chapter 25 outward remittances - union bank of...

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CHAPTER 25 OUTWARD REMITTANCES

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CHAPTER 25

OUTWARD REMITTANCE INDEX

Para No TOPIC Page No

25 Introduction 5

25 1 Restrictions 6

25 1 1 Prohibition 6

25 1 2 Prior Approval of Government of India 7

25 1 3 Prior Approval of Reserve Bank of India 8

25 2 Release of Foreign Exchange for Small Value

Remittances

11

25 3 Advance Remittances fro Outward Remittances 12

25 4 Undertaking/Certificate regarding Payment of

Income Tax

12

25 5 Foreing Travel 12

25 5 1 Restrictions 12

25 5 2 Foreign Currency Notes/Coins 13

25 5 3 Surrender of Unspent Exchange 13

25 5 4 Retenstion of Foreign Currency 14

25 5 5 Endoresement of Passport 14

25 5 6 Use of International Credit Cards (ICC) 14

25 5 7 Limits and Documentation for Release of Foreign

Exchange

15

25 6 Travel Abroad 15

25 6 1 Private Visits (BTQ) 15

25 6 2 Business Travel 15

25 6 3 Medical Treatment 16

25 6 4 Employment Abroad 16

25 6 5 Emigration 16

25 6 6 Studies Abroad 17

25 6 7 Remittances by Agents towards cost of Eurorail

etc.Passes/Tickets, Overseas Gotel, Reservations

etc. For Indians

17

25 6 8 Remittances by Tour Operators towards Hotel 17

3

Reservation Abroad for Indians

25 7 Miscllaneous Remittances 18

25 7 1 Consultancy Service from Abroad 18

25 7 2 Gifts 18

25 7 3 Donations 18

25 7 4 Maintenance of Close Relatives 18

25 7 5 Remittances on account of consolidated Tour

Arrangements for Foreign Tourists visiting

Neighbouring Countries

19

25 7 6 Remiiances towards Sale of Overseas Prepaid

Telephone Cards

19

25 7 7 Remittances towards Royalty under Technical

Collboration

20

25 7 8 Advertisements in Televisison Media Abroad 20

25 7 9 Advertisement in Print Media Abroad 21

25 7 10 Payments of Collections of Subscription to

Overseas TV Media Company

21

25 7 11 Supply of Goods by a 100% EOU/EPZ unit to

Another 100% EOU/EPZ unit, Units in STP/EHTP

to another Unit in STP/EHTP

21

25 7 12 Supply of Goods by 100% EOU/EPZ unit / Units in

STP/EHTP to units in Domestic Tariff Area (DTA)

22

25 7 13 Payment of Fees in Foreign Currency – Embassy

Affiliated Educational Institutions

22

25 7 14 Subscriptions for Magazines and Periodicals 22

25 7 15 Internet and Web Services 23

25 7 16 Remittance of Dividend to Non-resident

Shareholders

23

25 7 17 Commission to Agents Abroad for Sale of

Residential / Commercial Plots in India

23

25 7 18 Liberalised Remittance Scheme-LRS 24

Annex No Annexure

1 APPLICATION FOR RELEASE OF FOREIGN EXCHANGE

FOR TRAVEL ABROAD

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2 FORM & APPLICATION FOR REMITTANCE U/S 195 OF 32

4

THE INCOME TAX ACT

3 CERTIFICATE 33

4 FORM A 2 36

5 APPLICATION FOR LRS 37

25. INTRODUCTION

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Reserve Bank of India has delegated powers to banks for making outward

remittances in foreign currency subject to specific terms and conditions.

Our foreign exchange dealing branches can handle such remittances within

the delegated powers. Remittances not conforming to the powers vested in

us are to be referred to Reserve Bank of India for prior approval.

GENERAL GUIDELINES

With the introduction of FEMA Act 1999, Central Government has notified

that any person may sell or draw foreign exchange to or from an authorized

person if such sale or drawal is a current account transaction.

“Current Account Transaction” means a transaction other than a capital

account transaction (Capital account transaction means a transaction which

alters the assets or liabilities, including contingent liabilities, outside India

of person resident in India or vice versa) and without prejudice to the

generality of the foregoing such transactions include:

Payments due in connection with foreign trade, other current business,

services and short-term banking and credit facilities in the ordinary course

of business,

Payments due as interest on loans and net income from investments,

Remittances for living expenses of parents, spouse and children residing

abroad, and

Expenses in connection with foreign travel, education and medical care of

parents, spouse and children.

In terms of definition given under Section 2 (v) (i) of Foreign Exchange

Management Act (FEMA) 1999, a person resident in India means-

A person resident in India means a person residing in India for more than

one hundred and eighty two days during the course of the preceding

financial year but does not include:

a person who has gone out of India or who stays outside India, in either

case-

for or on taking up employment outside India, or

for carrying on outside India a business or vocation outside India, or

for any other purpose, in such circumstances as would indicate his intention

to stay outside India for an uncertain period.

