Key Takeaways about the TCS on LRS Applicability

Key Takeaways About the  TCS On Liberalized Remittance scheme (LSR) Applicability 

www.carajput.com; LRS

www.carajput.com; LRS

Information about the concept of Liberalized Remittance scheme as per RBI Regulation is described below:

  • AD’s Liberalized Remittance/ Transfer Scheme may openly allow Remittance/ Transfer s of up to USD 2,50,000 (April-March) per Financial Year to resident individuals for any approved current or capital account transaction or a combination of both.
  • The Liberalized Remittance/ Transfer Scheme is not applicable to corporations, partnership businesses, HUFs, trusts, etc.
  • Remittance/ Transfer s under the Scheme may be accumulated in respect of members of the family required to comply with its terms and conditions by individual members of the family.
  • Fortunately, for capital account activities such as opening a bank account/investment/purchase of property, clubbing is not allowed by other family members if They are not the co-owners / co-partners in foreign bank accounts/investment/property.
www.carajput.com; RBI guidelines

www.carajput.com; RBI guidelines

Activities that are prohibited in compliance with rule 3 of the foreign exchange management act, 1999:

  1. Remittance/ Transfer from winnings of lotteries.
  2. Remittance/ Transfer of revenue or some other pleasure from racing/riding etc.
  3. Remittance/ Transfer for lottery ticket purchases prohibited/proscribed magazines, football games, sweepstakes, etc.
  4. Payment of the export commission for equity investment in joint ventures / wholly owned subsidiaries of Indian companies abroad.
  5. Remittance/ Transfer of dividends from any company to whom a dividend balancing provision applies.
  6. Payment of commissions for exports under the Rupee State Credit Route, with the exception of commissions of up to 10% of the invoice value of tea and tobacco exports.
  7. Payment for telephones connected to ‘Call Back Systems.’
  8. Remittance/ Transfer of interest income on funds deposited in the Non-Resident Special Rupee (Account)  Scheme.

Activities that require prior approval by the central government (see Schedule II Rule 4)

  1. Cultural trips
  2. Advertisement in global print media by the State Government and its Public Sector Undertakings for objectives other than development of tourism, foreign investment, and international bidding (exceeding USD 10,000)
  3. Remittance/ Transfer of freight chartered by a PSU vessel
  4. Import payment by Govt. Department or PSU on the basis of c.i.f. (i.e. not based on f.o.b. and f.a.s.)
  5. Multi-modal transport operators that transfer Remittance/ Transfer s to their agents In abroad
  6. Remittance/ Transfer of transponder hiring charges by (a) TV networks (b) Internet Service Providers
  7. Remittance/ Transfer of charges for the detention of containers in excess of the rate stated by the Director-General of Shipping
  8. Technical partnership deal Remittance/ Transfer s where royalty payments exceed 5% on local revenues and 8% on exports and lumpsum payments exceed USD 2 million
  9. Remittance/ Transfer for P & I Club membership
  10. Remittance/ Transfer by a person of prize money/sponsorship for sports activities in abroad other than International / National / State Level sports bodies of prize money/sponsorship of sports operation overseas, if the sum concerned reaches USD 100,000.

In addition, a resident cannot give a foreign currency as a gift to another resident for the credit of a foreign currency account kept abroad by the latter under the LRS.

The scheme should not be used to make remittances/transfers for any prohibited or immoral activities such as margin lending, lotteries, etc.

Prohibition on the drawing of foreign exchange —- Prohibition on the drawing of foreign exchange by any person for the following purposes:

  1. The transaction specified in Schedule I;
  2. Travel to Bhutan and/or Nepal;
  3. The transaction with a person who is resident in Nepal or Bhutan.

Such that the prohibition referred to in clause (c) may be excluded by the RBI, pursuant to such terms and conditions as may be considered appropriate by special or general order.

  • All such transactions not otherwise permitted under FEMA and those of a margin or margin call Remittance/ Transfer form to overseas exchanges / overseas counterparties are not permitted under the Liberalized Remittance/ Transfer scheme.
  • Allowable Current account transactions: The cap of USD 2.50,000 per Financial Year (FY) under the Scheme also contains/subsumes Remittance/ Transfer s for current account transactions (i.e. private visits; gifts/donations; work from abroad; emigration; preservation of close relatives abroad; business trips; medical care in abroad; studies abroad) available to the resident individual in India foreign exchange not more than USD 250,000 by getting prior approval from RBI.
  • Private visits
  • Gift / donation
  • Moving abroad for jobs/employment
  • Emigration
  • Maintenance of  close relatives in Abroad
  • Business trip
  • Medical care in abroad
  • Resources for students to complete their studies abroad.

Permitted transactions of the capital account: The permitted transactions of the capital account by an individual under the LRS are

www.carajput.com; Permissible capital Account

www.carajput.com; Permissible Capital Account

  • New Opening a bank account for foreign currency account abroad.
  • Investment in abroad: purchase and retention of stock in both listed and unlisted foreign companies or debt instruments; purchase in qualified stock of a foreign company for hold the position of director; purchase of stocks of a foreign company for professional services rendered or in exchange of remuneration of the Director; investment in Mutual Funds units; Venture Capital Funds; promissory note, unrated debt securities;
  • Setting up of Wholly Owned Subsidiaries and Joint Ventures (w.e.f. 5th Aug 2013) for the bonafide industry outside India, according to the RBI terms and conditions.
  • Extending loans to non-resident Indians (NRIs) who are relatives, including loans in Indian Rupees as specified in the Companies Act, 2013
  • To encourage capital account Remittance/ Transfer s under the Liberalized Remittance Scheme, banks do not provide any kind of credit facilities to resident individuals.

TCS on an Amount for remittances transactions under LRS Scheme.

TCS on a sum for remittance transactions under the Liberalized Remittance Scheme.: According to the amendment pursuant to section 206C of the Finance Act 2020, an approved dealer who collects a sum for remittances under the Liberalized Remittance Scheme shall be liable for TCS transactions under the Liberalized Remittance Scheme.

