PART D - REMITTANCE FACILITIES TO FOREIGN NATIONALS

General

11D.1

The regulations and procedures relating to remittance facilities available to foreign nationals

including those resident outside India are set out in this Part. Ordinarily, foreign nationals

who have taken up residence in India temporarily on account of their employment, profession or other activity with the intention of retiring eventually to their own or any other foreign country, will be considered as 'not permanently resident in India' and be eligible for various facilities explained in this Part, if the activity undertaken in India is in accordance with the general or special permission of Reserve Bank as required under FERA 1973. Foreign nationals permanently resident in India and persons of Indian origin other than those residing in India for employment of a specified duration (irrespective of the length thereof) or for a specific job or assignment the duration of which does not exceed three years, are treated on par with Indian nationals resident in India and will not be eligible for facilities for which foreign nationals not permanently resident in India are eligible, except as specifically provided in the Manual or where Reserve Bank's specific approval has been obtained.

NOTE :

The procedure set out in the following paragraphs will not apply to the personnel of foreign diplomatic missions in India. Their requests for remittances will require prior approval of Reserve Bank, for which applications may be made by letter.

Short-term Engagement of Foreign Nationals by Indian Firms/Companies

11D.2

(i)

Indian firms/companies may engage the services of foreign nationals (including

non-resident persons of Indian nationality/origin) on short-term assignments without prior

approval of Reserve Bank. Applications for remittance of remuneration to foreign nationals or foreign companies (in the case of company-to-company contracts) should be made by the Indian firms/companies to authorised dealers on form A2 together with a statement in form EFT (in duplicate) and an Undertaking/ Certificate regarding payment of Income-tax (cf paragraph 3 B.10) Before allowing the remittance, authorised dealers should verify the statement in form EFT and the other documents/information submitted and be satisfied that -

(a)

the amount of remittance sought for is in accordance with the terms of contract entered into by the applicant firm/company with the foreign national/company.

(b)

the services of the foreign national are not covered either by any foreign collaboration agreement entered into by the Indian firm/company or under any warranty/guarantee obtained providing for deputation of the foreign national without any remuneration or any payment during the warranty/guarantee period. A confirmation to this effect should be obtained from the company concerned.

(ii)

If the period of engagement of the foreign national is upto 3 months,

authorised dealers should ensure that the concerned foreign national holds a valid visa i.e. employment, business, tourist etc. If the period exceeds three months, authorised dealers should ensure that the concerned foreign national holds a valid employment visa.

(iii)

A copy of the form EFT should be forwarded to Reserve Bank along with

(iv)

All payments made in connection with engagement/ deputation of foreign

personnel including payments made locally in Indian rupees towards their passage fares, local living expenses, etc. are liable for the levy of Cess under the Research and Development Cess Act, 1986. Authorised dealers should advise their constituents to deposit the amount of Cess while allowing the remittance towards fees of foreign personnel.

Engagement of foreign artistes for performance in India

11D.2A

(i)

Authorised dealers may allow remittance facilities for engagement of

foreign artistes such as dancers, musicians in the following cases.

(a)

Where the artistes are engaged by tourism related organisations in India like India Tourism Development Corporation, State Tourism Development Corporation, etc. during special festivals organised by them.

(b)

Where the artistes are engaged by hotels in India in five star category and the foreign exchange expenditure is met out of funds held in EEFC account of the hotel concerned.

Remittance should be allowed as per the terms of the contract and on production of an Accountant's certificate/undertaking regarding payment of Income-tax. Before allowing the remittance authorised dealers should ensure that the concerned artiste holds a valid visa where the period of engagement is up to 3 months and employment visa where the period exceeds 3 months. In the case of artistes engaged by hotels in five star categories, the remittance should be allowed only by debit to the EEFC account of the hotel concerned.

(ii)

Authorised dealers should keep a certified copy of the contract on record

for verification by their internal auditors/Reserve Bank.

