TaxTMI 
TaxTMI 
Master Circular on Miscellaneous Remittances from India - Facilities for Residents
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....e guided by the Rules made by the Government of India under Section 5 of the 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) notified by the Government of India vide Notification No. G.S.R.381 (E) dated 3rd May 2000 (Rules). In terms of the said Rules, drawal of foreign exchange for certain categories of transactions as listed in Schedule I is expressly prohibited. Exchange facilities for transactions included in Schedule II to the Rules may be permitted by the Authorised Dealer banks provided the applicant has secured the approval from the Ministry/Department of the Government of India as specified therein. In respect of transactions included in Schedule III, prior approval of the Reserve Bank would be required for remittance exceeding the specified limits. The release of foreign exchange up to the threshold ceilings specified in Schedule III stands delegated to the Authorised Dealer banks. All applications for release of foreign exchange exceeding the limits as prescribed in Schedule III to the Rules should be referred to the Regional Office conce....
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.... amount of foreign exchange availed of during the financial year. 2.2 In case of issue of travellers cheques, the traveller should sign the cheques in the presence of an authorised official and the purchaser's acknowledgement for receipt of the travellers cheques should be held on record. 2.3 Out of the overall foreign exchange being sold to a traveller, exchange in the form of foreign currency notes and coins may be sold up to the limit indicated below: (i) Travellers proceeding to countries other than Iraq, Libya, Islamic Republic of Iran, Russian Federation and other Republics of Commonwealth of Independent States - not exceeding USD 3000 or its equivalent. (ii) Travellers proceeding to Iraq or Libya - not exceeding USD 5000 or its equivalent (iii) Travellers proceeding to Islamic Republic of Iran, Russian Federation and other Republics of Commonwealth of Independent States - full exchange may be released. 2.4 The form A2 relating to sale of foreign exchange should be retained for a period of one year by the Authorised Persons, together with the related documents, for the purpose of verification by their Internal Auditors. However, in resp....
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....ot utilized for that purpose, it could be utilized for any other eligible purpose for which drawal of foreign exchange is permitted under the relevant Rules / Regulation. 7.2 General permission is available to any resident individual to surrender received / realised / unspent / unused foreign exchange to an Authorised Person within a period of 180 days from the date of receipt / realisation / purchase / acquisition / date of return of the traveller, as the case may be. 7.3 The liberalized uniform time limit of 180 days is applicable only to resident individuals and that too in areas other than export of goods and services. 7.4 In all other cases, the regulations / directions on surrender requirement shall remain unchanged. (cf. Notification No. FEMA 9/2000-RB dated May 3, 2000, as amended from time to time). A.8 Unspent Foreign Exchange 8.1 As stated above, unspent foreign exchange brought back to India by a resident individual should be surrendered to an Authorised Person within 180 days from the date of return of the traveller. Exchange so brought back can be utilized by the individual for his/her subsequent visit abroad. 8.2 However, a returning traveller is pe....
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.... provided in each case the Authorised Dealer is satisfied that the remittance is being made out of the foreign exchange purchased by the traveller concerned 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 accommodation or making other tour arrangements for travel from India, provided the Authorised Dealer is satisfied that the remittance is being made out of the foreign exchange purchased by the traveller concerned from an Authorised Person (including exchange drawn for private travel abroad) in accordance with the Rules, Regulations and Directions in force. 9.3 Authorised Dealer may open foreign currency accounts in the name of agents in India who have tie up arrangements with hotels / agents, etc., abroad for providing hotel accommodation or making other tour arrangements for travellers from India provided:- a) the credits to the account are by way of depositing i) collections made in foreign excha....
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.... within the limits (credit / prepaid cards) prescribed by the bank and c) the purchaser of foreign currency / foreign currency TCs and the credit/debit/prepaid card holder is one and the same person. 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 (Category-I banks) may allow advance remittance for import of services. However, where the amount exceeds USD 500,000 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 obtained from the overseas beneficiary. The Authorised Dealer should also follow up to ensure that the beneficiary of the advance remittance has fulfilled his obligations under the contract or agreement with the remitter in India. In the case of a Public Sector Company or a Department /Undertaking of the G....
