Master Circular on Miscellaneous Remittances from India – Facilities for Residents - FEMA - 05 /2007-08

RBI/2007-2008/245 Master Circular No. 05 /2007-08 February 21, 2008 To, All Authorised Persons in Foreign Exchange Madam / Sir, Master Circular on Miscellaneous Remittances from India - Facilities for Residents Miscellaneous remittance facilities for residents are allowed in terms of section 5 of the Foreign Exchange Management Act, 1999, read with Government of India Notification No. G.S.R 381(E) dated May 3, 2000, as amended from time to time. 2. This Master Circular consolidates the existing instructions (updated as on January 1, 2008) on the subject of 'Miscellaneous Remittances from India - Facilities for Residents' at one place. The list of underlying circulars/notifications consolidated in this Master Circular is furnished in Appendix-1. 3. This Master Circular is being issued with a sunset clause. This circular will stand withdrawn on July 1, 2008 and be replaced by an updated Master Circular on the subject. Yours faithfully, ( Salim Gangadharan ) Chief General Manager INDEX 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 service A.13 Liberalised Remittance Scheme of USD 200,000 A.14 Documentation A.15 Endorsement on Passport A.16 International Credit Cards A.17 International Debit Cards A.18 Store Value Cards/Charge Cards/Smart Cards etc A.19 Acquisition of foreign securities under Employees Stock Option Plan (ESOP) A.20 Income- tax clearance Annex-1 Annex-2 Annex - 3 Annex -4 Annex-5 Annex-6 Annex-7 Annex-8 APPENDIX-1 APPENDIX-2 NOTE Release of Foreign Exchange by Authorised Dealers A.1 General 1. 1For release of foreign exchange to persons resident in India for various current account transactions, authorised dealers are to be guided by the Rules made by the Govt. of India under Section 5 of Foreign Exchange Management Act, 1999 (as indicated in item 1 of Appendix 2) which are detailed in the Foreign Exchange Management (Current Account Transactions) Rules, 2000 ( Annex-1 ) notified by the Government of India vide Notification No. G.S.R.381(E) dated 3rd May 2000 (Rules). In terms of the said Rules, drawal of exchange for certain categories of transactions as listed in Schedule I is expressly prohibited. Exchange facilities for transactions included in Schedule II to the Rules may be permitted by the Authorised Dealers provided the applicant has secured the approval from the Ministry/Department of Government of India as specified therein. In respect of transactions included in Schedule III, prior approval of the Reserve Bank would be required for remittance exceeding specified values. The release of foreign exchange up to the threshold values specified in Schedule III stands delegated to Authorised Dealers. All applications for release of exchange exceeding limitsas prescribed in Schedule III to the Rules should be referred to the Regional Office of the Foreign Exchange Department of the Reserve Bank, under whose jurisdiction the applicant is functioning/ residing. 1.2 "Drawal" of foreign exchange also includes use of International Credit Cards (ICC), International Debit Cards (IDC), ATM cards, etc. "Currency", inter alia , includes ICC, IDC and ATM Cards. Accordingly, all Rules, Regulations made and Directions issued under the Act apply to the use of ICC, IDC and ATM Cards. 1.3 In order to provide adequate foreign exchange facilities and efficient customer service, the Reserve Bank has decided to grant licences to certain entities by authorising them as Authorised Dealer - Category II to undertake a range of miscellaneous non-trade current account transactions. Accordingly, Authorised Dealer - Category II are authorised to release / remit foreign exchange for the following non-trade current account transactions: (a) Private visits, (b) Remittance by tour operators / travel agents to overseas agents / principals / hotels, (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, registration / subscription / membership fees to International Organisations. 1.4 1.4 Release of foreign exchange is not admissible for travel to and transaction with residents of Nepal and Bhutan. (cf. Clause (b) of Rule 3 of the Rules. (as indicated in item 2 of Appendix 2) ) A.2 Sale of Exchange 2.1 2.1 Where approvals have been granted by the Reserve Bank / Government of India, foreign exchange may be sold within the period of validity stated in the approval and the details of the sale should be endorsed on the reverse of the original approval. 2.2 2.2 Authorized Dealers may release foreign exchange for travel purposes on the basis of a declaration given by the traveller regarding the amount of foreign exchange availed of during the financial year. 2.3 2. 3 In case of issue of travellers cheques, the traveller should sign the cheques in the presence of an authorised official and the purchaser's acknowledgement for receipt of the travellers cheques should be held on record. 