Thanks Gulshan! I need to put the facts straight here. I received a mail from him and answered his query but I'm not sure if that reached him. Now coming to the very nature of the transaction he has talked about.It involves less application of Income Tax provisions than the act I have mentioned. On the face of it, it looks an irregular transaction. What I could make out is that he has been receiving payments from sale effected on behalf of a foreign national without any formal legal authority and any legal instrument describing his services and permission from relevant authority and remitting money on an arbitrary basis to the same foreign national - the entire process is likely to bring scrutiny under various acts. As far as Income Tax Act is concerned it doesn't differentiate between legitimate and illegitimate income and one has to pay tax on income. In this respect it's also a problem to term the source of this income.Is he earning by rendering any service recognized under FEMA? That's the central question.

Income of a stray and casual nature can be clubbed under 'Income from Other Sources but not a regualr stream of income!