BILL TO OVERSEAS- SHIP TO INDIA FROM INDIA, FEMA

[Neeta Dharamshi]

We have delivered goods to Indian party as per order from overseas party. Billing is in the name of overseas party and ship to is Indian party. We have paid full gst amount since goods are not crossing Indian border .

Now we want to receive payment from overseas customer but bank is not allowing us to receive payment. we are ready for payment in INR too

what is way out. how to get this payment. Has anyone faced this problem? How to resolve it. whom to contact in RBI for this issue.

pls reply urgently

Posts / Replies

[Subhash Modi]

My site is svmodi.com from where you will find my email IDs.

[Neeta Dharamshi]

Thank you subhash sir for your valuable input. Sure i will contact you for further guidance.

This group is really very helpful and knowledgeable group.

Thanks to one and all.

will update how my issue was resolved.

[malay pota]

Dear Mam,

if your problem is resolved then ok otherwise,please inform the reason due to which your banker is not allowing you to receive the money.

[Neeta Dharamshi]

No it is not yet solved.

Since goods hv not crossed Indian Border Bank is not aware how to get payment from overseas billed party.

Still in process to find the way out

[Vishal Garge]

Hi Madam ,

is it resolved?

[malay pota]

Dear Madam,

Which is your bank? can you ask your bank that under which Notification/Circular/ Master circular of RBI the payment in FOREIGN CURRENCY can not be received in India if you have a correspondence with your foreign buyer for supply the goods to Indian Party and you raise Bill in the name of foreign party and the foreign party is ready to pay you as per the correspondence exchanged with you.

[BL Jain]

in the case of export, you may receive the payment from the overseas buyer even if the goods have been shipped to an Indian customer, provided the actual buyer receives original documents at his bank from the overseas exporter, and customs duty is paid against the BE.

[PRABHAT BK]

I do endorse the views of Subhash Modiji

[Subhash Modi]

Please refer to my comprehensive reply vide Sr. No. 15 dated 15-05-2019 under ID 114954. I am unable to open my own reply which on the screen appears partially up to the first 3 Paragraphs. It appears though though this forum is open to all and it was open for me also when I posted my reply on 15-05-2019 but now limitations of my package restricts me to have access to my own contribution to the Query raised under ID 114954. Request any one who still has access to my complete reply dated 15-05-2019 may copy it and forward to my email ID svmodi@hotmail.com

[Ravindran THiruvengadam]

I find very strange that bank Should object a internationally accepted commercial transaction

[KASTURI SETHI]

Bank is bound to follow RBI Rules & regulations.

[Neeta Dharamshi]

No my issue is not yet settled. still struggling to get payment from foreign debtors.

pls help if any one know how to get payment in case of BILL TO OVERSEAS- SHIP TO INDIA

payment to e received from overseas party

[Subhash Modi]

Kindly refer my extensive reply dated 15-05-2019 where I have with the authority under law (FEMA) explained as to how your banker can receive foreign inward remittance towards payment for supplies made within India.

In discussion forum my complete reply is not now appearing; it has been curtailed. In the subsequent reply I have also forwarded my contact details. I believe that you may take my help not through the forum, but directly.

[Nilesh Jadhav]

Hello Madam,

Please let us know whether the goods supplied by you to Indian party is used as raw material for production of finished goods to be exported to overseas party ?? May be my question can change the direction for solution.

[malay pota]

Show your banker FEMA Notification No. FEMA 14(R)/2016-RB May 02, 2016

(Amended upto November 13, 2019) on Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2016 which says as under:

3. Manner of Receipt in Foreign Exchange : -

(1) Every receipt in foreign exchange by an authorized dealer, whether by way of remittance from a foreign country or by way of reimbursement from his branch or correspondent outside India against payment for export from India, or against any other payment, shall be as mentioned below:

(A) Members of the Asian Clearing Union

(i) Bangladesh, Myanmar, Pakistan, Sri Lanka & Republic of Maldives -

Receipt for export of eligible goods and services by debit to the Asian Clearing Union Dollar account and / or Asian Clearing Union Euro account in India of a bank of the member country in which the other party to the transaction is resident or by credit to the Asian Clearing Union Dollar account and / or Asian Clearing Union Euro Account of the authorized dealer maintained with the correspondent bank in that member country ;

Receipt may also be made in any freely convertible currency in all other cases.

