NRO account Non Resident Ordinary Rupee A/c (NRO A/c) Eligibility to open Any person resident outside India, open and maintain the a/c with an AD or an Authorised bank For bonafide transactions denominated in INR Opening of accounts by individuals / entities of Bangladesh / Pakistan nationality / ownership require prior approval of the Reserve Bank. 51 www.sbsandco.com
NRO account … contd… Types of Accounts current, savings, recurring or fixed deposit accounts Permitted for Joint Accounts with Residents / Non- Residents Permissible Credits (i) Proceeds of remittances from outside India through normal banking channels received in foreign currency which is freely convertible. (ii) Any foreign currency, which is freely convertible, tendered by the account holder during his temporary visit to India. (iii) Transfers from rupee accounts of non-resident banks. (iv) Legitimate dues in India of the account holder. (v) Sale proceeds of assets including immovable property acquired out of rupee/foreign currency funds or by way of legacy/inheritance. 52 www.sbsandco.com
NRO account … contd… Permissible Debits (i) All local payments in rupees including payments for investments in India subject to compliance with the relevant regulations made by the Reserve Bank. (ii) Remittance outside India of current income like rent, dividend, pension, interest, etc. in India of the account holder. (iii) Remittance up to USD one million, per financial year (April- March), for all bona fide purposes, to the satisfaction of the Authorised Dealer bank. 53 www.sbsandco.com
NRO account … contd… Change of resident status of account holder (a) From Resident to Non-resident Existing account should be designated as a Non- Resident (Ordinary) Account. (b) From Non- resident to Resident NRO accounts may be re-designated as resident Rupee accounts on return of the account holder to India for taking up employment, or for carrying on business or vocation or for any other purpose indicating his intention to stay in India for an uncertain period. 54 www.sbsandco.com
NRO (PIS) account (w.e.f. 20/08/2013) Non Resident Ordinary Rupee A/c (NRO A/c) for Portfolio Investment Scheme (PIS) Eligibility to open Same as NRO account Purpose of the account To deal with the stock exchange(s) for buy/ sell securities 55 www.sbsandco.com
NRO (PIS) account … contd… Permissible Credits (i) Proceeds of remittances from outside India through normal banking channels received in foreign currency which is freely convertible. (ii) Transfer from applicant’s other NRE accounts or FCNR (B) accounts or NRO accounts maintained with AD bank in India (iii) Net sale proceeds ( after payment of applicable taxes) of shares and convertible debentures which were acquired on repatriation (at the NRI’s option) and non repatriation basis under PIS and sold on stock exchange through registered broker (iv) dividend or income earned on investments under PIS 56 www.sbsandco.com
NRO (PIS) account … contd… Permissible Debits i. Outward remittances of dividend or income earned ii. Amounts paid on account of purchase of shares and convertible debentures on non- repatriation basis on stock exchanges through registered broker under PIS; iii. Any charges on account of sale/ purchase of shares or convertible debentures under PIS 57 www.sbsandco.com
NRE account Non Resident (External) Rupee A/c (NRE A/c) Eligibility to open Can open and maintain these accounts with AD, and with banks (including cooperative banks) authorised by the RBI to maintain such accounts. Opening of accounts by individuals / entities of Bangladesh / Pakistan nationality / ownership require prior approval of the Reserve Bank. 58 www.sbsandco.com
NRE account … contd… Types of Accounts current, savings, recurring or fixed deposit accounts Joint Accounts with Non- Residents The accounts may be held jointly with NRIs. Permissible Credits Proceeds of remittances to India in any permitted currency. Proceeds of personal cheques drawn by the account holder on his foreign currency account and of travellers cheques, bank drafts payable in any permitted currency including instruments expressed in Indian rupees for which reimbursement will be received in foreign currency, deposited by the account holder in person during his temporary visit to India, Transfers from other NRE/FCNR accounts. Current Income Refund of share/debenture subscriptions to new issues of Indian companies or portion thereof, if the amount of subscription was paid from the same account or from other NRE/FCNR account of the account holder or by remittance from outside India through normal banking channels. 59 www.sbsandco.com
NRE account … contd… Permissible Credits Refund of application/EM made by the house building agencies on account of non-allotment of flat/plot, together with interest, if any (net of income tax payable thereon), provided the original payment was made out of NRE/FCNR account of the account holder or remittance from outside India through normal banking channels and the AD is satisfied about the genuineness of the transaction. Any other credit if covered under general or special permission granted by Reserve Bank. 60 www.sbsandco.com
NRE account … contd… Permissible Debits i. Local disbursements ii. Remittances outside India. iii. Transfer to NRE/FCNR accounts of the account holder or any other person eligible to maintain such account. iv. Investment in shares/securities /commercial paper of an Indian company or for purchase of immovable property in India. v. Any other transaction if covered under general or special permission granted by the Reserve Bank. 61 www.sbsandco.com
NRE (PIS) account (w.e.f. 20/08/2013) Non Resident (External) Rupee A/c (NRE A/c) for Portfolio Investment Scheme (PIS) Eligibility to open Same as NRE account Purpose of the account To deal with the stock exchange(s) for buy/ sell securities 62 www.sbsandco.com
