Monday, April 25, 2016

Foreign Exchange Management (Remittance of Assets) Regulations, 2016

In these Regulations, unless the context requires otherwise, -

(i) 'Act' means the FEMA, 1999 (42 of 1999);

(ii) 'Authorised Dealer' means a person authorised under the Act;

(iii)         ‘NRI’ & ‘PIO’ shall  be as defined in  Foreign  Exchange Management (Deposit) Regulations, 2016;

(iv)         'Remittance of asset' means remittance outside India, deposit with a bank or a firm or a company, provident fund balance or superannuation benefits, amount of claim or maturity proceeds of Insurance policy, sale proceeds of shares, securities, immovable property or any other asset held in India as per the Act or rules or regulations made there under;

Prohibition on Remittance outside India of assets held in India:-

No person, whether resident in India or not, shall make remittance of any asset held in India except for what is provided in the Act or special permission of RBI:

Permission for remittance of assets in certain cases:-

(1)           A citizen of a foreign state, other than a PIO or a citizen of Nepal or Bhutan, who
(i)             has retired from an employment in India, or
(ii)           has inherited the assets from a person referred to in the Act; or
(iii)         is a widow/ widower resident outside India and has inherited assets of the deceased spouse who was a resident Indian citizen. He/She may remit upto USD 1,000,000/- per financial year on production of documentary evidence. For the purpose of arriving at the annual ceiling, the sale proceeds of shares and immovable property owned or held by the citizen of foreign state on repatriation basis, shall not be included.

Where the remittance is made in more than one instalment, it shall be made through the same authorised dealer.

(iv)         had come to India for studies, may remit the balance available in his account after the studies are over. The balance should represent inward remittances or stipend/ scholarship received from the Government or any Organisation in India.

(2)           A NRI or PIO may remit upto USD 1,000,000 per financial year,

(i) out of the balances held in the NRO accounts / sale proceeds of assets/ inherited assets/ legacy;

(ii)           Under a deed of settlement made by either of his parents or a relative and the settlement taking effect on the death of the settler;

Where the remittance is made in more than one instalment, it shall be made through the same authorised dealer.

Where the remittance is to be made from the balances held in the NRO account, the account holder shall furnish an undertaking that “the said remittance is sought to be made out of the remitter’s balances held in the account arising from his/ her legitimate receivables in India and not by borrowing from any other person or a transfer from any other NRO account and if such is found to be the case, the account holder will render himself/ herself liable for penal action under FEMA.”

(3) An authorised dealer in India may, also allow remittance out of the assets of Indian companies under liquidation under the provisions of the Companies Act, 2013, subject to the following conditions:

(i)                 Authorised Dealer shall ensure that the remittance is in compliance with the court order in India/ order of the official liquidator or the liquidator in the case of voluntary winding up; and

(ii)               no remittance shall be allowed unless the applicant submits:-
(a)  Auditor's certificate confirming that all liabilities in India have been either fully paid or adequately provided for.
(b) Auditor's certificate to the effect that the winding up is in accordance with the provisions of the Companies Act, 2013.
(c)  In case of winding up otherwise than by a court, an auditor's certificate to the effect that there is no legal proceedings pending in any court in India against the applicant or the company under liquidation and there is no legal impediment in permitting the remittance.

Permission to an Indian entity to remit funds in certain cases:-

(1) An entity in India may remit its contribution towards the provident fund/ superannuation/ pension fund of the expatriate staff who are resident in India but not permanently resident therein.

For the purpose of this Regulation, -

(a)            'expatriate staff' means a person whose provident/ superannuation/ pension fund is maintained outside India by his principal employer outside India;

(b)           ‘not permanently resident' means a person resident in India for 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.

Permission for remittance of assets on closure or remittance of winding up proceeds of branch office/ liaison office (other than project office)
(1) A branch or office established in India by a non resident may apply to the Authorised Dealer, for making remittance of assets on closure or on winding up, supported by the following documents, namely:

(A)         A copy of the Reserve Bank's permission for establishing the branch/ office in India, for making remittance of assets on closure or on winding;

(B)          Auditor’s certificate:

(i)                  indicating the manner in which the amount has been arrived and supported by a statement of assets and liabilities of the applicant, and indicating the manner of disposal of assets;

(ii)                  confirming that all liabilities in India, have been either fully met or adequately provided for;

(iii)                 confirming that no income accruing from sources outside India (including proceeds of exports) has remained un-repatriated to India; and

(iv)                 confirming that the branch has complied with all regulatory requirements stipulated by the RBI.

(C)          A confirmation from the applicant that no legal proceedings are pending in any Court in India and there is no legal impediment to the remittance; and

(D) A report from the Registrar of Companies regarding compliance with the provisions of the Companies Act, 2013, in case of winding up of the office in India.

(2) On consideration of the application, the authorized dealer may permit the remittance subject to the directions of RBI.

Reserve Bank's prior permission in certain cases:-
(1)           A person who desires to make a remittance of assets in the following cases, may apply to the Reserve Bank, namely:

(i)             Remittance exceeding USD 1,000,000 per financial year –

(a)            on account of legacy, bequest or inheritance to a citizen of foreign state, resident outside India; and

(b)           by a NRI or PIO, out of the balances held in NRO accounts/ sale proceeds of assets/ the assets acquired by way of inheritance/ legacy.

(ii) Remittance to a person resident outside India on the ground that hardship will be caused to such a person if remittance from India is not made;

(2) On consideration of the application, the Reserve Bank may permit the remittance.

Payment of taxes:-
Any remittance of assets under these regulations shall be subject to the applicable tax laws in India.
Based on the RBI circular dated 1st April 2016. For further any clarifications please refer ……………. Poppy