For example: A person going for medical treatment abroad for a definite

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period of time will be considered as a person resident in India.

a person who has come to or stay in India, in either cases, otherwise than-

for or on taking up employment in India, or

for carrying on in India a business or vocation in India or

for any other purpose, in such circumstances as would indicate his intention

to stay in India for an uncertain period.

For example: - A person who has come to India and has taken up

employment in India will be considered as „a person resident in India‟.

Indian students studying abroad

Indian students studying abroad can be treated as Non-resident Indians

(NRIs) since it is clear that they are not really dependent for a dominant

part of their expenses on remittances from their household in India and

their stay abroad for more than 182 days in the preceding financial year and

their intension to stay outside India for uncertain period when they go

abroad for their studies.

“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.

25.1. RESTRICTIONS

25.1.1.PROHIBITION

Drawal of foreign exchange by any person for the following purpose is

prohibited, namely:

a transaction specified in the Schedule I; or

a travel to Nepal and/or Bhutan; or

a transaction with a person resident in Nepal or Bhutan.

Schedule I

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

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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 to that

extent of 10% of the invoice value on export of tea and tobacco to

Russia.

7. Payment related to “Call Back Services” of telephones.

8. Remittance of interest income on funds held on Non-Resident Special

Rupee (Account)

Scheme.

25.1.2.PRIOR APPROVAL OF GOVERNMENT OF INDIA

Drawal of foreign exchange for transactions included in the Schedule II*

without prior approval of Government of India is not permitted.

However, no such approval is required if the payment is made out of

funds held in

Resident Foreign Currency (RFC)

Resident Foreign Currency (Domestic) Account of the remitter.

Schedule II*

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 US $ 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 Ministry of Surface Transport,

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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)

(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

a) Ministry of Information and

Broadcasting

b) 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

9) Remittance of prize money

/sponsorship of sports

activity abroad by a person

other than International /

National / States Level

sports bodies, if the amount

involved exceeds US$

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)

Note:

The above restrictions will not be applicable if the remittances

are made out of funds held in EEFC account of the remitter except

for the purpose specified in item 9.

The above restrictions will not be applicable if the remittances

are made out of funds held in RFC (returning NRIs) and RFC (

domestic) account of the remitter without any exception.

25.1.3 PRIOR APPROVAL OF RESERVE BANK OF INDIA

No person shall draw foreign exchange for a transaction included in

the Schedule III* without prior approval of the Reserve Bank.

However, no such approval is required if the payment is made out of

funds held in

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Resident Foreign Currency (RFC returning NRIs)

Resident Foreign Currency (Domestic) Account of the remitter.

Schedule III*

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 or body or association in the field of activity of the

donor Company

Explanation: For the purpose of the item numbers 3 and 4, remittance of gift and

donation by resident individuals are subsumed under the Liberalised Remittance

Scheme.

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 also

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(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 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 project, for other

consultancy services procured from outside India.

Explanation:- For the purposes of this item number 'infrastructure project'

is those related to

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(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

Note:

The above restrictions will not be applicable if the remittances are

made out of funds held in EEFC account of the remitter except for

the purpose specified in item 5,6 and 15.

The above restrictions will not be applicable if the remittances are

made out of funds held in RFC (returning NRIs) and RFC (domestic)

account of the remitter without any exception.

25.2 RELEASE OF FOREIGN EXCHANGE FOR SMALL VALUE REMITTANCES

RBI has permitted to release amount upto USD25000 or its equivalent for all

permissble transactions on the basis of

1. Simple letter from the applicant containing basic information like

name and address of the applicant and beneficiary, amount to be

remitted and purpose of remittance (Refer Annexure 25(4).

2. Submission of A2 form should not be insisted in such cases. Dummy

A-2 form is to be prepared at the branch to provide purpose of

remittance for statistical inputs for Balance of Payment.

3. Need not obtain any documentary evidance.

In such cases payment has to be made by debit to the applicants account,

cheque on the applicant‟s bank account or by demand draft.

25.3 ADVANCE REMITTANCE FOR OUTWARD REMITTANCES

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Reserve Bank of India has permitted ADs to make advance remittance

for any current account transaction for which the release of foreign

exchange is admissible.

Where the amount of advance remittance exceeds USD2,00,000/- or its

equivalent a guarantee from a bank of international repute situated

outside or from an AD in India against counter guarantee of a bank of

international repute situated outside, should be obtained from the

overseas beneficiary.

AD should 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.

25.4 UNDERTAKING / CERTIFICATE REGARDING PAYMENT OF INCOME TAX

Certain types of remittances such as income earned in India, are allowed

by Reserve Bank of India or by ADs under delegated powers, subject to

production of Income Tax Clearance Certificate (ITCC) / NOC from

Income Tax authorities.