NRE (PIS) account … contd… Permissible Credits (i) Proceeds of remittances from outside India through normal banking channels received in foreign currency which is freely convertible. (ii) Transfer from applicant’s other NRE accounts or FCNR (B) accounts maintained with AD bank in India (iii) Net sale proceeds ( after payment of applicable taxes) of shares and convertible debentures which were acquired on repatriation and sold on stock exchange through registered broker (iv) dividend or income earned on investments under PIS 63 www.sbsandco.com
NRE (PIS) account … contd… Permissible Debits i. Outward remittances of dividend or income earned ii. Amounts paid on account of purchase of shares and convertible debentures on repatriation basis on stock exchanges through registered broker under PIS; iii. Any charges on account of sale/ purchase of shares or convertible debentures under PIS 64 www.sbsandco.com
LOANS FROM NRI/OCI 65 www.sbsandco.com
Loans from NRI / OCI Borrowing in FC by Individual resident Indian in India The lender is a close relative (ref Sec 2(77) of Companies Act, 2013) The maximum loan amount is USD 250,000 or its equivalent INR The loan amount shall be received by CFE/NRE/FCNR funds Minimum maturity period of the loan is 1 year The loan is free of Interest Restriction on end use of Funds The borrower shall not engage in Agricultural/ Plantation/ real estate business/ trading in TDR/ does not act as Nidhi or Chit Fund company; also the funds shall not be used for investment in capital or otherwise, in any company or partnership firm or proprietorship concern or any entity, whether incorporated or not or for re-lending 66 www.sbsandco.com 27/12/16
Loans from NRI / OCI Borrowing in INR by persons other than Companies in India • The loan amount shall be received by CFE/NRE/NRO/FCNR funds • The loan period shall not exceed 3 years • The Rate of Interest shall not exceed 2% over prevailing bank rate • The loan amount is not eligible for repatriation (but eligible under USD 1 Million scheme) Restriction on end use of Funds Same as in previous slide 67 www.sbsandco.com 27/12/16
Loans from NRI / OCI Borrowing in INR by Companies in India The amount shall be received by way issue of NCDs The issue of NCDs is made by public offer The loan period shall not be less than 3 years The Rate of Interest shall not exceed 3% over prevailing bank rate The company shall file report to RBI within 30 days of receipt Additional conditions for repatriation The % of investment by NRI shall be within the limits specified under FDI The amount has to come by CFE/NRE/FCNR account Restriction on end use of Funds The borrower shall not engage in Agricultural/ Plantation/ real estate business/ trading in TDR/ does not act as Nidhi or Chit Fund company; also the funds shall not be used for investment in capital or otherwise, in any company or partnership firm or proprietorship concern or any entity, whether incorporated or not or for re-lending 68 www.sbsandco.com
LOANS TO NRI/OCI 69 www.sbsandco.com
Loans to NRI / OCI Loan by an AD in India Loan Against Shares Against immovable Properties Loan for House Property Loan amount shall not be credited to NRE/FCNR account Loan amount is not eligible for repatriation outside India Repayment shall be made out of CFE/NRE/FCNR account Restriction on end use of Funds The funds shall be used for personal needs or for personal business (which are permitted under FDI) Housing Loan shall be used for acquisition of House Property only 70 www.sbsandco.com
Loans to NRI / OCI Loan by a resident in India Loan shall not be given by way of cash The Loan amount is subject to the LRS requirements It shall be free of interest Minimum maturity period – 1 year Loan amount shall not be credited to NRE/FCNR account Loan amount is not eligible for repatriation outside India Repayment shall be made out of CFE/NRE/FCNR account Restriction on end use of Funds The funds shall be used for personal needs or for personal business (which are permitted under FDI) 71 www.sbsandco.com
Compounding of offenses (1/2) The compounding application can be submitted to the RBI for the cases other than the Cases of contravention having a money-laundering, national and security concern involving serious infringements of the regulatory framework including cases where application for compounding has not been filed within the stipulated period in the memorandum issued by the Reserve Bank may be referred to Directorate of Enforcement for further investigation and necessary action under Section 37 of the Act or to the Anti Money Laundering Authority instituted under Prevention of Money Laundering Act, 2002 or to any other agencies as deemed fit. Contraventions related to any transaction without proper approval or permission from the concerned Government or any Statutory Authority as the case may be under the relevant laws/regulations as envisaged under FEMA, would not be compounded unless the required approval is obtained from the concerned authorities. 72 www.sbsandco.com
Compounding of offenses (2/2) The compounding application can be made in the format prescribed as per A.P.(DIR Series) Circular No.31 dated February 1, 2005 (in duplicate). Submitted to Compounding Authority, Cell For Effective Implementation of FEMA (CEFA), located in Mumbai or the Local Office (as the case may be). Application Fee Rs. 5,000/- 73 www.sbsandco.com
Compounding Powers of RBI Amount (INR) Relevant Officer <= 10 Lakhs AGM DGM > 10 Lakhs and <= 40 Lakhs GM CGM > 40 Lakhs and <= 100 Lakhs > 100 Lakhs 74 www.sbsandco.com
Compounding Powers of ED Amount (INR) Relevant Officer DD <= 5 Lakhs AD SD > 5 Lakhs and <= 10 Lakhs SD with DD SD with D > 10 Lakhs and <= 50 Lakhs > 50 Lakhs and <= 100 Lakhs > 100 Lakhs 75 www.sbsandco.com
SBS And Company LLP Thank you!!! Chartered Accountants CA Murali Krishna Our Presence in M.Com,F.C.A.,F.C.S. Telangana: Hyderabad (HO) Andhra Pradesh: Nellore, Kurnool, TADA (near Sri PH: +91 9849992493 City), Vizag [email protected] Karnataka: Bengaluru +91-40-40183366 / +91-40-64584494 / +91-9246883366 76 www.sbsandco.com Read our monthly e-Journals 27/12/16 www.sbsandco.com/wiki www.sbsandco.com/digest
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