TaxTMI 
TaxTMI 
TaxTMI 
Master Circular on Miscellaneous Remittances from India – Facilities for Residents
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....ical Treatment A.4 Cultural Tours A.5 PRIVATE VISITS A.6 Business visits A.7 Period of surrender of foreign exchange A.8 Unspent Foreign Exchange A.9 Remittances for Tour Arrangements, etc A.10 Payment in Rupees A.11 Advance Remittance - Import of services A.12 Issue of Guarantee- Import of service A.13 Liberalised Remittance Scheme of USD 200,000 A.14 Documentation A.15 Endorsement on Passport A.16 International Credit Cards A.17 International Debit Cards A.18 Store Value Cards/Charge Cards/Smart Cards etc A.19 Acquisition of foreign securities under Employees Stock Option Plan (ESOP) A.20 Income- tax clearance Annex-1 Annex-2 Annex - 3 Annex -4 Annex-5 Annex-6 Annex-7 Annex-8 APPENDIX-1 APPENDIX-2 NOTE Release of Foreign Exchange by Authorised Dealers A.1 General 1. 1For release of foreign exchange to persons resident in India for various current account transactions, authorised dealers are to be guided by the Rules made by the Govt. of India under Section 5 of Foreign Exchange Management Act, 1999 (as indicated in item 1 of Appendix 2) which are detailed in the Foreign Exchange Management (Current Account Transactions) Rules, 2000 (Annex-1) notif....
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....for GRE, TOEFL, etc., (l) Employment and processing, assessment fees for overseas job applications, (m) Emigration and emigration consultancy fees, (n) Skills / credential assessment fees for intending migrants, (o) Visa fees, (p) Processing fees for registration of documents as required by the Portuguese / other Governments, registration / subscription / membership fees to International Organisations. 1.4 1.4 Release of foreign exchange is not admissible for travel to and transaction with residents of Nepal and Bhutan. (cf. Clause (b) of Rule 3 of the Rules. (as indicated in item 2 of Appendix 2)) A.2 Sale of Exchange 2.1 2.1 Where approvals have been granted by the Reserve Bank / Government of India, foreign exchange may be sold within the period of validity stated in the approval and the details of the sale should be endorsed on the reverse of the original approval. 2.2 2.2 Authorized Dealers may release foreign exchange for travel purposes on the basis of a declaration given by the traveller regarding the amount of foreign exchange availed of during the financial year. 2.3 2. 3 In case of issue of travellers cheques, the traveller should sign the cheques in the p....
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....nt (Department of Education and Culture), Government of India, for their foreign exchange requirements. Authorised Dealers may release foreign exchange, on the strength of the sanction from the concerned Ministry, to the extent and subject to conditions indicated therein. A.5 Private visits Foreign exchange for private visit can also be released to a person who is availing of foreign exchange for travel outside India for any purpose up to the limits specified in Schedule III to the Rules. A.6 Business visits Foreign exchange for undertaking business travel or attending a conference or specialised training or for maintenance expenses of a patient going broad for medical treatment or check up abroad or for accompanying as attendant to a patient going abroad for medical treatment / check up to the limits specified in Schedule III to the Rules. A.7 Period of surrender of foreign exchange In case the foreign exchange purchased for a specific purpose is not utilized for that purpose, it could be utilized for any other eligible purpose for which drawal of foreign exchange is permitted under the relevant Regulation. General permission is available to any resident individual to surr....
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....ment for services not arising from any business in or anything done in India and by way of honorarium or gift. Or (iii) acquired by him, from any person not resident in India, and who is on a visit to India, as honorarium, gift, for services rendered or in settlement of any lawful obligation. Note: Where a person approaches an Authorised Person for surrender of unspent/unutilized foreign exchange after the prescribed period, Authorised Person should not refuse to purchase the foreign exchange merely on the ground that the prescribed period has expired. A.9 Remittances for TourArrangements, etc. 9.1 Authorised Dealers may remit foreign exchange up to a reasonable limit, at the request of a traveler towards his hotel accommodation, tour arrangements, etc., in the countries proposed to be visited by him, provided it is out of the foreign exchange purchased by the traveler from an Authorised Person (including exchange drawn for private travel abroad) in accordance with the Rules, Regulations and Directions in force. 9.2 Authorised Dealers may effect remittances at the request of agents in India who have tie-up arrangements with hotels/agents, etc., abroad for providing hotel ac....
