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1
CHAPTER 25 OUTWARD REMITTANCES
2
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
28
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
5
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
6
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
7
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,
8
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
9
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
10
(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
11
(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
12
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.
13
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
14
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
15
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) ).
16
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/-
Documentation A2 form
FEMA declaration (Annexure.25(4))
Simple application furnishing details such as
country of emigration, passport and visa details.
17
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
Documentation A2 form
Invoice
FEMA declaration (Annexure 25(4))
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)
Documentation A2 form
Invoice
FEMA declaration (Annexure 25(4))
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.
18
25.7 MISCELLANEOUS REMITTANCES
25.7.1 CONSULTANCY SERVICE FROM ABROAD
Entitlement USD 1,000,000/- (1 mio) per project.
Documentation A2 form
FEMA declaration (Annexure 25(4))
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.
FEMA declaration (Annexure 25(4))
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
19
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)
Documentation A2 form
Invoice
FEMA declaration (Annexure 25(4))
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
Documentation A2 form
Invoice
FEMA declaration (Annexure 25(4))
20
(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
FEMA declaration (Annexure 25(4))
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*
Documentation A2 form
Invoice
FEMA declaration (Annexure.25(4))
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.
21
25.7.9 ADVERTISEMENT IN PRINT MEDIA ABROAD
Entitlement Actuals*
Documentation A2 form
Invoice
FEMA declaration (Annexure 25(4))
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
Documentation A2 form
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
Documentation A2 form
Invoice
Proof of suply of goods (Transport Document/Delivery
22
Challan etc.)
FEMA declaration (Annexure 25(4))
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
Documentation A2 form
Permission by competent authority for sale of goods
in DTA
Invoice
Proof of suply of goods (Transport Document/Delivery
Challan etc.)
FEMA declaration (Annexure 25(4))
25.7.13 PAYMENT OF FEES IN FOREIGN CURRENCY – EMBASSY
AFFILIATED EDUCATIONAL INSTITUTIONS
Entitlement Actuals
Documentation A2 form
A certificate from the institution / school evidencing
that the same is embassy affliated
Notice of admission
Demand for fees
FEMA declaration (Annexure 25(4))
25.7.14 SUBSCRIPTIONS FOR MAGAZINES AND PERIODICALS
Remittance for purchase of banned / proscribed magazines are not allowed.
Entitlement Actuals
Documentation A2 form
Invoice
FEMA declaration (Annexure 25(4))
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
Documentation A2 form
FEMA declaration (Annexure 25(4))
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
Documentation A2 form
Application in RCD 1 and RCD 2
FEMA declaration (Annexure 25(4))
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
Documentation A2 form
FEMA declaration (Annexure.25(4))
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