In terms of Notification F.No.500/152/96-FID dated November 18, 1997,

issued by Central Board of Director Taxes in terms of which a person

making remittance of foreign exchange could submit an undertaking in

duplicate addressed to the Assessing Officer, which should be signed by a

person authorised to sign the Income Tax Return of the applicant

together with a certificate in duplicate from the Accountant (who is not

an employee) as they find under Section 288 of the Income Tax Act 1961.

Accordingly ADs are advised to obtain the undertaking (Annexure) in

duplicate in lieu of an ITCC / NOC from IT Authorities and allow

remittance of foreign exchange. ADs shall in turn forward one copy of

the same to the Assessing Officer mentioned in the undertaking. The

other copy shall be kept with them alongwith the respective folders.

25.5 FOREIGN TRAVEL

25.5.1 RESTRICTIONS

Drawal of foreign exchange to any person for travel to Nepal and or

Bhutan prohibited.

Traveller should ensure that journey commences not later than 60

days from the date of drawal of foreign exchange.

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Payment for drawal of foreign exchange for travel abroad for a single

journey or visit should not be accepted in cash when the Rupee

equivalent foreign exchange drawn exceeds Rs.50,000/-.

Where the rupee equivalent exceeds Rs.50,000/- the entire payment

is to be made by

o Crossed cheque drawn on the applicants bank account.

o Crossed cheque drawn on the bank account of the

firm/company sponsoring the visit of the applicant.

o Bankers‟ cheque / pay order / demand draft.

o Debit to the account of the applicant / sponsoring company.

25.5.2 FOREIGN CURRENCY NOTES / COINS

Out of the overall foreign exchange sold to a traveler exchange in the form

of Foreign currency notes and coins may be sold up to the limits indicated

below:

1. Travellers proceeding to Iraq or Libya:

Not exceeding US$ 5,000 or its equivalent.

2. Travellers proceeding to the Islamic Republic of Iran, Russian

Federation and other Republics of Commonwhealth of Independent

States, entire exchange released can be in the form of currency

notes.

3. Travellers proceeding to countries other than (i) and (ii) above:

Not exceeding US$ 3,000 or its equivalent.

25.5.3 SURRENDER OF UNSPENT EXCHANGE

Unspent exchange brought back to India by traveller should be surrendered

Within 90 days from the date of return if it is in the form of currency

notes / coins and

Within 180 days from the date of return if it is in the form of

travellers cheques.

Note : Unspent exchange can be utilised if the traveller subsequently visits

abroad during the period of 180 days as mentioned above.

In the event of cancellation of journey, foreign exchange drawn

should be surrendered within 60 days from the date on which the

traveller comes to know that the foreign exchange drawn cannot be

used for the travel purpose, provided such foreign exchange drawn is

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not used for any other purpose permitted under the provisions of

FEMA.

Note: Where a person approaches an Authorised Person for surrender of

Foreign Exchange after the prescribed period the Authorised Person should

not refuse to purchase the foreign exchange on the ground that the

prescribed period has expired.

25.5.4 RETENTION OF FOREIGN CURRENCY

A person resident in India can retain foreign currency notes, bank notes and

foreign currency travelers cheques not exceeding USD 2,000/- or its

equivalent provided such foreign exchange is acquired

While on a visit to any place outside India by way of payment for

services not arising from any business or anything done in India OR

From any person not resident in India and who is on a visit to India, as

honorarium or gift or services rendered or in settlement of any lawful

obligations OR

By way of honorarium or gift while on a visit to any place outside

India OR

Represents unspent amount of foreign exchange acquired by him from

authorised person for travel abroad [this facility is not available if

travel abroad is cancelled]

[A person resident in India can also open a Resident Foreigh Currency

(Domestic) Account, without any ceiling on the balance amount with the

foreign exchange acquired by him as above]

25.5.5 ENDORSEMENT OF PASSPORT

Passports of the persons availing of foreign exchange for travelling purposes

both business and private visits need not be endorsed, unless the traveller

makes specific request for endorsement.

25.5.6 USE OF INTERNATIONAL CREDIT CARDS (ICC)

Use of International Credit Cards (ICCs) / ATMs/ Debit Cards can be made

for travel abroad in connection with various purposes and for making

personal payments like subscription to foreign journals, internet

subscription, etc. The entitlement of foreign exchange on International

Credit Cards (ICCs) is limited by the credit limit fixed by the card issuing

authority only. With ICCs one can (i) meet expenses/make purchases while

abroad (ii) make payments in foreign exchange for purchase of books and

other items through internet in India. If the person has a foreign currency

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account in India or with a bank overseas, he/she can even obtain ICCs of

overseas banks and reputed agencies. However, use of International Credit

Cards/ATMs/Debit Cards is NOT permitted for prohibited transactions

indicated in Schedule -1 of FEM (CAT) Rules 2000 such as purchase of lottery

tickets, banned magazines etc,. This facility is available over and above the

entitlement of foreign exchange stipulated for travel abroad. Hence ADs

can release the entitlement as well as reimburse the drawals through use of

ICC.

