Executive Summary:
This notification outlines the Foreign Exchange Management (Remittance of Assets) Regulations, 2016, issued by the Reserve Bank of India, effective from April 1, 2016. These regulations govern the remittance of assets held in India by both residents and non-residents. The notification defines key terms and sets conditions under which such remittances are permitted, superseding previous regulations on the matter.
Key Points / Main Content:
* **General Prohibition:**
* Remittance of assets held in India is generally prohibited unless explicitly allowed under the Foreign Exchange Management Act (FEMA) or related regulations.
* The Reserve Bank of India (RBI) retains the authority to permit remittances for sufficient reasons.
* **Definitions:**
* The regulations define key terms such as "Act," "Authorised Dealer," "Non-Resident Indian (NRI)," "Person of Indian Origin (PIO)," and "Remittance of asset."
* **Permitted Remittances (Specific Cases):**
* **Foreign Citizens (excluding PIOs and citizens of Nepal/Bhutan):**
* May remit up to USD 1,000,000 per financial year if retired from Indian employment, inherited assets, or are widows/widowers inheriting from deceased Indian citizen spouses.
* Also applies to those who came to India for studies or training and have completed studies or training, and remit the balance from funds received from abroad or stipend or scholarship received from an Indian Government or Organisation.
* **NRIs/PIOs:**
* May remit up to USD 1,000,000 per financial year from Non-Resident Ordinary (NRO) account balances or sale proceeds of inherited assets.
* Also applies to funds received under a deed of settlement made by parents or a relative.
* **Indian Companies under Liquidation:**
* Authorised Dealers may allow remittances from assets of Indian companies under liquidation, subject to court orders/liquidator instructions, and auditor's certificates confirming liability payments and compliance with the Companies Act, 2013.
* **Remittance by Indian Entities:**
* Indian entities may remit contributions to provident fund/superannuation/pension fund for expatriate staff not permanently resident in India (employment duration <= 3 years).
* **Remittance on Closure of Branch/Liaison Office:**
* Branch/Liaison offices can remit assets upon closure with Authorised Dealer's permission, supported by RBI permission copy (if applicable), auditor's certificates, confirmation of no pending legal proceedings, and Registrar of Companies report.
* **RBI Prior Permission Required (Specific Cases):**
* Remittances exceeding USD 1,000,000 per financial year for legacy/inheritance to foreign citizens or by NRIs/PIOs from NRO accounts.
* Cases where hardship would result if remittance is not allowed.
* RBI will consider applications and may permit remittance with specific terms and conditions.
* **Tax Compliance:**
* All remittance transactions are subject to applicable Indian tax laws.
Impact Analysis
**Authorised Dealers:**
* Impact: Authorised Dealers are responsible for processing remittances in accordance with these regulations, ensuring compliance with documentation requirements and limits.
* Action Required: Adhere to the guidelines for processing remittances, verify required documentation, and report transactions as required by the RBI.
**Non-Resident Indians (NRIs) and Persons of Indian Origin (PIOs):**
* Impact: NRIs and PIOs are directly affected by the regulations governing the remittance of their assets held in India, particularly concerning the USD 1,000,000 annual limit and the conditions for remittances from NRO accounts.
* Action Required: Understand the regulations, provide necessary documentation for remittances, and ensure compliance with the specified limits and conditions.
**Foreign Citizens (excluding PIOs and citizens of Nepal/Bhutan):**
* Impact: These regulations affect foreign citizens who have retired from employment in India or have inherited assets in India, defining the conditions under which they can remit these assets.
* Action Required: Understand the regulations, provide necessary documentation for remittances, and ensure compliance with the specified limits and conditions.
**Indian Companies (under Liquidation):**
* Impact: The regulations affect the ability of Indian companies under liquidation to remit assets outside India, imposing conditions related to court orders, auditor certifications, and compliance with the Companies Act, 2013.
* Action Required: Comply with the conditions outlined in the regulations, including obtaining necessary certifications and ensuring compliance with legal requirements.
**Indian Entities employing Expatriate Staff:**
* Impact: Indian entities are permitted to remit contributions to provident, superannuation, and pension funds for expatriate staff who are not permanently resident in India.
* Action Required: Understand the regulations regarding remittances for expatriate staff and comply with the specified conditions.
**Branch/Liaison Offices of Foreign Companies:**
* Impact: These regulations affect the ability of branch/liaison offices to remit assets upon closure.
* Action Required: Prepare required documentation (auditor's certificate, RoC report, etc.) and apply to an Authorised Dealer for remittance approval.
Key Entities Referenced
Reserve Bank of India: The central bank of India, responsible for managing the country's monetary policy and foreign exchange reserves. It is the regulatory authority issuing this notification.
Foreign Exchange Management Act, 1999: An act of the Parliament of India to consolidate and amend the law relating to foreign exchange with the objective of facilitating external trade and payments and for promoting the orderly development and maintenance of foreign exchange market in India.
