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]

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

[Robert Kunnel]

The FTWZ Owner can hold the goods on behalf of the foreign client, the foreign client will raise his invoice on the Indian Buyer who will pay applicable custom duty on the said invoice. The Bill of entry will be filed by the Indian Buyer based on said invoice. And BOE can be submitted for remittance.

There is no commercial activity, (no manufacturing activity is permitted in FTWZ) the goods are sold as such to Indian Buyer. But if the foreign client wishes he can repack the packages considering same as general cargo. He is also allowed to do the kitting if required.

The said activity can be done on basis of Authorisation from foreign /Indian client.

[Saurabh SRIVASTAVA]

Respected Fellow Members, I am into same situation. We delivered the goods to India address from India (These were Medications for ship staff at Indian port) and received remittances in USD. The issue is PNB keeps sending reminders to submit shipping bill, which we do not have as it was not exported. PNB has listed all the payments received since 2015 and asking us to provide shipping bill for advance payment received. My question is how do I justify under which law i can be exempted for Billing Overseas and suppling In India from India. Any help regarding the law will be very much helpfull.

[Saurabh SRIVASTAVA]

Adding to above : We paid GST on all purchses / supplies

[VIKAS BANSAL]

Dear Subhash Ji,

Can you please mail me (cavikas4@gmail.com) all the relevant documents as i am facing same issue.

Thanks in advance

[Subramanya Rayaprol]

dear sir,

what you are trying to do is a kind of hawala transaction, which is illegal and punishable under FEMA with imprisonment and fine. pl avoid entering into such transactions or you may land into trouble.

[VIKAS BANSAL]

Dear Sir,

I think you have not understand my question properly???

[VIKAS BANSAL]

Dear Subramanya Ji,

I think you have not understand my question properly and without understanding should not reply like this..

My question was same as of neeta