Presentation by Mr. GD Chughwww.femaindia.in
 Key   Issues for Residents and NRIs – Overview   Liberalized    Remittance Scheme for Residents     (LRS)   Relaxation...
Definition of Residentwww.femaindia.in
www.femaindia.in
Section 5 of FEMA, 1999 & Foreign   Exchange Management (Current Account   Transactions) Rules, 2000www.femaindia.in
Capital Account Transactions             Current Account Transactions   ‘capital account transaction’ means a    All trans...
Remittances out of  • lottery winnings  • Income from racing/riding etc. or any    other hobby       Remittance for purcha...
Dividend to which dividend  balancing is applicable       Commission on export under       rupee state credit route       ...
Private visits abroad:   • upto USD 10,000 or its equivalent per financial year     for private visits Business Trips  Bus...
www.femaindia.in
Maximum amount of USD 100,000 or its equivalent                                     Self declaration from applicant      ...
 Facilities     to students:       1.   Estimate received from the institution abroad                                or  ...
 Foreign exchange available to a Person going abroad    for employment: upto USD 100,000 on self declaration   Foreign e...
 Mode of payment for buying forex: Where Rupee    equivalent exceeds Rs.50,000/-, the entire payment has to    be made by...
 Amount     of foreign currency by a person coming to     India:     No limit. On declaration to Customs on CDF     Tot...
 Extending     local hospitality to a non resident:             permitted under Regulation 2(i) of Receipt from         ...
Under sub-section (5) of Section 10 of the  FEMA, 1999 –              Documents and              other information  has to...
Liberalized Remittance Scheme (LRS) of USD  200,000 :   The Scheme was announced 04.02.2004 as a step    towards further ...
 Permissible     transactions under the Scheme:     Investment  in immovable property or shares or debt      instruments...
 LRS  is a facility in addition to existing facilities   Gifts/Donations to non residents: within the limit    under LRS...
 Remittances   under LRS may be consolidated in     respect of family members     Yes. In case of remitter being a minor...
 Requirements    to be complied by remitter     Designate a branch of an AD     2.Furnish an application-cum-declaratio...
www.femaindia.in
www.femaindia.in
 Non-Resident    Indians    A   Non Resident Indian (NRI) is a person resident      outside India, who is a citizen of I...
 Non Resident Ordinary Rupee Account (NRO    Account)   Non Resident (External) Rupee Account (NRE    Account)   Foreig...
 Types of Account - Current, Savings, Recurring, Fixed Rate of Interest - As determined by Bank, cannot be higher  than ...
 Type of Account - Current, savings, Recurring & Fixed.   Accounts can be opened only by the non-resident himself  Rate ...
 Type    of Account: Only in Term Deposits of 1 to     5 years   Currency       of Account: In any freely convertible   ...
 Eligible Debits - Local payments, FDI, Repatriation,   transfer to other NRE/FCNR  Operations - NRI can open joint acco...
 Borrowing money by an individual resident Indian     from his close relatives outside India                           M...
 Lending     money by individual resident to his      close relative NRI/PIO           Within overall limit of USD 20000...
 Repayment    of loans of an NRI by an Resident     Individual close relative     Where an AD bank in India has granted l...
On Repatriation basis – Under Schedule 1 and     Schedule 3 of Notification No. FEMA 20     On non-repatriation basis unde...
 Definition of NRI/PIO for investment in property   Property prohibited for acquisition   Source of funds   Acquisitio...
 NRI - Non-Resident Indian (NRI) is a citizen of India    resident outside India   PIO - A ‘Person of Indian Origin mean...
Agricultural Land                   Plantation property                   Farm housewww.femaindia.in
Funds remitted to India through normal     banking channels or     Funds held in NRE / FCNR (B) / NRO     accounts maintai...
 NRIs  and PIOs can freely acquire immovable     property by way of a gift either from    a  person resident in India; o...
NRI may transfer his immovable property to:                                            A Resident Indian                  ...
