Current Account Transactions
AP (DIR Series) (2000-2001) Circular No. 29, dated 31-3-2001
Attention
of authorised dealers is invited to the Government of India Notification No.
GSR 381(E), dated 3rd May, 2000 notifying the Foreign Exchange Management
(Current Account Transactions) Rules, 2000 in terms of which drawal of exchange
for certain current account transactions has been prohibited and restrictions
have been placed on certain other transactions.
2. Government
of India has now issued Notification No. S.O. 301(E), dated March 30, 2001,
amending their Notification No. GSR 381(E) dated 3rd May, 2000. The authorised
dealers may carefully study the changes introduced by the amendment.
3. The synopsis
of the changes brought about by the amendment are given below :
(a) Remittances
by any State Government or its Public Sector Undertakings require prior
approval from the Ministry of Finance (DEA) for advertisement abroad in print
media for any purpose other than for promotion of tourism, foreign investment
and for international bidding (exceeding US $ 10,000) [ef: item 2]
(b) The
restrictions imposed under items 10 and 11 of the Schedule on remittances for
securing Insurance for health from a company abroad and for membership of
P&I Club respectively will be applicable even though remittance is made out
of funds held in EEFC account.
(a) Gift
remittance exceeding US $ 5,000 per remitter/donor per annum and Donation
exceeding US $ 5,000 per remitter/donor per annum, respectively will require
prior approval of the Reserve Bank. The restriction would be applicable even in
cases where the remittance is being made out of funds held in EEFC account.
Therefore, authorised dealers may ensure that no person is allowed to make
remittance of Gift/Donation exceeding US $ 5,000 in a year, without prior
approval of the Reserve Bank. (ef : items 3 and 4)
(b) Restrictions
imposed under items 11 and 16 of the Schedule on payment of commission for sale
of immovable property and on remittance for use and/or purchase of
trademark/franchise in India would also be applicable to the remittances made
out of funds held in EEFC account,
(c) The
ceiling of US $ 5,000 per year on remittances to close relatives residing
abroad as contained in item 7 of Schedule III will not be applicable in case of
foreign nationals (other than Pakistani nationals), who are resident but not
permanently resident in India,
(d) The
remittances exceeding US $ 1,00,000 per project for any consultancy services
procured from outside India will require prior approval of the Reserve Bank.
This restriction will also apply to such remittances made out of funds held in
EEFC accounts, (ef: item 15)
(e) All
remittances exceeding US $ 1,00,000 for reimbursement of pre-incorporation
expenses will also require prior permission from the Reserve Bank (ef: item
17).
4. Authorised
dealers 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 section 10(4) and
section 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999). Any
contravention or non-observance of these directions is subject to the penalties
prescribed under the Act.