Foreign Exchange Management Remittance of Assets Regulations, 2016: The regulation established by the Reserve Bank of India pertaining to the remittance of assets outside India.
Non-Resident Indian (NRI): A person resident outside India who is a citizen of India or a person of Indian origin.
Person of Indian Origin (PIO): A person resident outside India who is of Indian origin.
Foreign Exchange Management Deposit Regulations, 2016: Regulations pertaining to deposits held by non-residents.
Companies Act, 2013: An Act of the Parliament of India which regulates incorporation of a company, responsibilities of a company, directors, dissolution of a company and other related aspects.
Nepal: A landlocked country in South Asia, bordering India. It is mentioned in the context of remittance rules for citizens of foreign states.
RESERVE BANK OF INDIA
FOREIGN EXCHANGE DEPARTMENT
CENTRAL OFFICE
MUMBAI 400 001
Notification No. FEMA 13 (R)/2016-RB April 01, 2016
Foreign Exchange Management (Remittance of Assets) Regulations, 2016
In exercise of the powers conferred by Section 47 of the Foreign Exchange Management Act, 1999 (42 of 1999) and in
supersession of Notification No. FEMA 13/2000-RB dated May 3, 2000, as amended from time to time, the Reserve
Bank makes the following regulations in respect of remittance outside India by a person whether resident in India or
not, of assets in India, namely:
1. Short title and commencement:-
i) These Regulations may be called the Foreign Exchange Management (Remittance of Assets) Regulations,
2016.
ii) They shall come into force from the date of their publication in the official Gazette.
2. Definitions:-
In these Regulations, unless the context requires otherwise, -
(i) 'Act' means the Foreign Exchange Management Act, 1999 (42 of 1999);
(ii) 'Authorised Dealer' means a person authorised as an authorised dealer under subsection (1) of section 10 of
the Act;
(iii) 'Non-Resident Indian’ (NRI) shall have the same meaning assigned under the Foreign Exchange
Management (Deposit) Regulations, 2016;
(iv) ‘Person of Indian Origin’ (PIO) shall have the same meaning assigned under the Foreign Exchange
Management (Deposit) Regulations, 2016;
(v) 'Remittance of asset' means remittance outside India of funds representing a deposit with a bank or a firm
or a company, provident fund balance or superannuation benefits, amount of claim or maturity proceeds of
Insurance policy, sale proceeds of shares, securities, immovable property or any other asset held in India in
accordance with the provisions of the Act or rules or regulations made there under;
(vi) the words and expressions used but not defined in these Regulations shall have the same meanings
respectively assigned to them in the Act.
3. Prohibition on Remittance outside India of assets held in India:-
Save as otherwise provided in the Act or rules or regulations made or issued thereunder, no person, whether resident in
India or not, shall make remittance of any asset held in India by him or by any other person:
Provided that the Reserve Bank may, for sufficient reasons, permit any person to make remittance of any asset held in
India by him or by any other person.4. Permission for remittance of assets in certain cases:-
(1) A citizen of foreign state, not being a Person of Indian origin (PIO) or a citizen of Nepal or Bhutan, who
(i) has retired from an employment in India, or
(ii) has inherited the assets from a person referred to in sub-section (5) of section 6 of the Act; or
(iii) is a widow/ widower resident outside India and has inherited assets of the deceased spouse who was an
Indian citizen resident in India, may remit through an authorised dealer an amount, not exceeding USD
1,000,000 (US Dollar One million only) per financial year on production of documentary evidence in support
of acquisition, inheritance or legacy of assets by the remitter
Provided that for the purpose of arriving at annual ceiling of remittance, the funds representing sale proceeds
of shares and immovable property owned or held by the citizen of foreign state on repatriation basis in
accordance with the Foreign Exchange Management (Acquisition and transfer of immovable property in India)
Regulations, 2016 and Foreign Exchange Management (Transfer or issue of security by a person resident
outside India) Regulations, 2000 made under the Act, shall not be included.
Provided further that where the remittance is made in more than one instalment, the remittance of all
instalments shall be made through the same authorised dealer.
(iv) had come to India for studies/ training and has completed his studies/ training, may remit the balance
available in his account, provided such balance represents funds derived out of remittances received from
abroad through normal banking channels or rupee proceeds of foreign exchange brought by such person and
sold to an authorised dealer or out of stipend/ scholarship received from the Government or any Organisation
in India.
