FEMA Guidelines on Foreign Exchange Transactions

With the increased movement of goods, services and people across the globe, questions on foreign exchange are also increasing. In order to get a clarity, the following questions are reproduced based on RBI.
 
1. How much foreign exchange is available for a business trip?
Ans.  For business trips abroad to countries, other than to Nepal and Bhutan, a person can avail of foreign exchange up to USD 25,000 per visit.  Visits in connection with attending of an international conference, seminar, specialised training, study tour, apprentice training, etc., are treated as business visits. Release of foreign exchange exceeding USD 25,000 for business travel abroad (other than to Nepal and Bhutan), irrespective of the period of stay, requires prior permission from the Reserve Bank.
No release of foreign exchange is admissible for any kind of travel to Nepal and Bhutan or for any transaction with persons resident in Nepal.
Investments in Bhutan are permitted in Indian Rupees as well as in freely convertible currencies. If investment is made in freely convertible currency/ies, sale/winding up proceeds are required to be repatriated to India in freely convertible currencies.

2. How much foreign currency can be taken while buying foreign exchange for travel abroad?
Ans.  Travellers going to all countries other than (a) and (b) below are allowed to purchase foreign currency notes / coins only up to USD 3000. Balance amount can be carried in the form of travellers cheque or banker’s draft. Exceptions to this are (a) travellers proceeding to Iraq and Libya who can draw foreign exchange in the form of foreign currency notes and coins not exceeding USD 5000 or its equivalent; (b) travellers proceeding to the Islamic Republic of Iran, Russian Federation and other Republics of Commonwealth of Independent States who can draw entire foreign exchange in the form of foreign currency notes or coins.

3. How much foreign exchange can be drawn for medical treatment abroad?
Ans. AD Category I banks and AD Category II, may release foreign exchange up to USD 100,000 or its equivalent to resident Indians for medical treatment abroad on self declaration basis, without insisting on any estimate from a hospital/doctor in India/abroad. A person visiting abroad for medical treatment can obtain foreign exchange exceeding the above limit, provided the request is supported by an estimate from a hospital/doctor in India/abroad.
An amount up to USD 25,000 is allowed for maintenance expenses of a patient going abroad for medical treatment or check-up abroad, or to a person for accompanying as attendant to a patient going abroad for medical treatment/check-up.
The amount of USD 25,000 allowed to the patient going abroad is in addition to the limit of USD 100,000 mentioned above.

4. What are the facilities available to students for pursuing their studies abroad? Ans.  For studies abroad the estimate received from the institution abroad or USD 100,000, per academic year, whichever is higher, may be availed of from an AD Category I bank and AD Category II. Students going abroad for studies are treated as Non-Resident Indians (NRIs) and are eligible for all the facilities available to NRIs under FEMA, 1999. Educational and other loans availed of by students as residents in India can be allowed to continue. A student holding NRO account may withdraw and repatriate up to USD 1 million per financial year from his NRO account.  The student may avail of an amount of USD 10,000 or its equivalent for incidental expenses out of which USD 3000 or its equivalent may be carried in the form of foreign currency while going for study abroad.

5. How much foreign exchange is available to a person going abroad on employment?
Ans.  A person going abroad for employment can draw foreign exchange up to USD 100,000 from any Authorised Dealer in India on the basis of self-declaration.

6. How many days in advance one can buy foreign exchange for travel abroad?
Ans.  Permissible foreign exchange can be drawn 60 days in advance. In case it is not possible to use the foreign exchange within the period of 60 days, it should be immediately surrendered to an authorised person. However, residents are free to retain foreign exchange up to USD 2,000, in the form of foreign currency notes or TCs for future use or credit to their Resident Foreign Currency (Domestic) [RFC (Domestic)] Accounts. 

7. Can one pay by cash full rupee equivalent of foreign exchange being purchased for travel abroad?
Ans.  Foreign exchange for travel abroad can be purchased from an authorized person against rupee payment in cash only up to Rs.50,000/-. However, if the Rupee equivalent exceeds Rs.50,000/-, the entire payment should be made by way of a crossed cheque/ banker’s cheque/ pay order/ demand draft/ debit card / credit card / prepaid card only.

8. How much foreign exchange can a resident individual send as gift / donation to a person resident outside India?
Ans.  Any resident individual, if he so desires, may remit the entire limit of USD 200,000 in one financial year under LRS as gift to a person residing outside India or as donation to a charitable/educational/ religious/cultural organization outside India.  Remittances exceeding the limit of USD 200,000 will require prior permission from the Reserve Bank.
Form (CDF), on arrival in India.

9. Is it required to follow complete export procedure when a gift parcel is sent outside India?
Ans.  A person resident in India is free to send (export) any gift article of value not exceeding Rs.5,00,000 provided export of that item is not prohibited under the extant Foreign Trade Policy and the exporter submits a declaration that goods of gift are not more than Rs.5,00,000 in value.
Export of goods or services up to Rs.5,00,000 may be made without furnishing the declaration in Form GR/ SDF/ PP/ SOFTEX, as the case may be. 

10. What is the Liberalised Remittance Scheme of USD 200,000?
Ans.  Under the Liberalised Remittance Scheme, all resident individuals, including minors, are allowed to freely remit up to USD 200,000 per financial year (April – March) for any permissible current or capital account transaction or a combination of both.

11. Please provide an illustrative list of capital account transactions permitted under the scheme.
Ans..  Under the Scheme, resident individuals can acquire and hold immovable property or shares or debt instruments or any other assets outside India, without prior approval of the Reserve Bank. Individuals can also open, maintain and hold foreign currency accounts with banks outside India for carrying out transactions permitted under the Scheme. 

12. What are the prohibited items under the Scheme?
Ans.  The remittance facility under the Scheme is not available for the following:
i) Remittance for any purpose specifically prohibited under Schedule-I (like purchase of lottery tickets/sweep stakes, proscribed magazines, etc.) or any item restricted under Schedule II of Foreign Exchange Management (Current Account Transactions) Rules, 2000;
ii) Remittance from India for margins or margin calls to overseas exchanges / overseas counterparty;
iii) Remittances for purchase of FCCBs issued by Indian companies in the overseas secondary market;
iv)  Remittance for trading in foreign exchange abroad;
v) Remittance by a resident individual for setting up a company abroad;
vi) Remittances directly or indirectly to Bhutan, Nepal, Mauritius and Pakistan;
vii) Remittances directly or indirectly to countries identified by the Financial Action Task Force (FATF) as “non co-operative countries and territories”, from time to time; and
viii) Remittances directly or indirectly to those individuals and entities identified as posing significant risk of committing acts of terrorism as advised separately by the Reserve Bank to the banks.

13. Is it mandatory for resident individuals to have PAN number for sending outward remittances under the Scheme?
Ans.   It is mandatory to have PAN number to make remittances under the Scheme.

 For any queries on Forex facilities for residents, please email karthikeyan.auditor@gmail.com or call +91 98422 10422