Share |

Liberalisation Of Current Account Transactions

[Permissible and Prohibited Current Account Transactions in Case of NRI ]

Vide RBI circular No. 76 dated 24-2-2004 provisions relating to current account transactions have been liberalised. The following is the extract of the circular:

  1. Attention of Authorised Dealers (ADs) is invited to Annexure I of A.D. (M.A. Series) Circular No. 11 dated May 16, 2000 with regard to Rules relating to Current Account Transactions.

  2. As a step towards further liberalisation, it has been decided to remove the following restrictions on remittances by residents.

    (I) Remittance for securing Insurance for Health from a Company Abroad

    In terms of item No. 10 of Schedule II, payment for securing insurance for health from a company abroad requires the approval of Ministry of Finance (Insurance Division). It has since been decided that Government’s approval would not be required and Authorised Dealers (ADs) may freely allow such remittances.


    (ii) Remittance by Artiste

    In terms of item No. 11 of Schedule III, remittance by artistes e.g. wrestler, dancer, entertainer, etc., requires prior approval of RBI. Henceforth, ADs may freely allow such remittances.


    (iii) Commission to Agents abroad for Sale of Residential Flats/Commercial Plots in India

    In terms of item No. II of Schedule III, remittance by way of commission to agents abroad for sale of residential flats/commercial plots in India, exceeding 5 per cent of the inward remittance requires RBI’s approval. ADs may freely allow such remittances upto USD 25,000 or 5 per cent of the inward remittance, per transaction, whichever is higher.


    (iv) Short-term Credit to Overseas Offices of Indian Companies

    In terms of item No. 12 of Schedule III, short term credit to overseas offices of Indian companies requires prior approval of RBI. Henceforth, ADs may allow such facility without RBI’s approval.


    (v) Remittance for Advertisement on Foreign Television Channels

    In terms of item No. 13 of Schedule III, RBI’s prior approval is required in cases where the export earnings of the advertiser are less than 1 0 lakhs during each of the preceding 2 years. Henceforth, ADs may freely allow remittances for advertisement on foreign television channels.


    (vi) Remittance of Royalty and Payment of lump sum fee

    In terms of item No.14 of Schedule Ill, RBI’s prior approval is required if the agreement for technical collaboration has not been registered with RBI. Henceforth, ADs may allow remittances for royalty and payment of lump sum fee provided the payments are in conformity with the norms as per item No. 8 of Schedule II i.e. royalty does not exceed 5 per cent on local sales and 8 per cent on exports and lump sum payment does not exceed USD 2 million.


    (vii) Remittance for Use and/or Purchase of Trademark/Franchise in India

    In terms of item No. 16 of Schedule III, RBI’s prior approval is required for remittance towards use and/or purchase of trademark/franchise in India. Henceforth, ADs may freely allow remittances for use of trade mark/franchise in India. However, RBI’s prior approval will continue to be required for remittance towards purchase of trademark/franchise.


    (viii) Remittance of Hiring Charges of Transponders

    In terms of item No. 18 of Schedule III, RBI’s prior approval is required for remittance of hiring charges of transponders. This item stands shifted to Schedule II of the Foreign Exchange Management (Current Account Transaction) Rules, 2000 and henceforth, the proposal for hiring of transponders by TV Channels and internet service providers will require prior approval of the Ministry of Information & Broadcasting.

3. Necessary amendments to the Foreign Exchange Management (Current Account Transactions) Rules, 2000 are being notified separately.


4.         Authorised Dealers may bring the contents of this circular to the notice of their constituents concerned.


5.         The directions contained in this circular have been issued under Section 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999).


Reference may also be made to RBI’s AP (DIR Series) Circular No. 64, dt. 4.2.2004, No. 80 dt. 18.3.2004 and No. 38 dt. 31.3.2005 as there is a Liberalised Remittance Scheme of US $25,000 per calendar year for any permissible current account or capital account transactions or a combination of both.


Besides, Resident Indians going abroad for employment can acquire foreign exchange up to $1,00,000. Similarly, for medical treatment outside India, a resident individual can obtain foreign exchange up to $1,00,000 by giving a self-declaration. Students can acquire foreign exchange up to $ 1,00,000 per academic year for meeting their tuition and other costs in respect of their studies overseas. This can be obtained from the authorized dealers. Unspent foreign exchange has to be surrendered within 90 days from the date of return of the traveller. For traveller’s cheques it is 180 days. However, upto $ 2,000 can be retained for subsequent travels.


The RBI has enhanced the limit of US$ 1,00,000 to US$ 2,00,000 under the Liberalised Remittance Scheme for resident individuals.


For latest changes, if any, please refer to the RBI.

Permissible and Prohibited Current Account Transactions in Case of NRI
1. Basic Introductions
2. Prohibited Categories Of Current Account Transactions
3. Prior Approval Of Government Of India Required For Certain Transactions
4. Prior Approval Of Reserve Bank Required For Certain Current Account Transactions
5. Liberalisation Of Current Account Transactions

More... Topics !..


Tax Guide for NRI - Tax Planning, Tax Saving, Investment Guidance for Non-Resident Indians !

