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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 ..... 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 Issue of Guarantee- Import of services A.12 Liberalised Remittance Scheme of USD 200,000 for Resident Individuals A.13 Documentation A.14 Endorsement on Passport A.15 International Credit Cards A.16 International Debit Cards A.17 Store Value Cards/Charge Cards/Smart Cards, etc A.18 Redemption of Unutilised balance on prepaid travel cards A.19 A.20 Acquisition of foreign securities under Employees Stock Option (ESOP) A.20 Income tax clearance A.21 Facility to grant loan to NRI/ PIO close relative under Liberalised Remittance Scheme Annex 1 FEM CAT Rules Annex 2 Form A-2 Annex 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertain entities by authorising them as Authorised Dealer Category II to undertake a range of 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 do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Ministry concerned, 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... awful 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 Indian Companies Act 1956 ) 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 travellers cheques, are as under :- (i) acquired by him from an Authorised Person for travel abroad and represents the unspent amount thereof or (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eed not be adjusted in the travellers 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 Dealer 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 r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 Liberalised Remittance Scheme (LRS) of USD 200,000 for Resident individuals 12.1 Under the Liberalised Remittance Scheme, (hereinafter referred to as the 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. 12.2 The Scheme is available to all resident individuals including minors. In case of remitter being a minor, the LRS declaration form should be countersigned by the minor s natural guardian. 12.3 Remittances under the Scheme can be consolidated in respect of family members subject to individual family members complying with its terms and conditions. 12.4 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. 12.5 Under the Scheme, Resident individuals are free to acquire and hold immovable property or shares (of l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e foreign currency accounts may be used for putting through all transactions connected with or arising from remittances eligible under this Scheme. 12.14 Banks should not extend any kind of credit facilities to resident individuals to facilitate remittances under the Scheme. 12.15 The scheme is not available for remittances for any purpose specifically prohibited under Schedule I or any item restricted under Schedule II of Foreign Exchange Management (Current Account Transaction) Rules, 2000 . 12.16 The facility is not available for making remittances directly or indirectly to Bhutan, Nepal, Mauritius and Pakistan. 12.17 The 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. 12.18 For undertaking transactions under the Scheme, resident individuals may use the application-cum-Declaration Form as at Annex-3 and it is mandatory to have PAN number to make remittances under the Scheme. 12.19 Investor, who has remitted funds under LRS can retain, reinvest the income earned on the investment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed 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.14 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 traveller. However, if requested by the traveller, they may record under their stamp, date, signature and details of foreign exchange sold for travel. A.15 International Credit Cards 15.1 The restrictions contained in Rule 5 of the Foreign Exchange Management (Current Account Transaction) Rules, 2000 will not be applicable for use of International Credit Cards (ICCs) by residents for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oreign exchange is not permitted. 16.3 The International Banking Divisions/Foreign Exchange Departments of AD banks were required to submit a statement as on December 31, each year in the prescribed proforma, in case the aggregate forex utilization by the IDC holders exceeds USD 100,000 in a calendar year. The requirement of submission of the above statement by the AD banks has been discontinued from the calendar year 2010 onwards. A.17 Store Value Cards/ Charge Cards/ Smart Cards, etc. Certain Authorised Dealer 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 the 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.18 Redemption of unutilized balance on prepaid travel cards: As per the practice followed by issuers, resident Indians who purchase their travel cards, are permitted refund of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ised Remittance Scheme of USD 200,000 per financial year available for a resident individual. It would be the responsibility of the lender to ensure that the amount of loan is within the Liberalised Remittance Scheme limit of USD 200,000 during the financial year; the loan shall be utilized for meeting the borrower s personal requirements or for his own business purposes in India. the loan shall not be utilized, either singly or in association with other person for any of the activities in which investment by persons resident outside India is prohibited, namely: The business of chit fund, or Nidhi Company, or Agricultural or plantation activities or in real estate business, or construction of farm houses, or trading in Transferable Development Rights (TDR Explanation: For the purpose of item (c) above, real estate business shall not include development of townships, construction of residential/ commercial premises, roads or bridges. the loan amount should be credited to the NRO a/c of the NRI / PIO. Credit of such loan amount may be treated as an eligible credit to NRO a/c; the loan amount shall not be remitted outside India; and repayment of loan shall be m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a; 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 US$ 10,000 or its equivalent in one financial year, for one or more private visits to any country (except Nepal and Bhutan). 3. Gift remittance exceeding US$ 5,000 per financial year per remitter or donor other than resident individual 4. (i) Donation exceeding US$ 5000 per financial year per remitter or donor other than resident individual (ii) Donations by Corporate, exceeding one per cent of their foreign exchange earnings during the previous three financial years or US$ 5,000,000, whichever is less, for:- (a) creation of Chairs in reputed educational institutes, (b) to funds (not being an investment fund) promoted by educational institutes; and (c) to a technical institution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s item number 'infrastructure project' is those related to (i) Power, (ii) Telecommunication, (iii) Railways, (iv) Roads including bridges, (v) Sea port and air port, (vi) Industrial parks, and (vii) Urban Infrastructure (water supply, sanitation and sewage) 16. Omitted 17. Remittances exceeding five per cent of investment brought into India or US$ 1,00,000 whichever is higher, 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.442(E) dated November 2, 2002, 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, G.S.R.412(E) dated July 11, 2006, G.S.R.511(E) dated July 28, 2006, G.S.R.349 (E) dated May 22, 2009 and G.S.R.382 (E) dated May 05, 2010. Please Note:- @@ May be read with A.P. (DIR Series) Circular No.26 dated January 14, 2010 . Annex-4 Statement / Returns to be submitted to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ohibited. 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 Resident Individuals for making additional amount of remittance, subject to compliance with the terms and conditions of the Scheme. Remittances for all other current Account 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 without any monetary/percentage ceilings subject to compliance with the provisions of subsection (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rior approval of the Reserve Bank. They can also open, maintain and hold foreign currency accounts with banks outside India. However remittance from India for margin or margin calls to overseas exchanges/overseas counter party 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. It is mandatory to have PAN number to make remittances under the Scheme. While allowing the facility to resident individuals, Authorised Dealers are required to ensure that 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 Authorised Dealers should obtain bank statement for the previous year from the applicant to satisfy themselves regarding t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 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. A.P. (DIR Series) Circular No.17 September 12, 2002 10. A.P. (DIR Series) Circular No.37 November 1, 2002 11. A.P.(DIR Series) Circular No.51 November 18, 2002 12. A.P. (DIR Series) Circular No.53 November 23, 2002 13. A.P. (DIR Series) Circular No.54 November 25, 2002 14 A.P. (DIR Series) Circular No.56 November 26,2002 15. A.P. (DIR Series) Circular No.64 December 24, 2002 16 A.P. (DIR Series) Cir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... May 4, 2010 47 A.P. (DIR Series) Circular No.52 May 13, 2010 48 A.P. (DIR Series) Circular No.29 December 22, 2010 49 A.P. (DIR Series) Circular No. 48 April 5, 2011 50 A.P. (DIR Series) Circular No.17 September 16, 2011 51 A.P. (DIR Series) Circular No.18 September 16, 2011 52 A.P. (DIR Series) Circular No.32 October 10, 2011 53 A.P. (DIR Series) Circular No.37 October 19, 2011 54 A.P. (DIR Series) Circular No.90 March 6, 2012 55 A.P. (DIR Series) Circular No.102 April 2, 2012 56 A.P. (DIR Series) Circular No.118 May 7, 2012 57 A,P. (DIR Series) Circular No. 106 May 23, 2013 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 restricti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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