MASTER CIRCULAR ON MISCELLANEOUS REMITTANCES FROM INDIA ‑ FACILITIES FOR RESIDENTS

 

MASTER CIRCULAR NO. 3/2004‑05, DATED 1.7‑2004, ISSUED BY FOREIGN EXCHANGE DEPARTMENT, RBI

 

Miscellaneous remittance facilities for residents are being allowed in terms of section 5 of the Foreign Exchange Management Act, 1999, read with Government of India Notification No. GSR 381(E) dated May 3, 2000 as amended from nine to lime.

 

2.          This Master Circular consolidates the existing instructions on the subject of "Miscellaneous Remittances from India ‑ Facilities for Residents" at one place, The list of underlying circulars/ notifications is set out at Annex­

 

3.          As recommended by the Committee on Procedures and Performance Audit on Public Services (CPPAPS) (Chairman: Shri S. S. Tarapore) set up by the Reserve Bank, this Master Circular is being issued with a sunset clause of one year. This circular will stand withdrawn on July 1, 2005 and be replaced by an updated Master Circular on the subject.

 

ANNEX I

 

LIST OF CIRCULARS, WHICH HAVE BEEN CONSOLIDATED IN THIS MASTER CIRCULAR ON MISCELLANEOUS REMITTANCES FROM INDIA ‑ FACILITIES FOR RESIDENTS

 

SI. No.

Circular No.

Date

1.

AP (DIR Series) Circular No. 1

June 1,2000

2.

AP (DIR Series) Circular No. 19

October 30, 2000

3.

AP (DIR Series) Circular No. 20

November 16, 2000

4.

AP (DIR Series) Circular No. 11

November 13, 2001

5.

AP (DIR Series) Circular No. 12

November 23, 2001

6.

EC.CO.FMD.599/18.08.01/2001-02

January 21, 2002

7.

AP (DIR Series) Circular No. 53

June 27, 2002

8.

AP (DIR Series) Circular No. 16

September 12,2002

9.

AP (DIR Series) Circular No. 17

September 12,2002

10.

AP (DIR Series) Circular No. 37

November 1, 2002

11.

AP (DIR Series) Circular No. 51

November 18,2002

12.

AP (DIR Series) Circular No. 53

November 23, 2002

13.

AP (DIR Series) Circular No. 54

November 25, 2002

14.

AP (DIR Series) Circular No. 64

December 24, 2002

15.

AP (DIR Series) Circular No. 65

January 6, 2003

16.

AP (DIR Series) Circular No. 73

January 24, 2003

 

No

Circular No.

Date

17

AP (DIR Series) Circular No. 103

May 21, 2003

18

AP (DIR Series) Circular No. 3

July 17,2003

19

AP (DIR Series) Circular No. 7

August 12 2003

20

AP (DIR Series) Circular No. 8

August 16,2003

21.

AP (DIR Series) Circular No. 33

November 13, 2003

22,

AP (DIR Series) Circular No. 55

December 23,2003

23.

AP (DIR Series) Circular No. 64

February 4, 2CO4

24.

AP (DIR Series) Circular No. 71

February 20,2004

25.

AP (DIR Series) Circular No. 76

February 24, 2004

26.

AP (DIR Series) Circular No. 77

March 13,2004

27.

AP (DIR Series) Circular No. 86

April 17, 2004

28.

AP (DIR Series) Circular No. 90

May 3, 2004

29.

Foreign Exchange Management (Current Account

Transactions) Rules, 2000

Not reproduced

 

Release of Foreign Exchange by Authorised Dealers.

 

A.1 General

 

1. 1 For release of foreign exchange to persons resident in India for travel abroad, authorized dealers are to be carded by the Rules made by the Govt. of India under section 5 of Foreign Exchange Management Act, 1999 which are detailed in terms of Foreign Exchange Management (Cut rent Account Transactions) Rules, 2000 notified the Government of India. In terms of the said rules, drawal of exchange for certain transactions have been prohibited and restrictions have been placed on certain other transactions. While drawal of exchange for certain categories of transactions as listed in Schedule I is expressly prohibited, exchange facilities for transactions included in Schedule if to the rules may be permitted by the authorized dealers provided the applicant has secured the approval from the Ministry/Department of Government of India indicated against the transactions. In respect of transactions included in Schedule III, where remittance applied for exceeds the limit, if any, indicated in the Schedule or other transactions included in Schedule III (for which no, limits have been stipulated), prior approval of Reserve Bank would be required. All applications for release of exchange exceeding the limits prescribed in Schedule III to tire Govt. Notification should be referred to the Regional Office of the Foreign Exchange Department, under whose jurisdiction the applicant is functioning/residing.