 Amount         to be repatriated shall not exceed:   the amount paid for acquisition of the immovable    property in fo...
Resident Foreign Currency Account:                                             Meaning                                    ...
 Under   clause (b) of section 2 of the RFC Scheme -    RFC Account means an account expressed in any    permitted curren...
 Proceeds   of assets held outside India at the    time of return can be credited to RFC account.   The funds in RFC acc...
 Holding  joint accounts with resident close relatives  Gift of shares/securities/convertible debentures etc   to NRI cl...
www.femaindia.in
GD Chugh                   Corporate Professionals, D-28, South Ex-Part-1, New Delhi -                       110 049, Indi...
Upcoming SlideShare
Loading in …5
×

Recent Developments in Foreign Exchange Management Law

2,787 views
2,623 views

Published on

This presentation summarizes the recent development in foreign exchange laws of India related to residents, non residents and person of Indian origin.

Published in: Business, Economy & Finance
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
2,787
On SlideShare
0
From Embeds
0
Number of Embeds
31
Actions
Shares
0
Downloads
124
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Recent Developments in Foreign Exchange Management Law

  1. 1. Presentation by Mr. GD Chughwww.femaindia.in
  2. 2.  Key Issues for Residents and NRIs – Overview  Liberalized Remittance Scheme for Residents (LRS)  Relaxations for Non Resident Individualswww.femaindia.in
  3. 3. Definition of Residentwww.femaindia.in
  4. 4. www.femaindia.in
  5. 5. Section 5 of FEMA, 1999 & Foreign Exchange Management (Current Account Transactions) Rules, 2000www.femaindia.in
  6. 6. Capital Account Transactions Current Account Transactions ‘capital account transaction’ means a All transactions undertaken by a transaction which alters the assets or resident that do not alter his / her liabilities, including contingent assets or liabilities, including liabilities, outside India of persons contingent liabilities, outside India resident in India or assets or are current account transactions. liabilities in India of persons resident outside Indiawww.femaindia.in
  7. 7. Remittances out of • lottery winnings • Income from racing/riding etc. or any other hobby Remittance for purchase of lottery tickets, banned/proscribed magazines, football pools, sweepstakes etc. Payment of commission on exports made for equity investment in JV/WOS abroad Continued on next pagewww.femaindia.in
  8. 8. Dividend to which dividend balancing is applicable Commission on export under rupee state credit route Call back services Interest income on funds in Non- Special Rupee (Account) schemewww.femaindia.in
  9. 9. Private visits abroad: • upto USD 10,000 or its equivalent per financial year for private visits Business Trips Business Trips: • upto USD 25,000 per visit • Visits in connection with attending of an international conference, seminar, specialised training, study tour, apprentice training, etc., are treated as business visits.www.femaindia.in
  10. 10. www.femaindia.in
  11. 11. Maximum amount of USD 100,000 or its equivalent  Self declaration from applicant required For the amount Exceeding above limit  Estimate from hospital/doctor is required  An amount up to USD 25,000 is allowed for maintenance expenses of a patient going abroad for medical treatment or check-up abroad, or to a person for accompanying as attendant to a patient going abroad for medical treatment/check-up.  The amount of USD 25,000 allowed to the patient going abroad is in addition to the limit of USD 100,000 mentioned above.www.femaindia.in
  12. 12.  Facilities to students: 1. Estimate received from the institution abroad or USD 100,000, per academic year, whichever is higher 2. A student holding NRO account may withdraw and repatriate up to USD 1 million per financial year from his NRO account. 3. The student may avail of an amount of USD 10,000 or its equivalent for incidental expenseswww.femaindia.in
  13. 13.  Foreign exchange available to a Person going abroad for employment: upto USD 100,000 on self declaration  Foreign exchange available to a Person going abroad for emigration: upto the amount prescribed by the country of emigration or USD 100,000  Small value remittances (upto USD 25000 or equivalent  Category of visit requiring prior Government approval: Dance troupes, artistes, etc.  No. of days in advance for buying Forex for travel: 60 dayswww.femaindia.in