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....usand only) against sale of foreign exchange for travel abroad (for private visit or for any other purpose). Wherever the sale of foreign exchange exceeds the amount equivalent to Rs.50,000, the payment must be received only by a (i)crossed cheque drawn on the applicant's bank account, or (ii) crossed cheque drawn on the bank account of the firm/company sponsoring the visit of the applicant, or (iii) Banker's Cheque/Pay Order/ Demand Draft. Note: Where the rupee equivalent of foreign exchange drawn exceeds Rs 50,000 either for any single drawal or more than one drawal reckoned together for a single journey/visit, it should be paid by cheque or draft. A.11 Advance Remittance - Import of services Authorised dealers may allow advance remittance for providing services under current account transaction for which the release of foreign exchange is admissible. However, where the amount exceeds USD 100,000 or its equivalent, a guarantee from a bank of International repute situated outside India or a guarantee from an authorised dealer in India, if such a guarantee is issued against the counter-guarantee of a bank of International repute situated outside India, should be obtain....
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....cilities to resident individuals to facilitate remittances under the Scheme. 13.7 Liberalised Remittance Scheme is not available for remittance to countries identified by Financial Action Task Force (FATF) as non co-operative countries and territories as available on FATF website www.fatf-gafi.org. or as notified by the Reserve Bank. 13.8 For undertaking transactions under the Scheme, resident individuals may use the Application-cum-Declaration Form as Annex-3 13.9 Authorized dealer may arrange to furnish information on the number of applicants and total amount remitted under the Scheme, on a quarterly basis, in the Format at Annex-8, to the Chief General Manager, Foreign Exchange Department, Foreign Investments Division (EPD), Reserve Bank of India, Central Office, Mumbai-400001 within 10 days of the reporting quarter. A soft copy of the statement (in Excel format) may also be sent by e-mail to [email protected] A.14 Documentation 14.1 The Reserve Bank will not, generally, prescribe the documents which should be verified by the Authorised Dealers while releasing foreign exchange. In this connection, attention of authorised dealers is drawn to sub-section (5) of Section 10....
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....import of books, purchase of downloadable softwares or import of any other item permissible under Foreign Trade Policy (FTP). 16.3 ICCs cannot be used on internet or otherwise for purchase of prohibited items, like lottery tickets, banned or proscribed magazines, participation in sweepstakes, payment for call-back services, etc., since no drawal of foreign exchange is permitted for such items/activities. 16.4 There is no aggregate monetary ceiling separately prescribed for use of ICCs through internet. 16.5 Resident individuals maintaining foreign currency accounts with an authorised dealer in India or a bank abroad, as permissible under extant Foreign Exchange Regulations, are free to obtain ICCs issued by overseas banks and other reputed agencies. The charges incurred against the card either in India or abroad, can be met out of funds held in such foreign currency account/s of the card holder or through remittances, if any, from India only through a bank where the card-holder has a current or savings account. The remittance for this purpose, should also be made directly to the card-issuing agency abroad, and not to a third party. 16.6 The applicable limit will be the credit l....