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....sident individuals are free to acquire and hold immovable property or shares (of listed companies or otherwise) or debt instruments or any other asset outside India without prior approval of the Reserve Bank. 13.6 The limit of USD 200,000 under the Scheme also include remittances towards gift and donation by a resident individual. 13.7 Remittances under the Scheme can be used for purchasing objects of art subject to the provisions of other applicable laws such as the extant Foreign Trade Policy of the Government of India. 13.8 The Scheme can also be used for remittance of funds for acquisition of ESOPs. The Scheme is in addition to acquisition of ESOPs linked to ADR / GDR and acquisition of qualification shares. 13.9 A resident individual can invest in units of Mutual Funds, Venture Capital Funds, unrated debt securities, promissory notes, etc. under this Scheme. Further, the resident can invest in such securities out of the bank account opened abroad under the Scheme (see 13.12). 13.10 An individual who has availed of a loan abroad while as a non resident can repay the same on return to India under the Scheme as a resident. 13.11 The Scheme can be used for outwar....
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....asing foreign exchange. In this connection, attention of authorized dealers is drawn to sub-section (5) of Section 10 of the FEMA, 1999 (as indicated in item 3 of Appendix 2)which provides that an authorised person shall require any person wanting to transact in foreign exchange to make such a declaration and to give such information as will reasonably satisfy him that the transaction will not involve and is not designed for the purpose of any contravention or evasion of the provisions of the FEMA or any rule, regulation, notification, direction or order issued there under. 14.2 Authorised Dealers are also required to keep on record any information / documentation, on the basis of which the transaction was undertaken, for verification by the Reserve Bank. In case the applicant refuses to comply with any such requirement or makes unsatisfactory compliance therewith, the Authorised Dealer shall refuse, in writing, to undertake the transaction and shall, if he has reasons to believe that any contravention / evasion is contemplated by the person, report the matter to the Reserve Bank. 14.3 Authorised Dealers have specifically been advised that they may release foreign exchange up....
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.... made directly to the card issuing agency abroad, and not to a third party. 16.6 The applicable limit will be the credit limit fixed by the card issuing banks. There is no monetary ceiling fixed by the Reserve Bank for remittances, if any, under this facility. 16.7 Use of ICC for payment in foreign exchange in Nepal and Bhutan is not permitted. A.17 International Debit Cards 17.1 Banks authorised to deal in foreign exchange are issuing International Debit Cards (IDCs) which can be used by a resident for drawing cash or making payment to a merchant establishment overseas during his visit abroad. It is clarified that IDCs can be used only for permissible current account transactions and the item-wise limits as mentioned in the Schedules to the Rules, as amended from time to time, are equally applicable to payments made through use of these cards. 17.2 The IDCs cannot be used on internet for purchase of prohibited items like lottery tickets, banned or proscribed magazines, participation in sweepstakes, payment for call-back services, etc., i.e. for such items/activities for which drawal of foreign exchange is not permitted. 17.3 The International Banking Divisions/Fo....
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....ng 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 requires : (a) "Act" means the Foreign Exchange Management Act, 1999 (42 of 1999); (b) "Drawal" means drawal of foreign exchange from an authorised person and includes opening of Letter of Credit or use of International Credit Card or International Debit Card or ATM Card or any other thing by whatever name called which has the effect of creating foreign exchange liability; (c) "Schedule" means a schedule appended to these rules; (d) The words and expressions not defined in these rules but defined in the Act shall have the same meanings respectively assigned to them in the Act. 3. 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 r....
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....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 other than promotion of tourism, foreign investments and international bidding (exceeding USD 10,000) by a State Government and its Public Sector Undertakings Ministry of Finance, (Department of Economic Affairs) 3. Remittance of freight of vessel chartered by a PSU Ministry of Surface Transport, (Chartering Wing) 4. Payment of import through ocean transport by a Govt. Department or a PSU on c.i.f. basis (i.e. other than f.o.b. and f.a.s. basis) Ministry of Surface Transport, (Chartering Wing) 5. Multi-modal transport operators making remittance to their agents abroad Registration Certificate from the Director General of Shipping 6. Remittance of hiring charges of transponders by (a) TV Channels (b) Internet Service providers Ministry of Inform....
