RBI/2007-2008/243 Master
Circular No. 04 /2007- 08 February 21, 2008 To, All
Authorised Persons in Foreign Exchange Madam / Sir, Master
Circular on Remittance Facilities for Non-Resident Indians / Persons of Indian
Origin / Foreign Nationals Remittance facilities for
Non-Residents/Persons of Indian Origin/Foreign Nationals are being governed by
sub-section (1) and (2) of section 6 of the Foreign Exchange Management Act, 1999
read with FEMA
Notification No.13/2000-RB and FEMA
Notification No. 21/2000-RB dated May 3, 2000, as amended from time to time.
2. This Master Circular consolidates the existing instructions
(updated as on January 1, 2008) on the subject of "Remittance
facilities for Non-Resident Indians/Persons of Indian Origin / Foreign Nationals"
at one place. The list of underlying circulars / notifications consolidated
in this Master Circular is furnished in Appendix. 3. This
Master Circular is being issued with a sunset clause. This circular
will stand withdrawn on July 1, 2008 and be replaced by an updated Master Circular
on the subject. Yours faithfully, (Salim
Gangadharan) Chief General Manager
INDEX 1.
Remittance facilities for Non Resident Indians (NRIs) /Persons
of Indian Origin (PIO) and Foreign Nationals 2. Definitions
of NRI/PIO 3. Remittance of current income 4.
Remittance of assets by a foreign national of non-Indian origin 5.
Remittance of assets by NRI/PIO 6. Repatriation
of sale proceeds of residential property purchased by NRIs / PIO out of foreign
exchange 7. Facilities for students 8.
Income- tax clearance 9. International Credit Cards Annex-1 Annex-2 APPENDIX NOTE
1.
Remittance facilities for Non Resident Indians (NRIs) / Persons of Indian Origin
(PIO) and Foreign Nationals |
The Regulations for transfer of assets outside
India by a person whether resident in India or not are given in the Notifications
No. FEMA 13/2000-RB and FEMA 21/2000-RB both dated May 3, 2000 and the related
amendments to these Notifications. Accordingly, remittance of capital assets in
India held by a person whether resident in or outside India would require approval
of the Reserve Bank except to the extent provided in FEMA or Rules or Regulations
made there under. |
2. Definitions of NRI/PIO |
NRI is defined as a person resident outside
India who is citizen of India. In terms of Regulation 2
FEMA Notification No.13 dated May 3, 2000, Non-Resident Indian (NRI) means a person
resident outside India who is a citizen of India. Person of Indian Origin (PIO)
means a citizen of any country other than Bangladesh or Pakistan who had (a) at
any time held Indian passport or (b) he or either of his
parents or any of his grand -parents was a citizen of India by virtue of the Constitution
of India or the Citizenship Act 1955 or (c) the person is a spouse of an Indian
citizen or a person referred to in (a) or (b). |
3.
Remittance of current income |
3.1 Remittance of current income like rent,
dividend, pension, interest, etc. of NRIs/PIO even those who do not maintain NRO
Account is freely allowed, on the basis of appropriate certification by a Chartered
Accountant certifying that the amount proposed to be remitted
is eligible for remittance and that applicable taxes have been paid / provided
for. 3.2 NRIs/PIO have the option to credit the current
income to their Non-Resident (External) Rupee account, provided the authorized
dealer bank is satisfied that the credit represents current income of the non-resident
account holder and income tax thereon has been deducted / provided for. |
4.
Remittance of assets by a foreign national of non-Indian origin |
4.1 A foreign national of non-Indian origin
who has retired from an employment in India or who has inherited assets from a
person resident in India or who is a widow of an Indian citizen who was resident
in India, may remit an amount not exceeding USD one million, per financial year
(April-March), on production of documentary evidence in
support of acquisition / inheritance of assets, an undertaking by the remitter
and certificate by a Chartered Accountant in the formats prescribed by the Central
Board of Direct Taxes vide their Circular No.10/2002 dated October 9, 2002. 4.2
These remittance facilities are not available to citizens of Nepal and Bhutan. |
5.