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....ttances to non-residents will be allowed to be made by the authorised dealers on production of an undertaking by the remitter and a Certificate from a Chartered Accountant in the formats (Annex-4) prescribed by the Central Board of Direct Taxes, Ministry of Finance, Government of India in their Circular No.10/2002 dated October 9, 2002. [cf. A. P. (DIR Series) Circular No.56 dated November 26, 2002]. Annex-1 (Para A. 1.1 of Master Circular) Foreign Exchange Management (Current Account Transactions) Rules, 2000 Notification No. G.S.R.381(E) dated 3rd May 2000 (as amended from time to time)* : In exercise of the powers conferred by Section 5 and sub-section (1) and clause (a) of sub-section (2) of Section 46 of the Foreign Exchange Management Act, 1999, and in consultation with the Reserve Bank, the Central Government having considered it necessary in the public interest, makes the following rules, namely :-- 1. Short title and commencement.---(1) These rules may be called the Foreign Exchange Management (Current Account Transactions) Rules, 2000; (2) They shall come into effect on the 1st day of June 2000. 2. Definitions.---In these rules, unless the context otherwise require....
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....on a visit outside India. Schedule I Transactions which are Prohibited (see rule 3) 1. Remittance out of lottery winnings. 2. Remittance of income from racing/riding etc. or any other hobby. 3. Remittance for purchase of lottery tickets, banned/proscribed magazines, football pools, sweepstakes, etc. 4. Payment of commission on exports made towards equity investment in Joint Ventures/ Wholly Owned Subsidiaries abroad of Indian companies. 5. Remittance of dividend by any company to which the requirement of dividend balancing is applicable. 6. Payment of commission on exports under Rupee State Credit Route, except commission upto 10% of invoice value of exports of tea and tobacco. 7. Payment related to 'Call Back Services' of telephones. 8. Remittance of interest income on funds held in Non-Resident Special Rupee (Account) Scheme. Schedule II Transactions which require prior approval of the Central Government (see Rule 4) Purpose of Remittance Ministry/Department of Govt. of India whose approval is required 1. Cultural Tours Ministry of Human Resources Development, (Department of Education and Culture) 2. Advertisement in foreign print media for the purposes ot....
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....s a citizen of India, who is on deputation to the office or branch or subsidiary or joint venture in India of such foreign company. ii. exceeding USD 100,000 per year, per recipient, in all other cases. Explanation: For the purpose of this item, a person resident in India on account of his employment or deputation of a specified duration (irrespective of length thereof) or for a specific job or assignment; the duration of which does not exceed three years, is a resident but not permanently resident. 8. Release of foreign exchange, exceeding USD 25,000 to a person, irrespective of period of stay, for business travel, or attending a conference or specialised training or for maintenance expenses of a patient going abroad for medical treatment or check-up abroad, or for accompanying as attendant to a patient going abroad for medical treatment/check-up. 9. Release of exchange for meeting expenses for medical treatment abroad exceeding the estimate from the doctor in India or hospital/doctor abroad. 10. Release of exchange for studies abroad exceeding the estimate from the institution abroad or USD 100,000, per academic year, whichever is higher. 11. Commission, per transaction....
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....f penalty for the said default as per the provisions of I.T. Act. (iv) I/we undertake to submit the requisite documents etc. for enabling the I.T. Authorities to determine the nature and amount of income of the beneficiary of the above remittance as well as documents required for determining our liabilities under the I.T. Act as a person responsible for deduction of tax at source. (v) The information given above is true to the best of my/our knowledge and belief and no relevant information has been concealed. Name and Signature [To be signed by a person responsible for signing the return of income (as to provisions of section 139(A) of the Income-tax Act) of the person making the remittance] CERTIFICATE I/we have examined the agreement (wherever applicable) between M/s ___________________ (remitters) and M/s ____________________________ (beneficiary) requiring the above remittance as well as the relevant documents and books of accounts required for ascertaining the nature of remittance and for determining the rate of deduction of tax at source as per provisions of section 195. We hereby certify the following : 1. Name and address of the beneficiary of the remittance and the....