(2) A Non-Resident Indian (NRI) or a Person of Indian Origin (PIO) may remit through an authorised dealer an amount,
not exceeding USD 1,000,000 (US Dollar One million only) per financial year,
(i) out of the balances held in the Non-Resident (Ordinary) Accounts (NRO accounts) opened in terms of
Foreign Exchange Management (Deposit) Regulations, 2016/ sale proceeds of assets/ the assets acquired by
him by way of inheritance/ legacy on production of documentary evidence in support of acquisition,
inheritance or legacy of assets by the remitter;
(ii) Under a deed of settlement made by either of his parents or a relative (relative as defined in Section 2(77)
of the Companies Act, 2013) and the settlement taking effect on the death of the settler, on production of the
original deed of settlement;
Provided that where the remittance under Clause (i) and (ii) is made in more than one instalment, the
remittance of all instalments shall be made through the same Authorised Dealer.
Provided further that where the remittance is to be made from the balances held in the NRO account, the
account holder shall furnish an undertaking to the Authorised Dealer that “the said remittance is sought to be
made out of the remitter’s balances held in the account arising from his/ her legitimate receivables in India and
not by borrowing from any other person or a transfer from any other NRO account and if such is found to be
the case, the account holder will render himself/ herself liable for penal action under FEMA.”
(3) An authorised dealer in India may, also allow remittance out of the assets of Indian companies under liquidation
under the provisions of the Companies Act, 2013, subject to the following conditions:(i) Authorised Dealer shall ensure that the remittance is in compliance with the order issued by a court in India/
order issued by the official liquidator or the liquidator in the case of voluntary winding up; and
(ii) no remittance shall be allowed unless the applicant submits:-
(a) Auditor's certificate confirming that all liabilities in India have been either fully paid or adequately
provided for.
(b) Auditor's certificate to the effect that the winding up is in accordance with the provisions of the
Companies Act, 2013.
(c) In case of winding up otherwise than by a court, an auditor's certificate to the effect that there is no legal
proceedings pending in any court in India against the applicant or the company under liquidation and
there is no legal impediment in permitting the remittance.
5. Permission to an Indian entity to remit funds in certain cases:-
(1) An entity in India may remit the amount being its contribution towards the provident fund/ superannuation/ pension
fund in respect of the expatriate staff in its employment who are resident in India but not permanently resident therein.
Explanation:
For the purpose of this Regulation, -
(a) 'expatriate staff' means a person whose provident/ superannuation/ pension fund is maintained outside India by his
principal employer outside India;
(b) ‘not permanently resident' means a person resident in India for employment of a specified duration (irrespective of
length thereof) or for a specific job or assignment, the duration of which does not exceed three years.
6. Permission for remittance of assets on closure or remittance of winding up proceeds of branch office/ liaison
office (other than project office)
(1) A branch or office established in India by a person resident outside India may, for making remittance of assets on
closure or remittance of its winding up proceeds, apply to the Authorised Dealer concerned supported by the following
documents, namely:
(A) A copy of the Reserve Bank's permission for establishing the branch/ office in India, wherever applicable;
(B) Auditor’s certificate:
(i) indicating the manner in which the remittable amount has been arrived and supported by a statement of assets
and liabilities of the applicant, and indicating the manner of disposal of assets;
(ii) confirming that all liabilities in India including arrears of gratuity and other benefits to the employees etc., of
the branch/ office have been either fully met or adequately provided for;
(iii) confirming that no income accruing from sources outside India (including proceeds of exports) has remained
un-repatriated to India; and
(iv) confirming that the branch/office has complied with all regulatory requirements stipulated by the Reserve
Bank of India from time to time regarding functioning of such offices in India.
(C) A confirmation from the applicant that no legal proceedings are pending in any Court in India and there is no legal
impediment to the remittance; and(D) A report from the Registrar of Companies regarding compliance with the provisions of the Companies Act, 2013, in
case of winding up of the office in India.
(2) On consideration of the application made under sub-regulation (1), the authorized dealer concerned may permit the
remittance subject to the directions issued by the Reserve Bank in this regard, from time to time.
7. Reserve Bank's prior permission in certain cases:-
(1) A person who desires to make a remittance of assets in the following cases, may apply to the Reserve Bank, namely:
(i) Remittance exceeding USD 1,000,000 (US Dollar One million only) per financial year –
(a) on account of legacy, bequest or inheritance to a citizen of foreign state, resident outside India;
and
(b) by a Non-Resident Indian (NRI) or Person of Indian Origin (PIO), out of the balances held in
NRO accounts/ sale proceeds of assets/ the assets acquired by way of inheritance/ legacy.
(ii) Remittance to a person resident outside India on the ground that hardship will be caused to such a person if
remittance from India is not made;
(2) On consideration of the application made under sub-regulation (1), the Reserve Bank may permit the remittance,
subject to such terms and conditions as it deem necessary.
8. Payment of taxes:-
Any transaction involving remittance of assets under these regulations shall be subject to the applicable tax laws in
India.
(Shekhar Bhatnagar)
Chief General Manager-in-charge
Published in the Official Gazette of Government
of India – Extraordinary – Part-II, Section 3, Sub-
Section (i) dated 01.04.2016- G.S.R.No.388(E)