1. 1For release of foreign exchange to persons resident in India for various current account transactions, authorised dealers are to be guided by the Rules made by the Govt. of India under Section 5 of Foreign Exchange Management Act, 1999 (as indicated in item 1 of Appendix 2) which are detailed in the Foreign Exchange Management (Current Account Transactions) Rules, 2000 (Annex-1) notified by the Government of India vide Notification No. G.S.R.381(E) dated 3rd May 2000 (Rules). In terms of the said Rules, drawal of exchange for certain categories of transactions as listed in Schedule I is expressly prohibited. Exchange facilities for transactions included in Schedule II to the Rules may be permitted by the Authorised Dealers provided the applicant has secured the approval from the Ministry/Department of Government of India as specified therein. In respect of transactions included in Schedule III, prior approval of the Reserve Bank would be required for remittance exceeding specified values. The release of foreign exchange up to the threshold values specified in Schedule III stands delegated to Authorised Dealers. All applications for release of exchange exceeding limitsas prescribed in Schedule III to the Rules should be referred to the Regional Office of the Foreign Exchange Department of the Reserve Bank, under whose jurisdiction the applicant is functioning/ residing.

1.3 In order to provide adequate foreign exchange facilities and efficient customer service, the Reserve Bank has decided to grant licences to certain entities by authorising them as Authorised Dealer – Category II to undertake a range of miscellaneous non-trade current account transactions. Accordingly, Authorised Dealer – Category II are authorised to release / remit foreign exchange for the following non-trade current account transactions:

1. (a) Private visits,
2. (b) Remittance by tour operators / travel agents to overseas agents / principals / hotels,
3. (c) Business travel,
4. (d) Fee for participation in global conferences and specialized training,
5. (e) Remittance for participation in international events / competitions (towards training, sponsorship and prize money),
6. (f) Film shooting,
7. (g) Medical treatment abroad,
8. (h) Disbursement of crew wages,
9. (i) Overseas education,
10. (j) Remittance under educational tie up arrangements with universities abroad,
11. (k) Remittance towards fees for examinations held in India and abroad and additional score sheets for GRE, TOEFL, etc.,
12. (l) Employment and processing, assessment fees for overseas job applications,
13. (m) Emigration and emigration consultancy fees,
14. (n) Skills / credential assessment fees for intending migrants,
15. (o) Visa fees,
16. (p) Processing fees for registration of documents as required by the Portuguese / other Governments,

1.4 1.4 Release of foreign exchange is not admissible for travel to and transaction with residents of Nepal and Bhutan. (cf. Clause (b) of Rule 3 of the Rules. (as indicated in item 2 of Appendix 2))

2.4 Out of the overall 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 may be released

A.4 Cultural Tours

In case the foreign exchange purchased for a specific purpose is not utilized for that purpose, it could be utilized for any other eligible purpose for which drawal of foreign exchange is permitted under the relevant Regulation.

General permission is available to any resident individual to surrender received / realised / unspent / unused foreign exchange to an Authorised Person within a period of 180 days from the date of receipt / realisation / purchase / acquisition / date of return of the traveler, as the case may be.

The liberalized uniform time limit of 180 days is applicable only to resident individuals and that too in areas other than export of goods and services.

A.8 Unspent
Foreign
Exchange

(i) acquired by him from an Authorised Person for travel abroad and represents the unspent amount thereof.

9.1 Authorised Dealers may remit foreign exchange up to a reasonable limit, at the request of a traveler towards his hotel accommodation, tour arrangements, etc., in the countries proposed to be visited by him, provided it is out of the foreign exchange purchased by the traveler from an Authorised 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 arrangements for travelers from India, provided the Authorised Dealer is satisfied that the remittance is being made out of the foreign exchange purchased by the concerned traveler 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 travelers from India provided:-

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

i)collections made in foreign exchange from travelers; 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 Authorised Dealer may allow tour operators to remit the cost of rail/road/water transportation charges outside India without any prior approval from the Reserve Bank, net of commission/mark up due to the agent. The sale of passes/ticket in India can be made either against the payment in Indian Rupees or in foreign exchange released for visits abroad. The cost of passes/tickets collected in Indian Rupees need not be adjusted in the travelers’ entitlement of foreign exchange for private visit.

Authorised dealers may accept payment in cash up to

Rs. 50,000 (Rupees fifty thousand only) against sale of foreign exchange for travel abroad (for private visit or for any 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.

Authorised Dealer may issue guarantee on behalf of their customers importing services, provided:

a. the guarantee amount does not exceed USD 100,000;
b. AD is satisfied about the bonafides of the transaction;
c. AD ensures submission of documentary evidence for import of services in the normal course; and

d. the guarantee is to secure a direct contractual liability arising out of a contract between a resident and a non-resident.

13.1 Under this Scheme, Authorised Dealers may freely allow remittances by resident individuals up to USD 200,000 per financial year (April-March) for any permitted current or capital account transactions or a combination of both.

13.2 The limit of USD 200,000 under the Scheme would also include remittances towards gift and donation by a resident individual.

13.3 Remittances under the Scheme are allowed only in respect of permissible current or capital account transactions or a combination of both. All other transactions which are otherwise not permissible under FEMA and those in the nature of remittance for margins or margin calls to overseas exchanges / overseas counterparty are not allowed under the Scheme.

13.4 Resident individuals are free to acquire and hold immovable property or shares (of listed companies or otherwise) or debt instruments or any other asset outside India without prior approval of the Reserve Bank.

13.5 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.