  14. 14.  Mode of payment for buying forex: Where Rupee equivalent exceeds Rs.50,000/-, the entire payment has to be made by way of a crossed cheque/ banker’s cheque/ pay order/ demand draft/ debit card / credit card / prepaid card only.  What to do with unspent Forex balance: 1. To be surrendered to AD bank within 180 days 2.May retain USD 2000 in F/c or T/C 3. May put in RFC(D) account.  Gift / Donation to a person resident outside India: upto limit of USD 200,000 under LRS  Use of International Credit Cards (ICCs) / ATMs/ Debit Cards for forex transactions: Use is permitted  Amount of Indian currency that can be taken abroad, brought back : upto INR7500 per personwww.femaindia.in
  15. 15.  Amount of foreign currency by a person coming to India:  No limit. On declaration to Customs on CDF  Total Foreign Exchange upto USD10,000 including T/Cs, currency notes  Foreign Currency notes upto USD 5000 may be brought without declaration.  Sending Gift article out of India- of value upto INR 500,000  Taking personal Jewellery out of India- as per the Baggage Ruleswww.femaindia.in
  16. 16.  Extending local hospitality to a non resident:  permitted under Regulation 2(i) of Receipt from and Payment to, a person resident outside India Regulations, 2000 Regulation 2 of Notification No. FEMA/16/RB-2000 dated 3.05.2000 permits “ a person resident in India, to make payment in rupees (i) towards meeting expenses on account of boarding lodging and services related thereto or towards to and from and within India of a person resident outside India who is on a visit to India.  Foreign Currency Account in India by a resident- EEFC, RFC and RFC(D) A/c s  Holding of assets abroad by a resident in India – 1. If acquired, held or owned by such person when he was resident outside India or inherited from a person who was resident outside India. 2. Acquired out of remittances made under the Liberalized Remittance Scheme of USD 200,000www.femaindia.in
  17. 17. Under sub-section (5) of Section 10 of the FEMA, 1999 – Documents and other information has to be submitted to the satisfaction of AD bank.www.femaindia.in
  18. 18. Liberalized Remittance Scheme (LRS) of USD 200,000 :  The Scheme was announced 04.02.2004 as a step towards further simplification and liberalization of the foreign exchange facilities available to residents.  Under the Liberalised Remittance Scheme, all resident individuals, including minors, are allowed to freely remit up to USD 200,000 per financial year (April – March) for any permissible current or capital account transaction or a combination of both.www.femaindia.in
  19. 19.  Permissible transactions under the Scheme:  Investment in immovable property or shares or debt instruments or any other assets outside India.  Open foreign currency accounts with banks outside India for carrying out transactions permitted under the Scheme  Prohibited items under the Scheme:  Purposes prohibited, restricted under Current Account transactions Rules  Trading forex, setting up a company abroad, to terrorist destinationswww.femaindia.in
  20. 20.  LRS is a facility in addition to existing facilities  Gifts/Donations to non residents: within the limit under LRS  Rupee gifts, loans to close relative NRIs / PIOs: also within LRS limit  Repatriation of investments and income thereon. Not required  LRS is on gross basis  Use of LRS for ESOPs etc. permissible  Use for repayment of overseas loan; Permissiblewww.femaindia.in
  21. 21.  Remittances under LRS may be consolidated in respect of family members Yes. In case of remitter being a minor, the LRS declaration form should be countersigned by the minor’s natural guardian.  Purchase of objects of art as Foreign Trade Policy  Permissible, as per Foreign Trade policy  Opening a Foreign Currency account with a bank outside India - No restriction  Restrictions on frequency of remittances under LRS - No restrictionwww.femaindia.in
