Deposits and Remittances under FEMA CIRC ICAI

1. Deposit and Remittances
Foreign Exchange Management Act, 1999
Ghaziabad Branch || CIRC
Institute of Chartered Accountants of India
03rd June 2016
Presentation by: CA. Sudha G. Bhushan
Associate Director – Taxpert Professionals
Sudha@taxpertpro.com
09769033172 || 07738892291

2. – Current and capital Account transaction
– Residential Status
– Authorities under FEMA
– Balance Sheet and FEMA
– Various Entities under FEMA
FEW BASIC CONCEPTS

3. Account
By Person
resident in India
Foreign Currency
account in India
By Resident
Individuals
By other
Account
maintained
outside India
BY Resident
Individuals
By Others
By Person
resident outside
India
By NRI/PIOs
By others
Accounts under FEMA
ForeignExchangeManagement(Foreign
currencyaccountsbyapersonresident
inIndia
Foreign Exchange Management
(Deposit) Regulations, 2016

4. ForeignExchangeManagement(Foreign
currencyaccountsbyapersonresident
inIndia
Account
By person
resident in India
Foreign Currency
account in India
By Resident
Individuals
By other
Account
maintained
outside India
BY Resident
Individuals
By Others
By Person
resident outside
India
By NRI/PIOs
By others
Account
By Person resident outside India
Foreign Exchange Management
(Deposit) Regulations, 2016

5. By Person resident outside
India
FCNR(B) account
NRE account
NRO account
Special Non-Resident Rupee
Account (SNRR account)
Escrow Account
Deposits by companies
Other
Unincorporated joint ventures
(UJV)
shipping or airline company
incorporated outside India
For Adjustment in export and
import value
Foreign Exchange Management
(Deposit) Regulations, 2016

6. • Regulations – FEMA 5/2000-RB on Foreign
Exchange Management (Deposit) Regulations,
2000 amended from time to time.
REGULATORY FRAMEWORK
NRE A/C
SCHEDULE 1
FCNR - B A/c
SCHEDULE 2
NRO A/c
SCHEDULE 3
SNRR A/c
Schedule 4
Escrow A/c

7. NON-RESIDENT (EXTERNAL) ACCOUNT
SCHEME (‘NRE ACCOUNT’)
NRIs and PIOs -
eligible to open
Rupee
Denominated
Savings, Current or
fixed deposit
Can be opened by
remittance of
funds in free
foreign exchange.
Principal and
interest both -
Repatriable
Interest lying to the
credit of NRE
accounts - exempt
from tax

8. Credits Debit
 Inward remittance to India in permitted currency
 proceeds of account payee cheques, demand
drafts / bankers' cheques, issued against
encashment of foreign currency
 transfers from other NRE / FCNR accounts
 sale proceeds of FDI investments
 interest accruing on the funds held in such
accounts
 interest on Government securities/dividends on
units of mutual funds purchased by debit to the
NRE/FCNR(B) account of the holder, certain types
of refunds, etc.
 local disbursements
 transfer to other NRE / FCNR accounts of person
eligible to open such accounts,
 remittance outside India,
 investments in shares / securities/commercial
paper of an Indian company, etc.
PERMISSIBLE DEBITS/CREDITS

9. NON RESIDENT (ORDINARY) RUPEE
ACCOUNT
NRIs and PIOs
Rupee
Denominated
Savings, Current or
Fixed Deposit
Can be opened
jointly with
residents
NON –
Repatriable*
Interest lying to the
credit of NRO
accounts is taxable
*repatriable subject to conditions

10. Credits Debit
 Proceeds of remittances from outside India through
normal banking channels received in any permitted
currency.
 Any foreign currency, which is freely convertible,
tendered by the account holder during his temporary
visit to India.
 Transfers from rupee accounts of non-resident banks.
 Legitimate dues in India of the account holder. This
includes current income like rent, dividend, pension,
interest, etc.
 Sale proceeds of assets including immovable property
acquired out of rupee / foreign currency funds or by way
of legacy /inheritance.
 Resident individual may make a rupee gift to a NRI/PIO
who is a close relative of the resident individual [close
relative as defined in Section 6 of the Companies Act,
1956] by way of crossed cheque /electronic transfer. The
amount shall be credited to the Non-Resident (Ordinary)
Rupee Account (NRO) a/c of the NRI / PIO and credit of
such gift amount may be treated as an eligible credit to
 All local payments in rupees including payments for
investments in India subject to compliance with the
relevant regulations made by the Reserve Bank.
 Remittance outside India of current income like rent,
dividend, pension, interest, etc. in India of the account
holder.
 Remittance up to USD one million, per financial year
(April- March), for all bona fide purposes, to the
satisfaction of the Authorised Dealer bank.
 Transfer to NRE account of NRI within the overall
ceiling of USD one million per financial year subject to
payment of tax, as applicable
PERMISSIBLE DEBITS/CREDITS

