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FAQs on Forex Facilities including the Liberalised Remittance Scheme (LRS) for Residents (Updated up to July 1 2015).

Dated:- 9-7-2015 - Introduction : The legal framework for administration of foreign exchange transactions in India is provided by the Foreign Exchange Management Act, 1999. Under the Foreign Exchange Management Act, 1999 (FEMA), which came into force with effect from June 1, 2000, all transactions involving foreign exchange have been classified either as capital or current account transactions. All transactions undertaken by a resident that do not alter his / her assets or liabilities, including .....

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zines, football pools, sweepstakes, etc.; remittance of dividend by any company to which the requirement of dividend balancing is applicable; payment of commission on exports under Rupee State Credit Route, except commission up to 10% of invoice value of exports of tea and tobacco and payment related to call back services of telephones. Foreign Exchange Management (Current Account Transactions) Rules, 2000 - Notification [GSR No.381(E)] dated May 3, 2000 and the revised Schedule III to the Rules .....

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1. Who is an Authorized Dealer? Ans. An Authorised Dealer is any person specifically authorized by the Reserve Bank under Section 10(1) of FEMA, 1999, to deal in foreign exchange or foreign securities (the list of ADs is available on www.rbi.org.in) and normally includes banks. Q 2. Who are authorized by the Reserve Bank to sell foreign exchange for travel purposes? Ans. Foreign exchange can be purchased from any authorised person, such as Authorised Dealer (AD) Category-I bank and AD Category I .....

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acility for the purposes mentioned in Para 1 of Schedule III of FEM (CAT) Amendment Rules 2015, within the limit of USD 2,50,000 only. If an individual remits any amount under LRS in a financial year, then the applicable limit for such individual would be reduced from USD 250,000 by the amount so remitted. In case of remitter being a minor, the LRS declaration form must be countersigned by the minor s natural guardian. Q 4. Please provide an illustrative list of capital account transactions perm .....

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ated August 5, 2013); extending loans in INR to Non-Resident Indians (NRIs) who are relatives as defined in section 6 of the Companies Act 1956. Q. 5. Can a resident individual make a rupee gift to a NRI/PIO who is a close relative of resident individual, by of crossed cheque/ electronic transfer? Ans. A resident individual is permitted to make a rupee gift to a NRI/PIO who is a close relative of the resident individual ( relative as defined in section 6 of the Companies Act 1956) by way of cros .....

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The loan shall be utilised for meeting the borrower's personal requirements or for his own business purposes in India. (iv) The loan shall not be utilised, either singly or in association with other person, for any of the activities in which investment by persons resident outside India is prohibited, namely; the business of chit fund, or Nidhi Company ,or agricultural or plantation activities or in real estate business, or construction of farmhouses, or trading in Transferable Development R .....

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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. Q. 6. Can the loans of Non-resident be repaid by resident close relatives? Can the loans of Non-Resident be repaid by close relatives who are resident in India? Ans. Where an authorised dealer in India has granted loan to a non-resident Indian in .....

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ited under Schedule-I (like purchase of lottery tickets/sweep stakes, proscribed magazines, etc.) or any item restricted under Schedule II of Foreign Exchange Management (Current Account Transactions) Rules, 2000. Remittance from India for margins or margin calls to overseas exchanges / overseas counterparty. Remittances for purchase of FCCBs issued by Indian companies in the overseas secondary market. Remittance for trading in foreign exchange abroad. Capital account remittances, directly or in .....

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Ans. The investor can retain and reinvest the income earned on investments made under the Scheme. At present, the residents are not required to repatriate the funds or income generated out of investments made under the Scheme. However, a resident individual who has made overseas direct investment in the equity shares and compulsorily convertible preference shares of a Joint Venture or Wholly Owned Subsidiary outside India, within the LRS limit then he/she shall have to comply with the terms and .....

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ter only. Clubbing is not permitted by other family members if they are not the co-owners of the investment/property/overseas bank account. Q. 10. Can one use the LRS for purchase of objects of art (paintings, etc.) either directly or through auction house? Ans. 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. Q.11. Is the AD required to check permissibilit .....

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resident Indian repay the same on return to India, under this Scheme as a resident? Ans. Yes, this is permissible. Q. 13. Is it mandatory for resident individuals to have PAN number for sending outward remittances under the Scheme? Ans. Yes, it is mandatory to have PAN number to make remittances under the Scheme. Q. 14. In case a resident individual requests for an outward remittance by way of issuance of a demand draft (either in his own name or in the name of the beneficiary with whom he inten .....

