Friday, September 18, 2015

Miscellaneous Remittances from India – Facilities for Residents

 Release of Forex by Authorised Dealers

General
AD Banks are to be guided by FEMA, 1999, for release of forex for current account transactions. In terms of the said Rules,
  • Transactions listed in Schedule I is expressly prohibited.
  • Transactions included in Schedule II may be permitted upon approval from the Ministry/Department of the Government of India.
  • For transactions included in Schedule III, AD Banks may release forex up to the threshold ceilings mentioned therein. Prior approval of the RBI would be required for remittance exceeding the specified limits.

All Rules, Regulations and Directions issued under the Act also apply to the use of International Credit Cards (ICC), International Debit Cards (IDC), ATM cards.

Authorised Dealer – Category II are authorised to release / remit forex for the following non-trade current account transactions:
(a)                Private visits,
(b)               Remittance by tour operators to overseas agents,
(c)                Business travel,
(d)               Fee for participation in global conferences and specialized training,
(e)                Remittance for participation in international events / competitions (towards training, sponsorship and prize money),
(f)                Film shooting,
(g)                Medical treatment abroad,
(h)               Disbursement of crew wages,
(i)                 Overseas education,
(j)                 Remittance under educational tie up arrangements with universities abroad,
(k)               Remittance towards fees for examinations held in India and abroad and additional score sheets for GRE, TOEFL, etc.
(l)                 Employment and processing, assessment fees for overseas job applications,
(m)             Emigration and emigration consultancy fees,
(n)               Skills / credential assessment fees for intending migrants,
(o)               Visa fees,
(p)               Processing fees for registration of documents as required by the Portuguese / other Governments,
(q)               Registration / subscription / membership fees to International Organisations.

Release of forex is not admissible for travel to and transaction with residents of Nepal and Bhutan.

Sale of Exchange
Authorised Persons may release forex for travel on the basis of a declaration from the traveler, regarding the amount of forex availed by him during the financial year. Though not mandatory, they may record under their stamp and signature, the details of forex sold, on the passport of the traveler, upon specific request.

The traveler should sign the cheques in the presence of an authorised official. Acknowledgement for receipt of the travellers cheques should be held on record. Authorised Dealers may, if requested, record on the passport of the traveler, under their stamp and signature, details of forex sold. In case of a child travelling on a parent's passport, the endorsement should be made on the joint passport.

Out of the overall forex (USD 250,000) that can be 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.
(iv)           Travellers proceeding for Haj/Umrah pilgrimage- full amount of BTQ entitlement in cash or up to the cash limit as specified by the Haj Committee of India, may be released.

A resident Indian is allowed to take INR in the denomination of Rs. 100 and below to Nepal and Bhutan, without any limits. For denominations of Rs 500 and Rs1,000, the limit is Rs 25,000.

Form A2 and other related documents should be retained for a period of one year. For current account remittances upto USD 25,000 Authorised Dealers need a simple letter containing the names and the addresses of the applicant and the beneficiary, amount to be remitted and the purpose of remittance. However, the payment in such cases is to be made by a cheque drawn on the applicant's bank account or by a Demand Draft. AD banks shall prepare dummy A-2 so as to enable them to provide purpose of remittance for statistical inputs for Balance of Payment.

Where the remittances are allowed on the basis of self-declaration, the onus of furnishing the correct details will remain with the applicant.

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 forex requirements. Authorised Dealers may release forex, on the strength of the sanction so received.

Private visits

For private visits abroad, other than to Nepal and Bhutan, any resident individual can obtain forex up to an aggregate amount of USD 2,50,000, per financial year, irrespective of the number of visits. If an individual has already remitted any amount under the Liberalised Remittance Scheme, then the applicable limit would be reduced by the amount so remitted.

The resident individual shall have to fill Form A2 and ‘Application cum declaration for purchase of forex under Liberalised Remittance Scheme of USD 250,000’.