 

1.2 In terms of clause (b) of rule 2 of the Government Notification No. GSR 381 (E) dated 3rd May, 2000, (Annexure A) 'Drawal" includes use of International Credit Cards, International Debit Cards, ATM Cards, etc. Further, in terms of clause (h) of section 2 of Foreign Exchange Management Act, 1999, 'currency", infer alia, includes International Credit Cards. The Reserve Bank has also, vide its Notification No. FEMA 15/2000‑RB dated 3rd May, 2000, notified ATM Cards and Debit Cards as "Currency". Accordingly, all Rules, Regulations made and Directions issued under the Act apply to Credit Cards, ATM Cards, Debit Cards, etc., also.

 

1.3 Resident individuals maintaining a foreign currency account with an authorised dealer in India or a bank abroad, as permissible under extant foreign Exchange Regulations, are free to obtain International Credit Cards issued by overseas banks and other reputed agencies Authorised dealers may allow remittances by their constituents maintaining foreign curt enc) accounts with them to meet the charges incurred against the ICCs issued by the foreign banks and other reputed agencies. The remittance should, however, be made to the Card issuing bank/agency and not to a third party.

 

1.4 It may be noted that in terms of item (b) of rule 3 of the Govt. Notification No. GSR 381(E) dated 3rd May, 2000, no release of foreign exchange is admissible for travel to Nepal and Bhutan.

 

A.2 Sale of Exchange

 

2.1 Where approvals have been granted by the Reserve Bank/Government of India, foreign exchange may be sold within the period of validity stated in the approval and the sale be endorsed on the reverse of the original approval.

 

2.2 On the basis of a declaration given by the traveller regarding the amount of foreign exchange availed of during a calendar year, authorised dealers may release exchange for tourism and private purposes.

 

2.3 In case of issue of travellers cheques, the traveller should sign the cheques in the presence of an authorized official and [be purchaser's acknowledgement for receipt of the it travellers cheques should be held on record.

 

2.4 Out of the Over all foreign exchange being sold to a traveller, exchange in the form of foreign currency notes and coins may be sold up to the limit indicated below:

 

(i)

Travellers proceeding to countries other than Iraq, Libya, Islamic Republic of Iran, Russian Federation and other Republics of Commonwealth of Independent States

Not exceeding USD 2000 or its equivalent

(ii)

Travellers proceeding to Iraq or Libya

Not exceeding USD 5000 or its equivalent

(iii)

Travellers proceeding to Islamic Republic of Iran, Russian Federation and other Republics of Commonwealth of Independent States.

Full exchange way be released

 

2.5 The Forms A2 relating to sale of foreign exchange for travel abroad, should be retained for a period of one year by the authorised dealers, together with the related documents, for the put pose of verification by then Internal Auditors. Such forms need not be obtained by the authorised dealers for remittance applications not exceeding USD 5,000.

 

2.6 In cases where the remittances are allowed on the basis of self declaration, the onus of furnishing the correct details in the application, will remain with the applicant who has certified the details relating to the purpose of such remittance.

 

A.3. Medical Treatment

 

3.1 A person who has fallen sick after proceeding abroad may also be released foreign exchange by an authorized dealer for medical treatment outside India in accordance with rule 5 of Government Notification No. GSR 381 (E) dated May 3, 2000 and further Notification vide GSR No.731 (E) dated September 3, 2003.

 

3.2 With a view to enable residents to avail (if foreign exchange for medical treatment abroad without are hassles and any loss of time, authorised dealers may release foreign exchange upto an amount of USD 100,000 or its equivalent, on the basis of self declaration that the applicant is buying exchange for medical treatment outside India, without insisting on any estimate from a hospital/ doctor.

 

3.3 For amount exceeding the above limit, estimate from the doctor in India or hospital/doctor abroad, is required to be submitted to the authorised dealers (a, provided in the Gazette Notification).