  22. 22.  Requirements to be complied by remitter  Designate a branch of an AD  2.Furnish an application-cum-declaration in the specified format regarding the purpose of the remittance  Declare that the funds belong to him and will not be used for purposes prohibited or regulated under the Scheme.  No guidelines for investing: Except exercising due diligence.www.femaindia.in
  23. 23. www.femaindia.in
  24. 24. www.femaindia.in
  25. 25.  Non-Resident Indians A Non Resident Indian (NRI) is a person resident outside India, who is a citizen of India or is a person of Indian origin.  Person of Indian Origin  Person of Indian Origin (PIO) for this purpose is defined as a citizen of any country other than Bangladesh or Pakistan, if (a) he at any time held Indian passport; or (b) he or either of his parents or any of his grandparents was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955); or (c) the person is a spouse of an Indian citizen or a person referred to in sub-clause (a) or (b).www.femaindia.in
  26. 26.  Non Resident Ordinary Rupee Account (NRO Account)  Non Resident (External) Rupee Account (NRE Account)  Foreign Currency Non Resident (Bank) Account ( FCNR(B) Account ) Individuals/ entities of Bangladesh and Pakistan require prior approval of the Reserve Bank for opening above accounts.www.femaindia.in
  27. 27.  Types of Account - Current, Savings, Recurring, Fixed Rate of Interest - As determined by Bank, cannot be higher than those offered by them on comparable domestic rupee deposits. Permissible credits - Inward remittances, Current income, sale proceeds of assets Eligible debits - Local payments, Current income net of taxes, Remittance of USD 1 million per financial year after paying applicable taxes. Operations - may be held jointly with Resident/ NRI Loans: Loans in rupees to non-resident account holder and to third against the security of fixed deposits. Repatriations of balances in NRO account: upto exceeding USD one million per financial year, subject to payment of applicable taxes.www.femaindia.in
  28. 28.  Type of Account - Current, savings, Recurring & Fixed. Accounts can be opened only by the non-resident himself  Rate of Interest: As determined by Bank, cannot be higher than those offered by them on comparable domestic rupee deposits  Permissible Credits: Inflow, Sale proceeds of FDI, income on investment under Sch.3 of FEMA 20,  Eligible debits: Local payments, FDI, Repatriation, transfer to other NRE/FCNR Accounts  Operations: Resident Power of Attorney holder can only make local payments or remittances to Account holder  Loans: upto 100 lakh on security of deposit to depositors older or third party.  Repatriability: Freely repatriable  Tax Benefits: Accrued interest income and balances held in NRE accounts are exempt from Income tax and Wealth tax, respectively.www.femaindia.in
  29. 29.  Type of Account: Only in Term Deposits of 1 to 5 years  Currency of Account: In any freely convertible currency  Rate of Interest: within the ceiling rate of LIBOR/SWAP rates plus 125 basis points for the respective currency/corresponding maturities  Permissible credits: : Inflow, Sale proceeds of FDI, income on investment under Sch.3 of FEMA 20www.femaindia.in
  30. 30.  Eligible Debits - Local payments, FDI, Repatriation, transfer to other NRE/FCNR  Operations - NRI can open joint account with a resident close relative on former or survivor basis  Loans - upto 100 lakh on security of deposit to depositors older or third party.  Repatriability - Freely repatriablewww.femaindia.in
  31. 31.  Borrowing money by an individual resident Indian from his close relatives outside India  Maximum USD 2,50,000  Subject to the conditions as follows:  the minimum maturity period of the loan is one year;  the loan is free of interest; and  the amount of loan is received by inward remittance in free foreign exchange through normal banking channels or by debit to the NRE/FCNR(B) account of the NRI  RBI vide its A.P.(DIR Series) Circular No. 95 dated 21.03.2012 has allowed that the repayment of such loans may also be made by credit to NRE / Foreign Currency Non-Resident (Bank) [FCNR(B)] account of the lender concerned.www.femaindia.in
  32. 32.  Lending money by individual resident to his close relative NRI/PIO  Within overall limit of USD 200000 under LRS per finacial year  by way of crossed cheque /electronic transfer to meet the borrower’s personal or business requirements in India  Conditions. The loan should be interest free; have a maturity of minimum one year and cannot be remitted outside India.www.femaindia.in
