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Master Circular on Import of Goods and Services(Updated as on September 24, 2015)

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..... anks may refer to respective circulars/ notifications for detailed information, if so needed. Yours faithfully, (A. K. Pandey) Chief General Manager INDEX Section I - Introduction Section II - General Guidelines for imports B.1. General Guidelines B.2. Remittances for Import Payments B.3. Import Licenses B.4. Obligation of Purchaser of Foreign Exchange B.5. Time Limit for Settlement of Import Payments B.6. Import of Foreign exchange / Indian Rupees B.7. Third Party Payment for Import Transactions Section III - Operational Guidelines for Imports C.1. Advance Remittance C.2. Interest on Import Bills C.3. Remittances against Replacement Imports C.4. Guarante .....

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..... erve Bank should first be made to the Regional Office of the Foreign Exchange Department situated in the jurisdiction where the applicant person resides, or the firm / company functions, unless otherwise indicated. If, for any particular reason, they desire to deal with a different office of the Foreign Exchange Department, they may approach the Regional Office of its jurisdiction for necessary approval. Section II - General Guidelines for Imports B.1. General Guidelines Rules and regulations to be followed by the AD Category I banks from the foreign exchange angle while undertaking import payment transactions on behalf of their clients are set out in the following paragraphs. Where specific regulations do not exist, AD Category I banks may be governed by normal trade practices. AD Category I banks may particularly note to adhere to Know Your Customer (KYC) guidelines issued by Reserve Bank (Department of Banking Regulation) in all their dealings. B.2. Remittances for Import Payments AD Category I Banks may allow remittance for making payments for imports into India, the after ensuring that all the requisite details are made available by the importer and th .....

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..... , 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. B.6. Import of Foreign Exchange / Indian Rupees (i) Except as otherwise provided in the Regulations, no person shall, without the general or special permission of the Reserve Bank, import or bring into India, any foreign currency. Import of foreign currency, including cheques, is governed by clause (g) of sub-section (3) of Section 6 of the Foreign Exchange Management Act, 1999, and the Foreig .....

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..... order / invoice has been produced. AD bank should be satisfied with the bonafides of the transactions and should consider the Financial Action Task Force (FATF) Statement before handling the transactions; The Invoice should contain a narration that the related payment has to be made to the (named) third party; Bill of Entry should mention the name of the shipper as also the narration that the related payment has to be made to the (named) third party; Importer should comply with the related extant instructions relating to imports including those on advance payment being made for import of goods. Section III - Operational Guidelines for Imports C.1. Advance Remittance C.1.1. Advance Remittance for Import of Goods (i) AD Category I bank may allow advance remittance for import of goods without any ceiling subject to the following conditions: (a) If the amount of advance remittance exceeds USD 200,000 or its equivalent, an unconditional, irrevocable standby Letter of Credit or a guarantee from an international bank of repute situated outside India or a guarantee of an AD Category I bank in India, if such a guarantee is issued against the counter-guarante .....

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..... er the existing guidelines. vii. AD Category - I banks should follow-up submission of the Bill of Entry / documents evidencing import of rough diamonds into the country by the importer, in terms of the Act / Rules / Regulations / Directions issued in this regard. b) In case of an importer entity in the Public Sector or a Department / Undertaking of the Government of India / State Government/s, AD Category - I banks may permit the advance remittance subject to the above conditions and a specific waiver of bank guarantee from the Ministry of Finance, Government of India, where the advance payments is equivalent to or exceeds USD 100,000/- (USD one hundred thousand only). C.1.3. Advance Remittance for Import of Aircrafts/Helicopters and other Aviation Related Purchases 1. As a sector specific measure, airline companies which have been permitted by the Directorate General of Civil Aviation to operate as a scheduled air transport service, can make advance remittance without bank guarantee, up to USD 50 million. Accordingly, AD Category I banks may allow advance remittance, without obtaining a bank guarantee or an unconditional, irrevocable Standby Letter of Credit, up to U .....

