TaxTMI 
TaxTMI 
Master Circular on Miscellaneous Remittances from India – Facilities for Residents.
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....= Document 1 A.1 General A.2 Sale of Exchange.…....... A.3 Medical 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 services ..... .2 .3 .4 5 .5 .5 .5 .6 .7 .9 .9 10 A. 13 Liberalised Remittance Scheme of USD 200,000 for Resident Individuals...... 10 A. 14 Documentation............ A.15 Endorsement on Passport A.16 International Credit Cards ...... A.17 International Debit Cards 13 14 14 15 15 A.18 Store Value Cards/Charge Cards/Smart Cards, etc A. 19 Acquisition of foreign securities under Employees Stock Option 16 Plan (ESOP)..... A.20 Income-tax clearance..... Annex-1 ...... Annex-2..... Annex-3... Annex - 4 .... Annex-5.. Annex-6.... Annex 7 APPENDIX-1. APPENDIX-2.. 1 16 17 .19 .27 .33 .35 .38 39 .43 44 46 .46 Release of Foreign Exchan....
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....travel agents to overseas agents / principals/hotels, Business travel, Fee for participation in global conferences and specialized training, Remittance for participation in international events / competitions (towards training, sponsorship and prize money), (a) Private visits, (b) (c) (d) (e) (f) Film shooting, (g) (h) (i) (j) (k) (I) (m) (n) Medical treatment abroad, Disbursement of crew wages, Overseas education, Remittance under educational tie up arrangements with universities abroad, Remittance towards fees for examinations held in India and abroad and additional score sheets for GRE, TOEFL, etc. Employment and processing, assessment fees for overseas job applications, Emigration and emigration consultancy fees, Skills/credential assessment fees for intending migrants, 1.4 (d) (0) Visa fees, Processing fees for registration of documents as required by the Portuguese / other Governments, registration / subscription / membership fees to International Organisations. Release of foreign exchange is not admissible for travel to and transaction with residents of ....
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....uivalent, on the basis of self declaration that the applicant is buying exchange for medical treatment outside India, without insisting on any estimate from a hospital/doctor. 3.2 For amount exceeding the above limit, estimate from the doctor in India or hospital/ doctor abroad, is required to be submitted to the Authorised Dealers. 3.3 A person who has fallen sick after proceeding abroad may also be released foreign exchange by an Authorised Dealer for medical treatment outside India. A.4 Cultural Tours Dance troupes, artistes, etc., who wish to undertake tours abroad for cultural purposes should apply to the Ministry of Human Resources Development (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 Ministry concerned, 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. ....
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....d abroad, as honorarium, gift, services rendered or in settlement of any lawful obligation from any person not resident in India. 8.4 The account may also be opened / credited with foreign exchange earned abroad, including proceeds of export of goods and/or services, royalty, honorarium, etc., and/or gifts received from close relatives (as defined in the Companies Act) and repatriated to India through normal banking channels by resident individuals. 6 8.5 The eligible credits to the Resident Foreign Currency (Domestic) Account, out of foreign exchange acquired in the form of currency notes, bank notes and travellers cheques, are as under :- (i) (ii) (iii) acquired by him from an Authorised Person for travel abroad and represents the unspent amount thereof or acquired by him, while on a visit to any place outside India, by way of payment for services not arising from any business in or anything done in India and by way of honorarium or gift or 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. ....
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..... The sale of passes/ticket in India can be made either against the payment in Indian Rupees or in foreign exchange released for visits abroad. The cost of passes/tickets collected in Indian Rupees need not be adjusted in the travellers' entitlement of foreign exchange for private visit. 9.5 In respect of consolidated tours arranged by travel agents in India for foreign tourists visiting India and neighbouring countries like Nepal, Bangladesh, Sri Lanka, etc., against advance payments / reimbursement through an Authorised Dealer, part of the foreign exchange received in India against such consolidated tour arrangement, may require to be remitted from India to these neighbouring countries for services rendered by travel agents and hoteliers in these countries. Authorised Dealer may allow such remittances after verifying that the amount being remitted to the neighbouring countries (inclusive of remittances, if any, already made against the tour) does not exceed the amount actually remitted to India and the country of residence of the beneficiary is not Pakistan. 8 A.10 Payment in Rupees Authorised Dealers may accept payment in cash u....
