ACRONYMS USED IN FEMA & FDI I-9 CHAPTER 1 FEMA - OVERVIEW 1 CHAPTER 2 AUTHORISED PERSON 9 CHAPTER 3 ACCOUNTS IN INDIA BY PERSON RESIDENT OUT OF INDIA 16 CHAPTER 4 ACCOUNTS OF INDIAN RESIDENTS IN FOREIGN CURRENCY 29 CHAPTER 5 RECEIPT AND PAYMENT IN FOREIGN EXCHANGE 40 CHAPTER 6 REALISATION, REPATRIATION AND SURRENDER OF FOREIGN EXCHANGE 45 CHAPTER 7 MONEY CHANGING ACTIVITIES 48 CHAPTER 8 MONEY TRANSFER SERVICE SCHEME (MTSS) 60 CHAPTER 9 POSSESSION AND RETENTION OF FOREIGN CURRENCY 65 CHAPTER 10 EXPORT AND IMPORT OF CURRENCY OR CURRENCY NOTES 67 CHAPTER 11 REMITTANCES ON CURRENT ACCOUNT 71 I-5 CONTENTS
CHAPTER 12 LIBERALISED REMITTANCE SCHEME (LRS) 86 CHAPTER 13 EXPORT OF GOODS AND SERVICES 98 CHAPTER 14 IMPORT OF GOODS AND SERVICES 137 CHAPTER 15 PROJECT EXPORTS AND SERVICE EXPORTS 160 CHAPTER 16 FOREIGN EXCHANGE RATES 162 CHAPTER 17 OVERVIEW OF CAPITAL ACCOUNT TRANSACTIONS 169 CHAPTER 18 FOREIGN INVESTMENT IN INDIA 174 CHAPTER 19 FDI IN INDIAN COMPANY 183 CHAPTER 20 SECTOR WISE FDI POLICY AT A GLANCE 205 CHAPTER 21 FDI - DOWNSTREAM INVESTMENT i.e. INDIRECT INVESTMENT 214 CHAPTER 22 FDI THROUGH RIGHTS, BONUS, SWEAT EQUITY OR MERGER/ AMALGAMATION 221 CHAPTER 23 FDI - TRANSFER OF SECURITIES 227 CHAPTER 24 FDI IN LLP 242 CHAPTER 25 FDI IN GDR/ADR 245 CHAPTER 26 INVESTMENT BY NRI OR OCI 251 I-6
CHAPTER 27 FDI IN STARTUP COMPANY 265 CHAPTER 28 INVESTMENT BY FOREIGN PORTFOLIO INVESTOR 268 CHAPTER 29 FDI IN INVESTMENT VEHICLE 275 CHAPTER 30 FDI BY FVCI 278 CHAPTER 31 FDI - INVESTMENT IN SECURITIES BY FUNDS, FOREIGN CENTRAL BANK ETC. 281 CHAPTER 32 OVERSEAS INVESTMENT BY INDIAN ENTITY 283 CHAPTER 33 GUARANTEES 324 CHAPTER 34 INSURANCE 329 CHAPTER 35 BORROWING AND LENDING IN FOREIGN CURRENCY 337 CHAPTER 36 BORROWING AND LENDING IN INDIAN RUPEES 342 CHAPTER 37 FOREIGN INVESTMENT IN DEBT INSTRUMENTS 349 CHAPTER 38 EXTERNAL COMMERCIAL BORROWINGS 360 CHAPTER 39 TRADE CREDIT (TC) AND STRUCTURED OBLIGATIONS 376 CHAPTER 40 ACQUISITION AND TRANSFER OF IMMOVABLE PROPERTY IN INDIA 383 I-7
CHAPTER 41 ACQUISITION AND TRANSFER OF IMMOVABLE PROPERTY OUTSIDE INDIA 389 CHAPTER 42 REMITTANCE OF ASSETS 392 CHAPTER 43 BRANCH/LO/PROJECT OFFICE IN INDIA BY FOREIGN ENTITIES 396 CHAPTER 44 INDIAN DEPOSITORY RECEIPTS 412 CHAPTER 45 RISK MANAGEMENT AND INTER-BANK DEALINGS 419 CHAPTER 46 VOSTRO ACCOUNT FOR INTERNATIONAL TRADING 423 CHAPTER 47 INDUSTRIAL POLICY OF GOVERNMENT OF INDIA 428 CHAPTER 48 ENFORCEMENT OF FEMA 434 CHAPTER 49 PENALTIES UNDER FEMA 437 CHAPTER 50 APPEALS UNDER FEMA 443 CHAPTER 51 COMPOUNDING OF CONTRAVENTIONS UNDER FEMA 446 CHAPTER 52 PREVENTION OF MONEY LAUNDERING ACT 458 CHAPTER 53 FOREIGN CONTRIBUTION (REGULATION) ACT (FCRA) 496 CHAPTER 54 COFEPOSA, 1974 524 CHAPTER 55 INTERNATIONAL FINANCIAL SERVICES CENTRE (IFSC) 538 SUBJECT INDEX 551 I-8
LIBERALISED REMITTANCE SCHEME
(LRS)
12.1 Background
vide -
Limit of USD 2,50,000 per financial year for current account transactions for individuals and others
TCS @ 20% on remittances under LRS and OTPP w.e.f. 1-10-2023 if amount exceeds Rs. 7 lakhs per annum
Payments through International Credit Cards are not included in LRS limit and TCS will not apply
12
ix
86
12.2 Liberalised Remittance Scheme (LRS) of USD 2,50,000 for resident individuals
Scheme available to minors also
Consolidation of remittance of family members
Transactions not permissible under LRS 12.2-1 Capital Account transactions permissible under LRS