NOTE :

Foreign nationals employed/engaged in racing trade (such as jockeys, stewards, bookies, trainers, breeders, etc.) as also foreign cabaret artistes, wrestlers and other entertainers visiting India would not be eligible for remittance facilities.

Recurring Remittances by Foreign Nationals who are in regular employment of Indian firms/companies

11D.3

(i)

Foreign nationals who are not permanently resident in India but are in regular

employment with Indian firms/companies on payment of monthly salary, are permitted to

make recurring remittances for family maintenance. Authorised dealers may allow such foreign nationals, who are their regular constituents, to make recurring remittances for family maintenance, etc., upto 75% of their net salary (i.e., after deduction of contribution to provident etc. funds and taxes payable) after verifying that they hold valid employment visas. On request, authorised dealers may also allow remittances in excess of 75% of net salary provided the foreign national is in receipt of perquisites in India such as free housing, conveyance and medical facilities and his family (wife and/or children) is resident outside India.

(ii)

Salaries to the employees deputed by foreign companies to their Indian

offices/branches/subsidiaries/joint ventures may be paid abroad to the extent of 75% of the net salary (tax to be paid for the full amount in India) and balance amount of salary may be paid in India.

NOTES:

A.

The foreign national concerned should be advised to maintain a bank account with the authorised dealer through whom the remittance is proposed to be made, for depositing his income in India.

B.

Every time a remittance is effected by authorised dealer in terms of this paragraph, a declaration should be obtained from the applicant, on the relative form A2, that remittances made by him for all purposes during the month including that applied for, have not in the aggregate exceeded the net salary and that remittance applied for is being made out of savings from income accrued during that month after retention of adequate funds for his current expenses in India. Authorised dealers should also append a certificate on reverse of the form that remittances made by applicant during the month have not exceeded the net salary.

Remittance Facilities to Iranian Nationals

11D.4

Deleted

Retirement Facilities

11D.5

(i)

Foreign nationals not permanently resident in India are permitted to transfer,

to their own countries, at the time of retirement from India, their current assets such as

(ii)

Authorised dealers may release foreign exchange up to U.S.$ 2000 or its

equivalent to retiring foreign nationals pending disposal of their applications for transfer facilities submitted to Reserve Bank. (Exchange sold in the form of foreign currency notes and coins should not however exceed U.S.$ 500 or its equivalent).

Foreign Born Widows of Indian Nationals

11D.6

Reserve Bank permits, on a selective basis, remittance facilities to foreign-born widows of

Indian nationals who wish to go back to the country of their birth. Applications in such cases

should be made in form EMG together with documents specified on the form. In approved cases, the facility for transfer of assets in India will be allowed to such ladies up to Rs.10,00,000/- at the time of leaving India for good and up to Rs.5,00,000/- annually thereafter. This scale will apply to their entire assets and income, if any, arising in India and they will not be eligible for separate remittance facility in respect of their income on assets left behind in India.

Repatriation Facilities to Foreign Students/Trainees

11D.7

(i)

Foreign students/trainees are permitted to transfer to their own countries, at the time

of leaving India after completion of their studies/training in India, the balance available in their

bank accounts maintained by them in terms of paragraph 11B.1. Authorised dealers may allow such remittances provided the balance in the account represents funds derived from rupee proceeds of remittances in foreign exchange received from abroad in an approved manner or rupee proceeds of foreign exchange brought by them to India and sold to authorised dealers or stipend/scholarship received from Central or State Government.

(ii)

Authorised dealers may also permit such students/trainees to take with them

foreign exchange up to U.S.$ 1000/- or its equivalent for meeting en route expenses while on visit to their home/foreign countries during vacation/holidays provided their accounts are fed exclusively by remittances in foreign currency.

NOTES:

A.

Trainees financed by the Commonwealth Fund for Technical Co-operation (CFTC), World Health Organisation (WHO) and United Nations Development Programme (UNDP) are not eligible for the above facility.