13.6 Banks should not extend any kind of credit facilities to resident individuals to facilitate remittances under the Scheme.

13.8 For undertaking transactions under the Scheme, resident individuals may use the Application-cum-Declaration Form as Annex-3

14.1 The Reserve Bank will not, generally, prescribe the documents which should be verified by the Authorised Dealers while releasing foreign exchange. In this connection, attention of authorised dealers is drawn to sub-section (5) of Section 10 of the FEMA, 1999 (as indicated in item 3 of Appendix 2)) which provides that an authorised person shall require any person wanting to transact in foreign exchange to make such a declaration and to give such information as will be 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 FEMA or any rule, regulation, notification, direction or order issued thereunder.

14.2 Authorised 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 Bank. In case the applicant refuses to comply with any such requirement or makes unsatisfactory compliance therewith, the authorised dealer 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.

16.1 The restrictions contained in Rule 5 of the Foreign Exchange Management (Current Account Transactions) Rules, 2000 will not be applicable for use of International Credit Cards (ICCs) by residents for making payment towards expenses, while on a visit outside India.

16.2 Residents can use ICCs on internet for any purpose for which exchange can be purchased from an authorised dealer in India, e.g. for import of books, purchase of downloadable softwares or import of any other item permissible under Foreign Trade Policy (FTP).

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

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

16.5 Resident individuals maintaining foreign currency accounts with an authorised 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 card 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.

17.1 Banks authorised to deal in foreign exchange are issuing International Debit Cards (IDCs) which can be used by a resident for drawing cash or making payment to a merchant establishment overseas during his visit abroad. It is clarified that IDCs can be used only for permissible current account transactions and the item-wise limits as mentioned in the Schedules to Rules as amended from time to time, are equally applicable to payments made through use of these cards.

17.2 The IDCs cannot be used on internet for purchase of prohibited items like lottery tickets, banned or proscribed magazines, participation in sweepstakes, payment for call-back services, etc., i.e. for such items/activities for which drawal of foreign exchange is not permitted.

6. Remittance of hiring charges of transponders by

(a) TV Channels

Ministry of Information and Broadcasting

In case remittance is for supply of articles or things (e.g. plant, machinery, equipment, etc.) or computer software, please indicate:-

(i)  Whether there is any permanent establishment in India through which the beneficiary of the remittance is directly or indirectly carrying on such activity of supply of articles or things?

(ii)  Whether such remittance is attributable to or connected with such permanent establishment?

(iii)  If so, the amount of income comprised in such remittance which is liable to tax.

In case remittance is on account of business income please indicate :-

(i)  Whether such income is liable to tax in India?

(ii)  If so, the basis for arriving at the rate of deduction of tax.

A.P.(DIR Series) Circular No. 46 dated

Liberalised Remittance Scheme for Resident Individuals

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, particularly of current account.

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.

In terms of the Rule 3 of the Foreign Exchange Management (Current Account Transactions) Rules, 2000, drawal of foreign exchange for the transactions included in Schedule I thereto is prohibited.

Authorised dealers may release foreign exchange for transactions included in Schedule II to the Rules, provided the applicant has secured the approval from the Ministry/Department of Government of India indicated against the transaction.

In respect of transactions included in Schedule III, where the remittance applied for exceeds the limit, if any, indicated in the schedule or other transactions included in the Schedule III for which no limit have been stipulated would require prior approval of Reserve Bank. However, resident individual has the option to avail the Liberalised Remittance Scheme for making additional amount of remittance, subject to compliance with the terms and conditions of the Scheme.

Remittances for all other current transactions which are not specifically prohibited under the Rules or which are not included in Schedule II or III may be permitted by the authorised dealers with out any monetary/percentage ceilings subject to compliance with the provisions of sub-section (5) of Section 10 of the Act. Remittances for transactions included in Schedule III may be permitted by authorised dealers up to the ceiling prescribed thereto.

The remittance under the Scheme is available to the resident individuals for any permitted current or capital account transactions or a combination of both.

The facility under the Scheme is in addition to those already available for private travel, business travel, gift remittances, donations, studies, medical treatment etc., as described in Schedule III of Foreign Exchange Management (Current Account Transactions) Rules, 2000.

Under the Scheme, resident individuals can acquire and hold immovable property or shares (listed or other-wise) or debt instruments or any other assets outside India, without prior approval of the Reserve Bank. They can also open, maintain and hold foreign currency accounts with banks outside India. However, remittance from India for margins or margin calls to overseas exchanges / overseas counterparty are not allowed under the Scheme.

The individual will have to designate a branch of an AD through which all the remittances under the Scheme will be made.

While allowing the facility to resident individuals, Authorised Dealers are required to ensure that the 'Know Your Customer' Guidelines have been implemented in respect of bank accounts. They should also comply with the Anti-Money Laundering Rules in force while allowing the facility.

The applicants should have maintained the bank account with the bank for a minimum period of one year prior to the remittance. If the applicant seeking to make the remittance is a new customer of the bank, Authorised Dealers should carry out due diligence on the opening, operation and maintenance of the account. Further the AD should obtain bank statement for the previous year from the applicant to satisfy themselves regarding the source of funds. If such a bank statement is not available, copies of the latest Income Tax Assessment Order or Return filed by the applicant may be obtained.

The AD should ensure that the payment is received out of funds belonging to the person seeking to make the remittance, by a cheque drawn on the applicant's bank account or by debit to his account or by Demand Draft / Pay Order. It is further clarified that banks should not extend any kind of credit facilities to resident individuals to facilitate remittances under the Scheme.