  • tax collection at source will be effective 1 October 2020 for all Liberalized Remittance Scheme transactions, including international debit card transactions.
  • Underpayments are within the limits of the tax collection at source applicability-
  • Liberalized Remittance Scheme forwarding transactions via the Bank branch or bank Online.
  • Foreign Currency Demand Draft or cash issuance from a domestic resident account for the purpose of the Liberalized Remittance Scheme.
  • International transactions on Debit Card Transactions (including transactions on international traders or platforms providing Dynamic Currency Conversion-DCC Transactions)
  • Transfers from domestic resident customers to Liberalized Remittance Scheme NGO account (Loan to NRI or Gift to NRI)

Below is the tax collection at source charging grid for Liberalized Remittance Scheme remittances and transactions 

www.carajput.com; LRS

www.carajput.com; LRS

Liberalized Remittance Scheme Purpose/Type of transaction Applicable of Tax collected at source
1. Remittances under Liberalized Remittance Scheme Purpose S0306 –
2. International transactions on Debit Cards (including Dynamic Currency Conversion – DCC transactions) and
3. Other travel including holiday trips and payments for settling international credit card transactions.
5% of the transaction/remittance amount
Liberalized Remittance Scheme Purpose S1107 Studies abroad and S0305 Travel for education, where the source of funds is Education loan 0.5% of the remittance amount above INR 7 lacs during the financial year.
Any Other Liberalized Remittance Scheme purposes 5% of the remittance amount, above INR 7 lacs during the financial year.

Note:- It is to ensure that the account is properly financed to cover the cost of the remittance, the Tax collected at source cost, the remittance charges, the related bank fees as well as other taxes/charges as applicable. In the case of insufficient balances, payments will not be processed.

Changes have been made to the Source Tax Collection (TCS) provision for international remittances made during the Union Budget 2020-21. Please find below the list of the amended provision;

  • The TCS clause will now be effective from 1 October 2020 instead of 1 April 2020.
  • On the basis of the recent clarification, TCS shall refer to sums greater than INR 7 lakh in the financial year and not to the total sum.
  • In situations where the sum is charged for continuing education through a loan from any financial institution, the rate of TCS shall be 0.5 percent above the sum of INR 7 lakh.

 Frequently Asked on TCS on Liberalized Remittance Scheme.

Questions: 1. what is the effective date of introduction of the tax implications?

Answer: Effectiveness of the Tax collected at the source clause on international remittances is updated from 1 April 2020 to 1 October 2020.

Question:2. What all transactions will be affected by this Tax collected at source requirement?

Answer: All remittances in excess of INR 7 lakh in the financial year under the LRS will be liable for 5 percent of TCS, except where the remittance is for education paid out through a loan from any financial institution. The rate would then be decreased from 5% to 0.5%. The exclusion from TCS for remittances abroad under LRS for sums just under INR 7 lakh in the financial year would not apply if the sum is charged for the purchase of the overseas tour program kit.

Questions: 3. Can GST be applied to the 5% TCS collected?

Answer: No GST would refer to the tax collected by the TCS. However, GST will refer to the conversion & remittance service fee of the currency.

Questions: 4. what are the various reasons for which the tax collection applies?

Answer: The tax would apply to all remittances from India that come under the Liberalized Remittance Scheme (LRS) of RBI.

Questions: 5. what are the various Purpose for purposes permitted under LRS?

Answer: The following are the purposes permitted under LRS.

  • Private visits to any country (excluding Nepal and Bhutan)
  • Donation or charity;
  • Study abroad
  • Moving overseas to work
  • Emigration:
  • Maintenance of loyal family members abroad
  • Travel for business, or attending a conference or advanced training, or meeting expenses for meeting medical expenses, or checking abroad, or accompanying a patient going abroad for medical treatment/check-up;
  • Expenditures for medical care overseas
  • Any other current account transaction not protected in FEMA 1999.

Questions: 6. what are the various permissible capital account transactions by an individual for purposes permitted under LRS?

Answer: The permissible capital account transactions by an individual under LRS are:

  • Investments abroad – acquisition and holding of shares in both listed and unlisted foreign companies or debt instruments; 5 acquisition in qualified shares of a foreign company for the role of the director; acquisition of shares of a foreign company for professional services rendered or in lieu of remuneration of the director; investment in units of mutual funds, venture capital funds;
  • Establishment of wholly-owned subsidiaries and joint ventures (with effect from 05 August 2013) outside India for bonafide company subject to the terms and conditions set out in Notification No FEMA.263 / RB-2013 of 5 March 2013;
  • to extend loans, namely loans in Indian Rupees, to non-resident Indians (NRIs) who are relatives.
  • the opening of foreign currency accounts with a bank abroad;
  • purchase of foreign property;

Questions: 7. What’s Dynamic Currency Conversion (DCC)?

Answer: Many international traders offer the ‘Dynamic Currency Conversion’ facility – which enables customers to make purchase payments directly in their home currency (i.e. Indian Rupees for cards issued in India). This service is provided by selected international merchants or websites. The final transaction amount (as determined by the merchant / DCC service provider) must be checked by you before the payment is made. Depending on the sum given by the merchant, Citi will charge you the final amount (Indian Rupees). The conversion procedure, the exchange rate and any markup applied in such cases shall be decided, as the case may be, by the applicable merchant or DCC service provider.

If we do not opt for DCC, you will be billed in local currency by the merchant. If the local currency is not USD, then the transaction is translated first from the local currency to $ then from $ to INR.

Regards

Rajput Jain & Associates

Disclaimer: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. carajput.com is committed to helping entrepreneurs and small business owners to start, manage and grow their business with peace of mind. Our goal is to support the entrepreneur on legal and regulatory requirements and to be a partner throughout the entire business life cycle, offering support to the company at every stage to ensure that it is compliant and consistently growing. Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 09811322785/4 9555 5555 480)

FEMA Compliance for FDI in Equity share in India

FCGPR – FEMA Compliance for FDI in Equity share in India

OVERVIEW

FDI Stands for Foreign Direct Investment (FDI) Reserve Bank of India has made regulations and issued certain notifications in relation to the receipt of Foreign Direct Investment (FDI) in India.

RBI has allowed the receipt of Foreign Direct Investment (FDI) by the way of the issue of capital instruments in India.

Further, the company receiving Foreign Direct Investment (FDI) has to make reporting of receipt of FDI in form FCGPR.