2.4 Out of the overall foreign exchange being sold to a traveller, exchange in the form of foreign currency notes and coins may be sold up to the limit indicated below: (i) Travellers proceeding to countries other than Iraq, Libya, Islamic Republic of Iran, Russian Federation and other Republics of Commonwealth of Independent States Not exceeding USD 2000 or its equivalent (ii) Travellers proceeding to Iraq or Libya, Not exceeding USD 5000 or its equivalent (iii) Travellers proceeding to Islamic Republic of Iran, Russian Federation and other Republics of Commonwealth of Independent States. Full exchange may be released 2.5 2.5 The form A2 relating to sale of foreign exchange should be retained for a period of one year by the Authorised Dealers, together with the related documents, for the purpose of verification by their Internal Auditors. However, in respect of remittance applications for miscellaneous non-trade current account transactions of value not exceeding USD 5,000, Authorised Dealers may obtain simplified Application cum Declaration form (Form A2) as shown at Annex -2. 2.6 2.6 In cases where the remittances are allowed on the basis of self declaration, the onus of furnishing the correct details in the application, will remain with the applicant who has certified the details relating to the purpose of such remittance. A.3 Medical Treatment 3.1 With a view to enable residents to avail of foreign exchange for medical treatment abroad without any hassles and any loss of time, Authorised Dealers may release foreign exchange up to an amount of USD 100,000 or its equivalent, 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 concerned Ministry, 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. A.6 Business visits Foreign exchange for undertaking business travel or attending a conference or specialised training or for maintenance expenses of a patient going broad for medical treatment or check up abroad or for accompanying as attendant to a patient going abroad for medical treatment / check up to the limits specified in Schedule III to the Rules. A.7 Period of surrender of foreign exchange In case the foreign exchange purchased for a specific purpose is not utilized for that purpose, it could be utilized for any other eligible purpose for which drawal of foreign exchange is permitted under the relevant Regulation. General permission is available to any resident individual to surrender received / realised / unspent / unused foreign exchange to an Authorised Person within a period of 180 days from the date of receipt / realisation / purchase / acquisition / date of return of the traveler, as the case may be. The liberalized uniform time limit of 180 days is applicable only to resident individuals and that too in areas other than export of goods and services. In all other cases, the regulations / directions on surrender requirement shall remain unchanged. (cf. Notification No. FEMA 9/2000-RB dated May 3 rd , 2000, as amended from time to time). A.8 Unspent Foreign Exchange 8.1 As stated above, unspent foreign exchange brought back to India by a resident individual should be surrendered to an Authorised Person within 180 days from the date of return of the traveler. Exchange so brought back can be utilised by the individual for his/her subsequent visit abroad. .2 However, a returning traveler is also permitted to retain with him, foreign currency travelers cheques and currency notes up to an aggregate amount of USD 2000 and foreign coins without any ceiling (cf. Notification No. FEMA 11/2000-RB dated 3 rd May 2000). Foreign exchange so retained, can be utilised by the traveler for his subsequent visit abroad. 8.3 A person resident in India can open, hold and maintain with an Authorised Dealer in India, a Resident Foreign Currency (Domestic) Account , out of foreign exchange acquired in the form of currency notes, bank notes and travellers cheques from any of the sources like, payment for services rendered 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. 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 travelers cheques, are as under :- (i) acquired by him from an Authorised Person for travel abroad and represents the unspent amount thereof. Or (ii) (ii)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 (iii) 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. Note: Where a person approaches an Authorised Person for surrender of unspent/unutilized foreign exchange after the prescribed period, Authorised Person should not refuse to purchase the foreign exchange merely on the ground that the prescribed period has expired. A.9 Remittances for TourArrangements, etc. 9.1 Authorised Dealers may remit foreign exchange up to a reasonable limit, at the request of a traveler towards his hotel accommodation, tour arrangements, etc., in the countries proposed to be visited by him, provided it is out of the foreign exchange purchased by the traveler from an Authorised Person (including exchange drawn for private travel abroad) in accordance with the Rules, Regulations and Directions in force. 