Export Sales made by Private Limited Company but payment received by director.

[Guest]

Export Sales of Service under the GST Regime was made by a Private Limited Company in the financial year 2022-23 under LUT. However, the payment of the said Export Sales was received from the foreign recipient by the Director in his own bank account instead of that of a company. What are the implications of this transaction in terms of receipt of payment.

[Padmanathan KV]

Have you claimed/ claiming refund of ITC?

[KASTURI SETHI]

Dear Querist,

This is not legally correct. You may face serious problems in FEMA and other Acts. Get it rectified at the earliest.

[KASTURI SETHI]

In order to be safe, visit jurisdictional DGFT office and seek advice for remedy.

[Shilpi Jain]

Agreed. Pls consult a consultant who is an expert in FEMA matters.

AI Summary

FEMA compliance risk when export proceeds are received in a director's personal account; seek rectification and specialist advice. Export sales by a private limited company under a Letter of Undertaking had payment credited to a director's personal bank account, creating FEMA compliance and other regulatory concerns; advisers recommend immediate rectification, seeking regulatory guidance, consulting a FEMA specialist, and considering potential impacts on any input tax credit refund claims.