18 January 2010

RBI notifies relaxation in remittance norms

RBI notifies relaxation in remittance norms

The Reserve Bank of India has notified relaxation in remittance norms regarding salary earned by foreign nationals employed in India by a foreign company or an Indian citizen employed by a foreign company outside India.

These individuals, according to the RBI, may open, hold and maintain a foreign currency account with a bank outside India and receive the whole salary payable to him for the services rendered to the office/branch/subsidiary/joint venture in India of such foreign company, by credit to such account, provided that income-tax chargeable under the Income-tax Act, 1961, is paid on the entire salary as accrued in India.

Hitherto, the amount that could be credited to the foreign currency account with a bank outside India could not exceed 75 per cent of the salary accrued to or received by the expatriate or Indian national from the foreign company.

Further, the RBI said that a citizen of a foreign State resident in India employed with a company incorporated in India may open, hold and maintain a foreign currency account with a bank outside India and remit the whole salary received in India in Indian rupees, to such account, for the services rendered to the Indian company, provided that income-tax chargeable under the Income-tax Act, 1961 is paid on the entire salary accrued in India.

The relaxation in the remittance norm by the RBI follows the Government notifying the same through a Gazette notification

Remittance of Salary - Relaxation

A.P. (DIR Series) Circular No. 26, dated 14-1-2010

Attention of Authorised Dealer Category – I banks is invited to A. P. (DIR Series) Circular No. 17 dated September 20, 2003 and sub-regulation 8 of Regulation 7 of Notification No. FEMA 10/2000-RB dated May 3, 2000 viz. Foreign Exchange Management (Foreign Currency Account by a person resident in India) Regulation, 2000, in terms of which a national of a foreign state resident in India, being an employee of a foreign company or a citizen of India employed by a foreign company outside India, and in either case on deputation to the office/ branch/ subsidiary/ joint venture in India of such foreign company, may open, hold and maintain a foreign currency account with a bank outside India and receive the salary payable to him by credit to such account subject to the conditions mentioned therein, which inter alia, include that the amount to be credited to such account shall not exceed 75 per cent of the salary accrued to or received by such person from the foreign company.

2. The Government of India, has since liberalised the above facility by notifying in the Gazette of India published in part II, Section 3, Sub-section (i) dated November 23, 2009 vide G.S.R. 838 (E) [Notification No. FEMA 199/2009-RB dated September 30, 2009], as indicated below:

(i) A citizen of a foreign state, resident in India, being an employee of a foreign company or a citizen of India, employed by a foreign company outside India and in either case on deputation to the office /branch /subsidiary /joint venture in India of such foreign company may open, hold and maintain a foreign currency account with a bank outside India and receive the whole salary payable to him for the services rendered to the office/branch/subsidiary/joint venture in India of such foreign company, by credit to such account, provided that income-tax chargeable under the Income-tax Act, 1961 is paid on the entire salary as accrued in India.

(ii) A citizen of a foreign state resident in India being in employment with a company incorporated in India may open, hold and maintain a foreign currency account with a bank outside India and remit the whole salary received in India in Indian Rupees, to such account, for the services rendered to the Indian company, provided that income-tax chargeable under the Income-tax Act, 1961 is paid on the entire salary accrued in India.

3. A copy of the Notification is annexed.

4. Authorised Dealer Category – I banks may bring the contents of this circular to the notice of their constituents and customers concerned.

5. The directions contained in this circular have been issued under Section 10(4) and Section 11(1) of the FEMA 1999 (42 of 1999) and is without prejudice to permissions/approvals, if any, required under any other law.

RESERVE BANK OF INDIA

FOREIGN EXCHANGE DEPARTMENT

CENTRAL OFFICE

MUMBAI- 400 001

Notification No.FEMA. 199 /2009-RB Dated: September 30, 2009

Foreign Exchange Management (Foreign Currency Accounts by a Person Resident in India) (Second Amendment) Regulations, 2009

In exercise of the powers conferred by clause (b) of Section 9 and clause (e) of sub-section (2) of Section 47 of the Foreign Exchange Management Act, 1999 (42 of 1999), the Reserve Bank of India makes the following amendment in the Foreign Exchange Management (Foreign Currency Accounts by a Person Resident in India) Regulations, 2000, (Notification No. FEMA 10/2000-RB dated 3rd May, 2000), namely:-

1. Short title and commencement:-

(i) These Regulations may be called the Foreign Exchange Management (Foreign Currency Accounts by a Person Resident in India) (Second Amendment) Regulations, 2009.

(ii) These Regulations shall come into force from the date of their publication in the Official Gazette.

2. Amendment to the Regulations:-

In the Foreign Exchange Management (Foreign Currency Accounts by a Person Resident in India) Regulations, 2000, (Notification No. FEMA. 10/2000-RB dated 3rd May, 2000), in Regulation 7, for sub-regulation (8) the following shall be substituted, namely:

"(8) (i) A citizen of a foreign State, resident in India, being an employee of a foreign company or a citizen of India, employed by a foreign company outside India and in either case on deputation to the office /branch /subsidiary /joint venture in India of such foreign company may open, hold and maintain a foreign currency account with a bank outside India and receive the whole salary payable to him for the services rendered to the office/branch/subsidiary/joint venture in India of such foreign company, by credit to such account, provided that income-tax chargeable under the Income-tax Act, 1961 is paid on the entire salary as accrued in India.

(ii) A citizen of a foreign State resident in India being in employment with a company incorporated in India may open, hold and maintain a foreign currency account with a bank outside India and remit the whole salary received in India in Indian Rupees, to such account, for the services rendered to such an Indian company, provided that income-tax chargeable under the Income-tax Act, 1961 is paid on the entire salary accrued in India."

Contributed by: CA. V.M.V.SUBBA RAO

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