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What is the timeframe for a non-resident individual to sell realised foreign exchange received as remuneration for services rendered?
If a non-resident acquires foreign exchange but does not use it for the declared purpose, how long do they have to surrender the unused portion?
When must a traveller surrender unspent foreign exchange received in the form of currency notes after returning to India?
For how many days can a resident individual keep received foreign exchange before surrendering it to an authorised person?
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What is the required action for a non-resident individual who purchases foreign exchange for travel but does not use all of it?
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How long does a non-resident have to surrender foreign exchange received as income on assets held outside India?
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If a non-resident individual receives gift money as foreign exchange, when must they surrender it?
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What is the deadline for surrendering foreign exchange in the form of travellers cheques after returning to India?
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What is the definition of a Non-Resident Indian?
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Which of the following statements accurately describes the term 'Repatriate to India'?
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Which section prohibits unauthorized persons from dealing in foreign exchange?
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What is a requirement for someone to be classified as a Person of Indian Origin?
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What does the term 'financial transaction' include as per the defined regulations?
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Which action is specifically prohibited under Section 3(d)?
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What does the term 'authorized person' refer to in the context of foreign exchange regulations?
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Which of the following is NOT included in the definition of repatriating to India?
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Which of the following foreign exchanges are exempt from regulations under the Foreign Exchange Management Act?
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What is the maximum remittance limit outside India per financial year for assets held by a foreign national?
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Under which condition may a foreign national be allowed to remit assets from India?
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What does the term 'remittance of assets' include?
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Which of the following individuals can remit assets under the regulations?
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For which of the following scenarios is remittance allowed?
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What requirement must be fulfilled if remittance occurs in multiple installments?
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Which of the following does NOT qualify for remittance as per the regulations?
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What must Indian companies under liquidation submit to allow remittance as per court directions?
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Which of the following is NOT required for remittance of winding up proceeds of a branch or liaison office?
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What does the auditor's certificate require in the context of winding up otherwise than by a court?
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Which contribution is Indian entities allowed to remit for expatriate staff not permanently resident in India?
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What is required from the applicant for remittance regarding regulatory compliance for branch offices?
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In the context of remittances by companies, which statement about proceeding with remittance is incorrect?
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Which of the following must be confirmed by the auditor when dealing with remittable amounts?
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Which document is NOT required for Indian companies to remit their winding up proceeds?
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Which ministry needs to approve cultural tours?
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What is the threshold for advertisements by public sector undertakings requiring approval from the Ministry of Finance?
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Which ministry must approve payment for chartered vessels by public sector undertakings?
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Who must obtain registration for multi-modal transport operators making payments abroad?
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When does hiring charges for transponders need approval from the Ministry of Information and Broadcasting?
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What is needed for remittance of prize money/sponsorship of sports activity exceeding US $ 1 lakh?
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Which ministry is responsible for remittance for membership of P&I Club?
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What requires approval from the Ministry of Shipping regarding container detention charges?
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Study Notes
Defining Terms
- Person Resident Outside India: A person who is not a resident of India. This includes citizens of India, but also people of Indian origin as long as they live outside the country.
- Repatriate to India: The process of converting foreign currency into Indian Rupees, achieved through an authorized person in India. It can involve selling the foreign currency, holding it in a designated account, or using it to settle debts denominated in foreign exchange.
- Non-Resident Indian (NRI): A resident of a country outside India who holds Indian citizenship or is of Indian origin.
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Person of Indian Origin (PIO): A person who is not a citizen of Pakistan or Bangladesh and meets at least one of the following:
- Held an Indian passport at any time.
- Both parents or grandparents were citizens of India.
- Married to an Indian citizen or a spouse of someone who meets the previous criteria.
Regulation and Management of Foreign Exchange
- Authorized Person: An entity permitted to deal in foreign exchange transactions in India.
- Regulation and Management of Foreign Exchange: The Foreign Exchange Management Act (FEMA) sets the rules governing international financial transactions. Chapter II of the Act (Sections 3-9) specifically focuses on this.
