CHAPTER 25 OUTWARD REMITTANCES

Transcription

1 CHAPTER 25 OUTWARD REMITTANCES 1

2 CHAPTER 25 OUTWARD REMITTANCE INDEX Para No TOPIC Page No 25 Introduction Restrictions Prohibition Prior Approval of Government of India Prior Approval of Reserve Bank of India Release of Foreign Exchange for Small Value Remittances 25 3 Advance Remittances fro Outward Remittances Undertaking/Certificate regarding Payment of Income Tax 25 5 Foreing Travel Restrictions Foreign Currency Notes/Coins Surrender of Unspent Exchange Retenstion of Foreign Currency Endoresement of Passport Use of International Credit Cards (ICC) Limits and Documentation for Release of Foreign Exchange 25 6 Travel Abroad Private Visits (BTQ) Business Travel Medical Treatment Employment Abroad Emigration Studies Abroad Remittances by Agents towards cost of Eurorail etc.passes/tickets, Overseas Gotel, Reservations etc. For Indians Remittances by Tour Operators towards Hotel

3 Reservation Abroad for Indians 25 7 Miscllaneous Remittances Consultancy Service from Abroad Gifts Donations Maintenance of Close Relatives Remittances on account of consolidated Tour 19 Arrangements for Foreign Tourists visiting Neighbouring Countries Remiiances towards Sale of Overseas Prepaid 19 Telephone Cards Remittances towards Royalty under Technical 20 Collboration Advertisements in Televisison Media Abroad Advertisement in Print Media Abroad Payments of Collections of Subscription to 21 Overseas TV Media Company Supply of Goods by a 100% EOU/EPZ unit to 21 Another 100% EOU/EPZ unit, Units in STP/EHTP to another Unit in STP/EHTP Supply of Goods by 100% EOU/EPZ unit / Units in 22 STP/EHTP to units in Domestic Tariff Area (DTA) Payment of Fees in Foreign Currency Embassy 22 Affiliated Educational Institutions Subscriptions for Magazines and Periodicals Internet and Web Services Remittance of Dividend to Non-resident 23 Shareholders Commission to Agents Abroad for Sale of 23 Residential / Commercial Plots in India Liberalised Remittance Scheme-LRS 24 Annex No Annexure 1 APPLICATION FOR RELEASE OF FOREIGN EXCHANGE 28 FOR TRAVEL ABROAD 2 FORM & APPLICATION FOR REMITTANCE U/S 195 OF 32 3

4 THE INCOME TAX ACT 3 CERTIFICATE 33 4 FORM A APPLICATION FOR LRS INTRODUCTION 4

5 Reserve Bank of India has delegated powers to banks for making outward remittances in foreign currency subject to specific terms and conditions. Our foreign exchange dealing branches can handle such remittances within the delegated powers. Remittances not conforming to the powers vested in us are to be referred to Reserve Bank of India for prior approval. GENERAL GUIDELINES With the introduction of FEMA Act 1999, Central Government has notified that any person may sell or draw foreign exchange to or from an authorized person if such sale or drawal is a current account transaction. Current Account Transaction means a transaction other than a capital account transaction (Capital account transaction means a transaction which alters the assets or liabilities, including contingent liabilities, outside India of person resident in India or vice versa) and without prejudice to the generality of the foregoing such transactions include: Payments due in connection with foreign trade, other current business, services and short-term banking and credit facilities in the ordinary course of business, Payments due as interest on loans and net income from investments, Remittances for living expenses of parents, spouse and children residing abroad, and Expenses in connection with foreign travel, education and medical care of parents, spouse and children. In terms of definition given under Section 2 (v) (i) of Foreign Exchange Management Act (FEMA) 1999, a person resident in India means- A person resident in India means a person residing in India for more than one hundred and eighty two days during the course of the preceding financial year but does not include: a person who has gone out of India or who stays outside India, in either case- for or on taking up employment outside India, or for carrying on outside India a business or vocation outside India, or for any other purpose, in such circumstances as would indicate his intention to stay outside India for an uncertain period. For example: A person going for medical treatment abroad for a definite 5

6 period of time will be considered as a person resident in India. a person who has come to or stay in India, in either cases, otherwise than- for or on taking up employment in India, or for carrying on in India a business or vocation in India or for any other purpose, in such circumstances as would indicate his intention to stay in India for an uncertain period. For example: - A person who has come to India and has taken up employment in India will be considered as a person resident in India. Indian students studying abroad Indian students studying abroad can be treated as Non-resident Indians (NRIs) since it is clear that they are not really dependent for a dominant part of their expenses on remittances from their household in India and their stay abroad for more than 182 days in the preceding financial year and their intension to stay outside India for uncertain period when they go abroad for their studies. 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 RESTRICTIONS PROHIBITION Drawal of foreign exchange by any person for the following purpose is prohibited, namely: a transaction specified in the Schedule I; or a travel to Nepal and/or Bhutan; or a transaction with a person resident in Nepal or Bhutan. Schedule I 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 6