B.

Exchange sold in the form of foreign currency notes and coins should not exceed U.S.$ 500 or its equivalent.

Issue of Travellers Cheques to Foreign Tourists, Transit Passengers and Foreign Nationals

11D.8

(i)

Authorised Dealers may issue travellers cheques/letters of credit/drafts to foreign

tourists/transit passengers and make remittances towards their hotel accommodation, tour

arrangements etc. either against reimbursement in any permitted currency by banks abroad or against surrender of foreign currency drafts, cheques, etc. by the applicant. Authorised dealer may also sell foreign currency notes, coins and travellers cheques to such persons against internationally recognised credit cards provided reimbursement is obtained promptly in any permitted currency from the credit card issuing institution abroad. Authorised dealers may also issue travellers cheques/letters of credit/drafts to foreign nationals who are not permanently resident in India and make remittances towards their hotel accommodation, tour arrangement, etc. if funds are provided by them from an external source. If, however, funds are provided from a resident source, authorised dealers may permit such remittances only within the remittance entitlements in terms of paragraph 11D.3. Issue of foreign currency notes may be restricted to US $ 500 or its equivalent

(ii)

Full-fledged money changers/Restricted money changers may sell rupees to

foreign tourists against International Credit Cards and obtain reimbursement promptly through banking channel from the overseas credit card issuing organisations.

Eligibility criteria for Remittance of Income to Non-residents

11D.9

Authorised dealers may allow remittance of income earned in India by foreign

nationals permanently resident outside India, provided beneficiary belongs to

any of the following categories

(a)

Foreign national who was never resident in India.

(b)

Foreign national of Indian origin who settled down permanently in a foreign country before introduction of Exchange Control (i.e. 8th July 1947 in the case of erstwhile Sterling Area countries and 3rd September 1939 in the case of other countries).

(c)

Foreign national who has retired from India after availing of retirement facilities.

(d)

Emigrant from India in whose case Reserve Bank had agreed specifically to allow remittance of income on his assets left behind in India.

Regulations contained in the following paragraphs will also have to be complied with for remittance of specified types of income. Remittance of income other than income specifically stated in this Manual, such as income of a non-resident proprietor/partner from a proprietorship/partnership concern in India, capital gains arising out of any activity in India etc. requires specific prior approval of Reserve Bank.

NOTE:

See paragraph 10C.24A regarding repatriation of current income earned by non-residents of Indian nationality/origin.

Remittance of Interest and Dividend

11D.10

Regulations regarding remittance of interest/dividend on investments in

India are laid down in paragraphs 10B.6, 10B.7and 10C.24.

Pension

11D.11

(i)

Authorised dealers may remit pension, net after tax, without obtaining prior approval

of Reserve Bank to persons eligible to receive current income from India in terms of

paragraph 11D.9 provided that in case of foreign nationals who have retired from India, standing approval of Reserve Bank had been obtained for remittance of pension from his employers in India, at the time of obtaining retirement facility.

(ii)

Authorised dealers may also remit pension to widows of foreign nationals who had earlier

retired from India after availing themselves of retirement facilities.

Other types of income

11D.12

Authorised dealers may remit, amounts representing refunds of income-tax to persons eligible

to receive current income from India in terms of paragraph 11D.9 after verifying the original

assessment order and the amount retained for payment of tax from the amount originally remitted.

Report to Reserve Bank

11D.13

Authorised dealers should certify on form A2 covering remittances under paragraphs 11D.11

and 11D.12 that the person to whom the remittance is being made is eligible for remittance

facilities in terms of paragraph 11D.9 and that regulations laid down in the said two paragraphs have been complied with. Wherever specific approval of Reserve Bank has been obtained such as in case of pension, the number and date of approval should also be cited.