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unt of foreign exchange purchased from or remitted through, all sources in India during a financial year should be within the cumulative limit of USD 2,50,000. Once a remittance is made for an amount up to USD 2,50,000 during the financial year, a resident individual would not be eligible to make any further remittances under this scheme, even if the proceeds of the investments have been brought back into the country. Q. 16. Whether LRS facility is in addition to existing facilities detailed in .....

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ribed under the LRS, if it is so required by a country of emigration, medical institute offering treatment or the university respectively. Q. 17. What are the purposes under FEM (CAT) Amendment Rules, 2015, under which a resident individual can avail of foreign exchange facility? Ans. Individuals can avail of foreign exchange facility for the following purposes within the limit of USD 2,50,000 only. Private visits to any country (except Nepal and Bhutan) Gift or donation. Going abroad for employ .....

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ior approval of the Reserve Bank of India. Any other current account transaction as given at (ix) above is to cover any other current account transactions which were available to individuals in the erstwhile Schedule III to FEM (CAT) Rules, 2000 dated May 3, 2000, and which do not appear above/ in Schedule III to FEM (CAT) Amendment Rules, 2015. However, for purposes such as emigration; expenses in connection with medical treatment abroad and studies abroad individuals may avail of exchange faci .....

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for the AD bank to satisfy themselves about the genuineness of the transaction, as hitherto. The resident individual needs to fill up the Form A2 as well as the Application cum declaration for purchase of foreign exchange under LRS of USD 250,000 . Q.18. How much foreign exchange can one buy when traveling abroad on private visits to a country outside India? Ans. For private visits abroad, other than to Nepal and Bhutan, any resident can obtain foreign exchange up to an aggregate amount of USD .....

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ve to fill Form A2 and Application cum declaration for purchase of foreign exchange under LRS of USD 250,000 while availing foreign exchange for travelling purposes from AD banks and FFMCs. No foreign exchange is available for visit to Nepal and/or Bhutan for any purpose. A resident Indian is allowed to take INR of denomination of ₹ 100 or lesser denomination, to Nepal and Bhutan, without any limits. For denominations of ₹ 500 and ₹ 1,000, the limit is ₹ 25,000. Q. 19. Ho .....

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rency, to the latter s foreign currency account under LRS. Further, general permission is available to persons other than individuals to remit towards donations up-to one per cent of their foreign exchange earnings during the previous three financial years or USD 5,000,000, whichever is less, for (a) creation of Chairs in reputed educational institutes, (b) contribution to funds (not being an investment fund) promoted by educational institutes; and (c) contribution to a technical institution or .....

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n exchange under LRS of USD 250,000 . This limit has been subsumed under the Liberalised Remittance Scheme w.e.f. May 26, 2015. If an individual remits any amount under the Liberalised Remittance Scheme in a financial year, then the applicable limit for such individual would be reduced from USD 250,000 by the amount so remitted. Q. 21. How much foreign exchange is available to a person going abroad on emigration? Ans. A person going abroad on emigration can draw foreign exchange from AD Category .....

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xchange can a person resident in India remit towards maintenance of close relatives abroad? Ans. A person resident in India can remit up-to USD 250,000 per financial year towards maintenance of close relative ( relative as defined in section 6 of the Companies Act, 1956) abroad. This limit has been subsumed under the Liberalised Remittance Scheme w.e.f. May 26, 2015. If an individual remits any amount under the Liberalised Remittance Scheme in a financial year, then the applicable limit for such .....

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tending of an international conference, seminar, specialised training, apprentice training, etc., are treated as business visits. Release of foreign exchange exceeding USD 2,50,000 for business travel abroad, irrespective of the period of stay, by residents require prior permission from the Reserve Bank. However, if an employee is being deputed by a company and the expenses are borne by the company, then such expenses shall be treated as residual current account transactions and may be permitted .....

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pital/doctor in India/abroad. However, a person visiting abroad for medical treatment can obtain foreign exchange from AD banks exceeding the above limit, provided the request is supported by an estimate from a hospital/doctor in India/abroad. In addition to the above, an amount up to USD 250,000 per FY is allowed to a person for accompanying as attendant to a patient going abroad for medical treatment/check-up. Q.25. What are the facilities available to students for pursuing their studies abroa .....

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Students going abroad for studies are treated as Non-Resident Indians (NRIs) and are eligible for all the facilities available to NRIs under FEMA, 1999. Educational and other loans availed of by students as residents in India can be allowed to continue. A student holding NRO account may withdraw and repatriate up to USD 1 million per financial year from his NRO account. USD 3000 or its equivalent may be carried by the student in the form of foreign currency (which shall be within the overall lim .....