25.5.7 LIMITS AND DOCUMENTATION FOR RELEASE OF FOREIGN

EXCHANGE

1. Only A2 form (Annexure 25(4))is to be obtained upon to release

foreign exchange upto USD5000 or its equivalent. No documentary

evidence should be insisted.

2. No documentary evidence should be insisted for release of exchange

for studies abroad

3. No documentry evidence should be insisted for release of foreign

exchange for medical treatment abroad, if the requirement is less

than USD100,000 or its equivalent.

25.6 TRAVEL ABROAD

25.6.1 PRIVATE VISITS (BTQ)

Entitlement USD 10,000/- per calendar year (except for visits

to Nepal and Bhutan)

Documentation Consolidated Application Form Annexure.25(1)

A2 form

25.6.2 BUSINESS TRAVEL

Purpose Business promotion.

Participation in International conferences /

seminars.

Training under Technical collaboration.

Sepcialised training / study tour by

professionals like Doctors.

Entitlement USD 25,000/- to a person irrespective of period of

stay.

Documentation Consolidated Application Form (

Annexure.25(1) ).

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A2 form

25.6.3 MEDICAL TREATMENT

Entitlement As per estimate from the Doctor in India or

hospital / Doctor abroad, if the requirement of

exchange exceeds USD 100,000/-.

Simple declaration for the exchange

requirement less than USD 100,000/-.

Documentation Consolidated Application Form (

Annexure.25(1) )

A2 form

Documentary evidence as prescribed in the

application form in case of exchange

requirement exceeding USD 100,000/-

Doctors Certificate in case of need for

attendant.*

For maintenance expenses of a patient going abroad for medical

treatment or check-up abroad or person accompanying as attendant

to the patient going abroad for medical treatment is entitled for

release of foreign exchange of USD 25,000/- irrespective of the period

of stay.

25.6.4 EMPLOYMENT ABROAD

Entitlement USD 100,000/-

Documentation A2 form

FEMA declaration (Annexure 25(4))

Simple application furnishing details such as

country of employment, name and address of

the employer, passport and visa details.

25.6.5 EMIGRATION

Entitlement USD 100,000/-


FEMA declaration (Annexure.25(4))

Simple application furnishing details such as

country of emigration, passport and visa details.

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25.6.6 STUDIES ABROAD

Entitlement USD 100,000/- or as per demand of the overseas

institution whichever is higher per academic year

Documentation Consolidated Application Form ( Annexure.25(1)).

A2 form.

CARE: No documentation should be insisted for release of exchange for

studies abroad upto USD100,000/-. In case of remitances exceeds of

USD100,000/- the estimate from the institution abroad should be obtained

in addition to the documents stated above.

25.6.7 REMITTANCES BY AGENTS TOWARDS COST OF EURORAIL ETC.

PASSES/TICKETS, OVERSEAS HOTEL RESERVATIONS, ETC. FOR

INDIANS

Entitlement Actuals net of commission /markup


Invoice


sale of passes/tickets in India can be made either against 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‟ enitlement of foreign exchange for private

visit.

No such exemption for Hotel Reservation.

25.6.8 REMITTANCES BY TOUR OPERATORS TOWARDS HOTEL

RESERVATION ABROAD FOR INDIANS

Entitlement Actuals net of commission (out of Foreign exchange

entitlement)


Invoice


An undertaking from the remitter that the

remittance is being made out of the foreign

exchange purchased by the traveller from an

authorised person and is out of the entitlement of

foreign exchange for travel abroad.

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25.7 MISCELLANEOUS REMITTANCES

25.7.1 CONSULTANCY SERVICE FROM ABROAD

Entitlement USD 1,000,000/- (1 mio) per project.



Application furnishing details of the project,

name, address and bank details of the consultant.

Invoice from consultant.

Copy of consultancy agreement.

Proof of payment of Income Tax / Income Tax

declaration.

25.7.2 GIFTS

Entitlement USD 5,000/- per remitter per calendar year.

Documentation Application giving details of the beneficiary and

their relationship.

Declaration that they have not remitted more

than USD 5,000/- during the year as gift.

A2 form.

FEMA declaration (Annexuer 25(4))

25.7.3 DONATIONS

Entitlement USD 5,000/- per remitter per calendar year.

Documentation Application giving details of the beneficiary.

Declaration that they have not remitted more

than USD 5,000/- during the year as donations.

A2 form.


25.7.4 MAINTENANCE OF CLOSE RELATIVES

Entitlement Net salary of a person who is resident but not

permanent resident in India and is a citizen of

foreign state other than Pakistan

USD 100,000/- in other cases.

Documentation Application giving details of the beneficiary and

their relationship.

A2 form

Details of remittances made earlier, if any, to the

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beneficiary during the calendar year.

FEMA declaration. (Annexure 25(4))

Note : For the purpose of this item, a person resident in India on account of

his employment 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.