 

A.4 Small Value Remittances

 

With a view to provide hassle free release of foreign exchange to resident individuals for various purposes, authorized dealers may release foreign exchange not exceeding USD 5000 or its equivalent, for all permissible current account transactions on the basis of a simple letter from the applicant containing the basic information viz., name and address of the applicant/beneficiary, amount to be remitted and the purpose of remittance, without insisting on submission of Form A 2.

 

A.5 Cultural Tours

 

Dance troupes, artistes, etc., who wish to undertake tours abroad for cultural purposes should apply to the Ministry of Human Resources Development (Department of Education and Culture), Government of India, for their foreign exchange requirements. Authorised dealers may release foreign exchange, on the strength of the sanction from the Ministry, to the extent and subject to conditions indicated therein.

 

A.6 Private visits

 

Foreign exchange for private visit can also be released to a person who is to ailing of foreign exchange for travel outside India for any purpose,

 

A.7 Period of surrender of foreign exchange

 

In case the foreign exchange purchased for any purpose is not used for the purpose or for any other purpose for which purchase or acquisition of foreign exchange is permitted under tire provisions of FEMA, 1999 or Rules or Regulations made there under and the evidence submitted to the satisfaction of the authorised dealer, the same or the unused per lion thereof is required to be surrendered to an authorised person within a period of 60 (sixty) days from the date of its purchase (cf. Notification No. FEMA 9/2000‑RB dated 3rd May, 2000).

 

Note: In cases where a person approaches an authorized person for surrendering foreign exchange after 60days, the authorized person should not refuse to purchase the foreign exchange merely on the ground that the prescribed period of 60 days has expired.

 

A.8 Unspent Foreign Exchange           

 

8.1 Unspent foreign exchange brought back in India by a traveller should be surrendered to an authorised person within 90 days from the date of return of the traveller, if the unspent foreign exchange is in the form of currency notes. If such foreign exchange is in the form of travellers cheques, the same should be surrendered to an authorised person within 180 days from the date of return. Exchange so brought back can be uilised by the traveller for his subsequent visit abroad during the period specified above.

 

8.2 However, a returning traveller is also permitted to retain with him, foreign currency travellers cheques and currency notes upto art aggregate amount of USD 2000 and foreign coins without any ceiling (cf, Notification No. FEMA 11 /2000 RB dated 3rd May, 2000). Foreign exchange so retained, can be uilised by the traveller for his subsequent visit abroad.

 

8.3 A person resident in India can open, hold and maintain with an authorized dealer in India, a Resident Foreign Currency (Domestic) Account, 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 tendered or in settlement of any lawful obligation front any person nut resident in India.

 

The account may also be credited with/opened out (if foreign exchange earned like proceeds of export (if goods and/or services, royalty, honorarium, etc., and/or gifts received from close relatives (as defined in the Companies Act) and repatriated to India through normal banking channels by resident individuals.

 

8.4 The eligible credits to the Resident Foreign Currency (Domestic) Account, out of foreign exchange acquired in the form of currency notes, bank notes and travellers cheques, are as under :

 

(i)          acquired by him from an authorised person for travel abroad and represent the unspent amount thereof.

 

Or

 

(ii)         acquired by him, while on a visit to any place outside India, by way of payment for services not arising from any business in or anything done in India.

 

Or

 

(iii)         acquired by him, from any person not resident in India, and who is on a visit to India, as honorarium, gift, for set vices tendered or in settlement of any lawful obligation.

 

Or

 

(iv)        acquired by him by way of honorarium, or gift, while on a visit to any place outside India,

 

Note: Where a person approaches an authorised person for surrender of foreign exchange after the prescribed period, authorised person should not refuse to purchase the foreign exchange merely, on the ground that the prescribed period has expired.

 

A.9 Remittances for Tour Arrangements, etc.

 

9.1 Authorised dealers may remit foreign exchange upto a reasonable limit, at the request of a traveller towards his hotel accommodation, tour arrangements, etc., in the counties proposed to be visited by him, provided it is out of the foreign exchange purchased by the traveller front an authorized person (including exchange drawn for private travel abroad) in accordance with the Rules, Regulations and Directions in force.

