MODE OF CURRENCY FOR BUSINESS FROM EOU TO EOU, FEMA

[Chandru Ramachandran]

As per GST Rule, it is understood that all transactions between EOU to EOU is taxable and such business would be treated on par with DTA. As regards payment, I need to know whether it is mandatory for EOU to make payment to other EOU only in terms of foreign currency or it can be paid in Indian Rupee. Please clarify.

Posts / Replies

[DR.MARIAPPAN GOVINDARAJAN]

In my view it can be paid in Indian Rupee.

[Ganeshan Kalyani]

I am also of the view that payment can be done in INR.

[Ramaswamy S]

The law does not specify that EOU to EOU settlement to be in FC. RBI in its circular has clarified that an EOU can pay to their EOU suppliers from EEFC account . It is not mandated. The payment from an EOU to another EOU can be made either in FC or in INR.

However, I am of the view that any transaction within India should be in INR only. FC is not earned by the supplier EOU when the FC earned by the recipient EOU when it is a transfer from one EEFC account to another.