11. FOREIGN CURRENCY NON RESIDENT
(BANKS) ACCOUNT
NRIs and PIOs are
eligible to open
Denominated in
Foreign Currency
Only in the form of
term deposit
Accounts can be
opened by remittance
of funds in free
foreign exchange.
Repatriable
Risk of foreign
exchange fluctuations
borne by Bank

12. Credits Debit
 Inward remittance to India in permitted currency
 proceeds of account payee cheques, demand
drafts / bankers' cheques, issued against
encashment of foreign currency
 transfers from other NRE / FCNR accounts
 sale proceeds of FDI investments
 interest accruing on the funds held in such
accounts
 interest on Government securities/dividends on
units of mutual funds purchased by debit to the
NRE/FCNR(B) account of the holder, certain types
of refunds, etc.
 local disbursements
 transfer to other NRE / FCNR accounts of person
eligible to open such accounts,
 remittance outside India,
 investments in shares / securities/commercial
paper of an Indian company, etc.
PERMISSIBLE DEBITS/CREDITS – FCNR
(B) A/C

13. Any person resident
outside India having
business interest in
India
Non Interest
Bearing
Debits and credits
specific to the
business
NEW Schedule 4 Repatriable
Transactions subject
to Taxes
Special Non-Resident Rupee Account -
SNRR account

14. Non resident or
Resident together
with non resident
Foreign Inward
remittance through
Normal Banking
channel
Operational for 6
months
NEW Schedule 5 Non interest bearing
Repatriable
(exchange risk to be
born by Non
resident)
ESCROW ACCOUNT

15. LOAN AGAINST THE DEPOSIT

16. LOAN AGAINST DEPOSIT IN NRE A/C
loan
In India
In INR
To the account
Holder
permitted
To third party Permitted
In Foreign
Currency
To the account
holder
Permitted
To third party Permitted
Outside India
To the account
holder
Permitted
To third party Permitted

17. LOAN AGAINST DEPOSIT IN FCNR(B)
loan
In India
In INR
To the account
Holder permitted
To third party Permitted
In Foreign
Currency
To the account
holder Permitted
To third party Permitted
Outside India
To the account
holder Permitted
To third party Permitted

18. LOAN AGAINST DEPOSIT IN NRO A/C
loan
In India
In INR
To the account Holder
Permitted subject
to extant Rules
To third party
Permitted subject
to conditions
In Foreign Currency
To the account holder Not Permitted
To third party Not Permitted
Outside India
To the account holder Not permitted
To third party Not Permitted

19. •i) Personal purposes or for carrying on business activities*
•ii) Direct investment in India on non-repatriation basis by way of contribution to the capital of
Indian firms / companies
•iii) Acquisition of flat / house in India for his own residential use.
To the
Account
holder
•Fund based and / or non-fund based facilities for personal purposes or for carrying on business
activities *.
To
Third
Party
•Fund based and / or non-fund based facilities for bonafide purposes.Abroad
*The loans cannot be utilised for the purpose of on-lending or for carrying on agriculture or plantation
activities or for investment in real estate business.
PURPOSE OF LOAN –IN CASE OF NRE A/C
AND FCNR (B) A/C

20. • Personal requirement and / or business
purpose.*
To the
account
holder
• Personal requirement and / or business
purpose*
To third
party
Resident individual to lend to a Non-resident Indian (NRI)/ Person of Indian Origin (PIO) close
relative [means relative as defined in Section 6 of the Companies Act, 1956] by way of crossed
cheque /electronic transfer.
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;
PURPOSE OF LOAN – NRO ACCOUNT
* The loans cannot be
utilised for the purpose
of on-lending or for
carrying on agriculture
or plantation activities or
for investment in real
estate business.

