Master Circular on Remittance Facilities for Non-Resident Indians / Persons of Indian Origin / Foreign Nationals - Master Circular - Dated 1-7-2014 - FEMA | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RBI/2014-2015/8
Master Circular No. 8 /2014-15
July 01, 2014
To
All Authorised Dealer Category – I banks and Authorised banks
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 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 the Appendix.
3. This Master Circular is being updated from time to time as and
when the fresh instructions are issued. The date up to which the Master
Circular has been updated is suitably indicated.
4. This Master Circular may be referred to for general guidance. The
Authorised Persons and the Authorised Dealer Category – I banks may
refer to respective circulars/ notifications for detailed information,
if so needed.
Yours faithfully
(C D Srinivasan)
Chief General Manager
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 Notification No. FEMA 13/2000-RB dated May 3, 2000,
as amended from time to time. Accordingly, remittance of funds from the
sale of capital assets in India held by a person, whether resident in
or outside India, requires approval of the Reserve Bank except to the
extent provided in FEMA or Rules or Regulations made there under.
2. Definition of NRI/PIO
NRI for this purpose is defined as a person resident outside India who is citizen of India. In terms of Regulation 2 of 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
grandparents 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 outside India of current income like rent, dividend,
pension, interest, etc. in India of the account holder is a permissible
debit to the NRO account. Authorised Dealer banks may also allow
repatriation of current income like rent, dividend, pension, interest,
etc. of NRIs who do not maintain an NRO account in India, subject to
payment of applicable taxes as prescribed by Central Board of Direct
Taxes.
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.
3.3 Foreign nationals who come to India on employment and become residents in terms of section 2 (v) of FEMA, 1999,
and are eligible to open/ hold a resident savings bank account, are
permitted to re-designate their resident account maintained in India as
NRO account on leaving the country after their employment to enable them
to receive their legitimate dues subject to certain conditions.
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), subject to the satisfaction of the Authorised Dealer
bank, on production of documentary evidence in support of acquisition/
inheritance of assets and information in the formats prescribed by the
Central Board of Direct Taxes, Ministry of Finance, Government of India
from time to time.
4.2 These remittance facilities are not available to citizens of Nepal and Bhutan.
4.3 When a person resident in India leaves India for a country (other
than Nepal or Bhutan) for employment/business/vocation outside India or
with an intention to stay outside India, his/her existing account is
re-designated as NRO account. In order to facilitate foreign nationals
to collect their pending dues in India, AD Category-I banks may permit
such foreign nationals to re-designate their resident account maintained
in India as NRO account on leaving the country after their employment
to enable them to receive their pending bona fide dues, subject to the
following conditions:
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 bona fide purposes, subject to the
satisfaction of the Authorized Dealer bank and in the formats prescribed
by the Central Board of Direct Taxes, Ministry of Finance, Government
of India from time to time.
5.2 NRI/PIO may remit sale proceeds of immovable property purchased
by him out of Rupee funds (or as a person resident in India) as
indicated in paragraph 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 to the Authorised Dealer documentary
evidence in support of inheritance or legacy of assets, an undertaking
by the remitter 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. In case settlement
is done without retaining any life interest in the property i.e. during
the lifetime of the owner/parent, it would be tantamount to regular
transfer by way of gift. Therefore, if the property is received by
NRI/PIO by way of 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.
A person or his successor who has acquired immovable property in accordance with Section 6(5) of FEMA, 1999 cannot repatriate sale proceeds of such property outside India except with prior permission of the Reserve Bank.
(b) The facility of remittance of sale proceeds of other financial
assets is not available to citizens of Pakistan, Bangladesh, Nepal and
Bhutan.
6. Remittance of Salary
6.1 A citizen of a foreign state resident in India, being an employee
of a foreign company and on deputation to the office/ branch/
subsidiary/ joint venture in India of such foreign company or being an
employee of a company incorporated in India, may open, hold and maintain
a foreign currency account with a bank outside India and receive/ remit
the whole salary payable to him for the services rendered, by credit to
such account, provided that income tax chargeable under the Income Tax Act, 1961 is paid on the entire salary as accrued in India.
6.2 A citizen of India, employed by a foreign company outside India
and on deputation to the office/ branch/ subsidiary/ joint venture in
India of such foreign company, may open, hold and maintain a foreign
currency account with a bank outside India and receive the whole salary
payable to him for the services rendered to the office/ branch/
subsidiary/ joint venture in India of such foreign company, by credit to
such account, provided that income tax chargeable under the Income Tax Act, 1961 is paid on the entire salary as accrued in India.
[The above provisions on remittance of Salary should be read with Schedule III (7) of FEM (Current Account Transactions) Rules, 2000]
7. Repatriation of sale proceeds of residential property purchased by NRIs / PIO out of foreign exchange *
7.1 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. The balance amount can be credited to the NRO account and
can be remitted under USD one million facility as mentioned in paragraph
5.1.
7.2 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
Authorized 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.
7.3 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) accounts.
(*Definition of PIO for this purpose will be as stated in Notification No. FEMA 1/2000-RB dated 03.05.2000.)
8. Facilities for students
8.1 Students going abroad for studies are treated as Non- Resident
Indians (NRIs) and are eligible for all the facilities available to NRIs
under FEMA.
8.2 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 (ii) up to USD 1 million per financial year,
out of sale proceeds of assets / balances in their NRO account
maintained with an Authorised Dealer bank in India and (iii) up to
limits prescribed under the Liberalized Remittance Scheme.
8.3 All other facilities available to NRIs under FEMA are equally applicable to the students.
8.4 Educational and other loans availed of by them as residents in India will continue to be available as per FEMA regulations.
9. Income-tax clearance
The remittances will be allowed to be made by the Authorized Dealer
banks on production of an undertaking by the remitter in the formats
prescribed by the Central Board of Direct Taxes, Ministry of Finance,
Government of India from time to time. Reserve Bank of India will not
issue any instructions under FEMA, 1999
clarifying tax issues. It shall be mandatory on the part of Authorised
Dealers to comply with the requirement of tax laws, as applicable.
10. International Credit Cards
Authorised Dealer banks have been permitted to issue International
Credit Cards to NRIs/ PIO, without prior approval of the 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
APPENDIX
List of notifications/circulars which have been consolidated in this Master Circular
http://www.rbi.org.in/Scripts/BS_ApCircularsDisplay.aspx
http://www.rbi.org.in/Scripts/Bs_FemaNotifications.aspx
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Tuesday, July 15, 2014
Master Circular on Remittance Facilities for Non-Resident Indians / Persons of Indian Origin / Foreign Nationals - Master Circular - Dated 1-7-2014 - FEMA
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