9.2 Authorised Dealers may effect remittances at the request of agents in India who have tie-up arrangements with hotels/agents, etc., abroad for providing hotel accommodation or making other tour arrangements for travelers from India, provided the Authorised Dealer is satisfied that the remittance is being made out of the foreign exchange purchased by the concerned traveler from an Authorised Person (including exchange drawn for private travel abroad) in accordance with the Rules, Regulations and Directions in force. 9.3 Authorised Dealer may open foreign currency accounts in the name of agents in India who have tie up arrangements with hotels/agents, etc., abroad for providing hotel accommodation or making other tour arrangements for travelers from India provided:- a) the credits to the account are by way of depositing i)collections made in foreign exchange from travelers; and ii)refunds received from outside India on account of cancellation of bookings/tour arrangements, etc., and b) the debits in foreign exchange are for making payments towards hotel accommodation, tour arrangements, etc., outside India, in accordance with 9.2 above. 9.4 Authorised Dealer may allow tour operators to remit the cost of rail/road/water transportation charges outside India without any prior approval from the Reserve Bank, net of commission/mark up due to the agent. 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 travelers' 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 dealers 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. A.10 Payment in Rupees Authorised dealers may accept payment in cash up to Rs. 50,000 (Rupees fifty thousand only) against sale of foreign exchange for travel abroad (for private visit or for any other purpose). Wherever the sale of foreign exchange exceeds the amount equivalent to Rs.50,000, the payment must be received only by a (i)crossed cheque drawn on the applicant's bank account, or (ii) crossed cheque drawn on the bank account of the firm/company sponsoring the visit of the applicant, or (iii) Banker's Cheque/Pay Order/ Demand Draft. Note: Where the rupee equivalent of foreign exchange drawn exceeds Rs 50,000 either for any single drawal or more than one drawal reckoned together for a single journey/visit, it should be paid by cheque or draft. A.11 Advance Remittance - Import of services Authorised dealers may allow advance remittance for providing services under current account transaction for which the release of foreign exchange is admissible. However, where the amount exceeds USD 100,000 or its equivalent, a guarantee from a bank of International repute situated outside India or a guarantee from an authorised dealer in India, if such a guarantee is issued against the counter-guarantee of a bank of International repute situated outside India, should be obtained from the overseas beneficiary. The authorised dealer should also follow up to ensure that the beneficiary of the advance remittance has fulfilled his obligations under the contract or agreement with the remitter in India. A.12 Issue of Guarantee- Import of service Authorised Dealer may issue guarantee on behalf of their customers importing services, provided: a. the guarantee amount does not exceed USD 100,000; b. AD is satisfied about the bonafides of the transaction; c. AD ensures submission of documentary evidence for import of services in the normal course; and d. the guarantee is to secure a direct contractual liability arising out of a contract between a resident and a non-resident. In case of invocation of the guarantee, the Authorised Dealer is required to submit to the Chief General Manager, 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 13.1 Under this Scheme, Authorised Dealers may freely allow remittances by resident individuals up to USD 200,000 per financial year (April-March) for any permitted current or capital account transactions or a combination of both. 13.2 The limit of USD 200,000 under the Scheme would also include remittances towards gift and donation by a resident individual. 13.3 Remittances under the Scheme are allowed only in respect of permissible current or capital account transactions or a combination of both. All other transactions which are otherwise not permissible under FEMA and those in the nature of remittance for margins or margin calls to overseas exchanges / overseas counterparty are not allowed under the Scheme. 13.4 Resident individuals are free to acquire and hold immovable property or shares (of listed companies or otherwise) or debt instruments or any other asset outside India without prior approval of the Reserve Bank. 13.5 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 under this Scheme. 