Provident/Pension Fund Contributions of Expatriate Staff

11D.14

Authorised dealers may allow remittances by Indian firms and companies on

account of Provident fund/Superannuation/Pension fund contributions in respect of

their expatriate staff who are not permanently resident in India in accordance with the service conditions of the foreign national concerned. A copy of the letter from the applicant indicating the service conditions on the basis of which the remittance was allowed may be forwarded to Reserve Bank alongwith form A2 while reporting the transactions in R return.

Sitting Fee, Commission, etc. to Non-resident Director

11D.15

(i)

By its Notification No.FERA 128/93-RB dated 29th March 1993, Reserve Bank

has granted general permission under Section 9(1)(a) of FERA 1973 to companies in India

for making payments in Indian rupees to their non-resident (including foreign nationals) non-wholetime directors while on a visit to India for the company's work such as attending Board meeting etc., towards sitting fees, commission or remuneration by way of monthly or quarterly or annual payment in accordance with the provisions contained in the Company's Memorandum of Association or Articles of Association or in any agreement entered into by it or in any resolution passed by the company in general meeting or by its Board of Directors. This general permission is, however, subject to the condition that the company has obtained the necessary approval from the Central Government under Section 309(4) or Section 310 of the Companies Act, 1956 wherever it applies.

(ii)

Applications for remittances of savings, if any, out of sitting fees paid to the non-resident

directors by the Indian companies concerned for actual attendance in Board meetings should be made to authorised dealers on form A2 together with a certificate issued by the company concerned confirming payment of sitting fees. Authorised dealers may allow such remittances without reference to Reserve Bank on verification of the company's certificate regarding payment of the sitting fees.

(iii)

Applications for remittances on account of payment of commission, remuneration, etc.

to the non-resident directors should be made by the Indian companies concerned to authorised dealers on form A2 together with a certified copy of the audited balance sheet of the company and a work sheet duly certified by a Chartered Accountant indicating how the remittable amount has been arrived at. Applicant's undertaking/Accountant's certificate regarding payment of income-tax in the prescribed form should also be submitted (cf paragraph 3B.10). Authorised dealers may allow remittances of net commission/remuneration after satisfying about the correctness of the amount and verification of the terms of appointment of the director.

Legacies, Bequests and Inheritances

11D.16

(i)

Applications for remittances on account of legacies, bequests and inheritances to foreign

nationals permanently resident outside India should be submitted to Reserve Bank in

form LEG together with particulars/documents mentioned therein.

(ii)

Legacies and bequests are treated as capital funds in India. Accordingly,

where a foreign national is availing of retirement facilities, Reserve Bank will consider requests for transfer of assets bequeathed to or inherited by him only within the quotas laid down from time to time for repatriation of capital assets from India.

Certain Remittances not permitted

11D.17

Foreign nationals will not be permitted to remit outside India winnings in State lotteries, horse racing and similar activities in India.

Holding of International Conferences/Seminars/Training Programmes in India

11D.18

(i)

Holding of international conferences/ seminars/ training programmes of scientific, technical

or educational nature in India as well as remittances towards payment of honoraria to the guest

speakers, etc. and fees to the concerned international organisations abroad require prior approval of the concerned Administrative Ministry of Government of India. Further, in the case of participation of overseas invitees, the Indian organisers of the conferences/seminars, etc. are required to seek the clearance from the Ministry of Home Affairs as well as from the Ministry of External Affairs. Applications for remittances towards honoraria/fees etc. by Indian organisers should be made to authorised dealers together with full details such as name of the conference/seminar, details of payments to be made, etc. and original approvals together with certified copies thereof obtained from the concerned Administrative Ministry/Ministry of Home Affairs/Ministry of External Affairs of the Government of India and an undertaking regarding payment of Income-tax together with the Accountant's certificate in the prescribed form (cf paragraph 3B.10). Authorised dealers may allow the remittances in accordance with the approval of the Administrative Ministry.

(ii)

Authorised Dealers should keep certified copies of the contract and the approvals of the

Ministries of the Government of India on record for verification by their internal auditors/Inspecting officers of Reserve Bank.