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TMI BlogMaster Circular on Miscellaneous Remittances from India –Facilities for ResidentsX X X X Extracts X X X X X X X X Extracts X X X X ..... ural Tours A.5 Private Visits A.6 Business Visits A.7 Period of surrender of foreign exchange A.8 Unspent Foreign Exchange A.9 Remittances for Tour Arrangements, etc A.10 Payment in Rupees A.11 Issue of Guarantee- Import of services A.12 Liberalised Remittance Scheme of USD 200,000 for Resident Individuals A.13 Documentation A.14 Endorsement on Passport A.15 International Credit Cards A.16 International Debit Cards A.17 Store Value Cards/Charge Cards/Smart Cards, etc A.18 Redemption of Unutilised balance on prepaid travel cards A.19 A.20 Acquisition of foreign securities under Employees Stock Option (ESOP) A.20 Income tax clearance A.21 Facility to grant loan to NRI/ PIO close relative under Liberalised Remittance Scheme Annex 1 FEM CAT Rules Annex 2 Form A-2 Annex 3 Application cum declaration Form for LRS Annex 4 Statements/ Returns to be submitted to RBI Annex 5 Operational Instructions to ADs Annex 6 Remittances under LRS - Return to be submitted by AD Appendix 1 List of Circulars Appendix 2 Section 5 of FEMA, 1999 Release of Foreign Exchange by Authorised Dealers A.1 General 1.1 For release of foreign exchange to persons res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... training, (e) Remittance for participation in international events / competitions (towards training, sponsorship and prize money), (f) Film shooting, (g) Medical treatment abroad, (h) Disbursement of crew wages, (i) Overseas education, (j) Remittance under educational tie up arrangements with universities abroad, (k) Remittance towards fees for examinations held in India and abroad and additional score sheets for GRE, TOEFL, etc. (l) Employment and processing, assessment fees for overseas job applications, (m) Emigration and emigration consultancy fees, (n) Skills / credential assessment fees for intending migrants, (o) Visa fees, (p) Processing fees for registration of documents as required by the Portuguese / other Governments, (q) registration / subscription / membership fees to International Organisations. 1.4 Release of foreign exchange is not admissible for travel to and transaction with residents of Nepal and Bhutan. (cf. Clause (b) of Rule 3 of the Rules (as indicated in item 2 of Appendix3). A.2 Sale of Exchange 2.1 Authorised Persons may release foreign exchange for travel purposes on the basis of a declaration given by the traveller regarding the amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Dance troupes, artistes, etc., who wish to undertake tours abroad for cultural purposes should apply to the Ministry of Human Resources Development (Department of Education and Culture), Government of India, for their foreign exchange requirements. Authorised Dealers may release foreign exchange, on the strength of the sanction from the Ministry concerned, to the extent and subject to conditions indicated therein. A.5 Private Visits Foreign exchange for private visit can also be released to a person who is availing of foreign exchange for travel outside India for any purpose up to the limits specified in Schedule III to the Rules. A.6 Business Visits Foreign exchange may be released for undertaking 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 to the limits specified in Schedule III to the Rules. A.7 Period of surrender of foreign exchange 7.1 In case the foreign exchange purchased for a specific purpose is not utilized for that purpose, it could be utilized for any other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r :- (i) acquired by him from an Authorised Person for travel abroad and represents the unspent amount thereof or (ii) acquired by him, while on a visit to any place outside India, by way of payment for services not arising from any business in or anything done in India and by way of honorarium or gift or (iii) acquired by him, from any person not resident in India, and who is on a visit to India, as honorarium, gift, for services rendered or in settlement of any lawful obligation. Note: Where a person approaches an Authorised Person for surrender of unspent/ unutilized foreign exchange after the prescribed period of 180 days, Authorised Person should not refuse to purchase the foreign exchange merely on the ground that the prescribed period has expired. A.9 Remittances for Tour Arrangements, etc. 9.1 Authorised Dealers may remit foreign exchange up to a reasonable limit, at the request of a traveller towards his hotel accommodation, tour arrangements, etc., in the countries proposed to be visited by him or for making other tour arrangements for travellers from India, provided in each case the Authorised Dealer is satisfied that the remittance is being made out of the foreign ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tances after verifying that the amount being remitted to the neighbouring countries (inclusive of remittances, if any, already made against the tour) does not exceed the amount actually remitted to India and the country of residence of the beneficiary is not Pakistan. A.10 Payment in Rupees Authorised Dealers may accept payment in cash up to Rs. 50,000 (Rupees fifty thousand only) against sale of foreign exchange for travel abroad (for private visit or for any other purpose). Wherever the sale of foreign exchange exceeds the amount equivalent to Rs.50,000, the payment must be received only by: (i) a crossed cheque drawn on the applicant's bank account, or (ii) crossed cheque drawn on the bank account of the firm/ company sponsoring the visit of the applicant, or (iii) Banker's Cheque- /- Pay Order- /- Demand Draft or (iv) Debit / credit / prepaid cards provided a) KYC/AML guidelines are complied with b) sale of foreign currency- /- issue of foreign currency TCs is within the limits (credit- /- prepaid cards) prescribed by the bank and c) the purchaser of foreign currency- /- foreign currency TCs and the credit/debit/prepaid card holder is one and the same person. Note: Wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly members subject to individual family members complying with its terms and conditions. 