13.6 Banks should not extend any kind of credit facilities to resident individuals to facilitate remittances under the Scheme. 13.7 Liberalised Remittance Scheme is not available for remittance to countries identified by Financial Action Task Force (FATF) as non co-operative countries and territories as available on FATF website www.fatf-gafi.org. or as notified by the Reserve Bank. 13.8 For undertaking transactions under the Scheme, resident individuals may use the Application-cum-Declaration Form as Annex-3 13.9 Authorized dealer may arrange to furnish information on the number of applicants and total amount remitted under the Scheme, on a quarterly basis , in the Format at Annex-8 , to the Chief General Manager, Foreign Exchange Department, Foreign Investments Division (EPD), Reserve Bank of India, Central Office, Mumbai-400001 within 10 days of the reporting quarter. A soft copy of the statement (in Excel format) may also be sent by e-mail to [email protected] A.14 Documentation 14.1 The Reserve Bank will not, generally, prescribe the documents which should be verified by the Authorised Dealers while releasing foreign exchange. In this connection, attention of authorised dealers is drawn to sub-section (5) of Section 10 of the FEMA, 1999 (as indicated in item 3 of Appendix 2) ) which provides that an authorised person shall require any person wanting to transact in foreign exchange to make such a declaration and to give such information as will be reasonably satisfy him that the transaction will not involve and is not designed for the purpose of any contravention or evasion of the provisions of the FEMA or any rule, regulation, notification, direction or order issued thereunder. 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 Reserve Bank. 14.3 Further, the 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 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 Persons up to USD 10,000 or its equivalent in one financial year for one or more private visits to any country (except Nepal and Bhutan) will continue to be available on a self-declaration basis. A.15 Endorsement on Passport It is not mandatory for authorised dealers to endorse the amount of foreign exchange sold for travel abroad on the passport of the traveler. However, if requested by the traveler, they may record under their stamp, date and signature, details of foreign exchange sold for travel. A.16 International Credit Cards 16.1 The restrictions contained in Rule 5 of the Foreign Exchange Management (Current Account Transactions) Rules, 2000 will not be applicable for use of International Credit Cards (ICCs) by residents for making payment towards expenses, while on a visit outside India. 16.2 Residents can use ICCs on internet for any purpose for which exchange can be purchased from an authorised dealer in India, e.g. for import of books, purchase of downloadable softwares or import of any other item permissible under Foreign Trade Policy (FTP). 16.3 ICCs cannot be used on internet or otherwise for purchase of prohibited items, like lottery tickets, banned or proscribed magazines, participation in sweepstakes, payment for call-back services, etc., since no drawal of foreign exchange is permitted for such items/activities. 16.4 There is no aggregate monetary ceiling separately prescribed for use of ICCs through internet. 16.5 Resident individuals maintaining foreign currency accounts with an authorised dealer in India or a bank abroad, as permissible under extant Foreign Exchange Regulations, are free to obtain ICCs issued by overseas banks and other reputed agencies. The charges incurred against the card either in India or abroad, can be met out of funds held in such foreign currency account/s of the card holder or through remittances, if any, from India only through a bank where the card-holder has a current or savings account. The remittance for this purpose, should also be made directly to the card-issuing agency abroad, and not to a third party. 16.6 The applicable limit will be the credit limit fixed by the card issuing banks. There is no monetary ceiling fixed by the Reserve Bank for remittances, if any, under this facility. 