 

9.2 Authorised dealers may effect remittances at the request of agents in India who have tie up arrangements with hotels/agents, etc., abroad for providing hotel accommodation or making other tour art arrangements for travellers town India, provided the authorised dealer is satisfied that the remittance is being made out of the foreign exchange purchased by the cancer tied traveller from an authorised person (including exchange drawn for private travel abroad) in accordance with the Rules, Regulations and Directions in force,

 

9.3 Authorised dealer may open foreign currency accounts in the name of agents in India who have, tie up arrangements with hotels/agents, etc., abroad for providing hotel accommodation or making other tour arrangements for travellers from India provided:

 

(a)         the credits to the account are by way of depositing

 

(i)          collections made in foreign exchange from travellers and

(ii)         refunds received from outside India on account of cancellation of bookings/tour arrangements, etc., and

 

(b)         the debits in foreign exchange are for making payments towards hotel accommodation, tour arrangements, etc., outside India, in accordance with 9.2 above.

 

9.4 Aulhorised dealer ma, allow tour operators to remit the cost of rail/road/water transportation charges Outside India without and prior approval from the Reserve Bank, net of commission/mark up, due to the agent. The sale of passes/ticket in India can lie made either against the payment in Indian Rupees or in foreign exchange released for visits aborad. The cost of passes /tickets collected in Indian Rupees need not be adjusted in the travellers' entitlement of foreign exchange for private visit.

 

9.5 In respect of consolidated tours it ranged by travel agents in India for foreign tourists visiting India and neighboring countries like Nepal, Bangla Desh, Sri Lanka, etc., against advance payments/reimbursement through in authorised dealer, part of the foreign exchange received in India against such consolidated tour arrangement, may require to be remitted from India to these countries for services rendered by travel agents and hoteliers in the neighboring countries. Authorised dealers may allow such remittances after verifying that the amount being remitted to the neighboring, countries (inclusive of remittances, if any, already made against the tour) does not exceed the amount actually remitted to India and the country of residence of the beneficiary is not Pakistan.

 

A.10 Payment In Rupees

 

Authorised dealers may accept payment in cash upto Rs. 50 000 (Rupees fifty thousand only) against sale of foreign exchange for travel abroad (for private visit or for am other purpose). Wherever the sale of foreign exchange exceeds the amount equivalent to Rs. 50,000, the payment must be received only by a

 

(i)          crossed cheque drawn on the applicant's bank account, or

 

(ii)         crossed cheque drawn on the bank account of the firm/company sponsoring the visit of the applicant, or

 

(iii)         Banker's Cheque/Pay Order/Demand Draft,

 

Note: Where the rupee equivalent of foreign exchange drawn exceeds Rs. 50,000 either for any single drawal or more than one drawal reckoned together for a single journey /visit, it should be paid by cheque or draft, as explained above.

 

A. 11 Advance Remittance4triport of services

 

Authorized dealers may allow advance remittance for providing services under current account transaction for which the release of foreign exchange is admissible. However, where the amount exceeds USD 100,000 or its equivalent, a guarantee from a bank of International repute situated outside India or a post guarantee from in authorized dealer in India, if such a guarantee is issued against the counter guarantee of a bank of International repute situated outside India, should be obtained from the overseas beneficiary. The authorized dealer should also follow up to ensure that the beneficiary of the advance remittance has fulfilled his obligations under the contract or agreement with the remitter in India,

 

A. 12 Liberalised Remittance Scheme of USD 25,000

 

Under this Scheme, authorized dealers may freely allow remittances by the individuals up to USD 25,000 per calendar year for mo, permissible current or capital account transactions or a combination of both. Resident individuals are free to acquire and hold immovable property or shares or any other asset outside India without prior approval of the Reserve Bank. Individuals can also open, maintain and hold foreign currency accounts with a bank outside India for making remittances under the Scheme without prior approval of the Reserve Bank. The foreign currency accounts may be used for putting through all transactions connected with or arising from remittances eligible under this Scheme.

 

A.13 Documentation

 

The Reserve Bank will not, generally, prescribe the documents which should be verified by the authorized dealers while releasing foreign exchange. In this connection attention of authorized dealers is drawn to sub-section (5) of section 10 of tile Foreign Exchange Management Act, 1999 (42 of 1999) which provide that an authorized person shall require that pet son to make such a declaration and to give such information as will reasonably satisfy him that the transaction will not involve and is not designed for the purpose of any contravention or evasion of the provisions of the Act or any rule, regulation, notification, direction or order issued thereunder.