21. A Comparison
NRE Account is meant for foreign
exchange earned outside India and
transferred to India
NRO Account are meant to keep the
money earned in India before or after
becoming an NRI

22. Bank Accounts by Residents

23. • Save as otherwise provided in the Act or rules or regulations made
thereunder, no person resident in India shall open or hold or maintain a
Foreign Currency Account:
• Provided that a Foreign Currency Account held or maintained before the
commencement of these Regulations by a person resident in India with
special or general permission of the Reserve Bank, shall be deemed to be
held or maintained under these Regulations
• Provided further that the Reserve Bank, may on an application made to it,
permit a person resident in India to open or hold or maintain a Foreign
Currency Account, subject to such terms and conditions as may be
considered necessary. [RBI Notification No.FEMA 10 /2000-RB dated
3rd May 2000]
REGULATION

24. Account
By person
resident in India
Foreign Currency
account in India
By Resident
Individuals
By other
Account
maintained
outside India
BY Resident
Individuals
By Others
By Person
resident outside
India
By NRI/PIOs
By others
By Resident in India
Foreign Exchange Management
(Deposit) Regulations, 2016
ForeignExchangeManagement(Foreign
currencyaccountsbyapersonresident
inIndia
Accounts

25. Foreign Exchange Management (Foreign currency accounts
by a person resident in India 2016
Foreign Currency account in
India
By Resident Individuals
Exchange Earners’ Foreign
Currency (EEFC) Account
Resident Foreign Currency
Account
Resident Foreign Currency
(Domestic) Account
By other
A Unit in a Special Economic
Zone (SEZ)
Diamond Dollar Accounts (DDAs)
Exporters
Other cases
Indian agent of a shipping or an
airline company incorporated
outside India
ship-manning/ crew managing
agencies
Project Offices
Indian company receiving
foreign investment
organisers of international
seminars etc

26. Foreign Currency Account outside India
Others
office/ branch/ representative outside
India
Exporters
External Commercial Borrowings (ECB)
For making Overseas Direct Investment
shipping or airline company
incorporated in India
Life Insurance Corporation of India or
General Insurance Corporation of India
Exhibition/ Trade fair
Resident
Individual
On a visit to a foreign country
Abroad for studies
LRS
Salary
Foreign Exchange Management (Foreign currency accounts by a
person resident in India 2016

27. RESIDENT FOREIGN
CURRENCY
(DOMESTIC)
ACCOUNT
RFRESIDENT
FOREIGN
CURRENCY
ACCOUNT
EXCHANGE
EARNERS
FOREIGN
CURRENCY
ACCOUNTS
Type of Accounts

28. All categories of resident
foreign exchange earners
can credit up to 100 per cent of
their foreign exchange earnings
to their EEFC Account with an
Authorised Dealer in India.
Funds held in EEFC account can
be utilised for all permissible
current account transactions
and also for approved capital
account transactions
The account is maintained in
the form of a non-interest
bearing current account
EXCHANGE EARNERS FOREIGN
CURRENCY ACCOUNTS

29.  Inward remittance through normal banking channels, other than remittances received on
account of foreign currency loan or investment received from abroad or received for meeting
specific obligations by the account holder;
 Payments received in foreign exchange by a 100 per cent Export Oriented Unit or a unit in
(a) Export Processing Zone or
(b) Software Technology Park or
(c) Electronic Hardware Technology Park for supply of goods to similar such units or to a unit in Domestic Tariff Area;
 Payments received in foreign exchange by a unit in the Domestic Tariff Area for supply of goods
to a unit in the Special Economic Zone (SEZ);
 Payment received by an exporter from an account maintained with an authorised dealer for the
purpose of counter trade.
 Advance remittance received by an exporter towards export of goods or services;
 Professional earnings including directors fees, consultancy fees, lecture fees, honorarium and
similar other earnings received by a professional by rendering services in his individual
capacity;
 Re-credit of unutilised foreign currency earlier withdrawn from the account;
 Amount representing repayment by the account holder's importer customer, of loan/advances
granted, to the exporter holding such account etc.
PERMISSIBLE CREDITS