25.7.5 REMITTANCES ON ACCOUNT OF CONSOLIDATED TOUR

ARRANGEMENTS FOR FOREIGN TOURISTS VISITING NEIGHBOURING

COUNTRIES

Travel agency in India may arrange consolidated tours to foreign tourists

visiting India and neighbouring countries like Nepal, Bangladesh, Sri Lanka

etc. against advance payments / reimbursement received through an

authorised dealer. Part of the foreign exchange received in India against

such consolidated tour arrangements may be remitted from India to the

neighbouring countries, except Pakistan, for services rendered by travel

agents / hoteliers in the neighbouring countries.

Entitlement Actuals net of commission (not exceeding advance

payments / reimbursement received in India)


Invoice


Proof of Inward Remittance

(Not permitted to remit to Pakistan)

25.7.6. REMITTANCES TOWARDS SALE OF OVERSEAS PRE-PAID

TELEPHONE CARDS

Agents of overseas organisations in India, issuing pre-paid telephone cards

are permitted to remit the sale proceeds of such cards sold to the travellers

visiting abroad without prior approval from Reserve Bank of India.

Remittance should be net of their commission.

Entitlement Actuals


Invoice


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(The cost of pre-paid telephone cards may be collected inIndian Rupees or

out of foreign exchange released for visits aborad. The cost of such cards

collected in India Rupees need not be adjusted in the travellers‟

entitlement of foreing exchange for private visit)

25.7.7 REMITTANCE TOWARDS ROYALTY UNDER TECHNICAL

COLLABORATION

Entitlement Not exceeding 5% on local sales and 8% on exports or

lump-sum payment not exceeding USD 2 mio.

Documentation Request letter

Letter from RBI registering technical collaboration

agreement

Copy of technical collaboration agreement

A2 form

Invoice


Income Tax Declaration ( Annexure 25(2) &

Annexure 25 (3)) or proof of payment of Income

Tax

Note - Prior approval from Ministry of Industry and Commerce required for

remittances exceeding these threshold limits.

25.7.8 ADVERTISEMENTS IN TELEVISION MEDIA ABROAD

Entitlement Actuals*


Invoice


Income Tax Declaration (Annexure.25(2 & 3 )) or

proof of payment of Income Tax

Certificate from a Chartered Accountant that the

remittance represents advertisement charges

towards telecast in foreign countries and not in

India alone.

*on behalf of a person whose export earnings are not less than Rs.10 lacs

during each of the preceding two years.

In case the export earnings of the applicant are less than Rs.10 lacs during

each of the preceding two years prior approval from Reserve Bank of India is

required in terms Item No.13 of Schedule III.

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25.7.9 ADVERTISEMENT IN PRINT MEDIA ABROAD

Entitlement Actuals*


Invoice


Income Tax Declaration (Annexure.25(2 & 3)) or

proof of payment of Income Tax

In case of advertisements by State Government or its Public Sector

undertakings prior approval from Ministry of Finance ( Department of

Economic Affairs) is required in terms item 2 of Schedule II.

25.7.10. PAYMENTS OF COLLECTIONS OF SUBSCRIPTION TO OVERSEAS

TV MEDIA COMPANY

Cable operators or collecting agents of Overseas TV media companies, to

remit subscription in India/advertisement charges collected from the

advertisers who are eligible to advertise on overseas TV channels without

any prior permission from the Reserve Bank.

Entitlement Actuals


Invoice

FEMA declaration (Annexuer25(4))

Income Tax clearance certificate / undertaking and

certificate (Annexure.25(2 & 3))

A declaration from the remitter along with a

certificate from Chartered Accountant stating that

advertisement charges are collected from the

advertisers who are eligible to advertise on overseas

TV channel and necessary documentary evidence is

held on record.

25.7.11 SUPPLY OF GOODS BY A 100% EOU/EPZ UNIT TO ANOTHER

100% EOU/EPZ UNIT, UNITS IN STP/EHTP TO ANOTHER UNIT

IN STP/EHTP

Entitlement Actuals


Invoice

Proof of suply of goods (Transport Document/Delivery

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Challan etc.)


A Certified copy from the beneficiary unit evidencing

that the same is 100% EOU/EPZ or unit in STP/EHTP.

25.7.12 SUPPLY OF GOODS BY 100% EOU/EPZ UNIT / UNITS IN

STP/EHTP TO UNITS IN DOMESTIC TARIFF AREA (DTA)

Upon permission from the respective authorities 100% EOU, units in EPZ,

EHTP and STPs may sell goods to buyers in DTA against payment in foreign

currency (Sales to local buyers in foreign currency), without prior approval

from Reserve Bank of India. Buyers of goods in DTA are permitted to settle

their purchases in free foreign exchange bought from market.

Entitlement Actuals


Permission by competent authority for sale of goods

in DTA

Invoice

Proof of suply of goods (Transport Document/Delivery

Challan etc.)