7 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 to that extent of 10% of the invoice value on export of tea and tobacco to Russia. 7. Payment related to Call Back Services of telephones. 8. Remittance of interest income on funds held on Non-Resident Special Rupee (Account) Scheme PRIOR APPROVAL OF GOVERNMENT OF INDIA Drawal of foreign exchange for transactions included in the Schedule II* without prior approval of Government of India is not permitted. However, no such approval is required if the payment is made out of funds held in Resident Foreign Currency (RFC) Resident Foreign Currency (Domestic) Account of the remitter. Schedule II* 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 US $ 10,000) by a State Government and its Public Sector Undertakings. 3) Remittance of freight of Vessel chartered by a PSU 7 Ministry of Finance, (Department of Economic Affairs) Ministry of Surface Transport, (Chartering Wing) 4) Payment of import through Ministry of Surface Transport,

8 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 b) Internet Service Providers 7) Remittance of container detention charges exceeding the rate prescribed by Director General of Shipping 8) Omitted 9) Remittance of prize money /sponsorship of sports activity abroad by a person other than International / National / States Level sports bodies, if the amount involved exceeds US$ 100,000 10) Omitted 11) Remittance for membership Of P & I Club (Chartering Wing) Registration Certificate from the Director General of Shipping a) Ministry of Information and Broadcasting b) Ministry of Communication and Information Technology Ministry of Surface Transport (Director General of Shipping) Ministry of Human Resources Development (Department of Youth Affairs and Sports) Ministry of Finance ( Insurance Division) Note: The above restrictions will not be applicable if the remittances are made out of funds held in EEFC account of the remitter except for the purpose specified in item 9. The above restrictions will not be applicable if the remittances are made out of funds held in RFC (returning NRIs) and RFC ( domestic) account of the remitter without any exception PRIOR APPROVAL OF RESERVE BANK OF INDIA No person shall draw foreign exchange for a transaction included in the Schedule III* without prior approval of the Reserve Bank. However, no such approval is required if the payment is made out of funds held in 8

9 Resident Foreign Currency (RFC returning NRIs) Resident Foreign Currency (Domestic) Account of the remitter. Schedule III* 1. Omitted 2. Release of exchange exceeding US$ 10,000 or its equivalent in one financial year, for one or more private visits to any country (except Nepal and Bhutan). 3. Gift remittance exceeding US$ 5,000 per financial year per remitter or donor other than resident individual 4. (i) Donation exceeding US$ 5000 per financial year per remitter or donor other than resident individual (ii) Donations by Corporate, exceeding one per cent of their foreign exchange earnings during the previous three financial years or US$ 5,000,000, whichever is less, for:- (a) creation of Chairs in reputed educational institutes, (b) to funds (not being an investment fund) promoted by educational institutes; and (c) to a technical institution or body or association in the field of activity of the donor Company Explanation: For the purpose of the item numbers 3 and 4, remittance of gift and donation by resident individuals are subsumed under the Liberalised Remittance Scheme. 5. Exchange facilities exceeding USD 100,000 for persons going abroad for employment. 6. Exchange facilities for emigration exceeding USD 100,000 or amount prescribed by country of emigration. 7. Remittance for maintenance of close relatives abroad, i. exceeding net salary (after deduction of taxes, contribution to provident fund and other deductions) of a person who is resident but not permanently resident in India and also 9

10 (a) is a citizen of a foreign State other than Pakistan; or (b) is 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 assignments, 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, 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 from outside India. Explanation:- For the purposes of this item number 'infrastructure project' is those related to 10

11 (i) Power, (ii) Telecommunication, (iii) Railways, (iv) Roads including bridges, (v) Sea port and air port, (vi) Industrial parks, and (vii) Urban Infrastructure (water supply, sanitation and sewage) 16. Omitted 17. Remittances exceeding five per cent of investment brought into India or US$ 1,00,000 whichever is higher, by an entity in India by way of reimbursement of preincorporation expenses. 18. Omitted Note: The above restrictions will not be applicable if the remittances are made out of funds held in EEFC account of the remitter except for the purpose specified in item 5,6 and 15. The above restrictions will not be applicable if the remittances are made out of funds held in RFC (returning NRIs) and RFC (domestic) account of the remitter without any exception RELEASE OF FOREIGN EXCHANGE FOR SMALL VALUE REMITTANCES RBI has permitted to release amount upto USD25000 or its equivalent for all permissble transactions on the basis of 1. Simple letter from the applicant containing basic information like name and address of the applicant and beneficiary, amount to be remitted and purpose of remittance (Refer Annexure 25(4). 2. Submission of A2 form should not be insisted in such cases. Dummy A-2 form is to be prepared at the branch to provide purpose of remittance for statistical inputs for Balance of Payment. 3. Need not obtain any documentary evidance. In such cases payment has to be made by debit to the applicants account, cheque on the applicant s bank account or by demand draft ADVANCE REMITTANCE FOR OUTWARD REMITTANCES 11