Gift/ donation
Any resident individual/entity, may remit up-to USD 2,50,000 per financial year as gift or as donation. Remittances exceeding USD 2,50,000 will require prior permission from the RBI. If an individual has already remitted any amount under the Liberalised Remittance Scheme, then the applicable limit would be reduced by the amount so remitted.

General permission is available to non individuals to remit towards donations up-to 1% of their forex earnings during the previous 3 financial years or USD 5,000,000, whichever is less, for (a) creation of Chairs in reputed educational institutes, (b) contribution to funds (not being an investment fund); and (c) contribution to a technical institution or body or association in the field of activity of the donor Company.
Any additional remittance in excess of the same shall require prior approval of the RBI of India.

Going abroad on employment
A person going abroad for employment can draw up to USD 2,50,000 per financial year on the basis of self-declaration in Form A2 and ‘Application cum declaration for purchase of foreign exchange under LRS of USD 250,000’. If an individual has already remitted any amount under the Liberalised Remittance Scheme, then the applicable limit would be reduced by the amount so remitted.

Emigration
A person going on emigration can draw forex upto the amount prescribed by the country of emigration or USD 250,000. This amount is only to meet the incidental expenses in that country and not for undertaking capital account transactions. No forex can be remitted to become eligible or for earning points or credits for immigration.

Maintenance of close relatives abroad
A resident individual can remit up-to USD 250,000 per financial year towards maintenance of close relatives abroad. If an individual has already remitted any amount under the Liberalised Remittance Scheme, then the applicable limit would be reduced by the amount so remitted.

Business trip
Resident individuals/ proprietorship firms can avail of forex up to USD 2,50,000 in a financial year irrespective of the number of visits. This limit has been subsumed under the LRS.
Visits for attending an international conference, seminar, specialised training, apprentice training, etc., are treated as business visits. Release of forex exceeding USD 2,50,000 require prior permission from the RBI.
However, if an employee is being deputed by a company and the expenses are borne by the company, then such expenses shall be permitted by the AD bank, without any limit, subject to verifying the bonafides of the transaction.

Medical treatment abroad
Authorised Dealers may release forex up to USD 2,50,000, on the basis of self-declaration in Form A2 and ‘Application cum declaration for purchase of forex under LRS of USD 250,000’ without insisting on any estimate from a hospital/doctor.
For amount exceeding the above limit, estimate from the doctor in India or hospital/ doctor abroad, is to be obtained.
A person who has fallen sick after proceeding abroad may also be released forex for medical treatment outside India.
An amount up to USD 250,000 per financial year is also allowed to a person for accompanying the patient as an attendant.

Facilities available to students for pursuing their studies abroad.
A D Banks may release forex up to USD 2,50,000 for studies abroad on the basis of Form A2 and ‘Application cum declaration for purchase of forex under LRS of USD 250,000’, without insisting on any estimate from the foreign University. However, if estimate is received, then forex may be released in excess of USD 250,000.
Students going abroad are treated as NRIs and are eligible for all the facilities under FEMA, 1999. Educational and other loans can be allowed to continue. He may withdraw and repatriate up to USD 1 million per financial year from his NRO account. USD 3000 may be carried by him in the form of foreign currency (which shall be within the limit of USD 2,50,000 or the estimate received from the institution) while going for study abroad.

Any other current account transaction
“Any other current account transaction” is to cover the current account transactions which were available in the erstwhile Schedule III to FEM (CAT) Rules, 2000 dated May 3, 2000, and which do not appear in Schedule III to FEM (CAT) Amendment Rules, 2015.


Period of surrender of forex
Unutilised forex could be used for any other eligible purpose for which drawal is allowed.
Unutilised forex may be surrendered to an Authorised Person within a period of 180 days from the date of purchase / date of return of the traveller, as the case may be. However, Authorised Person should not refuse to purchase the forex merely on the ground that the prescribed period has expired.
The time limit of 180 days is applicable only to resident individuals and in areas other than export of goods and services.
In all other cases, the regulations on surrender shall remain unchanged. (cf.  Notification No. FEMA 9/2000-RB dated May 3, 2000, as amended from time to time).

