Investment Remittance Ceiling Raised to
$250,000 from $125,000
RBI Notifies New Guidelines under LRS
[Ref: A.P. (DIR
Series)
Circular No 106 dated June 1, 2015]
Subject: I. Liberalised
Remittance Scheme (LRS) for resident individuals- increase in the limit from USD 125,000 to USD 250,000 and rationalisation of current account
transactions
II. Remittance facilities for
persons other
than individuals
Attention of Authorised
Persons is invited to the
A.P.(DIR Series) Circular No. 138 dated June 3, 2014 regarding the Liberalised
Remittance Scheme (LRS) for resident individuals and the existing guidelines issued under the Foreign Exchange Management (Current
Account Transactions) Rules, 2000. On a review, it has been decided to make the following
changes for further
liberalization and rationalization on the existing guidelines.
Limit and Facilities under
LRS
2. AD banks may now allow remittances by a resident individual up to USD 250,000 per financial year for any permitted current or capital account transaction or a combination of
both. If an individual has already remitted any amount under the LRS, then the applicable limit for such an individual would be reduced from the present limit of USD 250,000 for the financial year by the amount already remitted. The permissible capital account transactions
by
an individual
under LRS
are:
i) opening of foreign currency account abroad with a bank;
ii) purchase
of property abroad;
iii) making investments abroad;
iv) setting up Wholly owned subsidiaries and Joint Ventures abroad;
v) extending loans including loans in
Indian Rupees
to
Non-resident Indians
(NRIs) who are
relatives as defined in Companies Act, 2013.
3. Further, to facilitate ease of transactions, all the facilities (including private/business visits) for release of exchange/remittances for current account transactions available to resident individuals under Para 1 of Schedule III to the Foreign Exchange Management
(Current Account Transactions) Rules, 2000, as amended from time to time, shall now be subsumed under
the
overall limit of
USD 250,000.
However,
for item numbers
as mentioned at (iv)[ emigration], (vii)[expenses in connection with medical treatment abroad]
and
(viii)[studies abroad] in Para 1 of Schedule III provided at Annex 1, individuals may avail of exchange facility for an amount in excess of the overall limit prescribed under the
LRS,
if it is so required by a country of emigration, medical institute offering treatment or the university respectively. Gift in Indian Rupees by resident individuals to NRI relatives as
defined in the Companies Act, 2013 shall also be subsumed under the LRS limit.
The Notification dated May 26, 2015 containing the revised Schedule III is given in Annex
1.
4. As hitherto, the Scheme cannot be made use for making remittances for any prohibited
or illegal
activities such as margin trading, lottery, etc.
5. Remittance Procedure
Requirements to be complied with by the remitter
5.1 The resident individual seeking to make the remittances should furnish an application
cum
declaration in the format indicated in Annex 2 to the AD/ full fledged money changer
(FFMC) concerned regarding the purpose of the remittances and declaration to the effect
that
the funds belong to the remitter and will not be used for the prohibited purposes
referred to in Para 4 above. Resident individuals can also purchase foreign exchange from a full fledged
money changer (FFMC) for private/business visits. Foreign exchange thus purchased from an FFMC should also be reckoned within the overall LRS
limit USD
250,000 and declared accordingly in the application-cum-declaration form submitted to the
AD bank.
Requirements to be complied with by the Authorised Persons
5.2 While allowing the facility to resident individuals, Authorised
Persons, including AD
Category II and FFMCs, are required to ensure that the "Know Your Customer" guidelines and the Anti-Money Laundering Rules in force have been complied with while allowing the
transactions.
Requirements to be complied with by the Authorised
Dealers
5.3 It is clarified that banks should not extend any kind of funded and non-funded facilities
to resident individuals to facilitate capital
account remittances under
the Scheme.
5.4 The applicants should have maintained the bank account with the bank for a minimum
period of one year prior to the remittance for capital account transactions. If the applicant seeking to make the remittances is a new customer of the bank, Authorised Dealers should carry out due diligence on the operations and maintenance of the account.
5.5 No part of the foreign exchange of USD 250,000 shall be used for remittance directly
or indirectly to countries notified as non-cooperative countries and territories by the Financial Action Task Force (FATF) from time to time and communicated by the Reserve Bank of
India to all concerned.
