PART C - REMITTANCE OF PROFITS/SURPLUS ETC. BY FOREIGN COMPANIES

Remittance of Profits by Foreign Companies (other than Banks)

11C.1

Applications for remittance of profits by the branches of the foreign companies should be accompanied by the following documents:

(a)

Certified true copy of audited Balance Sheet and Profit and Loss Account statement for the year to which the profit relates.

(b)

Certificate from the auditors covering the following:

(1)

manner of arriving at the remittable amount;

(2)

confirmation that the entire income of the branch office included in the accounts for the year had accrued from sources in India (In case any part of the income had accrued form sources outside India, the auditor's certificate should clearly indicate that this amount was repatriated to India immediately on realisation);

(3)

confirmation that the requirements of the Companies Act, 1956 have been complied with.

(c)

Certificate, citing RBI's approval number and date, from the auditors to the effect that the branch office has carried on business strictly in terms of the approval under Section 29(1)(a) granted by the Reserve Bank of India.

(d)

Certificate from the auditors that sufficient funds have been set aside to meet all Indian tax liabilities or that these liabilities have already been met.

(e)

Declaration from the applicant that the profit sought to be remitted is purely the profit earned in the normal course of business and does not include profit from any other source.

Authorised Dealers may scrutinize the above documents particularly with reference to -

(a)

source of income which should be out of activities approved by RBI and

(b)

calculations of the amount sought to be remitted with reference to the Profit and Loss account and the provision of tax.

If found in order, authorised dealers may allow the remittance.

Remittance of Profits by Foreign Banks Operating in India

11C.2

Indian branches of foreign banks operating in India may remit to their Head Offices

outside India net profit/surplus (net of taxes) arising out of their Indian business after

finalisation of the accounts for the respective year, in accordance with the provisions of the Banking Regulation Act, 1949 and directions issued by Reserve Bank in this regard. Full details of the remittances made should be advised to the Chief General Manager, Exchange Control Department (External Payments Division), Reserve Bank of India, Central Office, Mumbai 400 001 duly certified by their auditors imeditely after making the remittance.

Remittance of Surplus Passage/Freight Collections by Foreign Airline/Shipping Companies

11C.3

Regulations governing remittance of surplus freight and passage collections by

foreign airline/shipping companies operating in or through India are laid down in

Part B of Chapter 8.

Refund of Income-tax to Non-resident Firms/Companies

11C.4

Applications for remittances on account of refund of income-tax to foreign firms/companies

should be made to authorised dealers on form A2 supported by the following documents/particulars:

(a)

Original assessment order (together with certified copy) and copy of Income-tax Return for the corresponding assessment year.

(b)

Certificate from authorised dealer through whom the income-tax refund order has been encashed that the proceeds of the refund order are held by them in suspense account pending remittance abroad.

(c)

Source of funds from which tax was originally paid. If paid out of remittance from abroad, a bank certificate for the inward remittance; if tax was paid by deduction at source from dividend, interest on loans, royalty or other income which has already been remitted to the foreign firm/company, full details as under of the income on which tax was deducted should be furnished.

(1)

Nature of income i.e. dividend, interest, royalty, etc. amount and assessment year in which it accrued.

(2)

Name and address of Indian firm/company from which the income was derived.

(3)

The year/period to which the income related.

(4)

The date of remittance and other particulars of the amount originally remitted.

Authorised dealers may allow such remittances if they are satisfied that the tax amount of which the refund has been claimed was deducted from the amount remitted originally.

(See paragraph 11D.12 regarding remittance of income-tax refunds to individuals).

Remittance of Winding up Proceeds

11C.5

Applications for remittance of winding up proceeds abroad will be entertained by Reserve

Bank only after winding up has been completed and the actual net remittable surplus established.

Applications should be made on form A2 supported by following particulars/documents:

(a)

Number and date of Reserve Bank's approval for establishing the branch/office in India.

(b)

Number and date of Reserve Bank's approval for sale of immovable properties, if any, held by the branch/office.

(c)

Auditor's certificate containing the following:

(1)

manner in which remittable amount has been arrived at, duly supported by a statement of all assets and liabilities of the applicant, the manner of disposal of assets, name/s, and address/es of the purchaser/s, Reserve Bank's approval number/s and date/s under Section 31 of FERA 1973 for disposal of immovable properties etc.;

(2)

confirmation that all liabilities in India including arrears of gratuity, employee benefits, etc. in respect of the applicant have either been fully met or adequately provided for;

and

(3)

confirmation that no income accruing from sources outside India (including proceeds of exports) has remained unrepatriated to India.

(d)

No objection Certificate or Tax Clearance Certificate from Indian Income-tax Authorities for the remittance of net surplus.

(e)

Confirmation from applicants that no legal proceedings in Indian Courts or enquiries from Enforcement Directorate are pending against them and that after remittance of the net surplus, no further remittance facilities will be asked for.