 

Authorized dealers are also required to keep on record any information/documentation, on the basis of which the transaction was undertaken, for verification by the Reserve Batik, in case the applicant refuses to comply with any such requirement or makes unsatisfactory compliance therewith, the authorized person shall refuse

in writing to undertake the transaction and shall, if he has reasons to believe that any contravention/evasion is contemplated by the person, report the matter to Reserve Bank.

 

However, with a view to provide hassle free service to the residents, it has also been decided to simplify the procedures and documentation formalities in respect of non‑import remittances. Accordingly, in consultation with FEDAL the A‑2 Form has been modified to incorporate tile application form and the declaration in terms of section 10(5) of FEMA, 1999.The specimen form to be used in this regard is enclosed as Annexure V to our A.P. (DIR Series) Circular No.77dated March 13, 2004 The individual customer will be required to submit early this form in respect of permissible transaction pertaining to individuals up to a limit of USD 5000 is per our A.P. (DIR Series) Circular No. 55 dated December 23,2003. The AD could then fill up the reverse of tire  form which contains purpose‑wise codes.

 

For undertaking transactions under the Liberalized Remittance Scheme of USD 25,000 for resident individuals (item No.12 above), ADs may be guided by the instructions conveyed in out‑ A.P. (DIR Series) Circular No. 64 dated February 4, 2004. As regards other transactions, apart from For in A2 as at Annexure V, the AD may call for additional information and documents as may be required.

 

Further, the authorized dealers have specifically been advised to release foreign exchange upto USD 100,000 each for employment abroad, emigration, maintenance of close relatives abroad, education abroad and medical treatment abroad without insisting on any supporting documents but on the basis of self‑declaration incorporating certain basic details of the transactions and submission of Form A2

 

A.14 Endorsement on Passport

 

It is not mandatory for authorized dealers to endorse, the amount of foreign exchange sold for travel abroad. However, it requested by the traveller, they may record under their stamp, date and signature, details of foreign exchange sold for travel.

 

A.15 International Credit Cards

 

The restrictions contained in rule 5 of tire Foreign Exchange Management (Curt cut Account Transactions) Rules, 2000 will not be applicable for use of later national Credit Cards (ICCs) by residents for making payment towards expenses, " line on a visit outside India, to the extent of the limit of the card.

 

Residents can use ICCs on internet for any purpose for which exchange can be purchased from an authorized dealer in India, e.g. for import of books, purchase of downloadable software’s or import of any other item permissible under EXIM Policy.

 

ICCs cannot be used on internet or otherwise for purchase of prohibited items, like lottery tickets, banned or prescribed magazines, participation in sweepstakes, payment for call‑back services etc., since no drawal of foreign exchange is permitted for such items/activities.

 

There is no aggregate monetary ceiling separately prescribed for rise of ICCs through internet.

 

Resident individuals maintaining a foreign currency account with an authorized dealer in India or a bank abroad, as permissible under extant Foreign Exchange Regulations, are free to obtain ICCS issued by overseas banks and other reputed agencies, The charges incurred against the card either in India or abroad, can be met out of funds held in such foreign currency account /s of the cat d holder or through remittances, if any, from India only through a bank where the card-holder has a current or savings account. The remittance for this purpose, should also be made directly to the card‑issuing agency abroad, and not to a third party.

 

It is also clarified that the applicable credit limit will be tire limit fixed by tire card issuing banks. There is no monetary ceiling fixed by the RBI for remittances, if any, under this facility.

 

A.16 Acquisition of foreign securities under Employees Stock Option Plan (ESOP)

 

Resident individuals who are either employees or director of an Indian office or branch of a foreign company in which foreign holding, is not less than 51% are permitted to acquire foreign securities under ESOP Scheme without any monetary limit. They are also permitted to freely sell the shares provided the proceeds there of are repatriated to India.

 

ANNEX II

FOREIGN EXCHANGE MANAGEMENT (CURRENT ACCOUNT TRANSACTIONS) RULES, 2000

[Not Reproduced]