COMPLETE UNDERSTANDING OF FOREIGN INWARD REMITTANCE CERTIFICATE

COMPLETE UNDERSTANDING OF FOREIGN INWARD REMITTANCE CERTIFICATE

www.carajput.com; Foreign Inward Remittance Certificate

www.carajput.com; Foreign Inward Remittance Certificate

Foreign Inward Remittance Certificate is details of information Documents that behaves as a recommendation for all the inward remittances entered in India.  This document form is used by the majority of statutory authorities as confirmation that a person has received a payment in the foreign currency from outside India. When an individual collects any sum of money from a foreign country, it is credited to his account by an authorized broker, usually approved by the Reserve Bank of India to do so by these banks. If the receiver does not have a bank account with an authorized bank, then he is unable to move his money to his bank account.

Foreign Inward Remittance Certificate is considered a very valuable form and the same includes various purposes,. If shares are distributed on behalf of a person or business that operates outside an India, then Foreign Inward Remittance Certificate serves as a confirmation of the money obtained in place of the order for shares/ otherwise. The Foreign Inward Remittance Certificate is an important proof of the export of the services and remittances received instead of those services. FIRC testifies that the resident seller has received the share purchase consideration when a resident Indian sells or transfers his shares to some non-resident Indian or foreign identity. In the case of EPCG and Advance License, Foreign Inward Remittance Certificate is a very important Documents that are sent to DGFC, RBI, and Bank Documentation and related Compliances with subsidiary Claims in various Govt department scheme.

Kind of Foreign Inward Remittance Certificate (FIRC)

Usually, there are two types of FIRC

  1. Physical Foreign Inward Remittance Certificate (FIRC)

As of 2016, Physical Foreign Inward Remittance Certificate (FIRC) officially withdrawn, remitter banks issue an alternate form called an advisory, a declaration, or a NOC for your home bank to complete the e-FIRC process from 2016 onwards.

  1. e-FIRC Foreign Inward Remittance Certificate (FIRC)

Your home bank completes this procedure when they obtain advice, declaration, or NOC from the remitter bank and when, as explained below, they gather additional necessary documentation. Usually, the home bank produces an Inward Remittance (IRM) on the government export portal (EDPMS) when satisfied with the papers, and the IRM number is further referred to as an e-FIRC number.

What is the process for requesting a Foreign Inward Remittance Certificate (FIRC)?

Your transaction is valid for an e-FIRC if your transaction comes under EDPMS reporting. You will have to comply with RBI regulations and the bank where the remittance was issued in India.

In most situations, in order to obtain a Foreign Inward Remittance Certificate (FIRC), a letter with the following account information would have to be sent to the bank:

  • Account number
  • Transfer Amount
  • Day on which the transfer took place
  • Purpose of transfer
  • UTR Number details
  • Receiver Details

The beneficiary must then pay for the Foreign Inward Remittance Certificate’s issuance, which will be provided either physically or electronically.

What is the information contains in Format from FIRC?

www.carajput.com; Foreign Inward Remittance Certificate

www.carajput.com; Foreign Inward Remittance Certificate

Usually, a Foreign Inward Remittance Certificate document includes the following information:

  • Name and address of the first bank handling the foreign transaction
  • Name of Beneficiary
  • Indicating whether the amount is paid in cash or to the bank account of the person
  • Name and address of the person who sent the money
  • Draft Demand (DD) or Telegraphic Transfer (TT) number or Number of Cheque
  • The sum denominated in that foreign currency
  • The same amount denominated in rupees (both completely written out and using only numerals)
  • Name of the beneficiary of the funds
  • The rate of exchange which was added to the transaction
  • The object of the remittance

Issuance of e-FIRC

www.carajput.com; Foreign Inward Remittance Certificate

www.carajput.com; Foreign Inward Remittance Certificate

In case the export Receipt for an receiving from the export of Goods and Services is received by a Financial Institution other than the bank through which papers are submitted, the Coorspending recipient bank issues an e-FIRC to connect the two. Usually, an Inward Remittance on the Government Export Portal is created when the home bank is pleased with the papers and documents, and the Inward remittance (IRM) number is further referred to as the E-FIRC number.

How to get an E-FIRC Online?

Within 7-15 days after receiving an order payment, you will receive your E- FIRCs directly through your respective account, It is fully free of charge, and if anything goes well, it will be ready to download. No more requests for manuals, high fees, or long waiting periods!

Whenever your first digital FIRCs Received, You will get an email with a password and directions to use it. Take the following steps:

  1. Go and log on to www.payoneer.com
  2. Click the notification icon and find the message.
  3. To retrieve the password protected text, open the message and click on the attached link.

You will get a message straight to your account each time a document is available for you.

Issuance of FIRC by Authorized Bank

We refer to the receipt of transfers of Foreign Fund Transactions from Foreign entities as authorized under the FEMA 1999 and the FEMA (Current Account) Rules, 2000 and as amended from time to time allowed, in respect of the sale of goods and services and under Miscellaneous remittances to India and other types of Foreign Currency Inward remittances.

In order to enhance the mechanism of issuing FIRCs with a view to further improving the FIRC Mechanism, The Foreign Exchange Dealers Association of India (hereinafter referred to as FEDAI) has further amended the Guidelines for the issuance of FIRC for Inward Remittances received by Authorized Bank.

