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    MRC Fema Update 5

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    mukeash
    The Reserve Bank of India has liberalized regulations to allow foreign nationals employed in India to re-designate their resident bank accounts as Non-Resident Ordinary (NRO) accounts upon leaving the country. This will allow them to receive any pending legitimate dues in India. The account can only receive bona fide dues owed to the individual when they were a resident, and all funds must be repatriated abroad within the financial year, subject to applicable taxes. Strict conditions are placed on the banks and individuals to ensure only legitimate dues are received and immediately transferred out of the country.

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    MRC Fema Update 5

    Uploaded by

    mukeash
    23 views2 pages
    The Reserve Bank of India has liberalized regulations to allow foreign nationals employed in India to re-designate their resident bank accounts as Non-Resident Ordinary (NRO) accounts upon leaving the country. This will allow them to receive any pending legitimate dues in India. The account can only receive bona fide dues owed to the individual when they were a resident, and all funds must be repatriated abroad within the financial year, subject to applicable taxes. Strict conditions are placed on the banks and individuals to ensure only legitimate dues are received and immediately transferred out of the country.

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    Mrc Fema Update 5

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    The Reserve Bank of India has liberalized regulations to allow foreign nationals employed in India to re-designate their resident bank accounts as Non-Resident Ordinary (NRO) accounts upon leaving the country. This will allow them to receive any pending legitimate dues in India. The account can only receive bona fide dues owed to the individual when they were a resident, and all funds must be repatriated abroad within the financial year, subject to applicable taxes. Strict conditions are placed on the banks and individuals to ensure only legitimate dues are received and immediately transferred out of the country.

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    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    23 views2 pages

    MRC Fema Update 5

    Uploaded by

    mukeash
    The Reserve Bank of India has liberalized regulations to allow foreign nationals employed in India to re-designate their resident bank accounts as Non-Resident Ordinary (NRO) accounts upon leaving the country. This will allow them to receive any pending legitimate dues in India. The account can only receive bona fide dues owed to the individual when they were a resident, and all funds must be repatriated abroad within the financial year, subject to applicable taxes. Strict conditions are placed on the banks and individuals to ensure only legitimate dues are received and immediately transferred out of the country.

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    Investor Focus l

    MRC
    Chartered Accountants
    June 2011

    Remittance of assets by foreign nationals Liberalisation by Reserve Bank of India


    The foreign nationals employed in India holding valid visas are eligible to maintain resident accounts with an Authorised Dealer Category - I (AD Category-I) bank in India. Presently, the AD Category-I banks are required to close the resident accounts of such foreign nationals on their leaving the country and transfer their assets to their accounts maintained abroad. As per current regulations* when a person resident in India leaves India for a country (other than Nepal or Bhutan) for taking up employment, or for carrying on business or vocation outside India or for any other purpose indicating her / his stay outside India for an uncertain period, her / his existing account should be designated as a Non-Resident (Ordinary) [NRO] Account. The extant instructions have been reviewed so as to facilitate the foreign nationals to collect their pending dues in India. AD Category-I banks may, therefore, permit such foreign nationals to re-designate their resident account maintained in India as NRO account on leaving the country after their employment to enable them to receive their pending bonafide dues. The conditions to which such re-designation of the account by non-resident is allowed: a) AD Category-I bank should obtain the full details from the account holder about his legitimate dues expected to be received into his account.

    b) AD Category-I bank has to satisfy itself as regards the credit of amounts which have to be bonafide dues of the account holder when she / he was a resident in India. c) The funds credited to the NRO account should be repatriated abroad immediately, subject to the AD Category-I bank satisfying itself regarding the payment of the applicable Income tax and other taxes in India. d) The amount repatriated abroad should not exceed USD one million per financial year. e) The debit to the account should be only for the purpose of repatriation to the account holders account maintained abroad. f) There should not be any other inflow / credit to this account other than that mentioned at point (a) above. g) AD Category-I bank should put in place proper internal control mechanism to monitor the credits and debits to this account. h) The account should be closed immediately after all the dues have been received and repatriated as per the declaration made by the account holder. *Paragraph 8 of Schedule 3 to the Notification No. FEMA 5 /2000-RB dated 3rd May 2000, viz. Foreign Exchange Management (Deposit) Regulations, 2000 Source: http://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=645 4&Mode=0

    For further clarification mail at mukesh@mukeshraj.com; sudha@mukeshraj.com

    Contributed by CA. Sudha G. Bhushan

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