6. Reporting
of the transactions
Authorised Dealers
may arrange to furnish on a monthly basis
information on the number of applicants and total amount remitted under LRS to the Chief General Manager, External Payment Division, Foreign Exchange Department, Reserve Bank of India, Central Office, Mumbai - 400001 through Online Return Filing System (ORFS) only.
7. Facilities for
persons
other than individuals
7.1 As provided
in Para
2 of Schedule III
provided in Annex
1, persons other than
individuals can make remittances for
i) Donations for educational
institutions;
ii) Commissions
to agents abroad for sale of residential flats/commercial plots in India;
iii) Remittances for consultancy services
and
iv) Remittances for reimbursement of pre-incorporation expenses within the limit and conditions
laid down therein.
7.2 While making the above remittances, such persons shall submit to the concerned AD branch a declaration to the effect that the limits and conditions relating to the remittances have been complied with.
8. All other
terms and conditions for making overseas remittances shall remain unchanged.
9. Necessary
amendments
to the Foreign Exchange
Management (Current Account
Transactions) Rules, 2000 and the Foreign Exchange Management (Permissible Capital Account Transactions) Regulations, 2000, (Notification No. FEMA 1/2000-RB dated May 3, 2000) have been notified vide GSR No. 426 (E) dated May 26, 2015 and GSR No.425 (E)
dated May 26, 2015 respectively.
10. Authorised
Persons
may
bring the
contents
of this circular to the notice
of their
constituents and customers
concerned.
11. The directions contained in this circular have been issued under Section 10(4) and
11(1) of the Foreign Exchange Management Act, 1992 (42 of 1999) and are without prejudice to permissions/approvals,
if any, required under
any
other law.
Annex-1
MINISTRY OF FINANCE
(Department of Economic Affairs)
NOTIFICATION
New Delhi, the 26th May, 2015
G.S.R. 426(E).In exercise of the powers conferred by section 5 and sub-section (1) and
clause (a) of sub-section (2) of section 46 of the Foreign Exchange Management Act, 1999 (42 of 1999), and in consultation with Reserve Bank, the Central Government having
considered it necessary in the public interest, makes the following amendment to the Foreign Exchange Management (Current Account Transactions) Rules, 2000, namely:
1. (1)
These rules may be called the Foreign Exchange Management (Current Account Transactions) Amendment Rules, 2015
(2) They shall come into force on the date of their publication in the Official
Gazette.
2. In the Foreign Exchange Management (Current Account Transactions) Rules, 2000,-
(i) for rule 5, the following rule shall be substituted, namely:-
5. Prior approval of Reserve Bank.Every
drawal of foreign exchange for transactions
included in Schedule III shall be governed as provided therein:
Provided that this rule shall not apply where the payment is made out of funds held in
Resident Foreign Currency (RFC) Account of the remitter.;
(ii) for Schedule III, the following shall be substituted, namely:
SCHEDULE III (See rule 5)
Facilities for individuals
1. Individuals
can
avail of foreign exchange facility for the following purposes within the limit of USD 2,50,000
only. Any additional remittance in excess of the said limit for the following purposes shall require prior
approval of the Reserve Bank of India.
(i) Private visits to any country (except Nepal and Bhutan)
(ii) Gift or donation.
(iii) Going abroad for
employment
(iv) Emigration
(v) Maintenance of close relatives
abroad
(vi) Travel for business, or attending a conference or specialised training or for meeting expenses for meeting medical expenses, or check-up abroad, or for accompanying as
attendant to a patient going abroad for medical
treatment/ check-up.
(vii) Expenses in connection with medical
treatment abroad
(viii)Studies abroad
(ix) Any other
current account transaction
Provided that for the purposes mentioned at item numbers (iv), (vii) and (viii), the individual
may
avail of exchange facility for an amount in excess of the limit prescribed under the Liberalised Remittance Scheme as provided in regulation 4 to
FEMA Notification 1/2000- RB, dated the 3rd May, 2000 (here in after referred to as the said Liberalised Remittance
Scheme) if it is so required by a country of emigration, medical institute offering treatment
or the university, respectively:
Provided
further that if an
individual remits
any amount
under
the said Liberalised Remittance Scheme in a financial year, then the applicable limit for such individual would
be
reduced from USD 250,000 (US Dollars Two Hundred and Fifty Thousand Only) by the
amount so remitted:
provided also
that for a person who is resident but not permanently resident in India and
(a) is a citizen of a foreign State other than Pakistan; or
(b) is a citizen of
India, who is on deputation to the office or branch of a foreign
company or subsidiary
or joint venture
in India of such foreign company,
may make remittance
up to his net salary (after
deduction
of taxes, contribution to
provident fund and other
deductions).
