Export of Goods and Software – Realisation and Repatriation of export proceeds – Liberalisation

Export of Goods and Software – Realisation and Repatriation of export proceeds – Liberalisation

In terms of A.P. (DIR Series) Circular No. 40 dated November 01, 2011 enhancing the period of realization and repatriation to India of the amount representing the full export value of goods or software exported, from six months to twelve months from the date of export. This relaxation was available up to September 30, 2012.
 
2. The issue has since been reviewed and it has been decided, in consultation with the Government of India, to extend the above relaxation w.e.f. October 01, 2012 till March 31, 2013.

3. The provisions in regard to period of realization and repatriation to India of the full export value of goods or software exported by a unit situated in a Special Economic Zone (SEZ) as well as exports made to warehouses established outside India remain unchanged.

Ref-A.P. (DIR Series) Circular No. 52 dated November 20, 2012

External Commercial Borrowings (ECB) Policy for 2G spectrum allocation

External Commercial Borrowings (ECB) Policy for 2G spectrum allocation

As per the extant policy, eligible borrowers in the telecommunication sector are permitted to avail of ECB for the purpose of payment for spectrum allocation, under the automatic route. Successful bidders of 3G auction were also permitted to make the payment for spectrum allocation initially out of Rupee resources to be refinanced with a long-term ECB under the approval route subject to certain conditions.

3. On a review of the ECB policy and keeping in view the large outlay of funds required to be paid directly to the Government within a limited period of time, the following relaxations are provided for the 2G spectrum auction:-

(i) Refinancing of Rupee resources

The successful bidders making the upfront payment for the award of 2G spectrum initially out of Rupee loans availed of from the domestic lenders would be eligible to refinance such Rupee loans with a long-term ECB, under the automatic route, subject to the following conditions:

1. the long term ECB shall be raised within a period of 18 months from the date of sanction of such Rupee loans for the stated purpose from the domestic lenders;
2. the designated AD Category I bank has evidenced the payment of upfront fees to GoI in the form of a receipt/challan from DoT; and
3. the designated AD - Category I bank shall monitor the end-use of funds.

(ii) Relaxation in ECB-liability ratio and percentage of shareholding

The successful bidders in the 2G auction will be allowed to avail of ECB under the ‘automatic route’ from their ultimate parent company without any maximum ECB liability-equity ratio subject to the condition that the lender holds minimum paid-up equity of 25 per cent in the borrower company, either directly or indirectly.

(iii) Bridge Finance facility

The successful bidders can avail of short term foreign currency loan in the nature of bridge finance under the ‘automatic route’ for the purpose of making upfront payment towards 2G spectrum allocation and replace the same with a long term ECB under the automatic route subject to the following conditions:-

1. the long term ECB is raised within a period of 18 months from the date of drawdown of bridge finance; and
2. the long term ECB is in compliance with all the extant guidelines on ECB.

4.The relaxations in respect of the ECB liability-equity ratio, percentage of shareholding by the ultimate parent, refinancing of Rupee loans and bridge finance are part of a special dispensation applicable only to the successful bidders in the upcoming 2G spectrum auction.

5. All other aspects of ECB policy, such as USD 750 million limit per company per financial year under the automatic route, eligible borrower, recognised lender, end-use, average maturity period, all-in-cost, prepayment, refinancing of existing ECB and reporting arrangements remain unchanged.

6. Reserve Bank has since amended the Regulations and notified vide Notification No.245 / 2012 RB dated November 12, 2012.


A.P. (DIR Series) Circular No. 54 dated November 26, 2012

Liaison Office (LO) / Branch Office (BO) in India by Foreign Entities – Reporting to Income Tax Authorities.

Liaison Office (LO) / Branch Office (BO) in India by Foreign Entities – Reporting to Income Tax Authorities.

In terms of A.P. (DIR Series) Circular No. 24 dated 30.12.2009 which LOs/BOs are required to furnish copy of the Annual Activity Certificate (AAC) to Director General of Income Tax (International Taxation), Drum Shaped Building, I.P. Estate, New Delhi 110002.

2. It is clarified that copies of the AACs submitted to the DGIT (International Taxation) should be accompanied by audited financial statements including receipt and payment account.

3. Further, at the time of renewal of permission of LOs by AD banks, they may note to endorse a copy of each such renewal to the office of the DGIT (international Taxation).

Ref -A.P. (DIR Series) Circular No. 55   dated November 26, 2012

ECB by Small Industries Development Bank of India (SIDBI) for Onlending to MSME Sector

ECB by Small Industries Development Bank of India (SIDBI) for Onlending to MSME Sector

On a review of the extant ECB policy, it has been decided to include SIDBI as an eligible borrower for availing of ECB for on-lending to MSME sector, as defined under the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, subject to the following terms and conditions:-

 

(a) such on-lending by SIDBI shall be to the borrowers’ directly either in INR or in foreign currency (FCY);

1. the foreign currency risk shall be hedged by SIDBI in full in case of on-lending to MSME sector in INR; and
2. on-lending in foreign currency shall be subject to Regulation 5(5) of FEMA Notification No. 3/2000-RB dated May 03, 2000, as amended from time to time and shall only be to those beneficiaries which have natural hedge by way of foreign exchange earnings;

(b) availment of ECBs, including the outstanding ECBs, up to 50 per cent of their owned funds, for on-lending to MSME sector, will be under the automatic route and beyond 50 per cent of owned funds, will be under the approval route, subject to a ceiling of USD 500 million per financial year; and

(c) the proceeds of ECB availed by SIDBI, shall be used for on-lending to MSME sector only for the permissible end-uses as provided under the extant ECB policy.

3. All other conditions of ECB, such as recognized lender, all- in-cost, average maturity, prepayment, refinancing of existing ECB and reporting arrangements shall remain unchanged.

4. The amended ECB policy shall come into force with immediate effect and is subject to review based on the experience gained in this regard.

 

REF:A.P. (DIR Series) Circular No. 48 dated 6/11/2012

RBI Asks NBFCs to replace " post dated cheques" with 'CTS 2010' standard Cheques by December 31, 2012.

RBI Asks NBFCs to replace " post dated cheques" with 'CTS 2010' standard Cheques by December 31, 2012.

The Reserve Bank of India (RBI) today asked non-banking financial companies (NBFCs) to replace post-dated cheques issued to them by customers with new standardised cheques with improved security features.

NBFCs accept post-dated cheques from their customers for future monthly installment payments. For the purpose of standardisation and enhanced security features, the banks have been told by RBI to migrate to the 'CTS 2010' standard by December 31, 2012.

The non-CTS cheques would be out of circulation from December 31, 2012 and will not be acceptable at clearing system of the banks as well.

"NBFCs are, therefore, required to ensure the replacement of Non-CTS-2010 standard compliant cheques with CTS-2010 standard compliant cheques before December 31, 2012," RBI said in a notification.

'CTS 2010' standard is a set of benchmarks towards achieving standardisation of cheques issued by banks across the country.

These include provision of mandatory minimum security features on cheque forms like quality of paper, watermark, bank's logo in invisible ink, void pantograph and standardisation of field placements on cheques.

RBI further asked NBFCs to confirm to the regional office of the bank that a plan has been put in place for implementing the CTS 2010 standard within the prescribed timeline.

Source- Indian Express