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....Signature: Name & Designation: Date: Seal: ANNEX-6 Statement/returns to be submitted to the Reserve Bank. Sl.No. Description Periodicity Ref.No. 1 Statement indicating the details of forex utilization of IDCs for amount exceeding USD 100,000 in a calendar year Annual (as on 31st December) A.P.(DIR Series) Circular No. 46 dated June 14, 2005 2 Liberalised Remittance Scheme for Resident Individuals Quarterly A.P. (DIR Series) Circular No.24 dated December 20, 2006. Annex-7 Operational Instructions for Authorised Dealer Banks. Master Circular on Miscellaneous Remittances from India - Facilities for Residents General Authorised dealers may carefully study the provisions of the Act/ Regulations/ Notifications issued under Foreign Exchange Management Act, 1999. Reserve Bank will not prescribe the documents which should be verified by the authorised dealers while permitting remittances for various transactions, particularly of current account. In terms of the provisions contained in sub-section 5 of section 10 of the Act, before undertaking any transaction in foreign exchange on behalf of any person, Authorised Dealer is required to obtain a declaration and su....
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....isions of sub-section (5) of Section 10 of the Act. Remittances for transactions included in Schedule III may be permitted by authorised dealers up to the ceiling prescribed thereto. Remittances to non-residents are allowed to be made by the authorised dealers on production of an undertaking by the remitter and a Certificate from a Chartered Accountant in the formats prescribed by the Central Board of Direct Taxes, Ministry of Finance, Government of India in their Circular No.10/2002 dated October 9, 2002. [cf. Our A.P. (DIR Series) Circular No.56 dated November 26, 2002]. Release of foreign exchange on self declaration basis. Authorised dealers may allow remittances upto USD 100,000 each towards (i) employment abroad (ii) emigration (iii) maintenance of close relatives abroad (iv) education abroad and (v) medical treatment abroad without insisting on any supporting documents but on the basis of self declaration incorporating the basic details of the transaction and submission of Application in Form A2. Authorised dealers should also ensure that payment for purchase of foreign exchange is made by the applicant by means of cheque or demand draft or by debit to his/her account. ....
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....hemselves regarding the source of funds. If such a bank statement is not available, copies of the latest Income Tax Assessment Order or Return filed by the applicant may be obtained. The AD should ensure that the payment is received out of funds belonging to the person seeking to make the remittance, by a cheque drawn on the applicant's bank account or by debit to his account or by Demand Draft / Pay Order. It is further clarified that banks should not extend any kind of credit facilities to resident individuals to facilitate remittances under the Scheme. The remittances made under this Scheme will be reported in the R-Return in the normal course. The ADs may also prepare and keep on record dummy Form A2, in respect of remittances exceeding USD 5000. In addition, ADs would also furnish information on the number of applicants and total amount remitted under the Scheme, on a quarterly basis, to Reserve Bank of India, Foreign Exchange Department (EPD), Central Office, Mumbai. Annex-8 (Para A.13.9 of Master Circular) [A.P.(DIR Series) Circular No.24 dated December 20, 2006] Format Statement indicating the details of remittances made by resident individuals under the Liberalised ....
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....ies) Circular No. 14 November 28,2006 36 AP (DIR Series) Circular No. 24 December 20,2006 37 AP (DIR Series) Circular No. 38 April 5,2007 38 AP (DIR Series) Circular No. 58 May 18, 2007 39 AP (DIR Series) Circular No. 9 September 26, 2007 40 Foreign Exchange Management (Current Account Transactions) Rules,2000 May3, 2000 (and subsequent amendments-please see page 28) APPENDIX-2 1. Section 5 of FEMA, 1999. Current Account Transactions Any person may sell or draw foreign exchange to or from an authorised person if such sale or drawal is a current account transaction: Provided that the Central Government may, in public interest and in consultation with the Reserve Bank, impose such reasonable restrictions for current account transactions as may be prescribed. (para A.1.1 of Master Circular) 2. Rule 3 of FEM (CAT) Rules, 2000 Prohibition on drawal of Foreign Exchange - Drawal of foreign exchange by any person for the following purpose is prohibited, namely:- (a) a transaction specified in the Schedule I; or (b) a travel to Nepal and/or Bhutan; or (c) a transaction with a person resident in Nepal or Bhutan; Provided that the prohibition in clause (c) may be exe....