See
-
-
i ii iii 87 Para 12.2
Banks should not finance to facilitate capital account remittances
12.2-2 LRS for current account transactions
Private visits abroad -
Tour related expenses -
Gift/donation to person resident out of India -
Going abroad on employment -
Emigration
iv bona fide v
-
Para 12.2 88
-
Maintenance of close relatives abroad
Business trips abroad -
LRS not permissible if employee deputed out of India bona fides Medical treatment abroad
Facilities available to students for pursuing their studies abroad-
12.2-3 Other remittance and expenses permissible under LRS
Purchase of objects or art -
Remittances by DD for permissible transactions
89 Para
12.2
Para 12.2 90
Opening and maintaining foreign currency account for LRS expenses -
Remittances to International Financial Services Centres (IFSCs) under LRS and opening FCA in IFSC -
12.2-4 Prohibited transactions under LRS
Purposes prohibited under Current Account transaction rules
Capital account remittances to FATF countries
12.2-5 Tax Collection at Source (TCS) on remittances under LRS and Overseas Tour Programme Packages [OTPP]
Rate of TCS under Section 206C(1G) of Income-tax Act - -
Amount paid abroad through International Credit Cards will not be considered as remittance under LRS and no TCS-
Limit of Rs. seven lakhs is for entire financial year and for all transactions together
No separate LRS limit for each type of transaction
When should tax be collected under Section 206C(1G) of Income-tax Act –
Type of remittance TCS RateUpto 1-10-2023 New TCS Rate (effective from 1-10-2023) [If remitter has PAN and files Income Tax Returns] -
-
-
a b v c d e 91 Para 12.2
TCS rate if the remitter does not furnish his PAN or is a non-filer of income-tax return -b
TCS applies even when LRS remittance is made to Bank or FI in International Financial Services Centre (IFSC) a
Threshold of Rs. 7 lakhs applies to all remittances made through different authorised dealers or different OTPP together and hence declaration from remitter required
-
Provisions of TCS on LRS and TCS on OTPP are separate and independent –
Remittance for purchase of package tour will be considered as OTPP even if amount is remitted under LRS -
Scope of remittance under LRS for medical treatment purposes - -
f
qua qua
Para 12.2 92
FEMA & FDI READY RECKONER
AUTHOR : TAXMANN'S EDITORIAL BOARD
PUBLISHER : TAXMANN
DATE OF PUBLICATION : JULY 2023
EDITION : 19th Edition
ISBN NO : 9789357782050
BINDING TYPE : PAPERBACK
DESCRIPTION
Rs.1450
This book provides complete and accurate information about all provisions of the For eign Exchange Management Act 1999 (FEMA). It also includes guidance on all practical issues faced by companies and FEMA professionals. The key features of this book are as follows:
• [Topic-wise Commentary] on 50+ topics
• [Analysis] with relevant Rules, Judicial Pronouncements, Circulars, Notifications and Master Directions issued by the Reserve Bank of India
• Guide to Liberalised Remittance Scheme (LRS) & Overseas Investment
• Law Relating to the following
o Prevention of Money Laundering Act (PMLA)
o Foreign Contribution (Regulation) Act (FCRA)
o Conservation of Foreign Exchange and Prevention of Smuggling Activities Act (COFEPOSA)
The Present Publication is the 19th Edition & amended up to 5th July 2023. This book is authored by Taxmann's Editorial Board.
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