Remittance of assets by NRI/PIO |
5.1 A Non-Resident Indian (NRI) or a Person
of Indian Origin (PIO) may remit an amount up to USD one million, per financial
year, out of the balances held in his Non-Resident (Ordinary) Rupee (NRO) account
/ sale proceeds of assets (inclusive of assets acquired by way of inheritance
or settlement), for all bonafide purposes, to the satisfaction of the authorized
dealer bank, on production of an undertaking by the remitter and certificate by
a Chartered Accountant in the formats prescribed by the Central Board of Direct
Taxes vide their Circular No.10/2002 dated October 9, 2002.
5.2 NRI/PIO may remit sale proceeds of immovable property
purchased by him out of Rupee funds (or as a person in India) as indicated in
para 5.1 above without any lock-in-period. 5.3 In respect
of remittance of sale proceeds of assets acquired by way of inheritance or legacy
or settlement for which there is no lock-in period, NRI / PIO may submit documentary
evidence in support of inheritance or legacy of assets, an undertaking by the
remitter and certificate by a Chartered Accountant in the prescribed formats.
Settlement is also a mode of inheritance from the parent, the only difference
being that the property under the settlement passes to the beneficiary on the
death of the owner/parent without any legal procedures/hassles and helps in avoiding
delay and inconvenience in applying for probate, etc. Here, it is also clarified
that in case settlement is done without retaining any life interest in the property,
it would tantamount to regular transfer by way of gift. Therefore, if property
is received by NRI/PIO by way settlement without the settler retaining life interest,
it may be reckoned as transfer by way of gift and the remittance of sale proceeds
of such property would be guided by the extant instructions on remittance of balance
in the NRO account. 5.4 (a) The remittance facility in
respect of sale proceeds of immovable property is not available to citizens of
Pakistan, Bangladesh, Sri Lanka, China, Afghanistan, Iran, Nepal and Bhutan. (b)
The facility of remittance of sale proceeds of other financial assets is not available
to citizens of Pakistan, Bangladesh, Nepal and Bhutan. |
6.
Repatriation of sale proceeds of residential property purchased by NRIs / PIO
out of foreign exchange |
6.1 Repatriation of sale proceeds of residential
property purchased by NRI / PIO is permitted to the extent of the amount paid
for acquisition of immovable property in foreign exchange received through banking
channels. The facility is restricted to not more than two such properties. 6.2
Authorised dealer banks may permit repatriation of amounts representing the refund
of application / earnest money / purchase consideration made by the house building
agencies / seller on account of non-allotment of flat / plot / cancellation of
bookings / deals for purchase of residential / commercial property, together with
interest, if any (net of income tax payable thereon), provided the original payment
was made out of NRE / FCNR (B) account of the account holder, or remittance from
outside India through normal banking channels and the authorised dealer bank is
satisfied about the genuineness of the transaction. Such funds may also be credited
to the NRE / FCNR (B) account of the NRI / PIO, if they so desire. 6.3
Authorised dealer banks may allow repatriation of sale proceeds of residential
accommodation purchased by NRIs/PIO out of funds raised by them by way of loans
from the authorized dealer banks / housing finance institutions to the extent
of such loan/s repaid by them out of foreign inward remittances received through
normal banking channel or by debit to their NRE / FCNR (B)
account. 6.4 Authorisation to Regional Rural Banks (RRBs):
With a view to make foreign exchange services available to the NRIs/PIO on a wider
scale, RRBs are now authorised to open and maintain FCNR (B) Deposit accounts
also by NRIs/PIO. 6.5. Repatriation of maturity proceeds
of FCNR (B) deposits: AD Category-I banks and authorised
banks are permitted to make remittance of the maturity proceeds of FCNR (B) deposits
to the third parties outside India, provided the transaction is specifically authorised
by the account holder and the authorised dealer is satisfied about the bonafides
of the transaction. 6.6 ESOP to NRI Employees: Authorised
dealers are permitted to grant Rupee loans to NRIs employees of Indian companies
for acquiring shares of the companies under the ESOP Scheme. The loan scheme should
be as per the policy approved by the bank’s Board and would further be subject
to the conditions indicated in AP (DIR Series) Circular No. 7 dated August 22,
2007. | 7.