30.  Payment outside India towards a permissible current account transaction [in
accordance to the provisions of the Foreign Exchange Management (Current Account
Transactions) Rules, 2000]
 Permissible capital account transaction [in accordance to the Foreign Exchange
Management (Permissible Capital Account Transactions) Regulations, 2000].
 Payment in foreign exchange towards cost of goods purchased from a 100 percent
Export Oriented Unit or a Unit in
(a) Export Processing Zone or
(b) Software Technology Park or
(c) Electronic Hardware Technology Park
 Payment of customs duty in accordance with the provisions of the Foreign Trade Policy
of the Central Government for the time being in force.
 Trade related loans/advances, extended by an exporter holding such account to his
importer customer outside India, subject to compliance with the Foreign Exchange
Management (Borrowing and Lending in Foreign Exchange) Regulations, 2000.
Permissible debits

31. Current or Savings or
Term deposit accounts
A person resident in
India
Free from all
restrictions regarding
utilisation of foreign
currency
opened to keep foreign
currency assets which
were held outside India
at the time of return
RFC Account

32. Permissible credits :
The foreign exchange received as:
 pension of any other superannuation or other monetary benefits from the
employer outside India;
 realised on conversion of the assets acquired, held or owned by such
person when he was resident in India or inherited from a person who was
resident in India
 received or acquired as gift or inheritance from a person who was resident
outside India
RFC ACCOUNT

33. Permissible debits to the RFC account
 The funds in RFC account are free from all restrictions regarding
utilization of foreign currency balances including any restriction on
investment outside India.
 Foreign securities can also be acquired from RFC account.
 The restriction of taking prior approval of government or prior
approval of RBI is not applicable to transactions undertaken out of
RFC account *
*However, the prohibited transactions as specified in Rule 3 of the Foreign Exchange Management (Current Account
Transactions) Rules, 2000 cannot be undertaken at all.

34. Regulations 5A of Foreign
Exchange Management
(Foreign Currency Accounts
by a Person Resident in
India) Regulations, 2000
Resident Individual may
open, hold and maintain
Current account
Does not bear any interest
No ceiling on the balances
in the account
RESIDENT FOREIGN CURRENCY
(DOMESTIC) ACCOUNT

35. Permissible Credits
The account can be opened 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;
 in settlement of any lawful obligation from any person not resident in India;
 proceeds of export of goods and/or services, royalty, honorarium, etc.;
 gifts received from close relatives (as defined in the Companies Act);
 disinvestment proceeds received by resident on conversion of shares to ADRs/GDRs
 proceeds of life insurance policy claims/maturity/ surrender values settled in foreign currency
from an insurance company in India permitted to undertake life insurance business by the
Insurance Regulatory and Development Authority; may also be credited to this account.
Permissible Debits
• The account may be debited for payments made towards permissible current and capital account
transactions. At the request of account holder, on change of his status of resident to non resident
the balance in his account can be credited to NRE/FCNR (B) account.
RESIDENT FOREIGN CURRENCY
(DOMESTIC) ACCOUNT

36. REMITTANCES

37. Remittance
For Capital Account Transactions
Schedule I
Person resident In India
Schedule II
Person resident outside India
For Current Account Transactions
Schedule I
Prohibited
Schedule II
approval from the
GOI
Schedule III
Approval
from RBI
Liberalised Remittance Scheme
USD 250,000
per F.Y
Subsumes limits
under CAT
Permissible capital
Account transactions
Permissible
current a/c
transactions
by CA. Sudha G. Bhushan

38. REMITTANCES
Non Resident Indian
From the funds in NRE
account
Freely repatriable on
request
Transfer from NRO account
or Current Income subject
to applicable Taxes
From the funds in NRO
account
Under Certificate from CA
Form 15CA/15CB
Remittance limited to USD 1
million per financial year
RESIDENT
In General
As per FEM (Current
Account Transactions)
Rules,2000
Schedule III of CA Rules
specifies the limits of
remittance
Under Liberalised
remittance scheme
USD 2,50,000* per financial
Year (April – March)
LRS facility subsumes limits
specified in Sche III of CA
Rules
Foreign National
From the funds in NRO
account
Retiring from
employment/inheritance
Remittance limited to USD 1
million per financial year

39. Taxpert Professionals Private Limited – Mumbai | New Delhi| Kolkata | Bangalore| Bhubaneswar
THANK YOU
Please feel free to call/mail me for further clarification.
CA.Sudha G. Bhushan
Taxpert Professionals Private Limited
Tel: +91 9769033172 || 07738892291
E-mail : sudha@taxpertpro.com
Visit us at: www.taxpertpro.com