25.7.13 PAYMENT OF FEES IN FOREIGN CURRENCY – EMBASSY

AFFILIATED EDUCATIONAL INSTITUTIONS

Entitlement Actuals


A certificate from the institution / school evidencing

that the same is embassy affliated

Notice of admission

Demand for fees


25.7.14 SUBSCRIPTIONS FOR MAGAZINES AND PERIODICALS

Remittance for purchase of banned / proscribed magazines are not allowed.

Entitlement Actuals


Invoice


23

25.7.15 INTERNET AND WEB SERVICES

Many schemes relating to purchase of websites offer earning in US Dollars

and/or in other foreign currency, on incremental basis, depending on the

number of new clients/customers added to the chain, thereby making the

operation of such schemes akin to money circulation. It is clarified by RBI

that authorised dealers should not allow remittance to operators of such

schemes and/or to any other overseas company carrying on such types of

activities.

However, Authorised Dealers are allowed to remit for website sold

unconditionally and if the remitter is purchasing it for developing for his

present / future business and not for the purpose of adding further members

to the chain.

Entitlement Actuals



A declaration from the remitter that the website

purchased is for developing is present / future

business and not for the purpose of adding further

members to the chain

Invoice ( if the remittance exceeds USD500/-)

25.7.16 REMITTANCE OF DIVIDEND TO NON RESIDENT SHAREHOLDERS

Remittance of dividend by any company to which requirement of dividend

balancing is applicable is not permitted as per item No.5 of schedule I. The

companies which are not required for dividend balancing can repatriate the

dividend declared.

Entitlement Actuals


Application in RCD 1 and RCD 2


25.7.17 COMMISSION TO AGENTS ABROAD FOR SALE OF RESIDENTIAL

/ COMMERCIAL PLOTS IN INDIA

Entitlement Not exceeding 5% of the inward remittance towards sale

proceeds

24



Documentary proof of inward remittance

Copy of sale agreement or a certificate from

Chartered Accountant certifying the sale price

25.7.18. LIBERALISED REMITTANCE SCHEME OF USD 1, 25,000 FOR

RESIDENT INDIVIDUALS

As a step towards further simplification and liberalization of the foreign

exchange facilities available to residents, RBI has decided that resident

individuals may freely remit upto USD 1,25,000 per financial year for any

purpose for which a Scheme has been formulated as detailed below:

1. Eligibility

All resident individuals are eligible to avail the facility under the

scheme including minors. In case of remitter being a minor, the LRS

declaration form should be countersigned by the minor‟s natural guardian.

The facility will not be available to corporates, partnership firms, HUF,

Trusts, etc.

2. Purpose

2.1 This facility is available for making remittance up to USD1, 25,000 per

financial year for any current or capital account transactions or a

combination of both. Remittances under the Scheme can be consolidated in

respect of family members subject to individual family members complying

with its terms and conditions.

2.2 Under this facility, resident individuals will be free to acquire and

hold immovable property or shares or any other asset outside India without

prior approval of the Reserve Bank. Individuals will also be able to open,

maintain and hold foreign currency accounts with a bank outside India for

making remittances under the scheme without prior approval of Reserve

Bank. The foreign currency account may be used for putting through all

transactions connected with or arising from remittances eligible under this

scheme. A resident individual 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.

25

2.3 It is further clarified that the facility under the scheme is in addition

to those already available for private travel, business travel, remittances,

gifts, studies,donations and medical treatment etc as described in Schedule

III of Foreign Exchange Management (Current Account Transactions) Rules,

2000. It is mandatory to have PAN number to make remittances under the

Scheme.

2.4 A resident individual is permitted to make a rupee gift/ loan to a

NRI /PIO who is a close relative of the resident individual [close relative as

defined in Section 6 of the Indian Companies Act, 1956]. The gift/ loan

amount should be within the overall limit of USD 125,000 per financial year

as permitted under the Liberalised Remittance Scheme (LRS) for a resident

individual. It would be the responsibility of the resident donor/lender to

ensure that the gift/ loan amount is under the LRS and all the remittances

under the LRS during the financial year including the gift/ loan amount have

not exceeded the limit prescribed under the LRS. It may be observed that

only LRS limit of the remitter would be utilized and gift/loan amount as the

case may be would actually be credited to NRO A/c. of NRI/ PIO close

relative.

2.5 The remittance facility under the scheme is not available for the

following:

i) Remittance for any purpose specifically prohibited under

Schedule-I (like purchase of lottery/sweep stakes, tickets

prescribed magazines etc) or any item restricted under Schedule

II of Foreign Exchange Management (Current Account

Transactions) Rules, 2000.

ii) Remittances made directly or indirectly to Bhutan, Nepal,

Mauritius or Pakistan.

iii) Remittances made directly or indirectly to countries identified by

the Financial Action Task Force (FATF) as “non co-operative

countries and territories” viz Cook Islands, Egypt, Guatemala,

Indonesia, Myanmar, Nauru, Nigeria, Philippines and Ukraine.

iv) Remittances directly or indirectly to those individuals and entities

identified as posing significant risk of committing acts of terrorism

as advised separately by the Reserve Bank to the banks.

