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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 ..... Authorised Dealer Category - I banks may refer to respective circulars/ notifications for detailed information, if so needed. Yours faithfully, (B.P. Kanungo) Principal 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 Issue of Guarantee- Import of services A.12 Liberalised Remittance Scheme of USD 125,000 for Resident Individuals A.13 Documentation A.14 Endorsement on Passport ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nge exceeding the limits as prescribed in Schedule III to the Rules should be referred to the Regional Office concerned 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 , interalia, 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 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 special ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nge should be retained for a period of one year by the Authorised Persons, 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 amount not exceeding USD 25,000, Authorised Dealers may obtain simplified Application-cum-Declaration form (Form A2) as shown at Annex -2. 2.5 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 abro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ays from the date of return of the traveller. Exchange so brought back can be utilized by the individual for his/her subsequent visit abroad. 8.2 However, a returning traveller is permitted to retain with him, foreign currency travellers cheques and currency notes up to an aggregate amount of USD 2000 and foreign coins without any ceiling beyond 180 days. (cf. Notification No. FEMA 11/2000-RB dated May 3, 2000 ). Foreign exchange so retained, can be utilized by the traveller 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 Indian Companies A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on or making other tour arrangements for travellers from India provided:- a) the credits to the account are by way of depositing i) collections made in foreign exchange from travellers; 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 paragraph 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 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/ reimb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he bonafides of the transaction; (b) the AD Category-I bank ensures submission of documentary evidence for import of services in the normal course; and (c) the guarantee is to secure a direct contractual liability arising out of a contract between a resident and a non-resident. In the case of a Public Sector Company or a Department/ Undertaking of the Government of India/ State Governments, approval from the Ministry of Finance, Government of India for issue of guarantee for an amount exceeding USD 100,000 (USD One hundred thousand) or its equivalent would be required. In case of invocation of the guarantee, the Authorised Dealer is required to submit to the Chief General Manager-in-Charge, 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.12 Liberalised Remittance Scheme (LRS) of USD 125,000 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 125,000 per financial year (April-March) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ual can invest in units of Mutual Funds, Venture Capital Funds, unrated debt securities, promissory notes, etc. under this Scheme. Further, the resident can invest in such securities out of the bank account opened abroad under the Scheme (see 12.13). 12.11 An individual who has availed of a loan abroad while as a non-resident can repay the same on return to India under the Scheme as a resident. 12.12 The Scheme can be used for outward remittance in the form of a DD either in the resident individual s own name or in the name of beneficiary with whom he intends putting through the permissible transactions at the time of private visit abroad, against self-declaration of the remitter in the format prescribed. 12.12A With effect from August 05, 2013, this Scheme, can be used by Resident individuals to set up Joint Ventures (JV)/ Wholly Owned Subsidiaries (WOS) outside India for bonafides business activities within the limit of USD 125,000 subject to the terms conditions stipulated in FEMA Notification No.263 . 12.13 Individuals can also open, maintain and hold foreign currency accounts with a bank outside India for making remittances under the Scheme without prior approva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the Reserve Bank. 13.3 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.14 Endorsement on Passport ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rseas 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 the Rules, as amended from time to time, are equally applicable to payments made through use of these cards. 16.2 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. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vided the proceeds thereof are repatriated to India immediately on receipt thereof and in any case not later than 90 days from the date of sale. 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 prescribed by the Central Board of Direct Taxes, Ministry of Finance, Government of India. A.21 Facility to grant loan to NRI/ PIO close relative under Liberalised Remittance Scheme (LRS): Resident individual is permitted to lend to a Non-resident Indian (NRI)/ Person of Indian Origin (PIO) close relative [means relative as defined in Section 6 of the Companies Act, 1956 ] by way of crossed cheque/ electronic transfer subject to the following conditions: (i) the loan is free of interest and the minimum maturity of the loan is one year; (ii) the loan amount should be within the overall limit under the Liberalised Remittance Scheme of USD 125,000 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 Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ional 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 Government 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ational 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 through ocean transport 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. omitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctive of length thereof) or for a specific job or assignments, 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. Remittances exceeding US$ 10,000,000 per project for any consultancy services in respect of infrastructure projects and US$ 1,000,000 per projec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 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 authorized person has reasons to believe that a contravention or evasion of the Act or the Rules or Regulations made or Notifications issued there under 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, Authorized 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/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to any country (except Nepal and Bhutan) will continue to be available on a self-declaration basis. 3. Small Value Remittances Authorized dealers may release foreign exchange not exceeding USD 5,000 or its equivalent, for all permissible current account transactions. Authorised Dealers may obtain simplified Application-cum-Declaration form (Form A2) as shown at Annex-2. 4. Liberalized Remittance Scheme for Resident Individuals 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 included in Schedule III of Foreign Exchange Management (Current Account Transactions) Rules, 2000. Remittances towards gift and donations have been subsumed under the Scheme. Under the scheme, resident individuals can acquire and hold immovable property. Individuals can acquire shares 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 margin or margin cal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... November 28, 2006 36 A.P. (DIR Series) Circular No. 24 December 20, 2006 37 A.P. (DIR Series) Circular No. 38 April 5, 2007 38 A.P. (DIR Series) Circular No. 58 May 18, 2007 39 A.P. (DIR Series) Circular No. 9 September 26, 2007 40 A.P. (DIR Series) Circular No. 36 April 4, 2008 41 Foreign Exchange Management (Current Account Transactions) Rules,2000 May 3, 2000 (and subsequent amendments) (Please see page 28) 42 A.P. (DIR Series) Circular No.15 September 8, 2008 43 A.P. (DIR Series) Circular No.40 A.P. (F. L. Series) Circular No.03 December 10, 2008 44 A.P. (DIR Series) Circular No.10 October 5, 2009 45 A.P. (DIR Series) Circular No.11 October 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cular) 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 there under 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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