In respect of exports from India to Myanmar, payment may be received in any freely convertible currency or through ACU mechanism from Myanmar.

[Subhash Modi]

Reply to Ms. Neeta directly through e-mail (and copy + pasted for all others in the discussion forum).

Reply:

Since physical delivery of the goods was from India to within India you have done the right thing by raising a GST invoice akin to any domestic sale.

You can legitimately receive payment in free foreign exchange or from the INR balances held in India by the overseas bank of the 'bill to' party known as Vostro Account.

Though there is no export, still receipt of payment in FE or in Rupees held by foreign bank in Vostro A/c in India is permitted vide the following: Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2016 as updated upto May 2019 (copy attached – appropriately highlighted).

Show this to bank and tell them not only export related payment but any other payment is allowed to be received in the manner prescribed in the said Regulations including receipt in free foreign exchange.

The purpose code will be as highlighted in the attached RBI Circular.

While you may succeed in getting your banker to convert the inward remittance to INR for your purposes, but the recipient (‘ship to’ party) in India of your goods may face difficulty with his bank in remitting the value of the goods in foreign currency for which the ‘bill to’ party must have given him a final value invoice. For any remittance to be made from India in foreign exchange there must be a proof of receipt in India of imported goods or import of services. But that is his (‘ship to’ party) botheration.

Any other participant in the discussion forum may contact me (svmodi.com) for soft copies of the RBI Regulations and Circular mentioned in this reply

[Neeta Dharamshi]

Thanks a ton sir. It is of great help. You willingly came forward to help is a great thing. Heartfelt gratitude to you

This forum is really very useful . Thx to all other also who have replied to my query.

I will update you the status after talking to bank.

[malay pota]

Dear Madam,

Subhashji is right i am also saying the same in my reply No.30 of 18.12.2019. I also request you please inform us your banker actions in this regars.

[Vineet Gupta]

Dear Neeta,

I hope your issue is resolved by now. We are also in a same condition. We got an order from European Company to supply the goods to Indian company in India. They have sent the foreign currency to our Bank account. And bank is asking for purpose code to remitt the amount to our account.

As said by others, that its not an export but a domestic sale, so its clear we can not take any benefit of GST waiver. But what is the purpose code to be told to bank. And how to show this transaction in our business as domestic sale but proceeds received from foreign company in foreign currency?

Will it create any hurdles in future? Also In GSTR-1 and GSTR 3B, will it shown under just domestic sale?

I will be looking forward for your reply and reply from other experts in this group, Subhash Modi ji.

thanks

kind regards

Vineet Gupta

[Neeta Dharamshi]

Our bank problem is not yet solved. It is in progress. Hopeful of get it sorted out based on reply from Modiji & Mr.Malay. Will keep updated on the same.

There wont be any problem in GSTR-1 OR 3B. YOU HAVE TO SHOW IT AS DOMESTIC SALE from unregistered dealer and charge IGST on the applicable rate.

No export benefit can be claimed on this.

I hope this answer all your queries.

[Vineet Gupta]

Thanks for the prompt reply and GST treatment of the transaction.

Mr. Modi, also helped us very promptly with circulars and highlighted purpose code for this transaction.

We are using P1099- Other services not included elsewhere

Thanks to the Blog for resolving the issue.

[Robert Kunnel]

Hi,

I would also like to inform that there is another way of doing the said transaction. wherein you can move the goods to an FTWZ and same can be done by filing a Bill of export here you need not pay GST.

Also a document is filed as evidence for export to FTWZ, which is now considered as export although the same lies within India.

And the foreign company can further sell the goods in India by raising their invoice to final Buyer who will file a Bill of entry and later clear the goods on payment of applicable custom duties.

[Vishal Garge]

Mr.Robert ,

You are right but overseas buyer should be ready to take atleast client base registration in FTWZ.

[Robert Kunnel]

As per instruction 60 (SEZ) we can hold the goods on behalf of the foreign client. they need not register. Just an authorisation to hold goods on their behalf.

[Vishal Garge]

Ok noted. As per instruction ,FTWZ can hold the goods behalf of buyer but could you please confirm whether FtWZ owner can enter in commercial activities and clear the goods to Indian company behalf of foreign buyer/supplier without agreement?

Please confirm.

also this type of transaction would attract custom duties which can increase the cost burden by 7.5% to 25% along with applicable cess to Indian buyer / foreign supplier