Form FCGPR is required to be filed in case the company is issuing equity shares, Compulsorily Convertible Preference Shares (CCPS)/ Compulsorily Convertible Debentures (CCD) to a person resident outside India.

What is FCGPR?

FCGPR stands for the Foreign Collaboration general permission route. RBI has specified Form FCGPR for making reporting of Foreign Direct Investment (FDI).

Whenever a Company issues equity shares, Compulsorily Convertible Preference Shares (CCPS)/ Compulsorily Convertible Debentures (CCD) in consideration of money received from a person resident outside India by way of Foreign Direct Investment (FDI), then the company needs to file FORM FCGPR using FIRMS Portal.

Time Limit for filing FORM FCGPR

www.carajput.com; time limit for FORM FC-GPR

www.carajput.com; time limit for FORM FC-GPR

Form FCGPR needs to be filed within 30days of allotment of shares / Compulsorily Convertible Preference Shares (CCPS)/ Compulsorily Convertible Debentures (CCD).

Applicable Regulation 

Inward remittance of Foreign Direct Investment (FDI) by a person resident outside India is regulated by Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2017

Document Required for filing FORM FCGPR

The following documents shall be required for filing Form FCGPR:
1 Board Resolution for Allotment of Shares / Compulsorily Convertible Preference Shares (CCPS)/ Compulsorily Convertible Debentures (CCD)

2 Memorandum of Association of the company in case the shares are allotted for the subscription to the Memorandum of Association (MOA)

3 Foreign Inward remittance Certificate (FIRC) from AD Bank

4 KYC from AD Bank

5 Valuation certificate regarding the value of shares from the Chartered Accountant

6 CS Certificate in the prescribed format

7 Declaration by Authorised representative of the Company

8 Debit Authorisation for debiting charges from the Bank

9 Declaration regarding issue price by the directors of the Company

10 Reason for delay in submission, if any

Routes of Foreign Direct Investment(FDI)

FDI can be received by way of the following routes:

1 Automatic Route: where no approval is required for getting inward remittance from a person resident outside India.

2 Government Approval Route: There are certain sectors in which government approval is required for receiving inward remittance from a person resident outside India.

Prohibited Sector for Foreign Direct Investment(FDI)

A person resident outside India cannot make any Foreign Direct investment in any of the following sectors:

1 Lottery Business. It includes the Government / private lottery or online lotteries

2 Gambling and betting including casinos

3 Chit Fund (except for investment made by NRI’s and OCI’s on a Non – repatriation basis)

4 Nidhi Company

5 Trading in Transferable Development Rights (TDR’s)

6 Real Estate business or construction of Farmhouses

7 Manufacturing of Cigars, cheroots, cigarillos and cigarettes, tobacco or of tobacco substitutes.

Note: The prohibition is on the manufacturing of the products mentioned and foreign investment in other activities relating to these products including wholesale cash and carry, retail trading, etc. will be governed by the sectoral restrictions laid down in Regulation 16 of FEMA 20(R).

8 Activities/sectors not open to private sectors investment i.e Atomic energy and Railway operations

9 Foreign technology collaboration in any form including licensing for franchise, trademark, brand name, management contract is also prohibited for Lottery Business and Gambling and Betting activities.

Process for filing FORM FCGPR

The following process shall be followed for reporting of Foreign Direct Investment (FDI) in India:

Step 1: Registration for Entity User on Firms Portal

The company has first of needs to get the registration of Entity user on the FIRM’s Portal in case the reporting of FDI is being made the first time for the Company.

In the case of subsequent reporting, the company does not need to make any registration for entity users.

Documents to be attached: Authority letter in signed Format, PAN of Entity, and PAN of Authorised Representative of the company.

After registering an entity user, the concerned authority will check and verify the details and documents filed and after being satisfied, a Password will be sent to the registered email ID which needs to change.

www.carajput.com; Entity User Registration

www.carajput.com; Entity User Registration

Step 2: Creation of Entity Master

After registration of entity user, there needs to create an entity master by logging into the FIRM’s Portal using the User ID and Password as created in the entity user process.

The Company needs to fill all the details as required in the entity master form in the FIRM’s Portal and then click on “Submit”.

Step 3 Registration for Business User on Firms Portal

After the creation of Entity Master, the company needs to apply for business user registration.

One important point to be noted is that here in the business user form the company needs to select the IFSC Code of the AD Bank from the Drop Down. So, the company should confirm the IFSC Code to be chosen in the form in advance from the Concerned Bank.

Documents to be attached: Authority letter in signed Format, PAN of Entity, and PAN of Authorised Representative of the company.

www.carajput.com; Business User Registration

www.carajput.com; Business User Registration

Step 4 Reporting of FDI Received

The Last step is to make the reporting of remittance received from a person resident outside India. The company needs to fill all the required details and attach the relevant documents as mentioned above while making reporting in this form and then submit the Form.

www.carajput.com; RBI

www.carajput.com; RBI

 

www.carajput.com; RBI

www.carajput.com; RBI

www.carajput.com; RBI

www.carajput.com; RBI

After filing Form FCGPR, the AD Bank or both AD Bank and RBI as the case may be will check the form and in case any discrepancy is found in the Form, then they will reject the Form giving the appropriate reasoning or otherwise they will approve the Form.

In case the form got rejected, then the company needs to file the Form again after removing all the discrepancies.

Consequences of late filing of FORM FCGPR

If the Company makes reporting of Foreign Direct Investment (FDI) after the period of 30 days of allotment of shares / CCPS / CCDs, then the Form will first be checked by the DA Bank and then AD Bank will send the form further to the Respective regional Reserve Bank of India.

Further, the Reserve Bank of India will either charge late submission Fees (LSF) or ask the Company to go for compounding for approval of Form FCGPR.

How Rajput Jain & Associates can Assist 

We offer all kinds of Consultancy, Compliances, and Registration Services in relation to Foreign Direct Investment (FDI) in India. We have impaneled various experts to provide the expert advisory, Registration, and Compliances services for Foreign Direct Investment (FDI) in India.