12.4 Remittances under the Scheme are allowed only in respect of permissible current or capital account transactions or a combination of both. All other transactions which are otherwise not permissible under FEMA and those in the nature of remittance for margins or margin calls to overseas exchanges/ overseas counterparty are not allowed under the Scheme. 12.5 Under the Scheme, Resident individuals are free to acquire and hold immovable property or shares (of listed companies) or debt instruments or any other asset outside India without prior approval of the Reserve Bank. 12.6 The limit of USD 200,000 under the Scheme also include remittances towards gift and donation by a resident individual. 12.7 Remittances under the Scheme can be used for purchasing objects of art subject to the provisions of other applicable laws such as the extant Foreign Trade Policy of the Government of India. 12.8 The Scheme can also be used for remittance of funds for acquisition of ESOPs. The Scheme is in addition to acquisition of ESOPs linked to ADR / GDR and acquisition of qualification shares. 12.9 A reside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble for remittance to countries identified by Financial Action Task Force (FATF) as non co-operative countries and territories as available on FATF website www.fatf-gafi.org. or as notified by the Reserve Bank. 12.18 For undertaking transactions under the Scheme, resident individuals may use the application-cum-Declaration Form as at Annex-3 and it is mandatory to have PAN number to make remittances under the Scheme. 12.19 Investor, who has remitted funds under LRS can retain, reinvest the income earned on the investments. 12.20 AD Category - I banks are required to furnish the information on remittances made under this scheme on a monthly basis, in the revised format as at Annex-6, to the Chief General Manager-in-Charge, Foreign Exchange Department, (FID-EPD), Reserve Bank of India, Central Office, 11th Floor, Central Office Building, Mumbai - 400 001, on or before fifth of the following month to which it relates. A soft copy of the statement (in Excel format) may also be sent by email. This statement in the revised format should be forwarded through Online Returns Filing System (ORFS) for which purpose all the AD Category - I Banks have been given user ID and password by the R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Authorised Dealers to endorse the amount of foreign exchange sold for travel abroad on the passport of the traveller. However, if requested by the traveller, they may record under their stamp, date, signature and details of foreign exchange sold for travel. A.15 International Credit Cards 15.1 The restrictions contained in Rule 5 of the Foreign Exchange Management (Current Account Transaction) Rules, 2000 will not be applicable for use of International Credit Cards (ICCs) by residents for making payment towards expenses, while on a visit outside India. 15.2 Residents can use ICCs on internet for any purpose for which exchange can be purchased from an Authorised Dealer in India, e.g. for import of books, purchase of downloadable software or import of any other item permissible under Foreign Trade Policy (FTP). 15.3 ICCs cannot be used on internet or otherwise for purchase of prohibited items, like lottery tickets, banned or proscribed magazines, participation in sweepstakes, payment for call-back services, etc., since no drawal of foreign exchange is permitted for such items/activities. 15.4 There is no aggregate monetary ceiling separately prescribed for use of ICCs through i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d also for drawing cash from ATM terminals. No prior permission from the Reserve Bank is required for issue of such cards. However, the use of such cards is limited to permissible current account transactions and subject to the prescribed limits under the Rules, as amended from time to time. A.18 Redemption of unutilized balance on prepaid travel cards: As per the practice followed by issuers, resident Indians who purchase their travel cards, are permitted refund of the unutilized foreign exchange balance only after 10 days from the date of last transaction and accordingly, this condition is stated in the "user guide". Since these cards are expected to act as substitutes for cash/ Travellers Cheques, the facilities available to the user will have to be similar. Accordingly, all such Authorised Persons shall redeem the unutilized balance outstanding in the cards immediately upon request by the resident Indians to whom the cards are issued subject to retention of: - * The amounts that are authorized and remain unclaimed/ not settled by the acquirers as of the date of redemption till the completion of the respective settlement cycle; * A small balance not exceeding US$ 100, for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or * trading in Transferable Development Rights (TDR Explanation: For the purpose of item (c) above, real estate business shall not include development of townships, construction of residential/ commercial premises, roads or bridges. * the loan amount should be credited to the NRO a/c of the NRI / PIO. Credit of such loan amount may be treated as an eligible credit to NRO a/c; * the loan amount shall not be remitted outside India; and * repayment of loan shall be made by way of inward remittances through normal banking channels or by debit to the Non-resident Ordinary (NRO) / Non-resident External (NRE) / Foreign Currency Non-resident (FCNR) account of the borrower or out of the sale proceeds of the shares or securities or immovable property against which such loan was granted. Annex-1 (Para A. 1.1 of Master Circular) Foreign Exchange Management (Current Account Transactions) Rules, 