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 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 may submit a statement as on December 31, each year (as per proforma at Annex-5 ) in case the aggregate forex utilization by the IDC holders exceeds USD 100,000 in a calendar year. The statement should reach the Chief General Manager, Foreign Exchange Department, External Payments Division, Central Office, Mumbai- 400 001 on or before 20th January of the succeeding year. A.18 Store Value Cards/Charge Cards/Smart Cards etc. Certain AD banks are also issuing Store Value Card/Charge Card/Smart Card to residents traveling on private/business visit abroad which are used for making payments at overseas merchant establishments and also for drawing cash from ATM terminals. No prior permission from Reserve Bank is required for issue of such cards. However, the use of such cards is limited to permissible current account transactions and subject to the prescribed limits under the Rules, as amended from time to time . A.19 Acquisition of foreign securities under Employees Stock Option Plan (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% 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 thereof are repatriated to India. A.20 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]. Annex-1 ( Para A. 1.1 of Master Circular) Foreign Exchange Management (Current Account Transactions) Rules, 2000 Notification No. G.S.R.381(E) dated 3rd May 2000 (as amended from time to time)* : In exercise of the powers conferred by Section 5 and sub-section (1) and clause (a) of sub-section (2) of Section 46 of the Foreign Exchange Management Act, 1999, and in consultation with the Reserve Bank, the Central Government having considered it necessary in the public interest, makes the following rules, namely :-- 1. Short title and commencement .---(1) These rules may be called the Foreign Exchange Management (Current Account Transactions) Rules, 2000; (2) They shall come into effect on the 1 st day of June 2000. 2. Definitions.---In these rules, unless the context otherwise requires : (a) "Act" means the Foreign Exchange Management Act, 1999 (42 of 1999); (b) "Drawal" means drawal of foreign exchange from an authorised person and includes opening of Letter of Credit or use of International Credit Card or International Debit Card or ATM Card or any other thing by whatever name called which has the effect of creating foreign exchange liability; (c) "Schedule" means a schedule appended to these rules; (d) The words and expressions not defined in these rules but defined in the Act shall have the same meanings respectively assigned to them in the Act. 3. Prohibition on drawal of Foreign Exchange. ---Drawal of foreign exchange by any person for the following purpose is prohibited, namely: a. a transaction specified in the Schedule I; or b. a travel to Nepal and/or Bhutan; or c. a transaction with a person 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. 4. Prior approval of Govt. 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 payment is made out of funds held in Resident Foreign Currency (RFC) Account of the remitter. 5. Prior approval of Reserve Bank No person shall draw foreign exchange for a transaction included in the Schedule III without prior approval of the Reserve Bank; Provided that this Rule shall not apply where the payment is made out of funds held in Resident Foreign Currency (RFC) Account of the remitter. 6. (1) Nothing contained in Rule 4 or Rule 5 shall apply to drawal made out of funds held in Exchange Earners' Foreign Currency (EEFC) account of the remitter. (2) Notwithstanding anything contained in sub-rule (1), restrictions imposed under rule 4 or rule 5 shall continue to apply where the drawal of foreign exchange from the Exchange Earners Foreign Currency (EEFC) Account is for the purpose specified in items 10 and 11 of Schedule II, or item 3, 4, 11, 16 17 of Schedule III as the case may be. 7. Use of International Credit Card while outside India Nothing contained in Rule 5 shall apply to the use of International Credit Card for making payment by a person towards meeting expenses while such person is on a visit outside India. 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 upto 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 of Remittance Ministry/Department of Govt. of India whose approval is required 1. Cultural Tours Ministry of Human Resources Development, (Department of Education and Culture) 2. Advertisement in foreign print media for the purposes other than promotion of tourism, foreign investments and international bidding (exceeding USD 10,000) by a State Government and its Public Sector Undertakings Ministry of Finance, (Department of Economic Affairs) 3. Remittance of freight of vessel chartered by a PSU Ministry of Surface Transport, (Chartering Wing) 4. Payment of import by a Govt. Department or a PSU on c.i.f. basis (i.e. other than f.o.b. and f.a.s. basis) Ministry of Surface Transport, (Chartering Wing) 5. Multi-modal transport operators making remittance to their agents abroad Registration Certificate from the Director General of Shipping 6. Remittance of hiring charges of transponders by (a) TV Channels (b) Internet Service providers Ministry of Information and Broadcasting Ministry of Communication and Information Technology 7. Remittance of container detention charges exceeding the rate prescribed by Director General of Shipping Ministry of Surface Transport (Director General of Shipping) 8. Remittances under technical collaboration agreements where payment of royalty exceeds 5% on local sales and 8% on exports and lump-sum payment exceeds USD 2 million Ministry of Industry and Commerce 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) 1. Omitted 2. Release of exchange exceeding USD 10,000 or its equivalent in one calendar year, for one or more private visits to any country (except Nepal and Bhutan). 