabilities (including contingent liabilities) outside India of a person resident in India; OR 2. The assets or liabilities in India of a person resident outside India.
Structural Breakdown: Capital Account: Impacts the Balance Sheet (Assets/Liabilities). Includes FDIs, ECBs, and immovable property.
Current Account: Everything other than capital account (e.g., trade, short-term credit, family remittances). Historical Context: This definition is the "gatekeeper" clause.
If a transaction fits this definition, it falls under the restrictive regime of Section 6. If it does not, it falls under the generally free regime of Section 5 (Current Account).
Concept Definition: A Capital Account Transaction is defined as one that alters: 1. The assets or liabilities (including contingent liabilities) outside India of a person resident in India; OR 2. The assets or liabilities in India of a person resident outside India.
Structural Breakdown: Capital Account: Impacts the Balance Sheet (Assets/Liabilities). Includes FDIs, ECBs, and immovable property.
Current Account: Everything other than capital account (e.g., trade, short-term credit, family remittances). Historical Context: This definition is the "gatekeeper" clause.
If a transaction fits this definition, it falls under the restrictive regime of Section 6. If it does not, it falls under the generally free regime of Section 5 (Current Account).