2000 Notification No. G.S.R.381(E) dated 3rd May 2000 (as amended from time to time)*: In exercise of the powers conferred by Section 5 and sub-section (1) and clause (a) of sub-section (2) of Section 46 of the Foreign Exchange Management Act, 1999, and in consultation with the Reserve B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Exchange Earners Foreign Currency (EEFC) Account is for the purpose specified in items 10 and 11 of Schedule II, or item 3, 4, 11, 16 & 17 of Schedule III as the case may be. 7. Use of International Credit Card while outside India Nothing contained in Rule 5 shall apply to the use of International Credit Card for making payment by a person towards meeting expenses while such person is on a visit outside India. Schedule I Transactions which are Prohibited (see rule 3) 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 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 commission up to 10% of invoice value of exports of tea and tobacco. 7. Payment related to "Call Back Services" of telephones. 8. Remittance of interest income on funds held in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 - (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 dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 26 dated January 14, 2010. Annex-4 Statement / Returns to be submitted to the Reserve Bank Description Periodicity Ref.No. Liberalised Remittance Scheme for Resident Individuals Monthly A.P. (DIR Series) Circular No. 36 dated April 4, 2008. (Please see Annex -6) Annex-5 Operational Instructions for Authorised Dealer Banks Master Circular on Miscellaneous Remittances from India - Facilities for Residents 1. General Authorised Dealers may carefully study the provisions of the Act / Regulations / Notifications issued under Foreign Exchange Management Act, 1999. Reserve Bank will not prescribe the documents which should be verified by the Authorised Dealers while permitting remittances for various transactions, particularly of current account. In terms of the provisions contained in sub-section 5 of section 10 of the Act, before undertaking any transaction in foreign exchange on behalf of any person, an Authorised Dealer is required to obtain a declaration and such other information from the person (applicant) on whose behalf the transaction is being undertaken that will reasonably satisfy him that the transaction is not designed to contravene or evade the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Remittances to non-residents are allowed to be made by the Authorised Dealers on production of an undertaking by the remitter and a Certificate from a Chartered Accountant in the formats prescribed by the Central Board of Direct Taxes, Ministry of Finance, Government of India in their Circular No.10/2002 dated October 9, 2002. [cf. A.P. (DIR Series) Circular No.56 dated November 26, 2002]. 2. Release of foreign exchange on self declaration basis Authorised Dealers may allow remittances up to USD 100,000 each towards (i) employment abroad (ii) emigration (iii) maintenance of close relatives abroad (iv) education abroad and (v) medical treatment abroad without insisting on any supporting documents but on the basis of self declaration incorporating the basic details of the transaction and submission of Application in Form A2. Authorised Dealers should also ensure that payment for purchase of foreign exchange is made by the applicant by means of cheque or demand draft or by debit to his/her account. Authorised Dealer may also accept the payment through credit /debit/prepaid card of the card holder as stipulated in our A.P. (DIR Series) Circular No.40 dated December 10, 2008. In add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt is not available, copies of the latest Income Tax Assessment Order or Return filed by the applicant may be obtained. The Authorised Dealer 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. The banks should not extend any kind of credit facilities to resident individuals to facilitate remittances under the Scheme. The remittances made under this Scheme will be reported in the R-Return in the normal course. The Authorised Dealers may also prepare and keep on record dummy Form A2, in respect of remittances exceeding USD 25000. In addition, Authorised Dealers would also furnish information on the number of applicants and total amount remitted under the Scheme, on a monthly basis, to the Reserve Bank of India, Foreign Exchange Department (EPD), Central Office, Mumbai. Annex 6 (Para A.13.18 of Master Circular) [A.P. (DIR Series) Circular No.36 dated April 4, 2008] Format Statement indicating the details of remittances made by resident individuals under the Liberalised Remittance Scheme for the month ended &hel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Circular No.20 October 25, 2004 31 A.P. (DIR Series) Circular No.38 March 31, 2005 32 A.P. (DIR Series) Circular No.46 June 14, 2005 33 A.P. (DIR Series) Circular No.25 March 6, 2006 34 A.P. (DIR Series) Circular No.13 November 17, 2006 35 A.P. (DIR Series) Circular No. 14 November 28, 2006 36 A.P. (DIR Series) Circular No. 24 December 20, 2006 37 A.P. (DIR Series) Circular No. 38 April 5, 2007 38 A.P. (DIR Series) Circular No. 58 May 18, 2007 39 A.P. (DIR Series) Circular No. 9 September 26, 2007 40 A.P. (DIR Series) Circular No. 36 April 4, 2008 41 Foreign Exchange Management (Current Account Transactions) Rules,2000 May 3, 2000 (and subsequent amendments) (Please see page 28) 42 A.P. (DIR Series) Circular No.15 September 8, 2008 43 A.P. (DIR Series) Circular No.40 A.P. (F. L. Series) Circular No.03 December 10, 2008 44 A.P. (DIR Series) Circular No.10 October 5, 2009 45 A.P. (DIR Series) Circular No.11 October 5, 2009 46 A.P. (DIR Series) Circular No. 50 A.P.(FL Series) Circular No. 7 May 4, 2010 47 A.P. (DIR Series) Circular No.52 May 13, 2010 48 A.P. (DIR Series) Circular No.29 December 22, 2010 49 A.P. (DIR Series) C ..... 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