3. @Gift remittance exceeding USD 5,000 per remitter/donor per annum. 4. # Donation exceeding USD 5000 per remitter/donor per annum. 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 - (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 assignment; 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.$ Remittance exceeding USD 1,000,000 per project, for any consultancy service procured from outside India. 16. Omitted 17. * Remittance exceeding USD 100,000 by an entity in India by way of reimbursement of pre-incorporation expenses. 18. Omitted (Amendments) (Notification GSR.663 (E) dated August 17, 2000, S.O.301(E) dated March 30, 2001, GSR. 831(E) dated December 20, 2002, GSR.33(E) dated January 16, 2003, GSR.397(E) dated May 14, 2003, GSR.731(E) dated September 11, 2003, GSR.849 (E) dated October 29, 2003, GSR.608(E) dated September 13, 2004, G.S.R.512(E) dated July 28,2005 and G.S.R.412(E) dated July 11, 2006. Please Note: @ Stands amended vide our A. P. (DIR Series) Circular No. 24 dated December 20, 2006. # Stands amended vide our A.P. (DIR Series) Circular Nos. 24 and 45 dated December 20, 2006 and April 30, 2007. $ Stands amended vide our A.P. (DIR Series) Circular No. 46 dated April 30, 2007. * Stands amended vide our A.P. (DIR Series) Circular No. 47 dated April 30, 2007. Necessary Gazette Notifications are being issued. Annex -4 ( Para A.20 of Master Circular) 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 responsible 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 remittance] CERTIFICATE I/we have examined the agreement (wherever applicable) between M/s ___________________ (remitters) and M/s ____________________________ (beneficiary) requiring the above 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. Foreign Currency Indian @ Currency Amount to be remitted Tax deducted at source Actual amount remitted Rate at which deducted 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, 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 on account of business income please indicate :- (i) Whether such income is liable to tax in India? (ii) If so, the basis for arriving at the rate of deduction of tax. (iii) If not, the reasons thereof. 9. In case tax is not deducted at source for any other reason, details thereof. (Attach separate sheet duly authenticated wherever necessary). Name, Address and registration numbers (To be signed and verified by an Accountant as defined in Section 288 of the Income-tax Act). Annex-5 ( Para A.17 of Master Circular) Format Statement indicating the details of forex utilization of IDCs for amount exceeding USD 100,000 in a calendar year - As on December 31,_____ Name of the Bank: Name of the Account holder Amount (in USD) Remarks Drawn in Cash Used at merchant establishments Signature: Name Designation: Date: Seal: ANNEX-6 Statement/returns to be submitted to the Reserve Bank. Sl.No. Description Periodicity Ref.No. 1 Statement indicating the details of forex utilization of IDCs for amount exceeding USD 100,000 in a calendar year Annual (as on 31 st December) A.P.(DIR Series) Circular No. 46 dated June 14, 2005 2 Liberalised Remittance Scheme for Resident Individuals Quarterly A.P. (DIR Series) Circular No.24 dated December 20, 2006. Annex-7 Operational Instructions for Authorised Dealer Banks. Master Circular on Miscellaneous Remittances from India - Facilities for Residents General Authorised dealers may carefully study the provisions of the Act/ Regulations/ Notifications issued under Foreign Exchange Management Act, 1999. Reserve Bank will not prescribe the documents which should be verified by the authorised dealers while permitting remittances for various transactions, particularly of current account. In terms of the provisions contained in sub-section 5 of section 10 of the Act, before undertaking any transaction in foreign exchange on behalf of any person, Authorised Dealer is required to obtain a declaration and such other information from the person (applicant) on whose behalf the transaction is being undertaken that will reasonably satisfy him that the transaction is not designed to contravene or evade the provisions of the Act or any of the Rules or Regulations made or Notifications or directions or orders issued under the Act. Authorised dealers should preserve the information/documents obtained by them from the applicant before undertaking the transactions for verification by the Reserve Bank. In case the person on whose behalf the transaction is being undertaken refuses