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which do not appear in Para 1 to Schedule III to FEM (CAT) Amendment Rules, 2015. Q. 27. Resident individuals (but not permanently resident in India) can remit up to net salary after deduction of taxes. However, if he has exhausted the limit of USD 2,50,000 as net salary remittance and desires to remit any other income under LRS is it permissible as the limit will be over and above USD 2,50,000? Ans. A person who is resident but not permanently resident in India and (a) is a citizen of a foreig .....

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job or assignments, the duration of which does not exceed three years, is a resident but not permanently resident. It is clarified that salary includes earnings from stage shows and other earnings from modelling assignments and acting assignments etc. Further, resident individuals (but not permanently resident in India) who have remitted their entire earnings and salary and wish to further remit other income may approach RBI through their AD bank for consideration with documents. Q. 28. Whether .....

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account transactions undertaken by such entities are otherwise permissible without any specified limit as hitherto. All such residual current account transactions, irrespective of the amount, are to be disposed off at the level of AD, as hitherto. It is for the AD bank to satisfy themselves about the genuineness of the transaction. Q. 29. How much foreign currency can be carried in cash for travel abroad? Ans. Travellers going to all countries other than (a) and (b) below are allowed to purchase .....

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o USD 250, 000) in the form of foreign currency notes or coins. For travellers proceeding for Haj/Umrah pilgrimage, full amount of BTQ entitlement (USD 250, 000) in cash or up to the cash limit as specified by the Haj Committee of India, may be released by the ADs and FFMCs. Q 30. How much Indian currency can be brought in while coming into India? Ans. A resident of India, who has gone out of India on a temporary visit may bring into India at the time of his return from any place outside India ( .....

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to India currency notes of Government of India and Reserve Bank of India notes up to an amount not exceeding ₹ 25,000 while entering only through an airport. Any person resident in India who had gone to Pakistan and/or Bangladesh on a temporary visit, may bring into India at the time of his return, currency notes of Government of India and Reserve Bank of India notes up to an amount not exceeding ₹ 10,000 per person. Q. 31. How much foreign exchange can be brought in while visiting I .....

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advance one can buy foreign exchange for travel abroad? Ans. Permissible foreign exchange can be drawn 60 days in advance. In case it is not possible to use the foreign exchange within the period of 60 days, it should be immediately surrendered to an authorised person. However, residents are free to retain foreign exchange up to USD 2,000, in the form of foreign currency notes or TCs for future use or credit to their Resident Foreign Currency (Domestic) [RFC (Domestic)] Accounts. Q.33. Can one .....

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-frame for a traveller who has returned to India to surrender foreign exchange? Ans. On return from a foreign trip, travellers are required to surrender unspent foreign exchange held in the form of currency notes and travellers cheques within 180 days of return. However, they are free to retain foreign exchange up to USD 2,000, in the form of foreign currency notes or TCs for future use or credit to their Resident Foreign Currency (Domestic) [RFC (Domestic)] Accounts. Q.35. Should foreign coins .....

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ge under the Liberalised Remittance Scheme and Form A2. All other documentation may be done as advised by the Authorised Dealer. The different limits stipulated [as in Schedule III of FEM (CAT) Amendment Rules, 2015] for various current account transactions like travel; gift; maintenance of close relatives; etc. have been subsumed within the LRS limit of USD 250, 000. Individuals remitting under Schedule III to FEM (CAT) Amendment Rules, 2015 will have to fill up the Form A2 and Application cum .....

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approval from the Reserve Bank or the Government of India? Ans. Dance troupes, artistes, etc., who wish to undertake cultural tours abroad, should obtain prior approval from the Ministry of Human Resources Development (Department of Education and Culture), Government of India, New Delhi. Q.38. Whether permission is required for receiving grant/donation from abroad under the Foreign Contribution Regulation Act, 1976? Ans. The Foreign Contribution Regulation Act, 1976 is administered and monitored .....

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yment to a merchant establishment overseas during his visit abroad. IDCs can be used only for permissible current account transactions and the usage of IDCs shall be within the LRS limit. AD banks can also issue Store Value Card/Charge Card/Smart Card to residents traveling on private/business visit abroad which can be used for making payments at overseas merchant establishments and also for drawing cash from ATM terminals. No prior permission from Reserve Bank is required for issue of such card .....

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reign currency account/s of the card holder or through remittances, if any, from India only through a bank where the card-holder has a current or savings account. The remittance for this purpose, should also be made directly to the card-issuing agency abroad, and not to a third party. It is also clarified that the applicable credit limit will be the limit fixed by the card issuing banks. There is no monetary ceiling fixed by the RBI for remittances, if any, under this facility. The LRS limit sha .....

