Foreign Remittance, FEMA

[Kaustubh Karandikar]

What is the maximum time limit for outward foreign remittance against import as per RBI guidelines?

Posts / Replies

[YAGAY andSUN]

B.5. Time Limit for Settlement of Import Payments
B.5.1. Time limit for Normal Imports
(i) In terms of the extant regulations, remittances against imports should be completed not later than six months from the date of shipment, except in cases where amounts are withheld towards guarantee of performance, etc.
(ii) AD Category – I banks may permit settlement of import dues delayed due to disputes, financial difficulties, etc. However, interest if any, on such delayed payments, usance bills or overdue interest is payable only for a period of up to three years from the date of shipment and may be permitted in terms of the directions in para C.2 of Section III below.
B.5.2. Time Limit for Deferred Payment Arrangements
Deferred payment arrangements (including suppliers’ and buyers’ credit) upto five years, are treated as trade credits for which the procedural guidelines as laid down in the Master Circular for External Commercial Borrowings and Trade Credits may be followed.
B.5.3. Time Limit for Import of Books
Remittances against import of books may be allowed without restriction as to the time limit, provided, interest payment, if any, is as per the instructions in para C.2 of Section III of this Circular.

[DR.MARIAPPAN GOVINDARAJAN]

Thanks Yagay for the useful information.

[YAGAY andSUN]

As per existing RBI guidelines (para B.5.1 (i) of the 'Master Direction on Import of Goods and Services' dated January 01, 2016, as amended from time to time, in terms of which remittances against normal imports (excluding Gems/ Jewellery sector) should be completed not later than six months from the date of shipment except in cases where amounts are withheld towards guarantee of performance etc.

In view of the disruptions due to outbreak of COVID- 19 pandemic, RBI has issued Circular vide ref RBI/2019-20/242 A.P. (DIR Series) Circular No.33 dated 22nd May 2020, whereby it has been decided to extend the time period for completion of remittances against such normal imports (except in cases where amounts are withheld towards guarantee of performance etc.) from six months to twelve months from the date of shipment for such imports made on or before July 31, 2020.

In our view, this option may be exercised by us, but is subject to payments’ terms and conditions, as mentioned in contracts/agreements which have been executed by us and will also depend on a fresh negotiations with the foreign suppliers on payment terms & conditions, wherever required.

[Kaustubh Karandikar]

Thanks sir for the guidance