or does not give satisfactory compliance of the requirements of an authorised person, he shall refuse in writing to undertake the transactions. Where an authorised person has reasons to believe that a contravention or evasion of the Act or the Rules or Regulations made or Notifications issued thereunder was contemplated in the transaction that he has refused to undertake, he shall report the matter to the Reserve Bank. With a view to maintaining uniform practices, authorised dealers may consider requirements or documents to be obtained by their branches to ensure compliance with provisions of sub-section (5) of section 10 of the Act. In terms of the Rule 3 of the Foreign Exchange Management (Current Account Transactions) Rules, 2000, drawal of foreign exchange for the transactions included in Schedule I thereto is prohibited. Authorised dealers may release foreign exchange for transactions included in Schedule II to the Rules, provided the applicant has secured the approval from the Ministry/Department of Government of India indicated against the transaction. In respect of transactions included in Schedule III, where the remittance applied for exceeds the limit, if any, indicated in the schedule or other transactions included in the Schedule III for which no limit have been stipulated would require prior approval of Reserve Bank. However, resident individual has the option to avail the Liberalised Remittance Scheme for making additional amount of remittance, subject to compliance with the terms and conditions of the Scheme. Remittances for all other current 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 with out any monetary/percentage ceilings subject to compliance with the provisions of sub-section (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 remitter and a Certificate from a Chartered Accountant in the formats 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. Our A.P. (DIR Series) Circular No.56 dated November 26, 2002]. Release of foreign exchange on self declaration basis. Authorised dealers may allow remittances upto USD 100,000 each towards (i) employment abroad (ii) emigration (iii) maintenance of close relatives abroad (iv) education abroad and (v) medical treatment abroad without insisting on any supporting documents but on the basis of self declaration incorporating the basic details of the transaction and submission of Application in Form A2. Authorised dealers should also ensure that payment for purchase of foreign exchange is made by the applicant by means of cheque or demand draft or by debit to his/her account. In addition, the existing facility of release of exchange by Authorised Persons up to USD 10,000 or its equivalent in one financial year for one or more private visits to any country (except Nepal and Bhutan) will continue to be available on a self-declaration basis. Small Value Remittances Authorized dealers may release foreign exchange not exceeding USD 5,000 or its equivalent, for all permissible current account transactions on the basis of a simple letter from the applicant containing the basic information viz., name and address of the applicant/beneficiary, amount to be remitted and the purpose of remittance, without insisting on submission of Form A 2. Liberalized Remittance Scheme. The remittance under the Scheme is available to the resident individuals for any permitted current or capital account transactions or a combination of both. The facility under the Scheme is in addition to those already available for private travel, business travel, gift remittances, donations, studies, medical treatment etc., as described in Schedule III of Foreign Exchange Management (Current Account Transactions) Rules, 2000. Under the Scheme, resident individuals can acquire and hold immovable property or shares (listed or other-wise) or debt instruments or any other assets outside India, without prior approval of the Reserve Bank. They can also open, maintain and hold foreign currency accounts with banks outside India. However, remittance from India for margins 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. While allowing the facility to resident individuals, Authorised Dealers are required to ensure that the ' Know Your Customer ' Guidelines have been implemented in respect of bank accounts. They should also comply with the Anti-Money Laundering Rules in force while allowing the facility. The applicants 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 AD 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. The AD 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. It is further clarified that banks should not extend any kind of credit facilities to resident individuals to facilitate remittances under the Scheme. The remittances made under this Scheme will be reported in the R-Return in the normal course. The ADs may also prepare and keep on record dummy Form A2, in respect of remittances exceeding USD 5000. In addition, ADs would also furnish information on the number of applicants and total amount remitted under the Scheme, on a quarterly basis, to Reserve Bank of India, Foreign Exchange Department (EPD), Central Office, Mumbai. Annex-8 ( Para A.13.9 of Master Circular) [A.P.