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.... d. the AD Category -I Bank is satisfied about the bonafides of the transaction. the AD Category -I Bank ensures submission of documentary evidence for import of services in the normal course. the guarantee is to secure a direct contractual liability arising out of a contract between a resident and a non-resident. In the case of a Public Sector Company or a Department /Undertaking of the Government of India /State Governments, approval from the Ministry of Finance, Government of India for issue of guarantee for an amount exceeding USD 100,000 (US Dollars one hundred thousand only) or its equivalent is required. In case of invocation of the guarantee, the Authorised Dealer is required to submit to the Chief General Manager-in-Charge, Foreign Exchange Department, Foreign Investments Division (EPD), Reserve Bank of India, Central Office, Mumbai- 400001 a report on the circumstances leading to the invocation of the guarantee. A.13 Liberalised Remittance Scheme of USD 200,000 for Resident Individuals 13.1 Under this Scheme, Authorised Dealers may freely allow remittances by resident individuals up to USD 200,000 per financial year (A....
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....t as the case may be would actually be credited to NRO A/c of NRI / PIO close relative. 11 13.10 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 13.13). 13.11 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. 13.12 The Scheme can be used for outward remittance in the form of a DD either in the resident individual's own name or in the name of beneficiary with whom he intends putting through the permissible transactions at the time of private visit abroad, against self declaration of the remitter in the format prescribed. 13.13 Individuals can also open, maintain and hold foreign currency accounts with a bank outside India for making remittances under the Scheme without prior approval of the Reserve Bank. The foreign currency accounts may be used for putting through all transactions connected with or arising from remittances eligible unde....
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....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 to USD 100,000 each for employment, emigration, maintenance of close relatives, education and medical treatment abroad without insisting on any 13 supporting documents but on the basis of self declaration incorporating certain basic details of the transactions and submission of Form A2. In addition, the existing facility of release of exchange by Authorised Person....
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.... 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/Foreign Exchange Departments of AD banks were required to submit a statement as on December 31, each year in the prescribed proforma, in case the aggregate forex utilization by the IDC holders exceeds USD 100,000 in a calendar year. The requirement of ....
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....shares provided the proceeds thereof are repatriated to India. 16 A.21. Income-tax clearance Remittances 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] A.22. Resident individual is permitted to lend to a Non resident Indian (NRI) / Person of Indian Origin (PIO) close relative [ means relative as defined in Section 6 of the Companies Act, 1956] by way of crossed cheque / electronic transfer subject to the following conditions: (i) the loan is free of interest and the minimum maturity of the loan is one year; (ii) the loan amount should be within the overall limit under the Liberalised Remittance Scheme of USD 200,000 per financial year available for a resident individual. It would be the responsibility of the lender to ensure that the amount of loan is within the Liberalised Remittance Sc....
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....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 resident in Nepal or Bhutan. Provided that the prohibition in clause (c) may be exempted by RBI subject to such terms and conditions as it may consider necessary to stipulate by special or general order. 19 4. Prior approval of Government of India---No person shall draw foreign exchange for a transaction included in the Schedule II without prior approval of the Government of India; Provided that this Rule shall not apply where the pa....
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.... State Government and its Public Sector Undertakings Ministry / Department of Govt. of India whose approval is required Ministry of Human Resources Development, (Department of Education and Culture) Ministry of Finance, (Department of Economic Affairs) 3. Remittance of freight of vessel Ministry of Surface Transport, chartered by a PSU 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) 5. Multi-modal transport operators making remittance to their agents abroad 6. Remittance of hiring charges of transponders by (a) TV Channels (Chartering Wing) Ministry of Surface Transport, (Chartering Wing) Registration Certificate from the Director General of Shipping Ministry of Information and Broadcasting (b) Internet Service providers 7. Remittance of container detention charges exceeding the rate prescribed by Director General of Shipping Ministry of Communication and Information Technology Ministry of Surface Transport (Director General of Shipping) 22 22 8. omitted 9. Remittance....
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....f 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. 24 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. Remittances exceeding US$ 10,000,000 per project for any consultancy services in respect of infrastructure projects and US$ 1,000,000 per project, for other consultancy services procured f....
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....for the said purpose. * 2) Foreign exchange purchased from you is for the purpose indicated above. (Strike out whichever is not applicable) Signature Name Date: (The purpose codes are on the reverse) 27 22 AD Code No. Form No. Currency Amount Equivalent to Rs.. (To be filled in by Authorised Dealer) Purpose codes For office use only ADs should put a tick ( ) against an appropriate purpose code. (In case of doubt/difficulty, consult customer/RBI.) Code Computer and Information Services (08) Purpose S0801 Capital Account Transactions (00) Hardware consultancy/implementation S0802 S0001 Indian investment abroad in equity capital (shares) S0002 Software consultancy/implementation S0803 Data base, data processing charges Indian investment abroad in debt securities S0804 S0003 Indian investment abroad in branches S0004 Indian investment abroad in subsidiaries and associates Repair and maintenance of computer and software S0805 News agency services S0806 S0005 Indian investment abroad in real estate S0006 Repatriation of Foreign Direct Investment in ....
