Reserve Bank of India now relaxes its rules to remit USD 2,50,000 by individual for aggregate of certain current account transactions for travel , business trip , gifts , donations , employment , education , medical treatment ,etc.

Reserve Bank of India  now relaxes its rules to remit  USD 2,50,000 f by individual for aggregate of certain current account transactions for travel , business trip , gifts , donations , employment , education , medical treatment ,etc. 

The Reserve Bank of India ('RBI') has notified amendment to the Foreign Exchange Management (Current Account Transactions) Rules to specify an aggregate limit of USD 2, 50,000 for remittance in foreign currency for certain current account transactions, inter-alia, for private visits to any country (except Nepal and Bhutan), gifts or donations, going abroad for employment, emigration, business travels, or medical treatment abroad, etc.

Remittances in foreign currency by an individual for the following current account transactions shall be made within limit of USD 2,50,000:

a) Holiday/Private Visits abroad

b) Business trip

c) Gifts/Donation

d) Employment or education

e) Remittance for Maintenance of a close relative abroad

f) Medical treatment abroad

g) Emigration facilities

Further, it is provided that an individual can avail of foreign exchange facility of an amount exceeding the limits as prescribed above under the Liberalized Remittance Scheme ('LRS') for the purpose of emigration, education, business travel, medical treatment, etc.

However, the amount so remitted by individual under the LRS shall be reduced from the USD 250,000 by the amount so remitted under the above-mentioned rules.

References – Ministry of Finance – Notification G.S.R 426 (E) dated 26 May 2015

All about Form 49C under Income-Tax Act and its submission by liaison office in India

All about Form 49C under Income-Tax Act   and its submission by liaison office in India

The last date for filing of Form 49C is almost there and it’s 30^th May 2015 which was notified vide Notification No.5/2012 dated 6-2-2012 with effect from 1^st April 2012.

Form 49C is primarily required to be filed by Non-residents having Liaison office(s) in India. It is to be filed in pursuance of Section 285 of the Income Tax Act and in accordance with rule 114DA of the Income Tax Rules.

Section 285 of Income Tax Act, 1961 read with rule 114DA mandates that Every person, being a non-resident having a liaison office in India set up in accordance with the guidelines issued by the Reserve Bank of India under the Foreign Exchange Management Act, 1999 (42 of 1999), shall, in respect of its activities in a financial year, prepare and deliver or cause to be delivered to the Assessing Officer having jurisdiction, within sixty days from the end of such financial year, a statement in form 49C of its activities.

However, as per RBI Master Circular No. 7/2012-13, dated 2-7-2012, the AAC is required to be filed within six months from the due date of the Balance Sheet. Therefore to that extent, there seems to be inconsistency between the due date of filing of Form No. 49C and AAC, which needs to be resolved.

Reserve Bank of India requires filing of an Annual Activity Certificate (AAC) annually after getting the same duly certified by a Chartered Accountant.

AAC is required to be filed prior to filing of Form 49C as the date of filing AAC is required to be mentioned in Form 49C.

Form 49C may be verified (Digitally Signed) by a Chartered Accountant or an Authorised Signatory for the purpose of e-filing the same.

In order to file Form 49C one needs to do the following:

1. Visit www.incometaxindiaefiling.gov.in

2. Login to the respective ID.

3. Go-to “e-file” and then click on “Prepare and Submit online Form (other than ITR)”.

4. Then on the page that appears, you need to select the Form, which in this case would be 49C, then select the relevant Assessment Year and then select the Digital Signature Certificate of the person who would be verifying Form 49C.

5. Then you will enter a page wherein you will have instructions w.r.t. Form 49C, followed by Form 49C itself, followed by “Attachments” page. Thus, fill-in and you are ready to go

Kindly note that attachments, if any, attached to Form 49C should not exceed 50MB in total and should either be in pdf or zip format.

Extract of Rule 114DA of Income Tax Rules

[Furnishing of Annual Statement by a non-resident having Liaison Office in India.

114DA. (1) The annual statement as provided under section 285 for every financial year, shall be furnished in Form No. 49C.

(2) The annual statement referred to in sub-rule (1) shall be duly verified by the Chartered Accountant or the person authorised in this behalf by the non-resident person, who shall be known as the Authorised Signatory.

(3) The annual statement referred to in sub-rule (1) shall be furnished in electronic form along with digital signature.

(4) The Director General of Income-tax (Systems) shall specify the procedure for filing of annual statement referred to in sub-rule (1) and shall also be responsible for formulating and implementing appropriate security, archival and retrieval policies in relation to statements so furnished.]

Extract of Section 285 of Income Tax Act, 1961

[Submission of statement by a non-resident having liaison office.

285. Every person, being a non-resident having a liaison office in India set up in accordance with the guidelines issued by the Reserve Bank of India under the Foreign Exchange Management Act, 1999 (42 of 1999), shall, in respect of its activities in a financial year, prepare and deliver or cause to be delivered to the Assessing Officer having jurisdiction, within sixty days from the end of such financial year, a statement in such form and containing such particulars as may be prescribed.