With reference to the Modified guidelines, FIRCs can now only be given unique/Distinctive serial numbers for the inward remittances on the protected documents as per Form BCI.

  • Inward remittances covering Foreign Direct Investment / Foreign Institutional Investment
  • Receipt of the export proceeds By bank otherwise than the one Handling export records. Such a FIRC will be issued on the basis of a submission to the receiver bank and would be addressed directly to the export documents owned by the bank.

Subsequently,

  • No fires will now be issued for Export Advance Payments.
  • One Year duration validity will remain for FIRCs.

These guidelines are applicable to affected from 1 May 2016, the said.

Foreign Inward Remittance Certificate Requirement in the case of exports of services in the view of GST Perspective

One of several circumstances for a service to qualify as an export of a service is that, in convertible foreign exchange, the consideration of the service should be received. FIRS / FIRA / NOC is then considered to be appropriate for the substantiation of that existence. For more details, please check with your chartered accountant Firm in India.

CA Rajput provides our clients with a free method of getting their FIRS / FIRA / NOC.

We are using many banking partners to process and send funds to our Indian customers. Please contact our client care dept to obtain these documents. They will be able to direct and give you lots of knowledge about which bank has been used for the collection and distribution of your funds.

  • You will obtain a soft copy of the E-FIRS for transactions performed through ICICI from December 2018, which is accessible on demand.
  • We will request a FIRA (hard copy) for transactions conducted through IndusInd. For these, the ETA is three to four weeks.
  • For transactions carried out by Deutsche Bank, includes all the transaction information submitted on the bank letterhead by the customer’s bank to Deutsche Bank. Deutsche stocks the FIRA and mails it to the bank of the vendor or seller.

Below Notifications released by any regulatory body concerning recent improvements to the procedure for issuing FIRCs

The list of circulars issued by FEDAI and RBI, you can be found below:

  • FEDAI circular Dated 21st April 2016, FEDAI Circular SPL-04/2016.
  • RBI Circular RBI/2015-16/414 RBI A.P. Circular number 74, dated 26th May 2016 (DIR Series).
  • FEDAI circular SPL-09/2016 dated 8th June 2016.
  • FEDAI circular 17th Oct, 2016, FEDAI circular Letter no 16/2016.

What are the differences between FIRC VS BRC?

BRS VS. FIRC

I have received several inquiries asking about the differentiation between the Bank Realization Certificate and the Foreign Inward Remittance Certificate. Someone wondered what the Bank Realization Certificate and others were, what the Foreign Inward Remittance Certificate was, and the distinction between the BRC and the FIRC.

Both are, exclusively speaking, certificates issued to customers by the authorized dealer bank for receiving amounts from foreign countries. Let us have a detailed discussion:

FIRC is provided against any receipt of the sum from foreign countries by a bank to its customers. It can be an advance payment for export, ocean or air freight proceeds, or remuneration or salaries for advisory fees or for some other reason.

BRC means the Bank Realization Certificate given to its customers by the bank against certain particular documents. Bank Realization Certificate is usually issued by a bank to its customers who, have been in the export business and on each export shipment. Multiple export promotion agencies provide rewards, import duty exemptions, and other financial assistance to the exporter. Export proof must be presented to these agencies by exporters in order to claim such an advantage. One of the evidence of exports other than the export promotion copy of the shipping bill (EP copy of the shipping bill), the Mate Receipt issued by the carrier and/or the customs approved ARE-1 (for central excise products only) is the Bank Realization Certificate issued by the respective bank receiving the exporters’ foreign amt.

Thus, after the amount received under each shipment, the exporter contacts their bank and submits the export proof and FIRC details to get the BRC under each shipment. This BRC is provided as evidence of shipment or evidence of export to the various authorities along with the customs legal record of the EP copy of the shipping bill, the Mate receipt Provided by the merchandise carrier, and, where appropriate, the central excise record of ARE-1 where ever applicable.

You need to note here that whenever you receive amounts from foreign countries, a FIRC can be obtained. That may be an amount in advance toward exports or services.

Until the Electronic Data Interchange system is implemented, exporters must submit a GR form along with a shipping bill to customs for completion of export procedures and formalities. A copy of the shipping bill is printed on the GR form. GR form is an export document to be submitted to the Reserve Bank of India for foreign inward remittance regulation. In order to secure the BRC, the exporter must request a copy of the GR form to show the account from which the foreign amount was obtained.

There is currently No FIRC or BRC required for government export promotion agencies such as the Customs Department Or DGFT or where applicable in the EDI facility, as the said foreign receipt is explicitly electronically linked to customs and DGFT through the exporter’s authorized dealer bank.

Therefore, FIRC (foreign inward remittance certificate) or BRC (BRC) need not be received by exporters. Consequently, exporters do not need to receive their bank’s FIRC or BRC to demand any export benefits from the DGFT or customs agency.

Concluding

As mentioned above, the FIRC is also of great significance when it comes to remittances obtained from banks that are abroad and not in India. It is therefore essential and necessary for the recipients to make it a matter and priority for them to follow up with the banks and obtain their FIRC issued as soon as possible after the inward remittance has been credited. Specific information and attention must also be given to foreign direct investment, as any mistake in mentioning this has significant ramifications and repercussions when it comes to remittances, their use, and their accounting.

Regards

Rajput Jain & Associates

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