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.... S0204 Agricultural, mining and on-site processing services- protection against insects & disease, increasing of harvest yields, forestry services, mining services like analysis of ores etc. S1011 Payments for maintenance of offices abroad S1012 Distribution services S1013 Environmental services S1019 Freight on exports - Shipping companies Other services not included elsewhere 29 29 Personal, Cultural and Recreational Services (11) S0205 Operational leasing (with crew) -Shipping companies S0206 Booking of passages abroad -Shipping companies S0207 Payments for surplus freight/passenger fare by foreign Airlines companies operating in India, S0208 Operating expenses of Indian Airlines companies operating abroad S0209 Freight on imports - Airlines companies S0210 Freight on exports - Airlines companies S1101 Audio-visual and related services -services and associated fees related to production of motion pictures, rentals, fees received by actors, directors, producers and fees for distribution rights. S1102 Personal, cultural services such as those related to museums, lib....
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....elating to import & export of goods Refunds/rebates / reduction in invoice value on account of exports S1502 Reversal of wrong entries, refunds of amount remitted for non exports S1503 S0603 Other general insurance premium S0604 Reinsurance premium S0605 Auxiliary services (commission on insurance) S0606 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. 31 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. 32 32 Annex - 3 [Annex to A.P. (DIR Series) Circular No.90 dated March 06, 2012] Application cum Declaration for purchase of foreign exchange under the Liberalised Remitta....
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....ss 2. Name and Address of the Assessing Officer having jurisdiction over the remitters 3. Applicant's PAN Number 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) (ii) (iii) (iv) (v) 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. 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. I/we shall also be subjected to the provisions of penalty for the said default as per the provisions of I.T. Act. I/we undertake to submit the requisite documents etc. for enabling the I.T. Authorities to determ....
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....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). Statement / Returns to be submitted to the Reserve Bank Annex-5 Description Periodicity Ref.No. Liberalised Remittance Monthly A.P. (DIR Series) Circular Scheme for Resident No. 36 dated April 4, 2008. Individuals (Please see Annex -7) 38 1.....
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....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. Remittances for all other current Account transactions which are not specifically prohibited under the Rules or which are not included in Schedule II or III may be permitted by the Authorised Dealers without any monetary/percentage ceilings subject to compliance with the provisions of subsection (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 remitt....
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....ntain 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. 41 The applicants should have maintained the bank account with the bank for a minimum period of one year prior to the remittance. If the applicant seeking to make the remittance is a new customer of the bank, Authorised Dealers should carry out due diligence on the opening, operation and maintenance of the account. Further, the Authorised Dealers should obtain bank statement for the previous year from the applicant to satisfy themselves regarding the source of funds.....
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....es) Circular No.20 A.P.(DIR Series) Circular No.11 A.P.(DIR Series) Circular No.12 EC.CO.FMD.599/18.08.01/2001-02 June 1, 2000 October 30, 2000 November 16, 2000 November 13, 2001 7 8. 9. 10. 11. A.P.(DIR Series) Circular No.53 A.P.(DIR Series) Circular No.16 A.P. (DIR Series) Circular No.17 A.P. (DIR Series) Circular No.37 A.P.(DIR Series) Circular No.51 November 23, 2001 January 21, 2002 June 27, 2002 September 12, 2002 September 12, 2002 November 1, 2002 November 18, 2002 12. A.P. (DIR Series) Circular No.53 November 23, 2002 13. November 25, 2002 November 26,2002 December 24, 2002 January 6, 2003 14 15. 16 17. A.P. (DIR Series) Circular No.54 A.P. (DIR Series) Circular No.56 A.P. (DIR Series) Circular No.64 A.P. (DIR Series) Circular No.65 A.P. (DIR Series) Circular No.73 A.P. (DIR Series) Circular No.103 A.P. (DIR Series) Circular No.3 A.P. (DIR Series) Circular No.7 January 24, 2003 May 21, 2003 July 17, 2003 August 12, 2003 August 16, 2003 November 13, 2003 December 23, 2003 February 4, 2004 18. 19. 20. 21. ....