The services that we offer include in Foreign Direct Investment (FDI) in India are:

  • FEMA Compliances related to Foreign Direct Investment (FDI)
  • Reporting to RBI in relation to Foreign Direct Investment (FDI)
  • Drafting of documents for reporting to RBI
  • Valuation of shares
  • Advising various routes for remitting the money in India
  • ROC Compliances in relation to Foreign Direct Investment (FDI)
  • Liaisoning with AD Bank and RBI in relation to compliances and FDI matters

Frequently Ask Question(FAQ)

Q 1 Where we can make reporting of Foreign Direct Investment (FDI)?

Ans Reporting of Foreign Direct Investment (FDI) can be made online using FIRMS Portal.

Q 2 What is the Time limit for allotment of shares for FDI received in India?

AnsThe shares need to be allotted within 60 days of receipt of Foreign Direct Investment (FDI) in India.

Q 3 Do we require to file form FCGPR for issuance of Preference shares or debentures?

Ans Form FCGPR is required to be filed if the Preference shares or debentures issued are fully and compulsorily convertible in shares, otherwise, it would be treated as ECB.

Q 4 Do we require to file form FCGPR for partly paid equity shares?

Ans Yes, Form FCGPR is also required to be filed for issuance of partly paid shares.

CS Akshay Gupta is a diligent and innovative qualified Company Secretary, striving in matters related to Corporate Law. Akshay takes a deep interest in corporate, NBFC and FDI matters and his specialization includes corporate Compliance, FEMA Compliances, and NBFC Registration. As a Company Secretary, Akshay is passionate about matters relating to corporate funding, NBFC, and its compliances.

Don’t Worry! Our experts are here to help you. Get in Touch with our team for easy filing of SMF Form FCGPR.

Write to RAJPUT JAIN & ASSOCIATES  or call us on 9555555480

Disclaimer: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. carajput.com is committed to helping entrepreneurs and small business owners to start, manage and grow their business with peace of mind. Our goal is to support the entrepreneur on legal and regulatory requirements and to be a partner throughout the entire business life cycle, offering support to the company at every stage to ensure that it is compliant and consistently growing. Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 09811322785/4 9555 5555 480)

Complete understanding of setting up a Branch Office in India

Complete understanding of setting up a Branch Office in India 

Complete understanding of Global Companies Preferences and Needs for open up operation setting up a Division or branch in India. a foreign company for setting up an office in India

  • Branch office in India
  • The liaison office in India or
  • Setting up a Private limited company in India or
  • Project office by a foreign company.
www.carajput.com;Foreign Company

www.carajput.com; Foreign Company

There are few requirements for a foreign corporation to open its branch in India. A subsidiary should be established for different reasons and the establishment of a head office in India’s requirements and needs.

The Reasons for set up Branch Office in India

For the following reasons, international firms, including US corporations, are allowed to set up branch offices in India:

  • Import and Export of supply of goods
  • Provision for Professional or advisory facilities
  • Start the research work which includes the parent company is already doing.
  • for enlarge the Promoting technical or financial collaborations between Indian businesses and a foreign parent or group of companies worldwide.
  • To provide the services to the parent company in India and to act as purchasing/selling representatives in India.
  • for initiate information technology services, and software development in India.
  • for the starting technological assistance to parent/group business provided goods.
  • open up Shipping / Foreign Airline operation
  • Global Banks opening

A Branch office is not allowed to conduct production operations of its own but is authorized to subcontract them to an Indian company. Branch offices founded with RBI approval may remit branch income outside India, net of relevant Indian taxes, and subject to RBI guidelines subjected to the condition of RBI grants permission to set up branch offices.

Specifications and conditions of an establishing  Branch office in India

www.carajput.com;procedure to establish a foreign entity

www.carajput.com; procedure to establish a foreign entity

  • Indian branch office name will be the same as the parent business name.
  • The Branch Office has no control, it is just an extension of an Existing company foreign world market.
  • All branch office costs are borne by the Principal /head office because it has Indian activities revenue does not have revenue.
  • Over the immediately intervening five years in the homeworld, the international parent corporation planning to open a branch office in India would have a successful track record.
  • The company must have The Net Worth, i.e., amount of paid-up capital and free deposits, less intangible assets as specified in the latest Audited Balance Sheet or Financial Report accredited by a Certified Public Accountant or other Registered Financial Practitioner of that name shall not be less than or equivalent to USD 100,000.

A branch office is ideal for international firms looking to set up a temporary office in India and not involved or intending to make long-term plans for Indian operations; except for the above-listed finance, shipping and airlines, etc.

Necessary document required to establish a branch office in India

www.carajput.com; Branch Office

www.carajput.com; Branch Office

Presently, the application for the branch office and BRANCH office is sent through the AD according to the Reserve Bank of India conditions. The approved dealer implies obtaining banking licenses for a different entity.

To start a branch office in India the following filings are required:

  • Certification of Incorporation – Translated & duly notarized and properly authenticated.
  • The Latest audited Balance sheet and annual accounts of the parent company duly Translated notarized for the past 3 years and properly authenticated.
  • The expected funding level for operations in India.
  • Details Relating to address of the proposed local office, the number of persons likely to be employed, the number of Foreigners among such employees, and address of the head of the local office, if decided
  • Details of Activity carried out in Home Country by the applicant organization in brief about the product and services of the company in Brief.
  • Bankers Certificate
  • Name, Address, email ID, and telephone number of the authorized person in Home
  • Letter from the principal officer of the Parent company to RBI.
  • Letter of authority from the parent company in favor of Local Representative.
  • Letter of authority/ Resolution from the parent company for setting up BRANCH office in
  • Comfort letter from the parent company intending to support the operation in India.
  • Two copies of the English version of the Certificate of Incorporation, Memorandum & Articles of association (Charter Document) of the parent company duly attested by the Indian embassy or notary public in the country of registration.
  • Details of Bankers of the Organization the Country of Origin along with the bank account number
  • Commitment from the Organization to the effect that it will be open to report / opinion sought from its banker by the Government of India / Reserve Bank of India
  • Form FNC 1 (Three copies)
  • Latest Proof of identity of all the Directors – Properly Certified by Banker in Home Country and duly authenticated
  • Latest Proof of address all of the Directors – Properly Certified by Banker in Home Country and duly authenticated
  • Details of the Individuals / Company holding more 10% of Equity
  • Structure of the Organization and its Shareholding pattern
  • Complete KYC of Shareholders holding more than 10% Equity in the Applicant Company Resolution for Opening up Bank Account with the Banker
  • Duly Signed Bank Account Opening Form for Indian Bank
  • Note: We can assist in getting all these documents, wherever required prepared and advice on the various issue relating to this. Please feel free for clarification, if any required in this regard.