1. Basic Aspects Of Tax Planning For NRIs
2. How an NRI can Avoid Clubbing of his Incomes and Wealth with that of his Spouse and Children
3. The Incomes of an NRI completely Exempt from Income Tax
4. Capital Gain of an NRI could be Completely Exempt from Income Tax
5. Items completely Exempt from Wealth Tax for an NRI
6. Special Procedure of Assessment regarding Income of an NRI from Foreign Exchange Assets
7. Deductions Allowed to NRIs in the Computation of Total Income and Tax Payable
8. Procedure for the Filing of Income Tax and Wealth Tax Returns, Assessment, and Refunds
9. Gifts by NRIs to Relatives and Friends can be made fully Exempt from Gift Tax
10. FEMA and NRIs Preliminary Aspects Analysed
11. Acquisition and Transfer of Immovable Property in India by NRIs and FEMA
12. Permissible and Prohibited Current Account Transactions in Case of NRI
13. Investment In Shares, Securities, Units And Other Activities, etc. by an NRI in India
14. Deposits in India by an NRI
15. RFC account of a Returning NRI and Investment Abroad
Get Updated ...
Tax Tutorials
E-Payment Of Direct Taxes
Filing Of Return Of Income
Interest for Delay in Filing the Return of Income [Section 234 A]
Interest for default in Payment of Advance Tax [Section 234B]
Provisions Of 'Income-Tax Law' Useful For Non-Residents
MAT (Minimum Alternate Tax)
AMT ( Alternative Minimum Tax)
Tax On Long-Term Capital Gains (LTCG)
Tax On Short-Term Capital Gains (STCG)
Exemption[ Section-54] For Capital Gains Arising On Transfer Of Residential House Property
Tax Treatment Of Gifts Received By An Individual Or HUF
Set Off And Carry Forward Of Loss Under The Income-Tax Act
Interest For Delay In Payment of TDS/TCS And For Non-Payment Of Tax Demanded
Tax Deduction/Collection Account Number (TAN)
How to apply for PAN ?
Refund Of Excess Tax Paid By The Taxpayer (Sections - 237 to 245 )
Presumptive Taxation Scheme of Section 44AD
Presumptive Taxation Scheme of Section 44ADA
Presumptive Taxation Scheme of Section 44AE
Deduction in respect of Life Insurance Premium, PPF, NSC, etc. [Section 80C]
Deduction in respect of Medical Insurance Premium [Section 80D]
Tax Deducted at Source (TDS) from Interest, other than Interest on Securities (Section-194A)
Tax Deducted at Source (TDS) from Interest on Securities (Section 193)
Late Filing Fees And Penalty For Failure To Furnish/Delay In Furnishing The TDS/TCS Statements
LIBRARY @ Tax Management
TAX & INVESTMENT GUIDE FOR "NRI"- Non-Resident Indians !
PRESCRIBED FORMS WITH with Section / Rules
New Topics @ Tax KnowledgeBase...

Most Popular Topics :

Corporate Tax ( Taxation in Companies)
FAQ on TDS on Salaries
FAQ on Taxable Income
FAQ on Filing of Income Tax Return
Graphical Chat Presentation of Provision of Motor Car / Other Vehicles [Rule 3(2)(A)&(B)]
'Appeals' Under Income Tax Act. 1961.
'Assessments' Under Income Tax Act. 1961.
List of Exempted Incomes (Tax-Free) Under Section-10
Income Under the Head ' Business and Professions' [Section 28 to 44]
Income Under the Head ' Capital Gain'
Income Under the Head ' House Property '[Section- 22 - 25 ]
Income Under the Head "Salary"
[Section 15-17]
Income Tax on 'Partnership Firms'
PENALTIES Under Income Tax Act. 1961.
Tax Saving Schemes for Individual -Instant Guide
New Tax Rates For FY 2017-18 & AY 2018-19
"Exempted Incomes" under Income Tax Act.
Charitable & Religious Trust :Formation, Registration, & Taxation
Hindu Undivided Family [HUF] - Formation, Management and Taxation

Most Popular Links :

Clubing of Income Deduction U/s 80C
Allowances Us-17(3) Exemption-Salary
Tax Amendment-2015 Taxable Income
Clubing of Income Tax Deductions
HUF Deduction HUF Investment
Gift by HUF HUF Tax Planning Tips
Tax Saving Schemes Tax Planning Tips
Refund of Tax Fringe Benefit Tax-FBT
Return Filing Assessment / Scrutiny
Notice from I.T. Dept. Incomes Types @ TDS
Exemptions-Tax Returns “Summon” U/s 131
'Black Money' @ I.Tax Big Gifts To Be Taxed
'Appeals' under I.Tax Assessment @ I.Tax
Exempted Incomes Capital Gain
Business & Professions House Property
Salaries @ I.Tax Partnership Firm
'Penalty' under I.Tax Act. Tax Ready Reckoner
Charitable Trust Useful Links @ I.Tax
Guide & FAQ on Tax Knowledgebase @ Taxation Income Tax @ Glance HUF - Formation, Planning & Taxation
Charitable & Religious TRUST NRI (Tax Planning,Saving,Investemnt) Budget 2017-2018 GST (FAQ, Law, Act. Rules, Schedule, Enrollment)
FAQs - Income Tax India Tax Tutorials    

All efforts are made to keep the content of this site correct and up-to-date. But, this site does not make any claim regarding the information provided on its pages as correct and up-to-date. The contents of this site cannot be treated or interpreted as a statement of law. In case, any loss or damage is caused to any person due to his/her treating or interpreting the contents of this site or any part thereof as correct, complete and up-to-date statement of law out of ignorance or otherwise, this site will not be liable in any manner whatsoever for such loss or damage.

The visitors may click here to visit the web site of Income Tax Department for resolving their doubts or for clarifications