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..... ned Regional Office of the Reserve Bank will be required in case of any deviation from the above stipulations. C.1.4. Advance Remittance for the Import of Services AD Category I bank may allow advance remittance for import of services without any ceiling subject to the following conditions: (a) Where the amount of advance exceeds USD 500,000 or its equivalent, a guarantee from a bank of international repute situated outside India, or a guarantee from an AD Category I bank in India, if such a guarantee is issued against the counter-guarantee of a bank of international repute situated outside India, should be obtained from the overseas beneficiary. (b) In the case of a Public Sector Company or a Department/ Undertaking of the Government of India/ State Governments, approval from the Ministry of Finance, Government of India for advance remittance for import of services without bank guarantee for an amount exceeding USD 100,000 (USD One hundred thousand) or its equivalent would be required. (c) AD Category I banks should also follow-up to ensure that the beneficiary of the advance remittance fulfils his obligation under the contract or agreement with the remitter i .....

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..... ications and Information Technology, Government of India and other authorities concerned for setting up of the ICC. (ii) The remittance should be allowed based on the AD Category - I banks commercial judgment, the bonafides of the transactions and strictly in terms of the contract. (iii) The remittance is made directly to the account of the overseas supplier. (iv) The AD Category I banks should also obtain a certificate as evidence of import from the Chief Executive Officer (CEO) or auditor of the importer company that the goods for which remittance was made have actually been imported and installed at overseas sites. C.6. Receipt of Import Bills/Documents C.6.1.1 Receipt of import documents by the importer directly from overseas suppliers Import bills and documents should be received from the banker of the supplier by the banker of the importer in India. AD Category I bank should not, therefore, make remittances where import bills have been received directly by the importers from the overseas supplier, except in the following cases: (i) Where the value of import bill does not exceed USD 300,000. (ii) Import bills received by wholly-owned Indian subsidi .....

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..... cases where the invoice value does not exceed USD 300,000 provided the AD Category I bank is satisfied about the bonafides of the transaction and track record of the importer constituent. C.7. Evidence of Import C.7.1. Physical Imports (i) In case of all imports, where value of foreign exchange remitted / paid for import into India exceeds USD 100,000 or its equivalent, it is obligatory on the part of the AD Category I bank through which the relative remittance was made, to ensure that the importer submits :- (a) The Exchange Control Copy of the Bill of Entry for Home Consumption, or (b) The Exchange Control Copy of the Bill of Entry for warehousing, in case of 100% Export Oriented Units, or(c) Customs Assessment Certificate or Postal Appraisal Form, as declared by the importer to the Customs Authorities, where import has been made by post, as evidence that the goods for which the payment was made have actually been imported into India. (ii) In respect of imports on Delivery against acceptance basis, AD Category I bank should insist on production of evidence of import at the time of effecting remittance of import bill. However, if importers fail to produce d .....

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..... should carry out verification of the documents evidencing import, e.g. Exchange Control copies of Bills of Entry or Postal Appraisal Forms, or Customs Assessment Certificates, etc. (ii) Documents evidencing import into India should be preserved by AD Category I bank for a period of one year from the date of their verification. However, in respect of cases which are under investigation by investigating agencies, the documents may be destroyed only after obtaining clearance from the investigating agency concerned. C.10. Follow-up for Import Evidence (i) In case an importer does not furnish any documentary evidence of import, as required under paragraph C.7. of Section III, within 3 months from the date of remittance involving foreign exchange exceeding USD 100,000, the AD Category I bank should rigorously follow-up for the next 3 months, including issuing registered letters to the importer. (ii) AD Category - I banks should henceforth submit a statement on half-yearly basis as at the end of June December of every year, in form BEF furnishing details of import transactions, exceeding USD 100,000 in respect of which importers have defaulted in submission of appropriat .....

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..... tion as at the end of the said month beginning from the 1st month of the Financial YearBoth the statements shall be submitted, even if there is 'Nil' position, by the 10th of the following month / half year, to which it relates. C.12.2. Import of Gold Jewellery Including Jewellery Made of Precious Metals or/and Studded With Diamonds / Precious Stones /Semi-precious. Suppliers and Buyers credit (trade credit) including the usance period of Letters of Credit opened for import of gold in any form, including jewellery made of gold/precious metals or/and studded with diamonds/semi- precious/precious stones, should not exceed 90 days from the date of shipment. C.13. Import of Other Precious Metals C.13.1. Import of Platinum /Palladium/Rhodium/ Silver/Rough, Cut Polished Diamonds / Precious and Semi-precious Stones. (a) Suppliers and Buyers Credit, including the usance period of Letters of Credit opened for import of Platinum, Palladium, Rhodium and Silver and rough, cut and polished Diamonds, Precious and semi-precious stones; should not exceed 90 days from the date of shipment. However for Clean Credit i.e. credit given by a foreign supplier to its India .....