The RBI accepts the application for BRANCH office licenses but the Approved Dealers (AD) route the applications for BRANCH office as per the recent changes. Despite that, the timeframe for creating the BRANCH office has significantly expanded. Even the paperwork needed for the same has significantly increased.

Other criteria for Incorporation of Branch Office

That RBI-licensed branch office shall be licensed with the Ministry of Corporate Affairs, it is a branch office registration as a foreign business establishment in India. On such registration, the business registrar allocates a CIN i.e. Corporate Identification Code. The following forms must be filled out with the Companies Registrar:

  • Form 44
  • Charter, laws or document and articles of agreement or other act constituting or establishing the creation of a company(In the manner provided for in Rule 16, General Rules and Functions of the Companies (Central Government), 1956)
  • Unless the records alluded to above are not in English instead of the original edition of the papers.
  • Information Director(s)-Persons
  • Information Director(s)-Public bodies
  • Reserve Bank of India letter of approval
  • Information Secretary(s)
  • Resolution of control of attorney or board in lieu of designated representative(s)

Procedural criteria for post-incorporation

The below few more criteria for a branch office are also required after Incorporation:

  • PAN of company.
  • TAN (Tax-deductible Number) -Shop and Establishment certificate details
  • certificate of GST Registering if  Branch provides services in India or provide  facilities in India

Annual enforcement practices a Branch Office needs

www.carajput.com; Branch Office

www.carajput.com; Branch Office

Every branch office is required each year to do the following activities:

  • To be maintaining complete record Files
  • To audited Financial Report
  • To be Filling with RBI Annual Operation Certificate
  • To be Completion of the regular report and balance sheet for business registrar
  • to timely inform about some shift in the world Business constitution of RBI & ROC
  • to timely information about any change of Foreign Company Directors to RBI & ROC
  • to timely information about all change or shift to RBI & ROC at the BRANCH office
  • No additional place of business may be established until RBI intimation and approval.

Regarding company management standards in India see also Annual Corporate Filings in India.

How to close a Branch office actives in India

www.carajput.com; Branch Office

www.carajput.com; Branch Office

A branch office license is usually issued for three years. If a business decides to close the branch office set up in India at any time, it must file with the RBI via its Registered Dealer the required documentation. Liaison offices cannot able closed without Properly compliance made with ROC,

The specification for the termination usually contains the followings:

DOCUMENTS REQUIRED FOR CLOSING OF LIAISON OFFICE: – For processing the Closing of Liaison Office, it shall file the necessary documents with the  AD, and the application for the closure shall be forwarded by the Authorized Dealer. following documents are required

  •   Copy of the Reserve Bank’s permission/ approval from the sectoral regulator(s) for establishing the BO / LO.
  •   Auditor’s certificate-
  1. i) indicating the manner in which the remittable amount has been arrived at and supported by a statement of assets and liabilities of the applicant, and indicating the manner of disposal of assets;
  2. ii) confirming that all liabilities in India including arrears of gratuity and other benefits to employees, etc., of the Office have been either fully met or adequately provided for; and iii) confirming that no income accruing from sources outside India (including proceeds of exports) has remained un-repatriated to India.
  • NOC / Tax Clearance Certification for the remittances from the Income-Tax department.
  • Confirmation from the applicant/parent corporation that no civil proceedings are pending at any court in India and that there is no procedural barrier to the remittance.
  • A report from the Registrar of Companies regarding compliance with the provisions of the Companies Act, 1956, in case of winding up of the Office in India.
  •  Any other document/s, specified by the Reserve Bank while granting approval.
  • Copy of the authorization/approval by the Sectoral Regulator(s) of the Reserve Bank to create the BO / LO.

Note: We can assist in getting all these documents, wherever required prepared and advice on a various issues relating to this. Please feel free for clarification, if any required in this regard.

The branch must be on “Stand Alone basis” in India 

Stand-alone branch offices are segregated and restricted to the Special Economic Zone ( SEZ) only, and no commercial activity/transaction is allowed beyond India’s SEZs, which involve branches/subsidiary offices of the parent company.

For a business to create a branch/unit in SEZs to conduct manufacturing and service activities under prescribed conditions, no approval is needed from RBI.

Liaison Office /Representatives office 

www.carajput.com; Branch Office

www.carajput.com; Branch Office

With the approval of the Indian government, a liaison office could be created or started. The Liaison Office’s function is limited to knowledge collection, export/import promotion, and promoting technical/financial partnerships.

The Liaison Office can not do any commercial operation explicitly or implicitly for business operations in India. For  processing the Liaison Office application of Stand Partners, the following fresh documents are required:

  • Duly signed & stamped detailed covering application ;
  • Financial projections of the proposed liaison office duly certified from its auditors ;
  • Signed & stamped new form FNC in quadruplicate ;
  • Fresh notarised & apostle Certificate of Incorporation of the applicant company along with Memorandum & Articles of Association ;
  • Signed & stamped Audited Financials of last 3 year from the auditors of the company duly signed from directors of the applicant company;
  • Fresh notarised & apostle POA along with duly signed & stamped board resolution of the applicant company
  • Signed & stamped letter of authority in our favor;
  • Signed & stamped details of activities carried on by the applicant company and to be carried on by the proposed liaison office ;
  • Signed & stamped details of Companies banker along with a report from the respective bank  about its tenure of operation of account & relations with the applicant company ;
  • Signed & stamped details of the state;
  • Signed & stamped details of directors of the applicant company;
  • A letter of comfort is not required in case if the applicant company provides audited financials of last year;

Should you require any further clarification/explanation in this regard, please feel free to revert.

Project Office in India 

www.carajput.com; Branch Office

www.carajput.com; Branch Office

Foreign companies intending to carry out unique projects in India will create temporary project/site offices in India to carry out activities relevant to that project only. The Indian Government has now given foreign companies normal permission to create project offices subject to defined conditions.