Unspent Forex
A returning traveller may retain foreign currency - travellers cheques and currency notes up to an aggregate amount of USD 2000 and foreign coins without any ceiling beyond 180 days. Forex so retained, can be utilized for his subsequent visit abroad.
A resident individual can maintain a Resident Foreign Currency (Domestic) Account. The eligible credits are as under :-

a)       while on a visit abroad, by way of payment for services not arising from any business in India;
b)      from any non resident who is on a visit to India, as honorarium or gift or for services rendered or in settlement of any lawful obligation;
c)       by way of honorarium or gift while on a visit abroad;
d)      unspent forex acquired from an authorised person for travel abroad.
e)       as gift from a close relative (as per Sec 6 of the Indian Companies Act, 1956) ;
f)       earning through exports, or as royalty, honorarium or by any other lawful means;
g)       disinvestment proceeds received on conversion of shares to ADRs/GDRs under the Sponsored ADR/GDR Scheme approved by the Foreign Investment Promotion Board.
h)      earnings received as the proceeds of life insurance policy settled in foreign currency.

Debits to the account shall be allowed for current account as well as capital account transaction in accordance with the FEMA (Current Account Transactions) Rules, 2000 and FEMA (Permissible Capital Account Transactions) Regulations, 2000.

Remittances for Tour Arrangements
Authorised Dealers may remit forex up to a reasonable limit, for making tour arrangements abroad, provided they are satisfied that the remittance is made out of the forex purchased in accordance with the Rules.

Authorised Dealers may effect remittances at the request of agents in India who have tie-up arrangements with hotels/ agents, etc., abroad for making tour arrangements for travel from India, provided they are satisfied that the remittance is made out of the forex purchased in accordance with the Rules.

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 making tour arrangements provided:-

a)                  the credits to the account are by way of depositing
i)  collections made in forex from travellers; and
ii)  refunds received from outside India on account of cancellation of bookings, and

b)                  the  debits  in  foreign  exchange  are  for  making  payments  towards  hotel accommodation, tour arrangements, etc., outside India.

Authorised Dealer may allow tour operators to remit the cost of rail/ road/ water transportation outside India. The sale of ticket can be made either against Rupees or in forex. The cost of tickets collected in Rupees need not be adjusted in the entitlement of forex for private visit.

In respect of consolidated tours for foreign tourists visiting India and neighbouring countries like Nepal, Bangladesh, Sri Lanka, etc., part of the forex received, may require to be remitted to these countries. Authorised Dealer may allow such remittances after verifying that the amount does not exceed the amount actually remitted to India and the beneficiary is not from Pakistan.

Payment in Rupees
Authorised Dealers may accept cash upto Rs. 50,000/- against sale of forex. Wherever the amount exceeds Rs.50,000, the payment must be received only by:

(i)                 a crossed cheque drawn on the applicant’s bank account, or
(ii)               a crossed cheque drawn on the bank account of the firm/company sponsoring the visit of the applicant, or Banker’ s Cheque/ Pay Order/ Demand Draft or
(iii)             Debit/Credit/pre-paid cards provided
(a)    KYC/AML guidelines are complied with.
(b)   Sale of foreign  currency / TCs is within the limits prescribed by the bank for the cards.
(c)    The  purchaser  of  foreign  currency / TCs  and  the card holder is the same person.

Note: Where the amount 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.

Issue of Guarantee – Import of service
AD Category-I banks are permitted to issue guarantee upto USD 500,000 in favour of a non-resident service provider, on behalf of a resident service importer, provided:

(a)    The AD Category-I bank is satisfied about the bonafides of the transaction.
(b)   The AD Category-I bank ensures submission of documentary evidence for import of services.
(c)    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 would be required for issue of guarantee exceeding USD 100,000.

