Payment to foreign related parties, FEMA

[Gourav Arora]

expert.

Is their any time restriction with in which indian party required to pay to there foreign related party after credited in the books of accounts..

Regards

Posts / Replies

[Pradeep Khatri]

The law says within period of 6 months/one year (as the case may be) foreign remittance should be paid.  In case of delay, then a genuin reason must be given but there should not be any involvement of any interest in such delayed payments.

[Gourav Arora]

Thanks sir.

that limit also apply for import of technical service. sir can you pls provide the section/regulation related to it.

..

Regards

[Pradeep Khatri]

 

RBI MC 13 /2012-13 / 02-07-2

 

B.5.1. Time limit for normal imports

(i) In terms of the extant regulations, remittances against imports should be completed not later than six months from the date of shipment, except in cases where amounts are withheld towards guarantee of performance, etc.

(ii) AD Category – I banks may permit settlement of import dues delayed due to disputes, financial difficulties, etc. Interest in respect of delayed payments, usance bills or overdue interest for a period of less than three years from the date of shipment may be permitted in terms of the directions in para C.2 of Part III below.

C.2. Interest on Import Bills

(i) AD – Category – I bank may allow payment of interest on usance bills or overdue interest for a period of less than three years from the date of shipment at the rate prescribed for trade credit from time to time.

(ii) In case of pre-payment of usance import bills, remittances may be made only after reducing the proportionate interest for the unexpired portion of usance at the rate at which interest has been claimed or LIBOR of the currency in which the goods have been invoiced, whichever is applicable. Where interest is not separately claimed or expressly indicated, remittances may be allowed after deducting the proportionate interest for the unexpired portion of usance at the prevailing LIBOR of the currency of invoice.