S.No. Particulars
A. SET-UP OF PROJECT OFFICE
1. GENERAL PERMISSION
Reserve Bank has granted general permission to foreign companies to establish Project Offices in India,

provided they have secured a contract form an Indian company to execute a project in India, and

(a) the project is funded directly by inward remittance from abroad; or

(b) the project is funded by bilateral or multilateral International Financing Agency; or

(c) the project has been cleared by an appropriate authority, or (d) a company or entity in India awarding the contract has been granted Term Loan by a Public Financial Institution or a bank in India for the project.

2. SPECIFIC PERMISSION
However, if the above criteria are not met, or if the parent entity is established in Pakistan, Bangladesh, Sri Lanka, Afghanistan, Iran or China, such applications have to be forwarded to the Central Office of the Foreign Exchange Department of the Reserve Bank at Mumbai for approval.
Procedure for Opening Project Office by Foreign Companies in India:

·        The foreign company has to apply in the form FNC 1 to the Reserve Bank of India in order to open a project office in the country

·        The foreign company has to secure a contract for a project from an Indian firm that will be executed in India

·        The project, that the foreign company has secured, has to be approved by the appropriate authority or

·        The project, that the foreign company has secured, has to receive funding directly from abroad in the form of inward remittance or

·        The project that the foreign company has secured has to receive funding from the Agency of International Financing or

·        The Indian firm that has given the contract to the foreign company has been granted by a bank or Financial Public Institution a term loan in the country for the project

 
Documents/Information Required:

·        Duly filled application form by Foreign Company

·        Copy of Memorandum / Charter of incorporation of a foreign company

·        Certificate of Incorporation of a foreign company

·        KYC of a foreign company

·        Name and address of Foreign Company

·        Reference No. and date of letter awarding the contract along with a copy of the contract, if any

·        Particulars of authority awarding the contract

·        Total amount of contract

·        Address of proposed project office

 

Note: It is really necessary to select the right form of company or corporate body for a foreign investor in India that better fits its interests and takes care of the issues of liability and tax planning. Foreign firms seeking to do business in India will pay careful attention to Foreign Investors Entry Strategies & Tax Preparation and corporate structuring to save taxes to the maximum possible degree permitted by laws and international tax treaties.

Disclaimer: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. carajput.com is committed to helping entrepreneurs and small business owners to start, manage and grow their business with peace of mind. Our goal is to support the entrepreneur on legal and regulatory requirements and to be a partner throughout the entire business life cycle, offering support to the company at every stage to ensure that it is compliant and consistently growing. Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 09811322785/4 9555 5555 480)

RBI Governor Press Announcements highlights: RBI reduces the rate, extends the loan relief

Announcements: RBI of the Government: 22/05/2020

www.carajput.com; Reserve Bank of India

www.carajput.com; Reserve Bank of India

  1. Term loan moratorium extends to August 31, 2020-The debt moratorium will be continued to August 31, 2020. Which gives it a six-month moratorium.
  2. Interest deferral on working capital-Interest on working capital is deferred by another 3 months, i.e. until 31 August 2020.
  3. Conversion of interest on working capital to fixed-term loans-Loan agencies is permitted to turn accrued interest on working capital facilities over the deferment period (until August 31, 2020) into a secured interest-term loan (repayable by March 31, 2021).
  4. The margin for Working Capital – Drawing Power – Lending institutions was required to return working capital margins to the original amount by 31 March 2021.
  5. Reduce the repo rate by 40 bps to 4%. The interest rate should then be reduced.
  6. Export Credits-Maximum Allowable Export Credit (Pre and Post Shipping) extended from 12 months to 15 months.
  7. Payment against imports-Extension of the time limit to allow payments against imports from 6 months to 12 months
  8. Help to EXIM Bank-Facility of Rs 15.000 crore credit line for 90 days for US dollar swap facility will be given to EXIM Bank.
  9. Extension of Resolution Timelines-Deferment or moratorium time shall be removed when measuring the 180-day resolution deadline.
  10. Group Financing -Group exposure increased from 25% to 30%
  11. SIDBI support – In order to provide greater flexibility to SIDBI, a further 90-day extension of the 90-day loan facility will be offered.
  12. Trade Impact -Loan moratorium shall have no effect on improvements in asset classification, financial history, and aging requirements, etc.
  13. Trade Impact-The The volume of world trade can fall by 13 percent-32% this year.

    Post by Rajput Jain & Associates

Disclaimer: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. carajput.com is committed to helping entrepreneurs and small business owners to start, manage and grow their business with peace of mind. Our goal is to support the entrepreneur on legal and regulatory requirements and to be a partner throughout the entire business life cycle, offering support to the company at every stage to ensure that it is compliant and consistently growing. Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 09811322785/4 9555 5555 480)

Corporate and Professional Updates on 22nd May 2019

Direct Tax Updates:

Related image
  • Income tax Due date for filing returns for the Financial year 2018-2019 is 31 July 2019.So, Provide all required Documents for filling your Income tax Return AY 19-20 as soon As  possible. penalty of Rs 5,000 will be charged for returns filed after due date but before 31st December. If returns are filed after 31st December, a penalty of Rs 10,000 shall apply. However, penalty will be Rs 1,000 for those with income upto Rs 5 Lakhs.
  • CBDT releases draft notification proposing new audit report for Trust/Institution. Notification F No 370142/6/2019-TPL, dated 21-05-2019. stakeholders are requested to provide inputs on draft Form no. 10B electronically.
  • CBDTs Notification 36/2019”, dated 12th April, 2019 the format of TDS Statement in Form No. 24Q, Annexure-II has been revised. The notification shall come into force w.e.f. 12th May’ 2019. Form 16 and 24Q have been amended to make them more elaborative.

