As defined in Section 2(j) of the FEMA, "current account transaction" means a transaction other than a capital account transaction and without prejudice to the generality of the foregoing such transaction includes :–
- Payments due in connection with foreign trade, other current business, services and short-term banking and credit facilities in the ordinary course of business,
- Payments due as interest on loans and as net income from investments,
- Remittances for living expenses of parents, spouse and children residing abroad, and
- Expenses in connection with foreign travel, education and medical care of parents, spouse and children.
- In terms of section 5 of the FEMA, Any person may sell or draw foreign exchange to or from an authorized person if such sale or drawl is a current account transaction provided that Central Government may, in public interest and in consultation with the Reserve Bank, impose such reasonable restrictions for current account transactions as may be prescribed. .
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