12 Reserve Bank of India has permitted ADs to make advance remittance for any current account transaction for which the release of foreign exchange is admissible. Where the amount of advance remittance exceeds USD2,00,000/- or its equivalent a guarantee from a bank of international repute situated outside or from an AD in India against counter guarantee of a bank of international repute situated outside, should be obtained from the overseas beneficiary. AD should 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 UNDERTAKING / CERTIFICATE REGARDING PAYMENT OF INCOME TAX Certain types of remittances such as income earned in India, are allowed by Reserve Bank of India or by ADs under delegated powers, subject to production of Income Tax Clearance Certificate (ITCC) / NOC from Income Tax authorities. In terms of Notification F.No.500/152/96-FID dated November 18, 1997, issued by Central Board of Director Taxes in terms of which a person making remittance of foreign exchange could submit an undertaking in duplicate addressed to the Assessing Officer, which should be signed by a person authorised to sign the Income Tax Return of the applicant together with a certificate in duplicate from the Accountant (who is not an employee) as they find under Section 288 of the Income Tax Act Accordingly ADs are advised to obtain the undertaking (Annexure) in duplicate in lieu of an ITCC / NOC from IT Authorities and allow remittance of foreign exchange. ADs shall in turn forward one copy of the same to the Assessing Officer mentioned in the undertaking. The other copy shall be kept with them alongwith the respective folders FOREIGN TRAVEL RESTRICTIONS Drawal of foreign exchange to any person for travel to Nepal and or Bhutan prohibited. Traveller should ensure that journey commences not later than 60 days from the date of drawal of foreign exchange. 12

13 Payment for drawal of foreign exchange for travel abroad for a single journey or visit should not be accepted in cash when the Rupee equivalent foreign exchange drawn exceeds Rs.50,000/-. Where the rupee equivalent exceeds Rs.50,000/- the entire payment is to be made by o Crossed cheque drawn on the applicants bank account. o Crossed cheque drawn on the bank account of the firm/company sponsoring the visit of the applicant. o Bankers cheque / pay order / demand draft. o Debit to the account of the applicant / sponsoring company FOREIGN CURRENCY NOTES / COINS Out of the overall foreign exchange sold to a traveler exchange in the form of Foreign currency notes and coins may be sold up to the limits indicated below: 1. Travellers proceeding to Iraq or Libya: Not exceeding US$ 5,000 or its equivalent. 2. Travellers proceeding to the Islamic Republic of Iran, Russian Federation and other Republics of Commonwhealth of Independent States, entire exchange released can be in the form of currency notes. 3. Travellers proceeding to countries other than (i) and (ii) above: Not exceeding US$ 3,000 or its equivalent SURRENDER OF UNSPENT EXCHANGE Unspent exchange brought back to India by traveller should be surrendered Within 90 days from the date of return if it is in the form of currency notes / coins and Within 180 days from the date of return if it is in the form of travellers cheques. Note : Unspent exchange can be utilised if the traveller subsequently visits abroad during the period of 180 days as mentioned above. In the event of cancellation of journey, foreign exchange drawn should be surrendered within 60 days from the date on which the traveller comes to know that the foreign exchange drawn cannot be used for the travel purpose, provided such foreign exchange drawn is 13

14 not used for any other purpose permitted under the provisions of FEMA. Note: Where a person approaches an Authorised Person for surrender of Foreign Exchange after the prescribed period the Authorised Person should not refuse to purchase the foreign exchange on the ground that the prescribed period has expired RETENTION OF FOREIGN CURRENCY A person resident in India can retain foreign currency notes, bank notes and foreign currency travelers cheques not exceeding USD 2,000/- or its equivalent provided such foreign exchange is acquired While on a visit to any place outside India by way of payment for services not arising from any business or anything done in India OR From any person not resident in India and who is on a visit to India, as honorarium or gift or services rendered or in settlement of any lawful obligations OR By way of honorarium or gift while on a visit to any place outside India OR Represents unspent amount of foreign exchange acquired by him from authorised person for travel abroad [this facility is not available if travel abroad is cancelled] [A person resident in India can also open a Resident Foreigh Currency (Domestic) Account, without any ceiling on the balance amount with the foreign exchange acquired by him as above] ENDORSEMENT OF PASSPORT Passports of the persons availing of foreign exchange for travelling purposes both business and private visits need not be endorsed, unless the traveller makes specific request for endorsement USE OF INTERNATIONAL CREDIT CARDS (ICC) Use of International Credit Cards (ICCs) / ATMs/ Debit Cards can be made for travel abroad in connection with various purposes and for making personal payments like subscription to foreign journals, internet subscription, etc. The entitlement of foreign exchange on International Credit Cards (ICCs) is limited by the credit limit fixed by the card issuing authority only. With ICCs one can (i) meet expenses/make purchases while abroad (ii) make payments in foreign exchange for purchase of books and other items through internet in India. If the person has a foreign currency 14