RBI Updates:

Image result for hd pics on rbi
  • The Reserve Bank of India (RBI) board on Tuesday sought to create a specialized oversight cadre while reviewing the current structure of supervision at the regulator. “With a view to strengthening the supervision and regulation of commercial banks, urban cooperative banks, and Non-Banking Financial Companies, the Board decided to create a specialized supervisory and regulatory cadre within the RBI,” said a central bank statement.
  • The Reserve Bank of India (RBI) board on Tuesday suggested not extending a credit line to struggling non-banking financial companies (NBFCs) because it felt there was no systemic liquidity issue but there were solvency concerns in some large entities. The board, headed by RBI Governor Shaktikanta Das, met in Chennai and discussed the NBFC crisis as well as a revised circular that would replace the controversial “resolution of stressed assets” framework released by the central bank on February 12, 2018.
  • The RBI is working on a liquidity framework for the NBFC sector and that may be released soon. Though an asset quality review (AQR) is not on the cards for NBFCs, the board was informed the central bank had called the management of large NBFCs and asked them to submit plans, with timelines, for capital infusion and asset monetisation. The NBFC liquidity issue was discussed at length in the meeting “but the liquidity is enough in the system”, a source said. The central bank is keeping a tab on the liquidity position of these firms on a monthly basis and recently asked NBFCs with assets over Rs 5,000 crore to appoint a chief risk officer.

SEBI Updates:

  • In a step that could significantly deepen the commodity derivatives segment (CDS), market regulator Sebi has issued norms for the participation of mutual fund in commodity derivatives like gold, silver, crude, copper, guar, mentha etc. However, MFs won’t be allowed to take positions in sensitive commodities like agri products subject to frequent government intervention and the Essential Commodities Act. Effective May 21, MFs can participate in gold derivatives only through gold exchange-traded funds launched by asset management companies (AMCs) and in other commodity derivatives through hybrid schemes, which currently invest in equity, debt and gold, Sebi stated in a circular.
  • As most commodities are physically settled, Sebi stated that MFs shouldn’t hold any physical goods for more than 30 days since they first take delivery. “No mutual fund schemes shall invest in physical goods except in ‘gold’ through Gold ETFs. Further, as mutual fund schemes participating in ETCDs (exchange-traded commodity derivatives) may hold the underlying goods in case of physical settlement of contracts, in that case mutual funds shall dispose of such goods from the books of the scheme, at the earliest, not exceeding 30 days from the date of holding of the physical goods.

Other Updates:

  • Airtel, Voda Idea lose 30 mn users in March, Jio gains
  • Evaluating Jet Airways opportunity says Hinduja Group
  • NCLAT reserves order on ArcelorMittal
  • PNB may take control of 2-3 small state-run banks
  • Indian millennials optimistic about the economic outlook
  • Tech Mahindra inks defence contract worth Rs 300 cr
  • HPCL to borrow Rs 8K cr in FY20 to fund expansion
  • Co-location: NSE moves Securities Appellate Tribunal against Sebi rulings
  • ICRA downgrades long-term rating for IDFC First Bank from AA+ to AA
  • High-level committee submit strategies on reducing import: Oil ministry
  • RBI to establish supervisory body to strengthen regulation of banks & NBFCs
  • Corporation Bank plans to trim slippages by 50% to Rs 4000 crore in FY20
  •  EPFO looks to pull back NBFC investments to avert default risk
  • Govt turns the heat on directors in fight against shell companies
  • Small trucks see growth, bucking industry slowdown
  • Solar-powered water pump launched for farming sector
  • Reliance beats Indian Oil Corporation to become biggest Indian company
  • Vedanta bags two copper blocks in Maharashtra
  • India’s thermal coal output seen growing 4.3% annually till 2028: Report
  • 68% Indians feel job market has improved in last 5 years: Survey
  • India among top 20 countries in the Artificial Intelligence readiness ranking
  • IL&FS initiates claim process for 70 group entities
  • Sebi permits mutual funds to participate in commodity derivatives
  • Crompton Greaves Consumer Electricals Q4 net up 36% at Rs 140.54 crore
  • India projected to grow at 7.1% in FY’20: UN report
  • New Indian government faces crucial foreign policy decisions, say US experts
  • US-China trade war gradually destabilising world economy
  •  46 pc ultra high net worth Indians to increase investment in private equity: Survey
  • L&T market capitalisation to touch Rs 3 lakh crore in five years: AM Naik
  • Oil rises on US-Iran tensions, but trade war concerns weigh
  • Rupee edges up 2 paise against US dollar as investors turn cautious.

Key Due Dates:

  • Deposit odf TDS /TCS for the month of April for purchase of property is 30th May 2019.
  • TDS return for March Quarter By all Deductors is 31st May 2019.

Disclaimer: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. carajput.com is committed to helping entrepreneurs and small business owners to start, manage and grow their business with peace of mind. Our goal is to support the entrepreneur on legal and regulatory requirements and to be a partner throughout the entire business life cycle, offering support to the company at every stage to ensure that it is compliant and consistently growing. Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 09811322785/4 9555 5555 480)

Corporate and Professional Updates on 21st May 2019

Indirect Tax Updates:

  • The amendment to Section 17 (5) of the Central Goods and Services Tax (CGST) Act deals with blocked credit. “Section 17 (5) of the CGST Act and the respective state Acts have led to a paradoxical situation by denying credits as the objective of the GST is free flow of credits when the output is in the course or furtherance of business,” said Abhishek A Rastogi, partner at law firm Khaitan & Co, who filed the writ petition on behalf of real estate companies.
  • “The impugned provisions are against the objectives of GST and have accordingly been challenged on the grounds of arbitrariness and vagueness.” Tax experts said the phrase ‘on his own account’ in the GST law will need to be interpreted differently if one were to take input tax credit. Input tax credit refers to a mechanism under the GST framework wherein the tax a company pays when it purchases raw materials or other services can be passed on to the buyer when the goods or services are sold.

RBI Updates:

Image result for hd pics on rbi
  • The Reserve Bank of India will take a relook at its supervision structure for banks, finance companies and other entities regulated by the central bank. It will initiate a discussion with its board of directors on a proposal to overhaul the crucial job of supervision so that the regulator is better equipped in picking up early warning signs. This may involve consolidating the different supervisory activities under a separate division or head, creating a pool of officials for better analysis of the continuous flow of data from banks and finance companies, and involving specialists.