26

v) Any kind of credit facilities should not be extended to resident

individuals to facilitate remittances under the Scheme.

3. Remittance Procedure

Requirements to be complied with by the remitter

3.1 To avail of this facility, the individual will have to designate a branch

of an AD through which all the remittances under the scheme will be made.

3.2 The resident individual seeking to make the remittance should furnish

an application letter cum declaration in the format as indicated in

Annexure–25(5) regarding the purpose of the remittance and declaration

that the funds belong to the remitter and will not be used for the purposes

as detailed above.

Requirements to be complied with by the branches

While allowing the facility to resident individuals, Branches are required

to ensure that the "Know Your Customer" Guidelines have been

implemented in respect of these 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, Branches

should carry out due diligence on the opening, operation and maintenance

of the account. Further the Branches 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.

3.5 The Branches 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.

3.6 Branches should certify that the remittance is not being made

directly or indirectly by /or to ineligible entities and that the

remittances are made in accordance with the instructions

contained herein.

27

4.Reporting of the transactions

The remittances made under this Scheme will be reported in the R-Return

in the normal course. The Branches may also prepare and keep on record

dummy Form A2, in respect of remittances exceeding USD 25000. Branches

may arrange to furnish on a quarterly basis, information on the number of

applicants and total amount remitted to the Chief General Manager,

External Payment Division, Foreign Exchange Department, Reserve Bank of

India, Central Office, Mumbai-400001.

28

25.8 Annexures

Annexure 25(1)

APPLICATION FOR RELEASE OF FOREIGN EXCHANGE FOR TRAVEL ABROAD

The Branch Head,

Union Bank of India

________________ Branch. Date:

Dear Sir,

TRAVEL ABROAD

I/We request you to release to me foreign exchange of ______________ for

my proposed visit to ______________ (Country) during the period from

__/___/____ to __ /__/______. We enclose A2 form duly filled in and

signed. Kindly debit my/our a/c ______________with you/ we enclose

cheque No.____________ to the debit of my account No.______________.

The details of my Passport / Travel are mentioned below:

1. Name, Nationality &

Address

of the Application:

Telephone No.

2. Name of the Company

(For Business Travel)

Telephone No.

3. Details of Passport:

o Pass Port Number/

Place of Issue

o Date of Issue /

Expiry

o Details of Visa

4. Purpose of visit BTQ Busines

s

Medical

Treatme

nt

Abroad

Studies

Abroad

5. Amount Required:

TCs Currency DDs

29

I/We declare that the exchange applied for together with the exchange

already availed under BTQ does not exceed the entitlement under FEMA.

Kindly endorse / do not endorse the Passport.

I/We hereby declare that the above transaction does not involve and is not

designated for the purpose of any contravention or evasion of the provisions

of the aforesaid act or any rule, regulation, notification, direction or order

made there under.

I/We also hereby agree and undertake to give such information/documents

as will naturally satisfy you about this transaction in terms of the above

transaction.

I/We also understand that if I/We refuse to comply with such requirement

or take unsatisfactory compliance therewith, the Bank shall refuse in writing

to undertake the transaction and shall if it has reason to believe that any

contravention/evasion is contemplated by me/us report the matter to RBI.

I hereby undertake to surrender unspent foreign exchange to AD within

90/180 days from the date of return if the same is in the form of

currency notes / TCs respectively.

________________________________

SIGNATURE OF THE APPLICANT*

I/ We declare that the exchange applied for is meant for business visit of

Mr./Mrs._____________________ who is _________________ (Designation)

of our company.

I/We further declare that the undersigned has/have the authority to give

the above undertaking and declaration on behalf of the firm/company.

__________________________________________________

SIGNATURE & RUBBER STAMP OF THE COMPANY*

PLEASE TURN OVERLEAF & FURNISH RELEVANT INFORMATION

FOR

“HIGHER STUDIES” & “MEDICAL TREATMENT”

Additional details to be furnished for release of exchange for Higher Studies

30

1. Name of the Student

2. Details of present academic

qualifications

3. Particulars of the Course

proposed to be studied

4. Duration of the course

5. Name of the Overseas

University / Institution

6. Foreign Exchange required for

[indicate annual requirement]

a) Tuition fees

b) Maintenance expenses

c) Books, personal

computers etc.

d) Others [specify ]

7. Amount of Scholarship /

Assistantship / Sponsorship

8. Any other information.

I declare that I have not submitted any application to any other Authorised

Dealer / any office of RBI for the above purpose. I also declare that total

drawal of exchange including the present request does not exceed the

ceiling prescribed by RBI and the statement made is true to the best of my

knowledge and belief.

S I G N A T U R E

Additional details to be furnished for release of foreign exchange for

Medical Purposes *:

1. Name of the Patient

2. Nature of the disease and since

when ?