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..... h the same AD bank. The bank should verify the documents like invoice, packing list, transport documents and insurance documents (if originals are not available, non-negotiable copies duly authenticated by the bank handling documents may be taken) and satisfy itself about the genuineness of the trade. (c) The entire Merchanting Trade Transactions should be completed within an overall period of nine months and there should not be any outlay of foreign exchange beyond four months. (d) The commencement of Merchanting Trade would be the date of shipment / export leg receipt or import leg payment, whichever is first. The completion date would be the date of shipment / export leg receipt or import leg payment, whichever is the last; (e) Short-term credit either by way of suppliers' credit or buyers' credit will be available for Merchanting Trade Transactions, to the extent not backed by advance remittance for the export leg, including the discounting of export leg LC by an AD bank, as in the case of import transactions ; (f) In case advance against the export leg is received by the Merchanting Trader, AD bank should ensure that the same is earmarked for making payment .....

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..... Government of India, it is clarified herein that goods consigned to the importers of Nepal and Bhutan from third countries under merchanting trade from India would qualify as traffic-in-transit, if the goods are otherwise compliant with the provisions of the India-Nepal Treaty of Transit and Indo-Bhutan Treaty of Transit respectively. C.16. Processing of import related payments through Online Payment Gateway Service Providers (OPGSPs) AD Category-l banks have been permitted to offer facility of payment for imports of goods and software of value not exceeding USD 2,000 by entering into standing arrangements with the OPGSPs subject to the following:- (a) The balances held in the Import Collection account shall be remitted to the respective overseas exporter's account immediately on receipt of funds from the importer and, in no case, later than two days from the date of credit to the collection account. (b) The AD Category I bank will obtain a copy of invoice and airway bill from the OPGSP containing the name and address of the beneficiary as evidence of import and report the transaction in R-Return under the foreign currency payment head. (c) The permitted credit .....

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..... AP(DIR Series) Circular No. 1 Import of Goods of Value USD 100,000 and Less -Clarification on Follow up for Evidence of Import July 12, 2005 11 AP(DIR Series) Circular No. 33 Liberalisation of Export and Import procedures February 28, 2007 12 AP(DIR Series) Circular No. 34 Import of Goods of Value USD 100,000 and Less -Clarification on Follow up for Evidence of Import March 2, 2007 13 AP(DIR Series) Circular No. 63 Import of Equipments by BPO Companies in India for International Call Centre May 25, 2007 14 AP(DIR Series) Circular No. 77 Advance Remittance for Import of aircrafts / helicopters / other aviation related purchases June 29, 2007 15 AP(DIR Series) Circular No. 18 Direct Receipt of Import Bills / Documents - Liberalisation November 7, 2007 16 AP(DIR Series .....

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..... Series) Circular No.83 Import of precious and semi precious stones- Clarification February 20, 2013 30 AP(DIR Series) Circular No.103 Import of Gold by Nominated Banks/Agencies May 13, 2013 31 AP(DIR Series) Circular No.107 Import of Gold by Nominated Banks/Agencies June 4, 2013 32 AP(DIR Series) Circular No. 122 Import of Gold by Nominated Banks/Agencies June 27, 2013 33 AP(DIR Series) Circular No.15 Import of Gold by Nominated Banks /Agencies/Entities July 22, 2013 34 AP(DIR Series) Circular No.39 Export import of Currency September 6, 2013 35 AP(DIR Series) Circular No.70 Third party payments for export / import transactions November 8 , 2013 36 AP(DIR Series) Circular No.71 Advance Remittance for .....

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..... 50 AP(DIR Series) Circular No 76 Form A1- Payments for Imports - Discontinuance thereof February 12, 2015 51 AP(DIR Series) Circular No 79 Guidelines on Import of Gold by Nominated Banks / Agencies February 18, 2015 52 AP(DIR Series) Circular No 96 Merchanting Trade to Nepal and Bhutan April 30, 2015 53 AP(DIR Series) Circular No .16 Processing and settlement of import and export related payments facilitated by Online Payment Gateway Service Providers September 24, 2015 54 AP(DIR Series) Circular No .29 Import of Goods into India Evidence of Import November 26, 2015 55 AP(DIR Series) Circular No .30 Advance Remittance for Import of aircrafts / helicopters /other aviation related purchases November 26, 2015 - Circular - Trade Notice - Public Notice - Instructions - Office orders Tax Management India - taxmanagementindia - taxmanagement - tax .....

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