15 account in India or with a bank overseas, he/she can even obtain ICCs of overseas banks and reputed agencies. However, use of International Credit Cards/ATMs/Debit Cards is NOT permitted for prohibited transactions indicated in Schedule -1 of FEM (CAT) Rules 2000 such as purchase of lottery tickets, banned magazines etc,. This facility is available over and above the entitlement of foreign exchange stipulated for travel abroad. Hence ADs can release the entitlement as well as reimburse the drawals through use of ICC LIMITS AND DOCUMENTATION FOR RELEASE OF FOREIGN EXCHANGE 1. Only A2 form (Annexure 25(4))is to be obtained upon to release foreign exchange upto USD5000 or its equivalent. No documentary evidence should be insisted. 2. No documentary evidence should be insisted for release of exchange for studies abroad 3. No documentry evidence should be insisted for release of foreign exchange for medical treatment abroad, if the requirement is less than USD100,000 or its equivalent TRAVEL ABROAD PRIVATE VISITS (BTQ) USD 10,000/- per calendar year (except for visits to Nepal and Bhutan) Documentation Consolidated Application Form Annexure.25(1) A2 form BUSINESS TRAVEL Purpose Business promotion. Participation in International conferences / seminars. Training under Technical collaboration. Sepcialised training / study tour by professionals like Doctors. USD 25,000/- to a person irrespective of period of stay. Documentation Consolidated Application Form ( Annexure.25(1) ). 15

16 A2 form MEDICAL TREATMENT As per estimate from the Doctor in India or hospital / Doctor abroad, if the requirement of exchange exceeds USD 100,000/-. Simple declaration for the exchange requirement less than USD 100,000/-. Documentation Consolidated Application Form ( Annexure.25(1) ) A2 form Documentary evidence as prescribed in the application form in case of exchange requirement exceeding USD 100,000/- Doctors Certificate in case of need for attendant.* For maintenance expenses of a patient going abroad for medical treatment or check-up abroad or person accompanying as attendant to the patient going abroad for medical treatment is entitled for release of foreign exchange of USD 25,000/- irrespective of the period of stay EMPLOYMENT ABROAD USD 100,000/- Documentation A2 form FEMA declaration (Annexure 25(4)) Simple application furnishing details such as country of employment, name and address of the employer, passport and visa details EMIGRATION USD 100,000/- Documentation A2 form FEMA declaration (Annexure.25(4)) Simple application furnishing details such as country of emigration, passport and visa details. 16

17 STUDIES ABROAD USD 100,000/- or as per demand of the overseas institution whichever is higher per academic year Documentation Consolidated Application Form ( Annexure.25(1)). A2 form. CARE: No documentation should be insisted for release of exchange for studies abroad upto USD100,000/-. In case of remitances exceeds of USD100,000/- the estimate from the institution abroad should be obtained in addition to the documents stated above REMITTANCES BY AGENTS TOWARDS COST OF EURORAIL ETC. PASSES/TICKETS, OVERSEAS HOTEL RESERVATIONS, ETC. FOR INDIANS Documentation Actuals net of commission /markup A2 form Invoice FEMA declaration (Annexure 25(4)) sale of passes/tickets in India can be made either against 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 enitlement of foreign exchange for private visit. No such exemption for Hotel Reservation REMITTANCES BY TOUR OPERATORS TOWARDS HOTEL RESERVATION ABROAD FOR INDIANS Actuals net of commission (out of Foreign exchange entitlement) Documentation A2 form Invoice FEMA declaration (Annexure 25(4)) An undertaking from the remitter that the remittance is being made out of the foreign exchange purchased by the traveller from an authorised person and is out of the entitlement of foreign exchange for travel abroad. 17

18 25.7 MISCELLANEOUS REMITTANCES CONSULTANCY SERVICE FROM ABROAD USD 1,000,000/- (1 mio) per project. Documentation A2 form FEMA declaration (Annexure 25(4)) Application furnishing details of the project, name, address and bank details of the consultant. Invoice from consultant. Copy of consultancy agreement. Proof of payment of Income Tax / Income Tax declaration GIFTS USD 5,000/- per remitter per calendar year. Documentation Application giving details of the beneficiary and their relationship. Declaration that they have not remitted more than USD 5,000/- during the year as gift. A2 form. FEMA declaration (Annexuer 25(4)) DONATIONS USD 5,000/- per remitter per calendar year. Documentation Application giving details of the beneficiary. Declaration that they have not remitted more than USD 5,000/- during the year as donations. A2 form. FEMA declaration (Annexure 25(4)) MAINTENANCE OF CLOSE RELATIVES Net salary of a person who is resident but not permanent resident in India and is a citizen of foreign state other than Pakistan USD 100,000/- in other cases. Documentation Application giving details of the beneficiary and their relationship. A2 form Details of remittances made earlier, if any, to the 18