In case of invocation of the guarantee, the Authorised Dealer is required to submit a report on the circumstances leading to the invocation, to RBI.

Liberalised Remittance Scheme (LRS) of USD 2,50,000 for Resident individuals

Under LRS, Authorised Dealers may allow remittances up to USD 2,50,000 per financial year for any permitted current or capital account transactions.

In case of a minor, the LRS declaration form must be countersigned by his natural guardian.

Remittances under the Scheme can be consolidated in respect of family members subject to individual family members complying with its terms and conditions.

Transactions which are not permissible under FEMA and those in the nature of margins or margin calls to overseas exchanges or counterparty are not allowed under the Scheme.

For acquiring and holding shares or debt instruments or any other asset including immovable property outside India without prior approval of the RBI.

The limit of USD 2,50,000 under the Scheme also includes remittances for current account transactions available to resident individuals. If an individual remits any amount under the LRS in a financial year, then the applicable limit would be reduced by the amount so remitted.

For purchasing objects of art subject to the provisions of other applicable laws.

For remittance of funds for acquisition of ESOPs. This is in addition to acquisition of ESOPs linked to ADR / GDR and acquisition of qualification shares.

For investing in units of Mutual Funds, Venture Capital Funds, unrated debt securities, promissory notes, etc. The resident can also invest in such securities out of the bank account opened abroad under the Scheme.

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.

For remittance in the form of a DD either in the remitter’s own name or in the name of beneficiary with whom he intends putting through the permissible transactions, against self-declaration in the format prescribed.

To set up Joint Ventures (JV)/ Wholly Owned Subsidiaries (WOS) outside India for bonafides business activities within the limit of USD 2,50,000 subject to  FEMA Notification No.263.

Individuals can maintain foreign currency accounts with a bank outside India for making remittances under the Scheme without prior approval of RBI. Such accounts may be used for putting through transactions connected to remittances eligible under this Scheme.
Banks should not extend credit facilities to facilitate capital account remittances under the Scheme.

The scheme is not available for remittances prohibited under Schedule I or Schedule II of Forex Management (Current Account Transaction) Rules, 2000.

The Scheme is not available for capital account remittances to countries identified by FATF as non-co-operative countries and territories.

For transactions under the Scheme, residents may use Form A-2 and Application-cum-Declaration Form. It is mandatory to have PAN number to make remittances under the Scheme.

Investor, who has remitted funds under LRS can retain or reinvest the income earned on the investments.

AD Category – I banks are required to furnish the information on remittances on a monthly basis, on or before the fifth of the following month through Online Returns Filing System (ORFS). Where there is no data to furnish, AD banks are advised to upload ‘nil’ figures in the ORFS system.

Facility to grant loan to NRI/ PIO close relative under Liberalised Remittance Scheme (LRS):

Resident individual is permitted to lend to a close relative who is a NRI/ PIO, by way of crossed cheque or 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)   It would be the responsibility of the lender to ensure that the amount of loan is within the LRS limit of USD 2,50,000 during the financial year;
(iii) the loan shall be utilized for meeting the borrower’s personal requirements or his own business in India.
(iv) the loan shall not be utilized for:
a.       The business of chit fund, or
b.      Nidhi Company, or
c.       Agricultural or plantation activities or in real estate business, or construction of farm houses. Real estate here shall not include development of townships, construction of residential/ commercial premises, roads or bridges.
d.      Trading in Transferable Development Rights (TDRs).

(v)   the loan amount should be credited to the NRO a/c of the NRI / PIO;
(vi)   the loan amount shall not be remitted outside India; and
(vii)  repayment of loan shall be by way of inward remittances through normal banking channels or by debit to the NRO / NRE / FCNR account of the borrower or out of the sale proceeds of the shares or securities or immovable property against which such loan was granted.

Documentation

FEMA requires that any person desiring to transact in forex should make a declaration to the AD that the transaction will not be in contravention of the provisions of any rules or regulations in force.

