FREQUENTLY ASKED QUESTIONS ON AVAILING FOREIGN EXCHANGE FACILITY
Q1. . What
are the purposes under FEM (CAT) Amendment Rules, 2015, under which a resident
individual can avail of foreign exchange facility?
Ans. Individuals can avail of foreign exchange
facility for the following purposes within the limit of USD 2,50,000 only on
financial year basis.
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
Any additional remittance in
excess of the said limit for the above mentioned purposes shall require prior
approval of the Reserve Bank of India.
“Any other current account
transaction” as given at (ix) above is to cover any other current account
transactions which were available to individuals in the erstwhile Schedule III
to FEM (CAT) Rules, 2000 dated May 3, 2000, and which do not appear above/ in
Schedule III to FEM (CAT) Amendment Rules, 2015.
However, for purposes such as
emigration; expenses in connection with medical treatment abroad and studies
abroad, individuals may be permitted to 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. (To be read along with Q 5, Q8 and Q9).
The AD bank may undertake the
remittance transaction without RBI’s permission for all residual current
account transactions which are not prohibited/ restricted transactions under
Schedule I, II or III of FEM (CAT) Rules, 2000, as amended from time to time.
It is for the AD bank to satisfy themselves about the genuineness of the
transaction, as hitherto.
The resident individual needs to
fill up the Form A2 as well as the ‘Application cum declaration for purchase of
foreign exchange under LRS of USD 250,000’.
Q.2. How
much foreign exchange can one buy when traveling abroad on private visits to a
country outside India?
Ans. For private visits abroad, other than to
Nepal and Bhutan, any resident can obtain foreign exchange up to an aggregate
amount of USD 2,50,000, from an Authorised Dealer or FFMC, in any one financial
year, irrespective of the number of visits undertaken during the year. This
limit has been subsumed under the Liberalised Remittance Scheme w.e.f. May 26,
2015. If an individual has already remitted any amount under the Liberalised
Remittance Scheme in a financial year, then the applicable limit for travelling
purpose for such individual would be reduced from USD 250,000 by the amount so
remitted.
The resident individuals shall
have to fill Form A2 and ‘Application cum declaration for purchase of foreign
exchange under LRS of USD 250,000’ while availing foreign exchange for
travelling purposes from AD banks and FFMCs.
No foreign exchange is available
for visit to Nepal and/or Bhutan for any purpose. A resident Indian is allowed
to take INR of denomination of Rs.100 or lesser denomination, to Nepal and
Bhutan, without any limits. For denominations of Rs 500 and Rs1,000, the limit
is Rs 25,000.
Further, all tour related
expenses including cost of rail/road/water transportation charges outside India
and remittances relating towards cost of Euro Rail; passes/tickets, etc. for
Indian travellers, and overseas hotel/flight charges have been subsumed under
the new enhanced limit of USD 250,000. The tour operator can collect this
amount either in INR or in FCY.
Q. 3. How
much foreign exchange can a resident send as gift / donation to a person
resident outside India?
Ans. Any resident individual/ entity (trust;
company; partnership firm, etc.), may remit up-to USD 2,50,000 in one financial
year as gift to a person residing outside India or as donation to an
organization outside India. Remittances exceeding the limit of USD 2,50,000
will require prior permission from the Reserve Bank. It is clarified that a
resident cannot gift to another resident, in foreign currency, for the credit
of the latter’s foreign currency account held abroad under LRS.
Further, general permission is
available to persons other than individuals’ to remit towards donations up-to
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. Any additional remittance in excess of the same shall require
prior approval of the Reserve Bank of India.
Q.4 . How
much foreign exchange is available to a person going abroad on employment?
Ans. A person going abroad for employment can draw
foreign exchange up to USD 2,50,000 per financial year from any Authorised
Dealer in India on the basis of self-declaration in Form A2 and ‘Application
cum declaration for purchase of foreign exchange under LRS of USD 250,000’.
This limit has been subsumed under the Liberalised Remittance Scheme w.e.f. May
26, 2015. If an individual remits any amount under the Liberalised Remittance
Scheme in a financial year, then the applicable limit for such individual would
be reduced from USD 250,000 by the amount so remitted.
Q. 5. How
much foreign exchange is available to a person going abroad on emigration?
Ans. A person going abroad on emigration can draw
foreign exchange from AD Category I bank and AD Category II up to the amount
prescribed by the country of emigration or USD 250,000. This amount is only to
meet the incidental expenses in the country of emigration. Further, this
remittance is not for undertaking any capital account transactions such as
overseas investment in government bonds; land; commercial enterprise; etc. No
amount of foreign exchange can be remitted outside India to become eligible or
for earning points or credits for immigration.
Q. 6. How
much foreign exchange can a person resident in India remit towards maintenance
of close relatives abroad?