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....al 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, to agents abroad for sale of residential flats or commercial plots in India exceeding USD 25,000 or 5% of the inward remittance whichever is more. 12. Omitted 13. Omitted 14. Omitted 15. Remittance exceeding USD 1,000,000 per project, for any consultancy service procured from outside India. 16. Omitted 17.* Remittance exceeding USD 100,000 by an entity in India by way of reimbursement of pre-incorporation expenses. 18. Omitted (Amendments) Notification GSR.663 (E) dated August 17, 2000, S.O.301(E) dated March 30, 2001, GSR.442(E) dated November 2, 2002, GSR.831(E) dated December 20, 2002, GSR.33(E) dated January 16, 2003, GSR.397(E) dated May 14, 2003, GSR.731(E) dated September 11, 2003, GSR.849(E) dated October 29, 2003, GSR.608(E) dated September 13, 2004, G.S.R.512(E) ....
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....urpose codes are on the reverse) Purpose codes For office use only AD Code No. ________________________________ Form No. ___________________________________ Currency ________________ Amount ________________ Equivalent to Rs._______________ (To be filled in by Authorised Dealer) ADs should put a tick (¬ ) against an appropriate purpose code. (In case of doubt/difficulty, consult customer/RBI.) Code Purpose Capital Account Transactions (00) S0001 Indian investment abroad in equity capital (shares) S0002 Indian investment abroad in debt securities S0003 Indian investment abroad in branches S0004 Indian investment abroad in subsidiaries and associates S0005 Indian investment abroad in real estate S0006 Repatriation of Foreign Direct Investment in India- in equity shares S0007 Repatriation of Foreign Direct Investment in India- in debt securities S0008 Repatriation of Foreign Direct Investment in India in real estate S0009 Repatriation of Foreign Portfolio Investment in India in equity shares S0010 Repatriation of Foreign Portfolio Investment in India in debt securities S0011 Loans ....
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....xport of goods S0603 Other general insurance premium S0604 Reinsurance premium S0605 Auxiliary services (commission on insurance) S0606 Settlement of claims Financial Services (07) S0701 Financial intermediation except investment banking - Bank charges, collection charges, LC charges, cancellation of forward contracts, commission on financial leasing etc. S0702 Investment banking - brokerage, underwriting commission etc. S0703 Auxiliary services - charges on operation & regulatory fees, custodial services, depository services etc. Computer and Information Services (08) S0801 Hardware consultancy/implementation S0802 Software consultancy/implementation S0803 Data base, data processing charges S0804 Repair and maintenance of computer and software S0805 News agency services S0806 Other information services - Subscription to newspapers, periodicals Royalties and License Fees (09) S0901 Franchises services - patents, copyrights, trade marks, industrial processes, franchises etc. S0902 Payment for use, through licensing arrangements, of produced originals or prototypes (such as manuscripts ....
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....nts (ST/MT/LT loans) S1404 Remittance of interest on debt securities -debentures /bonds/FRNs etc. S1405 Remittance towards interest payment by ADs on their own account (to VOSTRO a/c holders or the OD on NOSTRO a/c.) S1406 Repatriation of profits S1407 Payment/ repatriation of dividends Others (15) S1501 Refunds / rebates / reduction in invoice value on account of exports S1502 Reversal of wrong entries, refunds of amount remitted for non exports S1503 Payments by residents for international bidding S1504 Notional sales when export bills negotiated/ purchased/discounted are dishonoured/crystallized/cancelled of bills and reversed from suspense accounts. Annex - 3 (Para 13.17 of Master Circular) Application-cum- Declaration for purchase of foreign exchange under the Liberalised Remittance Scheme of USD 2,00,000 for Resident Individuals (To be completed by the applicant) I Details of the applicant a. Name ................................ b. Address.............................. c. Account No.......................... d. PAN No............................... II Details of the fo....
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.... 4. Name and address of the beneficiary of the remittance and the country to which remittance is made 5. Amount and nature of remittance 6. Rate of Deduction of Tax at Source 7. Reference to Provision of Act/DTAA under which the rate has been determined 8. Certificate (i) I/we propose to make the above remittance as per deduction of tax at source indicated above. We have obtained a certificate from M/s. ________________ who is an accountant as defined in the Section 288 of the I.T. Act, certifying the amount, nature and correctness of deduction of tax at source. (ii) In case the I.T. authority at any time finds that tax actually deductible on the amount of remittance has either not been paid or not paid in full, I/we undertake to pay the said amount of tax along with interest due. (iii) I/we shall also be subjected to the provisions of 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 w....