Explanation: For the purpose of this item,
a person resident in India on account
of his employment or deputation of a specified duration (irrespective of length thereof) or for a specific job or assignments, the duration of which does not exceed three
years, is a resident but not
permanently resident:
provided also
that a person other than an individual may also avail of foreign exchange
facility, mutatis mutandis, within the limit prescribed under the said Liberalised
Remittance
Scheme for the purposes
mentioned herein above.
Facilities for persons other than
individual -
2. The following remittances by persons other than individuals shall require prior approval
of
the Reserve Bank of India.
(i) Donations exceeding one per cent. of their foreign exchange earnings during the previous
three financial years or USD
5,000,000, whichever
is less, for-
(a) creation
of Chairs in reputed educational
institutes,
(b) contribution
to funds
(not being an investment fund)
promoted by
educational
institutes; and
(c) contribution to a technical institution or body or association in the field of
activity of the donor Company.
(ii) Commission, per
transaction,
to agents abroad
for sale of residential
flats
or commercial
plots
in India
exceeding USD 25,000
or five percent
of the inward remittance whichever is more.
(iii) Remittances exceeding USD 10,000,000 per project for any consultancy services in respect of infrastructure
projects
and
USD 1,000,000 per project,
for other
consultancy services procured from
outside India.
Explanation:For
the purposes of this sub-paragraph,
the expression
infrastructure shall mean as defined in explanation to para 1(iv)(A)(a) of Schedule I
of FEMA Notification 3/2000-RB, dated the May 3, 2000.
(iv) Remittances exceeding five per cent of investment brought into India or USD100,000 whichever is higher, by an entity in India by way of reimbursement of pre-incorporation expenses.
3. Procedure
The procedure for drawal
or remit of any
foreign exchange under this schedule shall be the
same as applicable
for
remitting any amount
under the
said
Liberalised Remittance
Scheme.
[F. No. 1/6/EM/2015]
MANOJ JOSHI, Jt. Secy. (Financial
Market)
Note : The principal rules were published in Part II, Section 3, Sub-section (i) of Gazette of
India, Extraordinary, vide G.S.R. 381(E), dated the 3rd
May, 2000.
Annex-2
[A.P.(DIR Series)
Circular No.106 dated June 1, 2015]
Application cum Declaration for purchase of foreign exchange under the Liberalised Remittance Scheme of USD 250,000
(To be completed
by the applicant)
I. Details of the applicant
a. Name
..
b. Address
c. Account No
..
d. PAN No
.
II. Details of the foreign
exchange required
1. Amount (Specify currency)
2. Purpose
.
III. Sources of funds:
.
IV. Nature of instrument
Draft
..
Direct remittance
Others
V. Details of the Beneficiary
1. Name
..
2. Address
3. Country
4*. Name and address of the bank
.
5*. Account No
..
(* Required only when the remittance is to be directly credited to the bank account of the
beneficiary)
This is to authorize
you
to debit my account and
effect
the foreign
exchange
remittance/issue a draft as detailed above. (strike out whichever is
not applicable).
VI. Details of the remittances made/transactions effected under
the Scheme in the current financial year (April-
March) ..
Sl. No
.Date :
Amount
:
. Name and address of
AD branch/FFMC
through which the transaction has been effected.
Declaration
I,
.
(Name), hereby
declare that the total amount of foreign exchange
purchased from or remitted through all sources in India during the financial year as per item
No
.of the Application,
is within the overall
limit
of USD 250,000/-(US
Dollar Two hundred and Fifty Thousand only), which is the limit prescribed by the Reserve Bank of India for the purpose and certify that the sources of funds for making the said remittance
belong to me and the foreign exchange will
not be used for prohibited purposes.
Signature of the applicant
(Name)
Certificate by the Authorised Dealer
This is to certify that the remittance is not being made by/ to ineligible entities and that the remittance is in conformity with the instructions issued by the Reserve Bank from time to time under
the
Scheme.
Name and designation of the authorised
official:
Stamp and seal
Signature
Date:
Place: