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

Citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan Macau and Hong Kong without prior permission of the Reserve Bank for acquiring assets in India

Acquisition/transfer of immovable property – Prohibition on citizens of certain countries

RBI/2014-15/495
A.P.(DIR Series) Circular No.83

March 11, 2015

To
All Category – I Authorised Dealer Banks
Madam / Sir,

Acquisition/transfer of immovable property – Prohibition on citizens of certain countries

Attention of Authorised Dealers in Foreign Exchange is invited to Regulation 7 of Foreign Exchange Management (Acquisition and Transfer of immovable property in India) Regulations, 2000 notified vide Notification No. FEMA 21/2000-RB dated 3rd May 2000 in terms of which no person being a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan without prior permission of the Reserve Bank shall acquire or transfer immovable property in India, other than lease, not exceeding five years.
2. It has been observed that Macau and Hong Kong are the two Special Administrative Regions of China. As they are notified separately, it has been decided, in consultation with the Government of India, that citizens of Macau and Hong Kong will also be included in the list of countries which are prohibited to acquire/transfer immovable property in India in terms of Regulation 7 of FEMA ibid.
3. Reserve Bank has since amended the Principal Regulations through the Foreign Exchange Management (Acquisition and Transfer of immovable property in India) (Amendment) Regulations, 2015 notified vide Notification No. FEMA.335/2015-RB dated February 4, 2015 c.f. G.S.R. No.120 (E) dated February 24, 2015.
4. Authorised Dealers may bring the contents of this circular to the notice of their constituents concerned.
5. The directions contained in this circular have been issued under Section 10(4) and 11(1) of the Foreign Exchange Management Act (FEMA), 1999 (42 of 1999) and are without prejudice to permissions/approvals, if any, required under any other law.

CHANGE IN THE WORKING OF ISSUE PRICE FOR THE ALLOTMENT OR TRANSFER OF UNLISTED COMPANIES FOR FDIs UNDER FEMA

CHANGE IN THE WORKING OF ISSUE PRICE FOR THE ALLOTMENT  OR TRANSFER OF UNLISTED COMPANIES FOR FDIs  UNDER FEMA 

The extant pricing guidelines in respect of transfer/issue of shares and for exit from investment in equity shares with or without optionality clauses of listed/unlisted Indian companies have since been reviewed so as to provide greater freedom and flexibility to the parties concerned under the FDI framework. The new pricing guidelines shall be as under:

(i) In case of listed companies

(a) The issue and transfer of shares including compulsorily convertible preference shares and compulsorily convertible debentures shall be as per the SEBI guidelines;

(b) The pricing guidelines for FDI instruments with optionality clauses shall continue to be in accordance with A.P. (DIR Series) Circular No. 86 dated January 9, 2014, i.e., the non-resident investor shall be eligible to exit at the market price prevailing on the recognised stock exchanges subject to lock-in period as stipulated, without any assured return.

(ii) In case of unlisted companies

The issue and transfer of shares including compulsorily convertible preference shares and compulsorily convertible debentures with or without optionality clauses shall be at a price worked out as per any internationally accepted pricing methodology on arm’s length basis. Thus, the guiding principle will be that the non-resident investor is not guaranteed any assured exit price at the time of making such investment/agreement and shall exit at a fair price computed as above at the time of exit subject to lock-in period requirement as applicable in terms of A.P. (DIR Series) Circular No. 86 dated January 9, 2014.

4. The changes in the existing pricing guidelines for FDI applicable to transfer/issue of shares and for exit from foreign direct investment with optionality clauses for the unlisted Indian companies are given in the Annex 1 and Annex 2 respectively.

5. An Indian company taking on record in its books any transfer of its shares or convertible debenture by way of sale from a resident to a non-resident and a non-resident to a resident shall disclose in its balance sheet for the financial year, in which the transaction took place, the details of valuation of share or convertible debentures, the pricing methodology adopted for the same as well as the agency that has given/certified the valuation.


Ref: A. P. (DIR Series) Circular No. 4 July 15, 2014

Liberalised Remittance Scheme (LRS) for resident individuals-Increase in the limit from USD 75,000 to USD 125,000

Liberalised Remittance Scheme (LRS) for resident individuals-Increase in the limit from USD 75,000 to USD 125,000

It was decided vide A.P.(DIR Series) Circular No. 138 dated June 3, 2014, to increase the limit to USD 125,000 per financial year (April-March) from USD 75,000. Accordingly, AD Category –I banks have been allowed to remit up to USD 125,000 per financial year, under the Scheme, for any permitted current or capital account transaction or a combination of both. Further, it is clarified that the Scheme can now be used for acquisition of immovable property outside India.


All other terms and conditions shall remain unchanged.

Ref

A.P. (DIR Series) Circular No.5 dated 17 July 2014

Switching Over to NIC 2008 from NIC 1987 for reporting FC-GPR / FC-TRS purpose- Reporting of FDI -

Foreign Direct Investment –

Reporting under FDI Scheme- Switching Over to NIC  2008 from NIC 1987 for reporting FC-GPR / FC-TRS purpose

Attention of Authorised Dealers Category-I (AD Category - I) banks is invited to the provisions of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations 2000, notified by the Reserve Bank vide Notification No.FEMA20/2000-RB, dated 3rd May 2000, as amended from time to time.

2. The Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce and Industry, Government of India has, vide Press Note 4 (2014 Series) dated June 26, 2014 decided to switch over to the National Industrial Classification 2008 (NIC 2008) from the NIC 1987 version, for the purpose of classification of activities under the industrial classification system. In terms of Para 9 (1) B of Schedule I to the FEMA Notification No. 20 dated May 03, 2000 as amended from time to time, Indian companies are required to report the details of the issue of shares, convertible debentures, partly paid shares and warrants in form FC-GPR, to the Regional Office concerned, within 30 days of issue of shares / convertible debentures. In terms of Para 10 of the Schedule ibid, transfer of shares, convertible debentures, partly paid shares and warrants by way of sale from a person resident in India to a person resident outside India or vice versa, are required to be reported by the transferor/transferee resident in India to the AD Bank in form FCTRS, within 60 days from the date of receipt or payment of the amount of consideration. Indian companies are required to report the NIC Codes in the FCGPR and FCTRS forms as per the NIC 2008 version, henceforth.

3. It has also been decided to introduce a uniform State and District code list for reporting of details of foreign direct investment by Indian companies in Form FCGPR. The list can be accessed on the RBI website (www.rbi.org.in → FEMA – State and District Code List).


Ref -A.P. (DIR Series) Circular No. 6 (RBI/2014-15/133) dated 18 July 2014

Modification in the Format of ECB-2 Return

Modification in the Format of ECB-2 Return 

In order to capture details of the financial hedges contracted by corporates, of their foreign currency exposure relating to ECB and their foreign currency earnings and expenditure, the format of ECB-2 Return has been modified (Part-E) and the same has been given in the Annex. The reporting in the modified ECB-2 Return will be applicable from the return of the month April 2014 onwards.

There is no change in the reporting procedure and corporates raising ECB continue to submit ECB-2 Return on a monthly basis duly certified by the designated AD Category-I bank so as to reach Department of Statistics and Information Management (DSIM) of Reserve Bank of India within seven working days from the close of month to which it relates.

You may access the ECB-2 Form by clicking the following link:

http://rbidocs.rbi.org.in/rdocs/content/pdfs/105AP170214_A.pdf

Ref:A. P. (DIR Series) Circular No. 105 dated February 17, 2014

Reporting dates and Due dates for Returns to be submitted by NBFCs

Reporting dates and Due dates for Returns to be submitted by NBFCs

Sr No	Name of the Return	Short Name	Periodicity	Reference Date	Reporting Time	Due on	Purpose	To be submitted by
1.	Quarterly Returns By deposit taking NBFCs (As required by “Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 1998”.)	NBS1	Quarterly	31st March/ 30th June/ 30th Sept/ 31st Dec	15 days	15th April/ 15th July/ 15th Oct/ 15th Jan	Details of Assets And Liabilities	NBFCs-D
2.	Quarterly  Statement of Capital Funds, Risk Assets etc as required under the Non-Banking Financial Companies Prudential Norms (Reserve Bank) Directions 2007 By deposit taking NBFCs	NBS2	Quarterly	31st March/ 30th June/ 30th Sept/ 31st Dec	15 days	15th April/ 15th July/ 15th Oct/ 15th Jan	Capital Funds, Risk Assets, Asset Classification etc	NBFCs-D
3.	Quarterly Return on Statutory Liquid Assets as per Section 45 IB of the Act By Deposit Taking NBFCs	NBS3	Quarterly	31st March/ 30th June/ 30th Sept/ 31st Dec	15 days	15th April/ 15th July/ 15th Oct/ 15th Jan	Statutory Liquid Assets	NBFCs-D
4.	Annual Return on Repayment of Deposits by the Rejected Companies holding Public Deposits (The return was subsequently simplified for better response)	NBS4	Annual	March 31	30 days	May 01	Details of Public Deposits, Other Liabilities	NBFCs holding public deposits whose application for Certificate of Registration under Section 45-IA of RBI Act, 1934 have been rejected
5.	Monthly Return on Capital Market Exposure	NBS6	Monthly	As at the end of the month	7days	7th day of next month	Details of Capital Market Exposure	NBFCs-D
6.	Quarterly Return of Capital Funds, Risk-Asset Ratio from NBFCs-ND-SI (Supervisory Return)	NBS7	Quarterly	31st March/ 30th June/ 30th Sept/ 31st Dec	15 days	15th April/ 15th July/ 15th Oct/ 15th Jan	Capital Funds, Risk Assets, Risk Weighted off-balance sheet items (Non-Funded Exposures), Asset Classification etc.	NBFCs-ND-SI
7.	Asset-Liability Management (ALM) Return	ALM	Half yearly	31st March/ 30th Sept	1 month	30th April/ 30th Oct	Structural Liquidity, Short-term dynamic liquidity, Interest Rate sensitivity etc.	NBFCs-D having public deposit of Rs 20 crore and/or asset size of more than Rs. 100 crore
8.	A Statement of short term dynamic liquidity in format ALM -NBS-ALM1	ALM-1	Monthly	As at end of the month	10 days	10th day of next month	Short-term dynamic liquidity	NBFC-ND-SI
9.	Statement of structural liquidity in format ALM – NBS-ALM2	ALM-2	Half yearly	31st March/ 30th Sept	20 days	20th April/ 20th Oct	Structural liquidity	NBFC-ND-SI
10.	Statement of Interest Rate Sensitivity in format ALM-NBS-ALM3.	ALM-3	Half yearly	31st March/ 30th Sept	20 days	20th April/ 20th Oct	Interest Rate sensitivity	NBFC-ND-SI
11.	Monthly Return on Important Financial Parameters of NBFCs not accepting/holding public deposits and having asset size of Rs.100 crore and above	100 Crore NBFCs-ND-SI	Monthly	end of every month	7days	7th of next month	Sources and Application of Funds, Profit and Loss Account,  Asset Classification, Bank's/FIs exposure on the company, Details of Capital Market Exposure, Foreign Sources etc.	NBFC-ND-SI
12.	Quarterly return to be submitted by non-deposit taking NBFCs with asset size of Rs 50 crore and above but less than Rs 100 crore,		Quarterly.	31st March/ 30th June/ 30th Sept/ 31st Dec	within a period of one month from the close of the quarter		Basic information like name of the company, address. NOF, profit / loss during the last  three years
13	Quarterly Return to be submitted by NBFCs having overseas investment		Quarterly.	31st March/ 30th June/ 30th Sept/ 31st Dec	within a period of one month from the close of the quarter		Name of the WOS/JV, Country and date of incorporation Date of NoC from DNBS, Business undertaken	All NBFCs