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:
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.
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.