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TMI BlogMaster Circular on Miscellaneous Remittances from India – Facilities for ResidentsX X X X Extracts X X X X X X X X Extracts X X X X ..... EX 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 Excha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated 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 re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als 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 qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ravel 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 forei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nk 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 Exchang ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ign 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 Subsidi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 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: Fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 defau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... easons 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thorised 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 Schedul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : 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 Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bition 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 reas ..... X X X X Extracts X X X X X X X X Extracts X X X X
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