Ans. A person resident in India can remit up-to
USD 250,000 per financial year towards maintenance of close relative
(‘relative’ as defined in section 6 of the Companies Act, 1956) abroad. . This
limit has been subsumed under the Liberalised Remittance Scheme w.e.f. May 26,
2015. If an individual remits any amount under the Liberalised Remittance Scheme
in a financial year, then the applicable limit for such individual would be
reduced from USD 250,000 by the amount so remitted.
Q. 7. How
much foreign exchange is available for a business trip?
Ans. For business trips to foreign countries,
resident individuals/ individuals having proprietorship firms can avail of
foreign exchange up to USD 2,50,000 in a financial year irrespective of the
number of visits undertaken during the year. This limit has been subsumed under
the Liberalised Remittance Scheme w.e.f. May 26, 2015.
Visits in connection with
attending of an international conference, seminar, specialised training,
apprentice training, etc., are treated as business visits. Release of foreign
exchange exceeding USD 2,50,000 for business travel abroad, irrespective of the
period of stay, by residents require prior permission from the Reserve Bank.
However, if an employee is being
deputed by a company and the expenses are borne by the company, then such
expenses shall be treated as residual current account transactions and may be
permitted by the AD bank, without any limit, subject to verifying the bonafides
of the transaction.
Q.8 . How
much foreign exchange can be drawn for medical treatment abroad?
Ans. AD Category I banks and AD Category II, may release foreign exchange up
to USD 2,50,000 or its equivalent to resident Indians for medical treatment
abroad on self-declaration basis in Form A2 and ‘Application cum declaration
for purchase of foreign exchange under LRS of USD 250,000’, without insisting
on any estimate from a hospital/doctor in India/abroad. However, a person
visiting abroad for medical treatment can obtain foreign exchange from AD banks
exceeding the above limit, provided the request is supported by an estimate
from a hospital/doctor in India/abroad.
In addition to the above, an
amount up to USD 250,000 per FY is allowed to a person for accompanying as
attendant to a patient going abroad for medical treatment/check-up.
Q. 9. What
is meant by ‘any other current account transaction” as given at item no. (ix)
of para 1 of Schedule III to FEM (CAT) Amendment Rules, 2015?
Ans. “Any other current account transaction” as
given at item no. (ix) of Rules ibid is to cover any other current account
transactions which were available to individuals in the erstwhile Schedule III
to FEM (CAT) Rules, 2000 dated May 3, 2000, and which do not appear in Para 1
to Schedule III to FEM (CAT) Amendment Rules, 2015.
Q.10.
Resident individuals (but not permanently resident in India) can remit up to
net salary after deduction of taxes. However, if he has exhausted the limit of
USD 2,50,000 as net salary remittance and desires to remit any other income
under LRS is it permissible as the limit will be over and above USD 2,50,000?
Ans. 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. It is clarified that salary
includes earnings from stage shows and other earnings from modelling
assignments and acting assignments etc.
Further, resident individuals
(but not permanently resident in India) who have remitted their entire earnings
and salary and wish to further remit ‘other income’ may approach RBI through
their AD bank for consideration with documents.
Q.11 .
Whether the limit of USD 2,50,000 per financial year as mentioned in Para 1 of
Schedule III of FEM (CAT) Amendment Rules, 2015 is also applicable to person
other than individuals?
Ans. Yes, the limit of USD 2, 50,000 is applicable
to persons other than individuals (such as corporates, trusts; etc.) who wish
to avail of facilities under Para 1 of Schedule III to FEM (CAT) Amendment
Rules, 2015. Such entities will have to fill up the Form A2 while remitting
foreign exchange.
However, all residual current
account transactions undertaken by such entities are otherwise permissible
without any specified limit as hitherto. All such residual current account
transactions, irrespective of the amount, are to be disposed off at the level
of AD Category I bank, as hitherto. It is for the AD Category I bank to satisfy
themselves about the genuineness of the transaction.
Q.12 . How
much foreign currency can be carried in cash for travel abroad?
Ans. Travellers going to all countries other than
(a) and (b) below are allowed to purchase foreign currency notes / coins only
up to USD 3000 per visit. Balance amount can be carried in the form of
travellers cheque or banker’s draft. Exceptions to this are (a) travellers
proceeding to Iraq and Libya who can draw foreign exchange in the form of
foreign currency notes and coins not exceeding USD 5000 or its equivalent per
visit; (b) travellers proceeding to the Islamic Republic of Iran, Russian
Federation and other Republics of Commonwealth of Independent States who can
draw entire foreign exchange (up-to USD 250, 000) in the form of foreign currency
notes or coins.
For travellers proceeding for
Haj/ Umrah pilgrimage, full amount of BTQ entitlement (USD 250, 000) in cash or
up to the cash limit as specified by the Haj Committee of India, may be
released by the ADs and FFMCs.