Authorised Dealers are also required to keep on record any information, on the basis of which the transaction was undertaken. In case the applicant refuses to comply with any such requirement, the Authorised Dealer shall refuse, in writing, to undertake the transaction and shall report any contravention to the RBI.

All the facilities for release of exchange for permitted current account transactions, have been subsumed under the overall limit of USD 250,000. However, for emigration; expenses in connection with medical treatment abroad and studies abroad, individuals may avail of exchange facility for an amount in excess of the overall limit prescribed under the LRS, if it is so required by a country of emigration; medical institute offering treatment or the university respectively.

The resident individuals shall be required to fill up Form A2 and Application cum declaration for purchase of forex under LRS of USD 250,000.

International Credit Cards
The restrictions contained in Rule 5 of the Forex Management (Current Account Transactions) Rules, 2000 will not be applicable for use of ICCs for payment towards expenses, while on a visit abroad.

Residents can use ICCs on internet for any permitted purpose, e.g. for import of books, purchase of downloadable software or import of any other item permissible under Foreign Trade Policy.

ICCs cannot be used for purchase of prohibited items, like lottery tickets, banned or proscribed magazines, participation in sweepstakes, payment for call-back services, etc.

There is no aggregate monetary ceiling separately prescribed for use of ICCs through internet.

Resident individuals maintaining foreign currency accounts, are free to obtain ICCs issued by overseas banks and other reputed agencies. The charges incurred against the card, can be met out of funds held in such accounts or through remittances from India through a bank where the card holder has a current or savings account. Such remittances should be made directly to the card issuing agency, and not to a third party.

The applicable limit will be the credit limit fixed by the card issuing banks. There is no monetary ceiling fixed by the RBI for remittances under this facility.

Use of ICC for payment in forex in Nepal and Bhutan is not permitted.

International Debit Cards
Banks authorised to deal in forex are issuing International Debit Cards (IDCs) which can be used for drawing cash or making payment overseas during visits abroad. It is clarified that IDCs can be used only for permissible current account transactions subject to limits prescribed from time to time.

The IDCs cannot be used on internet for purchase of prohibited items as mentioned in case of ICCs.

Store Value Cards/ Charge Cards/ Smart Cards, etc.
Certain A D Banks are also issuing Store Value Card/ Charge Card/ Smart Card to residents traveling abroad, which are used for making payments and for drawing cash from ATM terminals. No prior permission from the RBI is required for issue of such cards. However, the use of such cards is limited to permissible current account transactions and subject to limits prescribed from time to time.

Redemption of unutilized balance on prepaid travel cards:
Authorised Persons shall redeem the unutilized balance outstanding in the cards immediately upon request by the resident Indians to whom the cards are issued subject to retention of: -
a)      The amounts that are authorized and remain unclaimed/ not settled by the acquirers as of the date of redemption till the completion of the respective settlement cycle;
b)      A small balance not exceeding US$ 100, for meeting any pipeline transactions till the completion of the respective settlement cycle; and
c)      Transaction fees / service tax payable in India in Rupees.
For the amount that are authorized but unclaimed/ not settled by the acquirer, the issuer of such cards can hold such amounts until such transactions are processed/ settled by the acquirers within the prescribed settlement timeframe.

Acquisition of foreign securities under Employees Stock Option (ESOP)
Resident individuals who are either employees or director of an Indian office or branch of a foreign company in which foreign holding is not less than 51 per cent are permitted to acquire foreign securities under ESOP Scheme without any monetary limit. They are also permitted to freely sell the shares provided the proceeds are repatriated to India.

Income- tax clearance
It shall be mandatory on the part of Authorised Dealers to comply with the requirement of the tax laws, as applicable.