  33. 33.  Repayment of loans of an NRI by an Resident Individual close relative Where an AD bank in India has granted loan to a non- resident Indian, such loans may also be repaid by resident close relative, of the NRI by crediting the borrowers loan account through the bank account of such relative. Close Relative means a Relative as defined in Section 6 of the Companies Act, 1956www.femaindia.in
  34. 34. On Repatriation basis – Under Schedule 1 and Schedule 3 of Notification No. FEMA 20 On non-repatriation basis under Schedule 4 of above Notification NRI can also invest in non-convertible debentures both on repatriation basis and on non-repatriation basis Note : NRIs are not permitted to invest in small savings or Public Provident Fund (PPF).www.femaindia.in
  35. 35.  Definition of NRI/PIO for investment in property  Property prohibited for acquisition  Source of funds  Acquisition by gift, inheritance  Transfer of property by NRI  Repatriation of sale proceedwww.femaindia.in
  36. 36.  NRI - Non-Resident Indian (NRI) is a citizen of India resident outside India  PIO - A ‘Person of Indian Origin means an individual (not being a citizen of Pakistan or Bangladesh or Sir Lanka or Afghanistan or China or Iran or Nepal or Bhutan) who  at any time, held an Indian Passport or  who or either of whose father or mother or whose grandfather or grandmother was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955).www.femaindia.in
  37. 37. Agricultural Land Plantation property Farm housewww.femaindia.in
  38. 38. Funds remitted to India through normal banking channels or Funds held in NRE / FCNR (B) / NRO accounts maintained in India No payment can be made either by traveller’s cheque or by foreign currency notes or by other mode except those specifically mentioned above.www.femaindia.in
  39. 39.  NRIs and PIOs can freely acquire immovable property by way of a gift either from a person resident in India; or  an NRI; or  a PIO  The property can only be commercial or residential in nature.  i) An NRI; ii) a PIO; and iii) a foreign national of non-Indian origin can inherit and hold immovable property in India from a person who was resident in India.www.femaindia.in
  40. 40. NRI may transfer his immovable property to: A Resident Indian A NRI and A PIOwww.femaindia.in
  41. 41.  Amount to be repatriated shall not exceed:  the amount paid for acquisition of the immovable property in forex through normal banking channels  the amount paid out of funds held in FCNR (B) Account  the foreign currency equivalent (as on the date of payment) of the amount paid where such payment was made from the funds held in Non-Resident External account for acquisition of the property; and In the case of residential property, the repatriation of sale proceeds is restricted to not more than two such propertieswww.femaindia.in
  42. 42. Resident Foreign Currency Account: Meaning Featureswww.femaindia.in
  43. 43.  Under clause (b) of section 2 of the RFC Scheme - RFC Account means an account expressed in any permitted currency, opened and maintained pursuant to this Scheme, by an eligible person with any Authorised Dealerwww.femaindia.in
  44. 44.  Proceeds of assets held outside India at the time of return can be credited to RFC account.  The funds in RFC accounts are free from all restrictions  Maintenance in the form of current or savings or term deposit accounts  permitted to be held jointly with the resident close relative(s)www.femaindia.in
  45. 45.  Holding joint accounts with resident close relatives  Gift of shares/securities/convertible debentures etc to NRI close relative  Types of services that can be provided by resident to NRIwww.femaindia.in
  46. 46. www.femaindia.in
  47. 47. GD Chugh Corporate Professionals, D-28, South Ex-Part-1, New Delhi - 110 049, India, (B): 9013802058, +91 11 40622243 Our Gamut of Services Investment Banking | Corporate Restructuring | Stock Exchange Services | Securities Laws & Capital Market Advisory | Corporate Compliances & Due Diligence | Global Business Setup | Corporate Taxation | Forex & Overseas Transactions | Corporate Finance | www.CorporateProfessionals.comwww.femaindia.in

×