What transactions are prohibited?
Avinash Kumar Khard, Partner at DSK Legal, says: “Appendix I of the FEMA Current Account Rules provides a list of prohibited transactions. Additionally, these transactions cannot be made using credit or debit cards.
Khard states: “International credit and debit cards cannot be used for the online or otherwise purchase of prohibited items such as lottery tickets, prohibited or prohibited magazines, participation in sweepstakes, payment for reminder services, etc., as no currency withdrawals are permitted for these items/activities.”
According to a recent email sent by SBI Credit Card to its customers, using your credit card for currency trading, betting and gambling is also prohibited in addition to the transactions mentioned above.
What is the penalty?
Usually, banks/non-banks issuing credit/debit cards inform their customers that such transactions via the cards are prohibited. If a customer uses their credit card for such prohibited transactions, then according to RBI regulations, the cardholder will be held liable and will not be able to hold the card, SBI Card said in its email.
Khard says, “If an individual violates FEMA’s current account rules, then that individual will be subject to a fine under FEMA. The amount of this fine can be up to three times the amount involved in such an offence.
In many foreign countries, currency dealers, casinos, hotels and websites advertise the aforementioned products and services. To benefit from it, the individual is often asked to pay with his card – debit or credit card. If you are traveling abroad and come across one of these advertisements and are attracted to it, think twice before using your credit/debit card.
Khard says, “FEMA’s checking account rules only apply to international transactions. Thus, people traveling abroad should avoid using their international credit and debit card to avoid making prohibited transactions.”