3. Details of the treatment

proposed to be taken abroad –

Name of the country / hospital

to be visited

Expected duration of treatment

31

a) In Hospital

b) Pre/Post hospitalisation

4. Exchange required for the

patient

Medical

treatment

including

hospitalisation

Living &

Incidental

expenses for Pre

/ Post

hospitalisation.

Name of the attendant &

relationship with patient.

5. Proposed date of departure.

6. Any other relevant information.

* Enclosures (if the request for drawal of exchange exceed USD 100,000/-

)

a) Medical Certificate issued by the Medical Practitioner

confirming having examined the patient and found that the

patient is suffering from the disease ……….. and requires

treatment abroad.

b) Correspondence with the overseas doctor / hospital regarding

proposed treatment / or any other evidence in this regard

along with a certified estimate of expenses from the overseas

doctor / hospital.

c) Original and copy of Passport / Visa of the Patient & Attendant

for endorsement.

I undertake to submit details of actual expenses within 15 days from the

date of returning to India and return the unspent foreign exchange, if

any.

__________________________________________

SIGNATURE OF THE PATIENT / APPLICANT

32

Annexure 25(2)

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 responsbile 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

remittances]

33

Annexure 25(3)

CERTIFICATE

I/We have examined the agreement (wherever applicable) between

M/s.________________________ and M/s____________________ requiring

the above

Remitters beneficiary

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.

: Foreig

n

Curre

ncy

Indian

@

Curren

cy

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,

:

34

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 not on

account of business income please

indicate :-

i. Whether such income is liable

to tax in India?

ii. If so, the basis for arriving a

the rate of deduction of tax.

:

35

iii. If not, the reason thereof.

9. In case tax is not deducted at

source for any other reason,

details thereof.

:

(Attach separate sheet duly authenticated wherever nenessary).

________________________________

Name, Address and registration numbers

(To be signed and verified by an Accountant as defined in Section 288 of

the Income-tax Act.)

36

Annexure – 25(4)

Form A2

Application cum Declaration

(To be completed by the applicant)

Application for drawal of foreign exchange

I. Details of the applicant –

a.Name ____________________________

b. Address ____________________________________________

c. Account No. _____________________

II. Details of the foreign exchange required

1. Amount (Specify currency) ___________________

2. Purpose __________________________________

III. I authorise you to debit my Saving Bank/Current/RFC/EEFC Account

No._________________ together with your charges and

* a) Issue a draft : Beneficiary's Name________________________

Address ________________________________

* b) Effect the foreign exchange remittance directly -1.

Beneficiary's Name _________________________________

2. Name and address of the Bank _______________________

3. Account No. ____________________

* c) Issue travellers cheques for _____________________________

* d) Issue foreign currency notes for _________________________

(Strike out whichever is not applicable)

Signature

Declaration (Under FEMA 1999)

I, _________________________ declare that -*

1) The total amount of foreign exchange purchased from or remitted

through, all sources in India during this calendar year including this

application is within USD _____________ (USD

___________________________________________________only) the annual

limit prescribed by Reserve Bank of India for the said purpose.

* 2) Foreign exchange purchased from you is for the purpose indicated

above.

(Strike out whichever is not applicable)

Signature

Name _____________

Date :

(The purpose codes are on the reverse)

37

Annexure 25(5)

Application cum Declaration for purchase of foreign exchange under LRS

scheme

(To be completed by the applicant)

I Details of the applicant

a. Name …………………………..

b. Address…………………………

c. Account No……………………..

d. PAN No………………………….

II Details of the foreign exchange required

1. Amount (Specify currency)………………………………

2. Purpose ………………………………..

III Source of funds: ………………………………….

IV Nature of instrument

Draft…………….

Direct remittance…………

V Details of the remittance made under the scheme in the financial

year ………

Date Amount

VI Details of the Beneficiary

1. Name …………….

2. Address ……………………

…………………………….

* 3. Name and address of the bank……………………….

* 4. Account No………………………………….

(* Required only when the remittance is to be directly credited to the bank

account of the beneficiary)

38

This is to authorize you to debit my account and effect the foreign

exchange remittance/issue a draft as detailed above. (strike out whichever

is not applicable).

Declaration

I, ………………. …………, hereby declare that the total amount of foreign

exchange

(Name)

exchange purchased from or remitted through, all sources in India during

the current calendar year as per item No. V of the Application, is within

the limit of USD 1,25,000/- (US Dollar one lac Twenty Five Thousand only),

which is the limit prescribed by the Reserve Bank for the purpose and

certify that the source of funds for making the said remittance belongs to

me and will not be used for prohibited purposes.

Signature of the applicant

(Name)

Certificate by the authorised dealer

This is to certify that the remittance is not being made by/ to ineligible

entities and that the remittance is in conformity with the instructions

contained in Reserve Bank A.P.(DIR Series) Circular No.138 dated June

3, 2014.

Name and designation of the authorized official:

Place: Signature

Date: Stamp and seal of the AD

branch

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