- Restrictions on Foreign Exchange Transactions: Except for authorized persons, individuals or entities are prohibited from engaging in foreign exchange transactions or transfers without adhering to specific conditions, such as receiving general or special permission from the Reserve Bank of India (RBI).
Surrender of Realized Foreign Exchange
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Timelines for Surrender: Non-resident individuals in India must surrender their realized foreign currency to an authorized person within specific deadlines:
- 7 days: If the currency is earned as remuneration for services, settlement of legal obligations, income from assets held abroad, or received through inheritance, settlement, or gift.
- 90 days: For all other cases.
Remittances Outside India
- Definition of Remittance of Assets: Transferring assets, such as bank deposits, provident fund balances, insurance proceeds, or sale proceeds of properties, from India to another country.
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Remittances by Individuals: Remittances for foreign nationals who have retired from employment in India, inherited assets from individuals connected to India, or are non-resident widows/ widowers inheriting assets from spouses who were Indian nationals are allowed with certain conditions:
- Limit: USD 1 million per financial year, excluding sale proceeds of assets held on repatriation basis.
- Procedure: Multiple installments must be remitted through the same authorized dealer with supporting documentation.
Remittances for Companies and Entities
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Indian Companies Under Liquidation: Authorized dealers (ADs) may allow remittances from Indian companies that are liquidating with specific requirements:
- Auditor's Certificate: Guaranteeing that all liabilities in India have been settled or adequately provided for, confirming the winding up process aligns with the Companies Act, 1956, and confirming no legal proceedings are pending.
- Indian Entities: Remittances for contributions towards provident fund/superannuation/pension funds for non-permanently resident expatriate staff are permitted.
Remittances for Closure of Branch/Office
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Remittances on Closure: ADs may allow remittances of assets upon closure of a branch or liaison office, excluding project offices, subject to providing necessary documents:
- Reserve Bank Permission: A copy of the RBI's approval for establishing the branch or office in India.
- Auditor's Certificate: Detailing the remittable amount, including a statement of assets and liabilities, explaining asset disposal, confirming all liabilities in India have been met, ensuring no income from sources outside India has remained un-repatriated, and confirming compliance with RBI regulations governing branch/office operations in India.
- Confirmation: A statement from the applicant confirming no legal proceedings are pending.
- Registrar of Companies Report: A report detailing compliance with the Companies Act, 2013, if the office is being wound up.
Specific Remittance Restrictions
- Cultural Tours: Ministry of Human Resource Development (MHRD) approval is needed for cultural tours.
- Public Sector Undertakings/Government Advertisements: Advertisements abroad by public sector undertakings, State Governments, and Central Government departments, exceeding US $ 10000 and for purposes beyond tourism, foreign investment, and international bidding, require approval from the Ministry of Finance.
- Chartered Vessels: Payment for freight of vessels chartered by public sector undertakings or import by government departments/ public sector undertakings on a CIF basis needs approval from the Ministry of Shipping.
- Import Payments: Payment of imports through ocean transport by government or public sector undertakings on a CIF basis requires approval from the Ministry of Transport.
- Multi Modal Transporters: The Ministry of Transport issues registration certificates to multimodal transport operators making payments to their agents abroad.
- Transponder Hire Charges: TV channels need the Ministry of Information and Broadcasting's approval for transponder hire charges, while Internet Service Providers (ISPs) require authorization from the Ministry of Communication and Information Technology.
- Container Detention Charges: Remittances for container detention charges exceeding prescribed rates set by the Director General of Shipping require the Ministry of Shipping’s approval.
- Sports Prize Money/Sponsorship: Remittances for prize money or sponsorship of sports activities abroad exceeding US $ 1 lakh require approval from the Ministry of HRD. International, national, or state-level sports bodies are exempt from this requirement regardless of the amount.
- Protection and Indemnity (P&I) Club Membership: The Ministry of Finance (Insurance Division) grants approval for fees related to membership in P&I Clubs.
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Description
This quiz covers essential definitions and regulations related to foreign exchange in India. Engage with terms like Non-Resident Indian (NRI), Person of Indian Origin (PIO), and the repatriation process. Test your understanding of the management of foreign currency and regulations governing such transactions.