19 beneficiary during the calendar year. FEMA declaration. (Annexure 25(4)) Note : For the purpose of this item, a person resident in India on account of his employment 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 REMITTANCES ON ACCOUNT OF CONSOLIDATED TOUR ARRANGEMENTS FOR FOREIGN TOURISTS VISITING NEIGHBOURING COUNTRIES Travel agency in India may arrange consolidated tours to foreign tourists visiting India and neighbouring countries like Nepal, Bangladesh, Sri Lanka etc. against advance payments / reimbursement received through an authorised dealer. Part of the foreign exchange received in India against such consolidated tour arrangements may be remitted from India to the neighbouring countries, except Pakistan, for services rendered by travel agents / hoteliers in the neighbouring countries. Documentation Actuals net of commission (not exceeding advance payments / reimbursement received in India) A2 form Invoice FEMA declaration (Annexure 25(4)) Proof of Inward Remittance (Not permitted to remit to Pakistan) REMITTANCES TOWARDS SALE OF OVERSEAS PRE-PAID TELEPHONE CARDS Agents of overseas organisations in India, issuing pre-paid telephone cards are permitted to remit the sale proceeds of such cards sold to the travellers visiting abroad without prior approval from Reserve Bank of India. Remittance should be net of their commission. Documentation Actuals A2 form Invoice FEMA declaration (Annexure 25(4)) 19

20 (The cost of pre-paid telephone cards may be collected inindian Rupees or out of foreign exchange released for visits aborad. The cost of such cards collected in India Rupees need not be adjusted in the travellers entitlement of foreing exchange for private visit) REMITTANCE TOWARDS ROYALTY UNDER TECHNICAL COLLABORATION Documentation Not exceeding 5% on local sales and 8% on exports or lump-sum payment not exceeding USD 2 mio. Request letter Letter from RBI registering technical collaboration agreement Copy of technical collaboration agreement A2 form Invoice FEMA declaration (Annexure 25(4)) Income Tax Declaration ( Annexure 25(2) & Annexure 25 (3)) or proof of payment of Income Tax Note - Prior approval from Ministry of Industry and Commerce required for remittances exceeding these threshold limits ADVERTISEMENTS IN TELEVISION MEDIA ABROAD Documentation Actuals* A2 form Invoice FEMA declaration (Annexure.25(4)) Income Tax Declaration (Annexure.25(2 & 3 )) or proof of payment of Income Tax Certificate from a Chartered Accountant that the remittance represents advertisement charges towards telecast in foreign countries and not in India alone. *on behalf of a person whose export earnings are not less than Rs.10 lacs during each of the preceding two years. In case the export earnings of the applicant are less than Rs.10 lacs during each of the preceding two years prior approval from Reserve Bank of India is required in terms Item No.13 of Schedule III. 20

21 ADVERTISEMENT IN PRINT MEDIA ABROAD Documentation Actuals* A2 form Invoice FEMA declaration (Annexure 25(4)) Income Tax Declaration (Annexure.25(2 & 3)) or proof of payment of Income Tax In case of advertisements by State Government or its Public Sector undertakings prior approval from Ministry of Finance ( Department of Economic Affairs) is required in terms item 2 of Schedule II PAYMENTS OF COLLECTIONS OF SUBSCRIPTION TO OVERSEAS TV MEDIA COMPANY Cable operators or collecting agents of Overseas TV media companies, to remit subscription in India/advertisement charges collected from the advertisers who are eligible to advertise on overseas TV channels without any prior permission from the Reserve Bank. Documentation Actuals A2 form Invoice FEMA declaration (Annexuer25(4)) Income Tax clearance certificate / undertaking and certificate (Annexure.25(2 & 3)) A declaration from the remitter along with a certificate from Chartered Accountant stating that advertisement charges are collected from the advertisers who are eligible to advertise on overseas TV channel and necessary documentary evidence is held on record SUPPLY OF GOODS BY A 100% EOU/EPZ UNIT TO ANOTHER 100% EOU/EPZ UNIT, UNITS IN STP/EHTP TO ANOTHER UNIT IN STP/EHTP Documentation Actuals A2 form Invoice Proof of suply of goods (Transport Document/Delivery 21

