Bill to Overseas client' ship to ' indian customer'

[Mathi]

Dear All

We will receive the purchase order (PO) from our overseas client for Machine delivery and Will supply the machinery in INDIA as per PO condition. But payment will be transferred from our overseas client and we will raise the invoice as per PO Currency. (Foreign currency)

Bill to Overseas client' ship to ' indian customer'

In this scenario what will be the rules as per RBI and FEMA preview? Kindly advice with details

[Sadanand Bulbule]

Because the machinery stays in India, this is treated as a domestic sale, not an export. However, it is completely legal to receive the payment in foreign currency from your overseas client, provided you have a clear contract showing the "Bill-to/Ship-to" setup, route the money through an Authorized Bank, and link the incoming foreign funds directly to your local tax invoice for clean regulatory reporting.

Further in terms of Section 10(1)(b) of the IGST Act, this is treated as regular domestic taxable supply.

AI Summary

FEMA and RBI compliance for bill-to overseas client, ship-to Indian customer machinery supply and foreign-currency invoicing. Compliance under FEMA and RBI rules is sought for a bill-to overseas client and ship-to Indian customer arrangement involving supply of machinery in India, foreign-currency invoicing, and payment by the overseas client. The issue is whether such a cross-border transaction structure is permissible, and what regulatory requirements apply to the characterisation of the transaction, invoicing in foreign currency, and receipt of payment from a foreign party where delivery is made to an Indian customer.