What is current account transaction?

Ans.  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:–

(i) payments due in connection with foreign trade, other current business, services, and short-term banking and credit facilities in the ordinary course of business,

(ii) payments due as interest on loans and as net income from investments,

(iii) remittances for living expenses of parents, spouse and children residing abroad, and

(iv) expenses in connection with foreign travel, education and medical care of parents, spouse and children

Current account transactions are governed by section 5 of the Foreign Exchange Management Act, 1999 read with Foreign Exchange Management (Current Account Transaction) Rules, 2000