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....shment in India through which the beneficiary of the remittance is directly or indirectly carrying on such activity of supply of articles or things? (ii) Whether such remittance is attributable to or connected with such permanent establishment? (iii) If so, the amount of income comprised in such remittance which is liable to tax. (iv) If not, the reasons in brief thereof. 8. In case remittance is on account of business income please indicate :- (i) Whether such income is liable to tax in India? (ii) If so, the basis for arriving at the rate of deduction of tax. (iii) If not, the reasons thereof. 9. In case tax is not deducted at source for any other reason, details thereof. (Attach separate sheet duly authenticated wherever necessary). ___________________________________ Name, Address and registration numbers (To be signed and verified by an Accountant as defined in Section 288 of the Income-tax Act). Annex-5 (Para 17.3 of Master Circular) Format Statement indicating the details of forex utilization of IDCs for amount exceeding USD 100,000 in a calendar year - As on December 31,_____ Name of the ....
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....ort the matter to the Reserve Bank. With a view to maintaining uniform practices, Authorized Dealers may consider requirements or documents to be obtained by their branches to ensure compliance with provisions of sub-section (5) of section 10 of the Act. In terms of the Rule 3 of the Foreign Exchange Management (Current Account Transactions) Rules, 2000, drawal of foreign exchange for the transactions included in Schedule I thereto is prohibited. Authorised Dealers may release foreign exchange for transactions included in Schedule II to the Rules, provided the applicant has secured the approval from the Ministry/Department of Government of India indicated against the transaction. In respect of transactions included in Schedule III, where the remittance applied for exceeds the limit, if any, indicated in the schedule or other transactions included in the Schedule III for which no limit have been stipulated would require prior approval of Reserve Bank. However, resident individual has the option to avail the Liberalised Remittance Scheme for Resident Individuals for making additional amount of remittance, subject to compliance with the terms and conditions of the Scheme. Rem....
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.... combination of both. The facility under the Scheme is in addition to those already included in Schedule III of Foreign Exchange Management (Current Account Transactions) Rules, 2000. Remittances towards gift and donations have been subsumed under the Scheme. Under the scheme, resident individuals can acquire and hold immovable property or shares (listed or otherwise) or debt instruments or any other assets outside India, without prior approval of the Reserve Bank. They can also open, maintain and hold foreign currency accounts with banks outside India. However remittance from India for margin or margin calls to overseas exchanges/overseas counterparty are not allowed under the scheme. The individual will have to designate a branch of an AD through which all the remittances under the scheme will be made. It is mandatory to have PAN number to make remittances under the Scheme. While allowing the facility to resident individuals, Authorised Dealers are required to ensure that "Know Your Customer" guidelines have been implemented in respect of bank accounts. They should also comply with the Anti-Money Laundering Rules in force while allowing the facility. The applicants....
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....nature Date: Stamp and seal APPENDIX-1 List of circulars, which have been consolidated in the Master Circular- Miscellaneous Remittances from India - Facilities for Residents http://www.rbi.org.in/Scripts/BS_ApCircularsDisplay.aspx http://www.rbi.org.in/Scripts/Bs_FemaNotifications.aspx Sl. No. Circular No. Date 1. A.P.(DIR Series) Circular No.1 June 1, 2000 2. A.P.(DIR Series) Circular No.19 October 30, 2000 3. A.P.(DIR Series) Circular No.20 November 16, 2000 4. A.P.(DIR Series) Circular No.11 November 13, 2001 5. A.P.(DIR Series) Circular No.12 November 23, 2001 6. EC.CO.FMD.599/18.08.01/2001-02 January 21,2002 7 A.P.(DIR Series) Circular No.53 June 27,2002 8. A.P.(DIR Series) Circular No.16 September 12,2002 9. AP (DIR Series) Circular No.17 September 12, 2002 10. AP (DIR Series) Circular No.37 November 1, 2002 11. A.P.(DIR Series) Circular No.51 November 18, 2002 12. AP (DIR Series) Circular No.53 November 23, 2002 13. AP (DIR Series) Circular No.54 November 25, 2002 14 AP (DIR Series) Circular No.56 November 26,2002 15.....