(DIR Series) Circular No.24 dated December 20, 2006] Format Statement indicating the details of remittances made by resident individuals under the Liberalised Remittance Scheme for the quarter ended ……... Name of the Bank: Sl.No. Purpose of remittance No. of applicants Amount remitted in USD 1. Deposit 2. Purchase of immovable property 3. Investment in equity/debt 4. Gift 5. Donation 6. Others Total Name and designation of the authorised official: Place: Signature Date: Stamp and seal APPENDIX-1 List of circulars, which have been consolidated in the Master Circular- Miscellaneous Remittances from India - Facilities for Residents Sl. No. Circular No. Date 1. A.P.(DIR Series) Circular No.1 June 1, 2000 2. A.P.(DIR Series) Circular No.19 October 30, 2000 3. A.P.(DIR Series) Circular No.20 November 16, 2000 4. A.P.(DIR Series) Circular No.11 November 13, 2001 5. A.P.(DIR Series) Circular No.12 November 23, 2001 6. EC.CO.FMD.599/18.08.01/2001-02 January 21,2002 7 A.P.(DIR Series) Circular No.53 June 27,2002 8. A.P.(DIR Series) Circular No.16 September 12,2002 9. AP (DIR Series) Circular No.17 September 12, 2002 10. AP (DIR Series) Circular No.37 November 1, 2002 11. A.P.(DIR Series) Circular No.51 November 18, 2002 12. AP (DIR Series) Circular No.53 November 23, 2002 13. AP (DIR Series) Circular No.54 November 25, 2002 14 AP (DIR Series) Circular No.56 November 26,2002 15. AP (DIR Series) Circular No.64 December 24, 2002 16 AP (DIR Series) Circular No.65 January 6, 2003 17. AP (DIR Series) Circular No.73 January 24, 2003 18. AP (DIR Series) Circular No.103 May 21, 2003 19. AP (DIR Series) Circular No.3 July 17,2003 20. AP (DIR Series) Circular No.7 August 12,2003 21. AP (DIR Series) Circular No.8 August 16,2003 22. AP (DIR Series) Circular No.33 November 13,2003 23. AP (DIR Series) Circular No.55 December 23,2003 24 AP (DIR Series) Circular No.64 February 4,2004 25 AP (DIR Series) Circular No.71 February 20,2004 26 AP (DIR Series) Circular No.76 February 24,2004 27 AP (DIR Series) Circular No.77 March 13,2004 28 AP (DIR Series) Circular No.86 April 17,2004 29 AP (DIR Series) Circular No.90 May 3, 2004 30 AP (DIR Series) Circular No.20 October 25,2004 31 AP (DIR Series) Circular No.38 March 31,2005 32 AP (DIR Series) Circular No.46 June 14,2005 33 AP (DIR Series) Circular No.25 March 6, 2006 34 AP (DIR Series) Circular No.13 November 17,2006 35 AP (DIR Series) Circular No. 14 November 28,2006 36 AP (DIR Series) Circular No. 24 December 20,2006 37 AP (DIR Series) Circular No. 38 April 5,2007 38 AP (DIR Series) Circular No. 58 May 18, 2007 39 AP (DIR Series) Circular No. 9 September 26, 2007 40 Foreign Exchange Management (Current Account Transactions) Rules,2000 May3, 2000 (and subsequent amendments-please see page 28) APPENDIX-2 1. Section 5 of FEMA, 1999. Current Account Transactions Any person may sell or draw foreign exchange to or from an authorised person if such sale or drawal is a current account transaction: Provided that the Central Government may, in public interest and in consultation with the Reserve Bank, impose such reasonable restrictions for current account transactions as may be prescribed. (para A.1.1 of Master Circular) 2. Rule 3 of FEM (CAT) Rules, 2000 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. (para A.1.4 of Master Circular) 3. Sub-section (5) of Section 10 of the FEMA, 1999 An authorized person shall before undertaking any transaction in foreign exchange on behalf of any person, require that person to make such declaration and to give such information as will reasonably satisfy him that the transaction will not involve, and is not designed for the purpose of any contravention or evasion of the provisions of this Act or of any rule, regulation, notification, direction or order made thereunder , and where the said person refuses to comply any such requirement or makes only unsatisfactory compliance therewith , the authorized person shall refuse in writing to undertake the transaction and shall , if he has reason to believe that any such contravention or evasion as aforesaid is contemplated by the person, report the matter to the Reserve Bank. (para A.14.1 of Master Circular) NOTE For the convenience of authorised dealers, a table of Statements / Returns to be submitted to RBI and Operational Guidelines have been given in Annex-6 7 respectively. It is also clarified for information of all users that the Master Circular need not necessarily be exhaustive and a reference to the relevant A. P. (DIR Series) Circular is needed wherever further information/ clarification is required.