22 Challan etc.) FEMA declaration (Annexure 25(4)) A Certified copy from the beneficiary unit evidencing that the same is 100% EOU/EPZ or unit in STP/EHTP SUPPLY OF GOODS BY 100% EOU/EPZ UNIT / UNITS IN STP/EHTP TO UNITS IN DOMESTIC TARIFF AREA (DTA) Upon permission from the respective authorities 100% EOU, units in EPZ, EHTP and STPs may sell goods to buyers in DTA against payment in foreign currency (Sales to local buyers in foreign currency), without prior approval from Reserve Bank of India. Buyers of goods in DTA are permitted to settle their purchases in free foreign exchange bought from market. Documentation Actuals A2 form Permission by competent authority for sale of goods in DTA Invoice Proof of suply of goods (Transport Document/Delivery Challan etc.) FEMA declaration (Annexure 25(4)) PAYMENT OF FEES IN FOREIGN CURRENCY EMBASSY AFFILIATED EDUCATIONAL INSTITUTIONS Documentation Actuals A2 form A certificate from the institution / school evidencing that the same is embassy affliated Notice of admission Demand for fees FEMA declaration (Annexure 25(4)) SUBSCRIPTIONS FOR MAGAZINES AND PERIODICALS Remittance for purchase of banned / proscribed magazines are not allowed. Documentation Actuals A2 form Invoice FEMA declaration (Annexure 25(4)) 22

23 INTERNET AND WEB SERVICES Many schemes relating to purchase of websites offer earning in US Dollars and/or in other foreign currency, on incremental basis, depending on the number of new clients/customers added to the chain, thereby making the operation of such schemes akin to money circulation. It is clarified by RBI that authorised dealers should not allow remittance to operators of such schemes and/or to any other overseas company carrying on such types of activities. However, Authorised Dealers are allowed to remit for website sold unconditionally and if the remitter is purchasing it for developing for his present / future business and not for the purpose of adding further members to the chain. Documentation Actuals A2 form FEMA declaration (Annexure 25(4)) A declaration from the remitter that the website purchased is for developing is present / future business and not for the purpose of adding further members to the chain Invoice ( if the remittance exceeds USD500/-) REMITTANCE OF DIVIDEND TO NON RESIDENT SHAREHOLDERS Remittance of dividend by any company to which requirement of dividend balancing is applicable is not permitted as per item No.5 of schedule I. The companies which are not required for dividend balancing can repatriate the dividend declared. Documentation Actuals A2 form Application in RCD 1 and RCD 2 FEMA declaration (Annexure 25(4)) COMMISSION TO AGENTS ABROAD FOR SALE OF RESIDENTIAL / COMMERCIAL PLOTS IN INDIA Not exceeding 5% of the inward remittance towards sale proceeds 23

24 Documentation A2 form FEMA declaration (Annexure.25(4)) Documentary proof of inward remittance Copy of sale agreement or a certificate from Chartered Accountant certifying the sale price LIBERALISED REMITTANCE SCHEME OF USD 1, 25,000 FOR RESIDENT INDIVIDUALS As a step towards further simplification and liberalization of the foreign exchange facilities available to residents, RBI has decided that resident individuals may freely remit upto USD 1,25,000 per financial year for any purpose for which a Scheme has been formulated as detailed below: 1. Eligibility All resident individuals are eligible to avail the facility under the scheme including minors. In case of remitter being a minor, the LRS declaration form should be countersigned by the minor s natural guardian. The facility will not be available to corporates, partnership firms, HUF, Trusts, etc. 2. Purpose 2.1 This facility is available for making remittance up to USD1, 25,000 per financial year for any current or capital account transactions or a combination of both. Remittances under the Scheme can be consolidated in respect of family members subject to individual family members complying with its terms and conditions. 2.2 Under this facility, resident individuals will be free to acquire and hold immovable property or shares or any other asset outside India without prior approval of the Reserve Bank. Individuals will also be able to open, maintain and hold foreign currency accounts with a bank outside India for making remittances under the scheme without prior approval of Reserve Bank. The foreign currency account may be used for putting through all transactions connected with or arising from remittances eligible under this scheme. 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. 24

25 2.3 It is further clarified that the facility under the scheme is in addition to those already available for private travel, business travel, remittances, gifts, studies,donations and medical treatment etc as described in Schedule III of Foreign Exchange Management (Current Account Transactions) Rules, It is mandatory to have PAN number to make remittances under the Scheme. 2.4 A resident individual is permitted to make a rupee gift/ loan to a NRI /PIO who is a close relative of the resident individual [close relative as defined in Section 6 of the Indian Companies Act, 1956]. The gift/ loan amount should be within the overall limit of USD 125,000 per financial year as permitted under the Liberalised Remittance Scheme (LRS) for a resident individual. It would be the responsibility of the resident donor/lender to ensure that the gift/ loan amount is under the LRS and all the remittances under the LRS during the financial year including the gift/ loan amount have not exceeded the limit prescribed under the LRS. It may be observed that only LRS limit of the remitter would be utilized and gift/loan amount as the case may be would actually be credited to NRO A/c. of NRI/ PIO close relative. 2.5 The remittance facility under the scheme is not available for the following: i) Remittance for any purpose specifically prohibited under Schedule-I (like purchase of lottery/sweep stakes, tickets prescribed magazines etc) or any item restricted under Schedule II of Foreign Exchange Management (Current Account Transactions) Rules, ii) iii) iv) Remittances made directly or indirectly to Bhutan, Nepal, Mauritius or Pakistan. Remittances made directly or indirectly to countries identified by the Financial Action Task Force (FATF) as non co-operative countries and territories viz Cook Islands, Egypt, Guatemala, Indonesia, Myanmar, Nauru, Nigeria, Philippines and Ukraine. Remittances directly or indirectly to those individuals and entities identified as posing significant risk of committing acts of terrorism as advised separately by the Reserve Bank to the banks. 25

