Bill to Overseas client

[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.

[Mathi]

Dear Sir

Thanks for the update . For foreign remittance, We need to give Invoice to bank with foreign currency . right. then how we can adhere the procedure as per FEMA rules. Please clarify

[Ryan Vaz]

Your proposed structure is generally permissible under FEMA/RBI, provided the transaction is properly documented and routed through your Authorised Dealer (AD) Bank.

However, the most important issue is:

• This may NOT qualify as an "export" under FEMA or GST merely because payment is received in foreign currency.
• Since the machinery is delivered within India to an Indian customer, RBI and GST authorities may treat this as a domestic supply in India, unless specific cross-border trade conditions are satisfied.

Therefore, FEMA compliance will depend on:

1. who owns/imports the goods,
2. whether title transfers outside India,
3. whether you are acting as merchant exporter/intermediary,
4. whether customs export documentation exists,
5. whether overseas client is principal buyer.

Your AD bank will scrutinize:

• PO,
• contract,
• invoice,
• shipping/delivery terms,
• foreign remittance purpose,
• FEMA declaration.

[YAGAY andSUN]

Your proposed transaction structure, "Bill to: Overseas Client / Ship to: Indian Customer" with machinery supplied within India and payment received in foreign currency is generally permissible under FEMA, RBI, Customs, and GST laws, subject to proper documentation and compliance.

FEMA / RBI

Under FEMA, receipt of foreign currency from a non-resident against supply of goods in India is permitted if supported by a genuine commercial contract/PO and routed through normal banking channels. Since goods are delivered within India, the transaction is not treated as a physical export under FEMA export regulations.

Key requirements:

• Overseas party must be the contractual buyer.

• Indian entity must be shown as consignee/end user.

• Invoice may be raised in foreign currency as per contract.

• Proper inward remittance documentation and AD Bank compliance must be maintained.

Customs Law

As goods are not physically exported outside India, Customs export provisions do not apply. Therefore:

• No Shipping Bill or export customs clearance is required.

• The supply does not qualify as "export of goods."

• Export incentives such as RoDTEP, Duty Drawback, etc., are generally not available.

• If machinery is imported before domestic supply, applicable import duties and customs compliances remain applicable.

GST Law

Under the IGST Act, export requires physical movement of goods outside India. Since machinery is delivered to an Indian customer, the transaction is treated as a domestic taxable supply, even if payment is received in foreign currency. Accordingly:

• GST must be charged as applicable.

• CGST+SGST or IGST will apply based on place of supply rules.

• Foreign currency receipt does not make the transaction zero-rated/export.

• "Bill-to / Ship-to" provisions under Section 10(1)(b) of the IGST Act may apply for determining place of supply.

Compliance Recommendation

Maintain:

• Purchase Order / tripartite agreement,

• GST invoice with proper Bill-to / Ship-to details,

• Foreign remittance records (FIRC/BRC, if applicable),

• Delivery proof and end-user documents,

• AD Bank correspondence and contract records.

Hence, the transaction is legally feasible under FEMA and RBI regulations, but it will generally be treated as a domestic taxable supply under GST and not as an export under Customs/GST laws.

[Shilpi Jain]

You must be receiving forex for this transaction. You would have to submit docs to the AD Bank to justify that receipt. Once done based on your contracts/PO/invoices and other documents this should get closed.

[Mathi]

Dear all

We have approached the banker for this transaction and They are not agreed and says that It's violation of FEMA.

For payment received in foreign currency for good supplied domestically /DTA entitie. Kindly suggest and seeking

[YAGAY andSUN]

Ask them, under which provision of FEMA Laws read with FT(DR)Act and Rules made thereunder, it is a violation of FEMA. However, in any case, Foreign Currency in form of payment/transactional proceeds had been routed through proper Banking Channels and you are disclosing it. Get the reply from your AD (Banker), then approach to RBI for seeking the relief, if required.

[Mathi]

Dear Sir

We need the FEMA guidelines to match this criteria and would really help ful

[YAGAY andSUN]

Let your banker freeze their objections. On the basis of it relevant provisions, Guideline and case laws will be shared.

AI Summary

FEMA compliance for bill-to overseas and ship-to Indian supply depends on documentation, banking channels, and domestic tax treatment. Receipt of foreign currency from an overseas buyer for machinery supplied within India may be permissible under FEMA and RBI if supported by a genuine contract, routed through an Authorised Dealer bank, and backed by proper remittance documentation. The overseas party should be the contractual buyer, the Indian party the consignee or end user, and the foreign currency invoice should match the domestic supply. Since the machinery remains in India, the transaction is generally treated as a domestic taxable supply, not an export, for customs or GST purposes.