Facilities for students |
7.1 Students going abroad for studies are
treated as Non- Resident Indians (NRIs) and are eligible for all the facilities
available to NRIs under FEMA. 7.2 As Non-Residents, they
will be eligible to receive remittances from India (i) up to USD 100,000 from
close relatives in India on self declaration towards maintenance, which could
include remittances towards their studies also and (ii) up to USD 1 million per
financial year, out of sale proceeds of assets / balances in their account maintained
with an AD bank in India. 7.3 All other facilities available
to NRIs under FEMA are equally applicable to the students. 7.4
Educational and other loans availed of by them as residents in India will continue
to be available as per FEMA regulations. |
8. Income- tax clearance |
The remittances will be allowed to be made
by the authorized dealer banks on production of an undertaking by the remitter
and a Certificate from a Chartered Accountant in the formats prescribed by the
Central Board of Direct Taxes, Ministry of Finance, Government of India in their
Circular No.10/2002 dated October 9, 2002. [cf. A. P. (DIR
Series) Circular] No.56 dated November 26, 2002]. |
9. International Credit Cards |
Authorised dealer banks have been permitted
to issue International Credit Cards to NRIs/PIO, without prior approval of Reserve
Bank. Such transactions may be settled by inward remittance or out of balances
held in the cardholder’s FCNR (B) / NRE / NRO accounts.
|
Annex-1
Statement/returns to be submitted to the Reserve Bank. Master
Circular on Remittance Facilities for Non-Resident Indians/Persons of Indian Origin
/ Foreign Nationals
1 |
Facilities to NRIs/PIO and Foreign Nationals
– Liberalisation- Remittance from NRO account. |
Quarterly |
A.P. (DIR Series) Circular No. 12 dated
November 16, 2006. | |
Annex-2 Operational
Instructions for Authorised Dealer Banks. Master
Circular on Remittance Facilities for Non-Resident Indians/Persons of Indian Origin
/ Foreign Nationals
General
| Authorised
dealers may carefully study the provisions of the Act/ Regulations/ Notifications
issued under Foreign Exchange Management Act, 1999. Reserve
Bank will not prescribe the documents which should be verified by the authorised
dealers while permitting remittances for various transactions. In
terms of the provisions contained in sub-section 5 of section 10 of the Act, before
undertaking any transaction in foreign exchange on behalf of any person, authorised
dealer is required to obtain a declaration and such other information from the
person (applicant) on whose behalf the transaction is being undertaken that will
reasonably satisfy him that the transaction is not designed to contravene or evade
the provisions of the Act or any of the Rules or Regulations made or Notifications
or directions or orders issued under the Act. Authorised dealers should preserve
the information/ documents obtained by them from the applicant before undertaking
the transactions for verification by the Reserve Bank. In
case the person on whose behalf the transaction is being undertaken refuses or
does not give satisfactory compliance of the requirements of an authorised person,
he shall refuse in writing to undertake the transactions. Where an authorised
person has reasons to believe that a contravention or evasion of the Act or the
Rules or Regulations made or Notifications issued thereunder was contemplated
in the transaction that he has refused to undertake, he shall report the matter
to the Reserve Bank. With a view to maintaining uniform
practices, authorised dealers may consider requirements or documents to be obtained
by their branches to ensure compliance with provisions of sub-section (5) of section
10 of the Act. |
Opening of accounts by Bangladesh/ Pakistan entities.