26 v) Any kind of credit facilities should not be extended to resident individuals to facilitate remittances under the Scheme. 3. Remittance Procedure Requirements to be complied with by the remitter 3.1 To avail of this facility, the individual will have to designate a branch of an AD through which all the remittances under the scheme will be made. 3.2 The resident individual seeking to make the remittance should furnish an application letter cum declaration in the format as indicated in Annexure 25(5) regarding the purpose of the remittance and declaration that the funds belong to the remitter and will not be used for the purposes as detailed above. Requirements to be complied with by the branches While allowing the facility to resident individuals, Branches are required to ensure that the "Know Your Customer" Guidelines have been implemented in respect of these accounts. They should also comply with the Anti-Money Laundering Rules in force while allowing the facility. 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, Branches should carry out due diligence on the opening, operation and maintenance of the account. Further the Branches should obtain bank statement for the previous year from the applicant to satisfy themselves 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. 3.5 The Branches 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. 3.6 Branches should certify that the remittance is not being made directly or indirectly by /or to ineligible entities and that the remittances are made in accordance with the instructions contained herein. 26

27 4.Reporting of the transactions The remittances made under this Scheme will be reported in the R-Return in the normal course. The Branches may also prepare and keep on record dummy Form A2, in respect of remittances exceeding USD Branches may arrange to furnish on a quarterly basis, information on the number of applicants and total amount remitted to the Chief General Manager, External Payment Division, Foreign Exchange Department, Reserve Bank of India, Central Office, Mumbai

28 25.8 Annexures Annexure 25(1) APPLICATION FOR RELEASE OF FOREIGN EXCHANGE FOR TRAVEL ABROAD The Branch Head, Union Bank of India Branch. Date: Dear Sir, TRAVEL ABROAD I/We request you to release to me foreign exchange of for my proposed visit to (Country) during the period from / / to / /. We enclose A2 form duly filled in and signed. Kindly debit my/our a/c with you/ we enclose cheque No. to the debit of my account No.. The details of my Passport / Travel are mentioned below: 1. Name, Nationality & Address of the Application: Telephone No. 2. Name of the Company (For Business Travel) Telephone No. 3. Details of Passport: o Pass Port Number/ Place of Issue o Date of Issue / Expiry o Details of Visa 4. Purpose of visit BTQ Busines s Medical Treatme nt Abroad Studies Abroad 5. Amount Required: TCs Currency DDs 28

29 I/We declare that the exchange applied for together with the exchange already availed under BTQ does not exceed the entitlement under FEMA. Kindly endorse / do not endorse the Passport. I/We hereby declare that the above transaction does not involve and is not designated for the purpose of any contravention or evasion of the provisions of the aforesaid act or any rule, regulation, notification, direction or order made there under. I/We also hereby agree and undertake to give such information/documents as will naturally satisfy you about this transaction in terms of the above transaction. I/We also understand that if I/We refuse to comply with such requirement or take unsatisfactory compliance therewith, the Bank shall refuse in writing to undertake the transaction and shall if it has reason to believe that any contravention/evasion is contemplated by me/us report the matter to RBI. I hereby undertake to surrender unspent foreign exchange to AD within 90/180 days from the date of return if the same is in the form of currency notes / TCs respectively. SIGNATURE OF THE APPLICANT* I/ We declare that the exchange applied for is meant for business visit of Mr./Mrs. who is (Designation) of our company. I/We further declare that the undersigned has/have the authority to give the above undertaking and declaration on behalf of the firm/company. SIGNATURE & RUBBER STAMP OF THE COMPANY* PLEASE TURN OVERLEAF & FURNISH RELEVANT INFORMATION FOR HIGHER STUDIES & MEDICAL TREATMENT Additional details to be furnished for release of exchange for Higher Studies 29

