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Under Section 2(e) of FEMA, a 'Capital Account Transaction' is one that:
AGenerates revenue
BAlters assets/liabilities outside India of a person resident in India OR assets/liabilities in India of a person resident outside India
CIs settled in INR only
DIs below USD 250,000
Answer & Solution
Correct answer: B. Alters assets/liabilities outside India of a person resident in India OR assets/liabilities in India of a person resident outside India
1. Section 2(e) of FEMA — a capital account transaction is defined by its impact on assets/liabilities across borders.
2. Section 6 governs permissible capital account transactions.
3. Hence (B).
_Source: ICAI BoS CA Inter Paper 2 — FEMA 1999_