| Opening
of accounts by individuals/entities of Bangladesh / Pakistan nationality / ownership
requires prior approval of Reserve Bank. All such requests may be referred to
the Chief General Manager, Foreign Exchange Department, (Foreign Investment Division),
Reserve Bank of India, Central Office, Mumbai-400 001. |
Remittance of current income |
Remittance outside India of current income
like rent, dividend, pension, interest, etc. in India of the account holder is
a permitted debit to the NRO account. Authorised Dealers
may allow repatriation of current income like rent, dividend, pension, interest,
etc. of NRIs who do not maintain an NRO account in India based on an appropriate
certification by a Chartered Accountant, certifying that the amount proposed to
be remitted is eligible for remittance and that applicable taxes have been paid/provided
for. | Restrictions
| (a)
The remittance facility in respect of sale proceeds of immovable property is not
available to citizens of Pakistan, Bangladesh, Sri Lanka, China, Afghanistan,
Iran, Nepal and Bhutan. (b) The facility of remittance
of sale proceeds of other financial assets is not available to citizens of Pakistan,
Bangladesh, Nepal and Bhutan. |
Tax compliance |
Authorised dealers can allow remittances
to non-residents only on production of an undertaking by the remitter and a Certificate
from a Chartered Accountant in the formats prescribed by the Central Board of
Direct Taxes, Ministry of Finance, Government of India in their Circular No.10/2002
dated October 9, 2002. [cf. Our A.P.(DIR Series) Circular No.56 dated November
26,2002]. |
APPENDIX List
of notifications / circulars which have been consolidated in this Master Circular
- Remittance facilities for Non-Resident Indians/Persons of Indian Origin/Foreign
Nationals http://www.rbi.org.in/Scripts/BS_ApCircularsDisplay.aspx http://www.rbi.org.in/Scripts/Bs_FemaNotifications.aspx
Sl.
No. | Notification/Circular
No. | Date |
1. |
Notification
No. FEMA 62/2002-RB | May
13, 2002 | 2. |
Notification
No. FEMA 65/2002-RB | June
29,2002 | 3. |
Notification
No. FEMA 93/2003-RB | June
9, 2003 | 4. |
Notification
No. FEMA 97/2003-RB | July
8, 2003 | 5. |
Notification
No. FEMA 119/2004-RB | June
29,2004 | 6. |
Notification
No. FEMA 152/2007-RB | May
15, 2007 | 1. |
AP
(DIR Series) Circular No.45 | May
14, 2002 | 2. |
AP
(DIR Series) Circular No.1 | July
2, 2002 | 3. |
AP
(DIR Series) Circular No.5 | July
15, 2002 | 4. |
AP
(DIR Series) Circular No.19 | September
12, 2002 | 5. |
AP
(DIR Series) Circular No.26 | September
28, 2002 | 6. |
AP
(DIR Series) Circular No.27 | September
28, 2002 | 7. |
AP
(DIR Series) Circular No.35 | November
01, 2002 | 8. |
AP
(DIR Series) Circular No.40 | November
5, 2002 | 9. |
AP
(DIR Series) Circular No.46 | November
12, 2002 | 10. |
AP
(DIR Series) Circular No.56 | November
26, 2002 | 11. |
AP
(DIR Series) Circular No.59 | December
9, 2002 | 12. |
AP
(DIR Series) Circular No.67 | January
13, 2003 | 13. |
AP
(DIR Series) Circular No.101 | May
5, 2003 | 14. |
AP
(DIR Series) Circular No.104 | May
31, 2003 | 15. |
AP
(DIR Series) Circular No.43 | December
8, 2003 | 16. |
AP
(DIR Series) Circular No.45 | December
8, 2003 | 17. |
AP
(DIR Series) Circular No.62 | January
31, 2004 | 18. |
AP
(DIR Series) Circular No.43 | May
13,2005 | 19. |
AP
(DIR Series) Circular No.12 | November
16, 2006 | 20 |
AP
(DIR Series) Circular No.57 | May
18, 2007 | 21. |
AP (DIR Series) Circular No. 1 |
July 5, 2007 |
22. |
AP (DIR Series) Circular No. 7 |
August 22, 2007 |
NOTE - For
the convenience of authorised dealers, a table of Statements / Returns to be submitted
to RBI and Operational Guidelines have been given in Annex-1 & 2, respectively.
- It is also clarified for information of all users
that the Master Circular need not necessarily be exhaustive and a reference to
the relevant A.P.(DIR Series) Circular is needed wherever further information/
clarification is required.
|