30 1. Name of the Student 2. Details of present academic qualifications 3. Particulars of the Course proposed to be studied 4. Duration of the course 5. Name of the Overseas University / Institution 6. Foreign Exchange required for [indicate annual requirement] a) Tuition fees b) Maintenance expenses c) Books, personal computers etc. d) Others [specify ] 7. Amount of Scholarship / Assistantship / Sponsorship 8. Any other information. I declare that I have not submitted any application to any other Authorised Dealer / any office of RBI for the above purpose. I also declare that total drawal of exchange including the present request does not exceed the ceiling prescribed by RBI and the statement made is true to the best of my knowledge and belief. S I G N A T U R E Additional details to be furnished for release of foreign exchange for Medical Purposes *: 1. Name of the Patient 2. Nature of the disease and since when? 3. Details of the treatment proposed to be taken abroad Name of the country / hospital to be visited Expected duration of treatment 30

31 a) In Hospital b) Pre/Post hospitalisation 4. Exchange required for the patient Medical treatment including hospitalisation Living & Incidental expenses for Pre / Post hospitalisation. Name of the attendant & relationship with patient. 5. Proposed date of departure. 6. Any other relevant information. * Enclosures (if the request for drawal of exchange exceed USD 100,000/- ) a) Medical Certificate issued by the Medical Practitioner confirming having examined the patient and found that the patient is suffering from the disease.. and requires treatment abroad. b) Correspondence with the overseas doctor / hospital regarding proposed treatment / or any other evidence in this regard along with a certified estimate of expenses from the overseas doctor / hospital. c) Original and copy of Passport / Visa of the Patient & Attendant for endorsement. I undertake to submit details of actual expenses within 15 days from the date of returning to India and return the unspent foreign exchange, if any. SIGNATURE OF THE PATIENT / APPLICANT 31

32 Annexure 25(2) FORM & APPLICATION FOR REMITTANCE U/S 195 OF THE INCOME TAX ACT 1. Name and Address of the Applicant : and principal place of business 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. 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 well as documents required for determining our liabilities under the I.T. Act as a person responsbile 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 remittances] 32

33 Annexure 25(3) CERTIFICATE I/We have examined the agreement (wherever applicable) between M/s. and M/s requiring the above Remitters beneficiary 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 name of the foreign country to which remittance is being made. 2. Amount of remittance in foreign currency indicating the proposed date/month and bank through which remittance is being made. 3. Details of tax deducted at source rate at which tax has been deducted and date of deduction. 4. In case the remittance as indicated in (2) above is net of taxes, whether tax payable has been grossed up? If so, computation thereof may be indicated. 5. If the remittance is for royalties, fee for technical services, 33 : : : Foreig n Curre ncy : : Amount to be remitted Tax deducted at source Actual amount remitted Rate at which deducted Date of Deduction Curren cy

34 interest, dividend, etc., the clause of the relevant DTAA under which the remittance is covered along with reasons and the rate at which tax is required to be deducted in terms of such clause of the applicable DTAA. 6. In case the tax has been deducted at a rate lower than the prescribed under the applicable DTAA, the reasons thereof. 7. In case remittance is for supply of articles or things (e.g. plant, machinery, equipment, etc.) or computer software, please indicate:- i. Whether there is any permanent establishment 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 not on account of business income please indicate :- : i. Whether such income is liable to tax in India? ii. If so, the basis for arriving a the rate of deduction of tax. 34

35 iii. If not, the reason thereof. 9. In case tax is not deducted at source for any other reason, details thereof. : (Attach separate sheet duly authenticated wherever nenessary). Name, Address and registration numbers (To be signed and verified by an Accountant as defined in Section 288 of the Income-tax Act.) 35

36 Annexure 25(4) Form A2 Application cum Declaration (To be completed by the applicant) Application for drawal of foreign exchange I. Details of the applicant a.name b. Address c. Account No. II. Details of the foreign exchange required 1. Amount (Specify currency) 2. Purpose III. I authorise you to debit my Saving Bank/Current/RFC/EEFC Account No. together with your charges and * a) Issue a draft : Beneficiary's Name Address * b) Effect the foreign exchange remittance directly -1. Beneficiary's Name 2. Name and address of the Bank 3. Account No. * c) Issue travellers cheques for * d) Issue foreign currency notes for (Strike out whichever is not applicable) Signature Declaration (Under FEMA 1999) I, declare that -* 1) The total amount of foreign exchange purchased from or remitted through, all sources in India during this calendar year including this application is within USD (USD only) the annual limit prescribed by Reserve Bank of India 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) 36

37 Annexure 25(5) Application cum Declaration for purchase of foreign exchange under LRS scheme (To be completed by the applicant) I II Details of the applicant a. Name.. b. Address c. Account No.. d. PAN No. Details of the foreign exchange required 1. Amount (Specify currency) 2. Purpose.. III Source of funds:. IV Nature of instrument Draft. Direct remittance V Details of the remittance made under the scheme in the financial year Date Amount VI Details of the Beneficiary 1. Name. 2. Address. * 3. Name and address of the bank. * 4. Account No. (* Required only when the remittance is to be directly credited to the bank account of the beneficiary) 37