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s, banned magazines etc. Use of these instruments for payment in foreign exchange in Nepal and Bhutan is not permitted. Q. 40. Is it required to follow complete export procedure when a gift is sent outside India? Ans. A person resident in India is free to send outside India (export) any gift article, which may be free to be exported as per the extant Foreign Trade Policy, of value not exceeding ₹ 5,00,000/- in value, subject to the exporter submitting a declaration that goods / gift are no .....

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a resident extend local hospitality to a non-resident? Ans. A person resident in India is free to make any payment in Indian Rupees towards meeting expenses, on account of boarding, lodging and services related thereto or travel to and from and within India, of a person resident outside India, who is on a visit to India. Q. 43. Can residents purchase air tickets in India for their travel not touching India? Ans. Residents may book their tickets in India for their visit to any third country. For .....

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ified in the Schedule to Notification No. FEMA 10/2000-RB dated 3rd May, 2000 as amended from time to time, to their EEFC Account with an Authorised Dealer in India. The 100 per cent credit is however, subject to the condition that the sum total of the accruals in the account during a calendar month should be converted into Rupees on or before the last day of the succeeding calendar month after adjusting for utilization of the balances for approved purposes or forward commitments. Funds held in .....

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metal jewellery plain, minakari and / or studded with / without diamond and / or other stones, with a track record of at least 2 years in import / export of diamonds / coloured gemstones / diamond and coloured gemstones studded jewellery / plain gold jewellery and having an average annual turnover of ₹ 3 crores or above during the preceding three licensing years (licensing year is from April to March) are permitted to transact their business through Diamond Dollar Accounts. It may be note .....

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a a Resident Foreign Currency (RFC) Account to keep their foreign currency assets which were held outside India at the time of return can be credited to such accounts. The foreign exchange received as (i) pension of any other superannuation or other monetary benefits from the employer outside India; (ii) received or acquired as gift or inheritance from a person referred to sub-section (4) of section 6 of FEMA, 1999 or (iii) referred to in clause (c) of section 9 of the Act or acquired as gift or .....

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rrency balances including any restriction on investment outside India. d. Resident Foreign Currency (Domestic) Account:- A resident Individual may open, hold and maintain with an Authorized Dealer in India, a Resident Foreign Currency (Domestic) Account, out of foreign exchange acquired in the form of currency notes, Bank notes and travellers cheques, from any of the sources like, payment for services rendered abroad, as honorarium, gift, services rendered or in settlement of any lawful obligati .....

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nt. The account may be debited for payments made towards permissible current and capital account transactions. It may be noted that the sum total of the accruals in the account during a calendar month should be converted into Rupees on or before the last day of the succeeding calendar month after adjusting for utilization of the balances for approved purposes or forward commitments. Q.45. Can a person resident in India hold assets outside India? Ans. In terms of sub-section 4, of Section (6) of .....

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46. Para 5.4 of AP DIR Circular 106 dated June 01, 2015 states that the applicants should have maintained the bank account with the bank for a minimum period of one year prior to the remittance for capital account transactions. Whether this restriction applies to current account transactions? Ans. No. The rationale is that remittance facility is up to the LRS limit of USD 250, 000 for current account transactions under Schedule III of FEM (CAT) Amendment Rules, 2015, such as for private and bus .....

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current account transactions? Ans. No. However, capital account remittances for capital account transactions, directly or indirectly to countries identified by the Financial Action Task Force (FATF) as non- cooperative countries and territories , from time to time; and remittances directly or indirectly to those individuals and entities identified as posing significant risk of committing acts of terrorism as advised separately by the Reserve Bank to the banks are not permissible. Q. 48. Can FFMC .....

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seeking to make the remittance is a new customer of the bank, Authorised Dealers should carry out due diligence on the opening, operation and maintenance of the account. Further, the AD should obtain bank statement for the previous year from the applicant to satisfy themselves regarding the source of funds. If such a bank statement is not available, copies of the latest Income Tax Assessment Order or Return filed by the applicant may be obtained. He has to furnish the application-cum-declaratio .....

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lients? Ans. Banks including those not having operational presence in India are required to obtain prior approval from Reserve Bank for soliciting deposits for their foreign/overseas branches or for acting as agents for overseas mutual funds or any other foreign financial services company. Q.52. Are there any restrictions on the kind/quality of debt or equity instruments an individual can invest in? Ans. No ratings or guidelines have been prescribed under the Liberalised Remittance Scheme of USD .....

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emittances for capital account transactions under LRS. However, AD banks may extend funded and non-funded facilities to resident individuals to facilitate current account remittances under the Scheme. Q. 54. Can bankers open foreign currency accounts in India for residents under LRS? Ans. No, banks in India cannot open foreign currency accounts in India for residents under the Scheme. Q. 55. Can an Offshore Banking Unit (OBU) in India be treated on par with a branch of the bank outside India for .....

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