Information courtesy : CA Sahil Jolly – Jolly & Co. Chartered Accountants

NOW , ECB (External Commercial Borrowings ) CAN BE DENOMINATED IN INDIAN CURRENCY ALSO- UNDER AUTOMATIC ROUTE

External Commercial Borrowings (ECB) denominated in Indian Rupees (INR) – Mobilisation of INR

RBI/2014-15/608 A. P. (DIR Series) Circular No. 103 May 21, 2015 External Commercial Borrowings (ECB) denominated in Indian Rupees (INR) – Mobilisation of INR Attention of Authorized Dealers Category – I (AD Cat – I) banks is invited to the Foreign Exchange Management (Foreign Exchange Derivative Contracts) Regulations, 2000 dated May 3, 2000 [Notification No. FEMA 25/RB-2000 dated May 3, 2000], as amended from time to time, A.P. (DIR Series) Circular No.63 dated December 29, 2011 and A.P. (DIR Series) Circular No. 25 dated September 3, 2014. 2. In terms of A.P. (DIR Series) Circular No. 25 dated September 3, 2014, recognised non-resident ECB lenders may extend loans in Indian Rupees subject to, inter alia, the lender mobilising Indian Rupees through a swap undertaken with an AD Cat-I bank in India. To facilitate ECB lending denominated in INR by overseas lenders, it has now been decided that such lenders may enter into swap transactions with their overseas bank which shall, in turn, enter into a back-to-back swap transaction with any AD Cat-I bank in India as per the procedure given below: (i) The recognised non-resident lender approaches his overseas bank with appropriate documentation as evidence of an underlying ECB denominated in INR with a request for a swap rate for mobilising INR for onward lending to the Indian borrower. (ii) The overseas bank, in turn, approaches an AD Cat-I bank for a swap rate along with documentation furnished by the customer that will enable the AD bank in India to satisfy itself that there is an underlying ECB in INR (scanned copies would be acceptable). (iii) A KYC certification on the end client shall also be taken by the AD bank in India as a one-time document from the overseas bank. (iv) Based on the documents received from the overseas bank, the AD bank in India should satisfy itself about the existence of the underlying ECB in INR and offer an indicative swap rate to the overseas bank which, in turn, will offer the same to the non-resident lender on a back-to-back basis. (v) The continuation of the swap shall be subject to the existence of the underlying ECB at all times. (vi) On the due date, settlement may be done through the Vostro account of the overseas bank maintained with its counterparty bank in India. (vii) All other Operational Guidelines, Terms and Conditions as contained in the annex to A.P. (DIR Series) Circular No.63 dated December 29, 2011 governing hedging of ECBs denominated in INR shall apply, mutatis mutandis. (viii) The concerned AD Cat-I bank shall keep on record all related documentation for verification by Reserve Bank.3. AD Category – I banks may bring the contents of this circular to the notice of their constituents and customers. 4. The directions contained in this circular have been issued under sections 10(4) and 11(1) of the Foreign Exchange Management Act 1999 (42 of 1999) and are without prejudice to permissions/approvals, if any, required under any other law. Yours faithfully, (R Subramanian) Chief General Manager

Indian Banks cannot insist for the personal presence of NRI DEPOSITOR WHEN CLOSING THE FCNR (B) DEPOSITS

 Foreign Currency (Non-Resident) Account (Banks) (FCNR (B)) Scheme

RBI/2014-15/596
A.P. (DIR Series) Circular No. 98

May 14, 2015

To
All Category – I Authorised Dealer Banks

Madam / Sir,

Foreign Currency (Non-Resident) Account (Banks) (FCNR (B)) Scheme

Attention of Authorised Dealer Category-I (AD Category-I) banks is invited to Schedule 2 of the Foreign Exchange Management (Deposit) Regulations, 2000, notified vide Notification No. FEMA 5/2000-RB dated May 3, 2000, as amended from time to time, in terms of which instructions regarding opening and maintenance of FCNR (B) deposit have been stipulated.
2. It has come to our notice that Authorised Dealer banks are insisting on different requirements at the time of closure of FCNR (B) deposits and subsequent remittance of funds as under:

1. Submission of A2 form
2. Insisting on physical presence of the account holder
3. Asking for purpose of remittance

3. In this connection it is clarified that A2 form is to be filed at the time of purchase of foreign exchange using rupee funds and hence is not applicable while remitting FCNR (B) funds. Further, banks, with the help of technology, will have to devise better alternatives/ methods for ensuring bonafides of the transaction rather than insisting on physical presence of the account holder, in order to ensure hassle free remittance of funds to the account holder.
4. AD Category- I banks may bring the contents of the circular to the notice of their constituents concerned.
5. The directions contained in this circular have been issued under Sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and is without prejudice to permissions / approvals, if any, required under any other law.

Yours faithfully,

(A. K. Pandey)
Chief General Manager