Schedule I

Transactions which are Prohibited (see rule 3)

1.   Remittance out of lottery winnings.
2.   Remittance of income from racing/riding etc. or any other hobby.
3.   Remittance for purchase of lottery tickets, banned /proscribed magazines, football pools, sweepstakes, etc.
4.     Payment of commission on exports made towards equity investment in Joint Ventures / Wholly Owned Subsidiaries abroad of Indian companies.
5.     Remittance of dividend by any company to which the requirement of dividend balancing is applicable.
6.     Payment of commission on exports under Rupee State Credit Route, except commission up to 10% of invoice value of exports of tea and tobacco.
7.   Payment related to "Call Back Services" of telephones.
8.     Remittance of interest income on funds held in Non-Resident Special Rupee (Account) Scheme.

Schedule II

Transactions which require prior approval of the Central Government (see Rule 4)

Purpose
Ministry / Department whose approval is required
1. Cultural Tours
Ministry of HRD, (Department of Education and Culture)
2. Advertisement in foreign print media, other than for promotion of tourism, foreign investments and international bidding (over 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
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 I&B;  Ministry of Communication and IT
7. Remittance of container detention charges exceeding the rate prescribed by Director General of Shipping
Ministry of Surface Transport (Director General of Shipping)
8. omitted

9. Remittance of prize money/sponsorship of sports activity abroad by a person other than International / National / State Level sports bodies, if the amount involved exceeds USD 100,000.
Ministry of Human Resources Development (Department of Youth Affairs and Sports)

10. Omitted

11. Remittance for membership of P&I Club
Ministry of Finance (Insurance Division)





SCHEDULE III
                                                (See rule 5)

Facilities for individuals

1. Individuals can avail of forex facility for the following purposes within the limit of USD 2,50,000 only. Any remittance in excess of the said limit shall require prior approval of the RBI of India.

(i)           Private visits to any country (except Nepal and Bhutan).
(ii)         Gift or donation.
(iii)       Going abroad for employment.
(iv)       Emigration.
(v)         Maintenance of close relatives abroad.
(vi)       Travel for business, or attending a conference or specialised training or for meeting expenses for meeting medical expenses, or check-up abroad, or for accompanying as attendant to a patient going abroad for medical treatment/ check-up.
(vii)     Expenses in connection with medical treatment abroad.
(viii)   Studies abroad.
(ix)       Any other current account transaction

provided that for a person who is resident but not permanently resident in India and –
(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 of a foreign company or subsidiary or joint venture in India of such foreign company, may make remittance up to his net salary (after deduction of taxes and other deductions).
Explanation: a person resident in India on account of his employment or deputation of a specified duration or for a specific job or assignments, the duration of which does not exceed three years, is a resident but not permanently resident:

provided also that a person other than an individual may also avail of forex facility, mutatis mutandis, within the limit prescribed under the said Liberalised Remittance Scheme for the purposes mentioned herein above.


Facilities for persons other than individual -

2. The following remittances by persons other than individuals shall require prior approval of the RBI of India.

(i)     Donations exceeding one per cent. of their forex earnings during the previous three financial years or USD 5,000,000, whichever is less, for-
(a)    creation of Chairs in reputed educational institutes,
(b)   contribution to funds (not being an investment fund) promoted by educational institutes;
(c)    contribution to a technical institution or body or association in the field of activity of the donor Company.

(ii)       Commission, per transaction, to agents abroad for sale of residential flats or commercial plots in India exceeding USD 25,000 or five percent of the inward remittance whichever is more.

(iii)     Remittances exceeding USD 10,000,000 per project for any consultancy services in respect of infrastructure projects and USD 1,000,000 per project, for other consultancy services procured from outside India.

(iv)     Remittances exceeding 5% of investment brought into India or USD 100,000 whichever is higher, by an entity in India by way of reimbursement of pre-incorporation expenses.”

Procedure
The procedure for drawal or remittance of any foreign exchange under this schedule shall be the same as applicable for remitting any amount under the said Liberalised Remittance Scheme.
____________________________________________________________________________
Based on the Master Circular of 1/7/15.
Please visit www.rbi.org.in  for any further clarification if required…………….. Poppy