SEBI Updates:

Image result for hd pics on sebi
  • The Securities and Exchange Board of India on Monday came out with a discussion paper highlighting proposals for allowing a start-up listed on the Innovators Growth Platform (IGP) to trade under the regular category of the main board. According to the proposals, the company should have listed on the IGP for a year and have a minimum of 200 shareholders for making the shift. The company, or any of its promoters, promoter group or directors, should not have been debarred from accessing the capital market or been a willful defaulter.
  • Minimum promoters’ contribution should be 20 per cent of the total capital. In case of a shortfall, alternative investment funds, foreign venture capital investors, scheduled commercial banks, public financial institutions or insurance companies can step in, subject to a maximum of 10 per cent of the total capital. This capital shall be locked in for three years from the date on which trading approval on the main board is granted, and any excess over and above the 20 per cent of promoter’s holding shall be locked-in for one year. The lock-in would not apply for companies listed on the IGP for three years or more.

Other Updates:

  • Aluminium body cautions govt about China
  • WTO warns trade weakness to continue in Q2
  • Australian election results bode well for Adani
  • India adopts new standards for measuring units
  • Irdai proposes to increase 3rd-party insurance premium
  • MNC boardrooms open doors to Indian women leaders
  • Power sector’s outstanding regulatory assets at Rs76,963 cr
  • Full blow trade war will push world towards recession: Morgan Stanley
  • Auditor exits mount at listed SMEs as scrutiny increases after IL&FS crisis
  • Torrent Pharma reports Q4 net loss of Rs 152 crore, cites drug recall
  • Lakshmi Vilas rejects Religare Finance’s disclosure, threatens action
  • US seeks to join Japan-India consultations on IT product tariffs
  • Tata Motors profit dips 47 % in Q4
  • WTO quarterly trade growth indicator still at nine-year low
  • HPCL Q4 net profit jumps 70% on inventory gains
  • Gold imports rise 54% to $ 3.97 billion in April
  • Ford to cut about 10% of global salaried workforce
  • ICICI Bank to buy stake in BSE subsidiary INX for ₹31 crore
  • BPCL Q4 net profit rises 16% to ₹3,125 cr; revenue up 10% at ₹83,942 cr
  • JLR posts 1st profit in four quarters despite China woes
  • Adani Green Energy’s 8.75 crore shares to be offered for sale on Tuesday
  • Bitcoin roars back from ‘flash crash’ to breach $8,000 once more
  • Bank credit to infra sector grows 18.5% in FY19: RBI data
  • TRAI says up to government to take a call on Huawei issue
  • ArcelorMittal to pay Rs 42,000 crore for Essar Steel takeover: Company tells NCLAT
  • Dr Reddy’s to spend $300 million on R&D in FY 20
  • Rupee records biggest gain in 2 months after exit poll results
  • Gold loses sheen, falls Rs 150 on lacklustre demand
  • Investor wealth soars Rs 5.33 lakh cr as exit polls predict return of NDA govt.

Key Due Dates:

  • Deposit odf TDS /TCS for the month of April for purchase of property is 30th May 2019.
  • TDS return for March Quarter By all Deductors is 31st May 2019.

Quote of the day:

  • Being your own person and standing for what you believe is a critical aspect of a good professional life.

Disclaimer: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. carajput.com is committed to helping entrepreneurs and small business owners to start, manage and grow their business with peace of mind. Our goal is to support the entrepreneur on legal and regulatory requirements and to be a partner throughout the entire business life cycle, offering support to the company at every stage to ensure that it is compliant and consistently growing. Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 09811322785/4 9555 5555 480)

A FORIGN COMPANY OPEN A BRANCH OFFICE IN INDIA

www.carajput.com; Foregin Company

www.carajput.com; Foreign Company

REQUIRED CONDITIONS OF A FOREIGN COMPANY OPEN A BRANCH OFFICE IN INDIA,

  • The name of the Indian Branch office shall be the same as the parent company.
  • The Branch office does not have any ownership, it is just an extension of the exiting company in a foreign country.
  • All the expenses of the BRANCH office are met by the head office if it does not have the revenue from Indian
  • The foreign parent company looking to start a Branch office in India shall have a profitable track record during immediately preceding five years in the home country.
  • The Net Worth i.e. total of paid-up capital and free reserves, less intangible assets as per the latest Audited Balance Sheet or Account Statement certified by a Certified Public Accountant or any Registered Accounts Practitioner by whatever name shall be not less than or equal to USD 100,000.
  • A branch office is suitable for foreign companies looking to set up a temporary office in India and not interested or not planning to have long term plans for the Indian operations; except banking, shipping and airlines, etc. mentioned above.

PROCEDURES FOR SETTING UP A BRANCH OFFICE IN INDIA BY A FOREIGN COMPANY:

  • Approval from RBI– Permission for setting up branch offices is granted by the Foreign Exchange Department,
  • Reserve Bank of India, Central Office, Mumbai (note – Not by the RBI offices in respective state capitals)
  • Track Record of the company -Reserve Bank of India considers the track record of the applicant company, the activity of the company proposing to set up an office in India as well as the financial position of the company while scrutinizing the application. (note – for setting up a company, there are no criteria for checking the track record or the financial position of the parent company)
  • The applications from such entities in Form FNC (Annex-1) will be considered by Reserve Bank under two routes: The application in the prescribed form (Form FNC)should be submitted to the RBI through the Authorized Dealer bank.
  • Reserve Bank Route— where principal business of the foreign entity falls under sectors where 100 percent
  • Foreign Direct Investment (FDI) is permissible under the automatic route.
  • Government Route— where principal business of the foreign entity falls under the sectors where 100 percent
  • FDI is not permissible under the automatic route. Applications from entities falling under this category and those from Non – Government Organizations / Non – Profit Organizations / Government Bodies / Departments are considered by the Reserve Bank in consultation with the Ministry of Finance, Government of India.
  • Procedure for Approval from RBI:

  1. Currently, as per the RBI Requirement, the application for the branch office and BRANCH office is
  2. submitted through the Authorized dealer. The authorized dealer means the various institution having
  3. banking licenses.
  4. The application in the prescribed form (Form FNC) should be submitted to the RBI.

Disclaimer: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. carajput.com is committed to helping entrepreneurs and small business owners to start, manage and grow their business with peace of mind. Our goal is to support the entrepreneur on legal and regulatory requirements and to be a partner throughout the entire business life cycle, offering support to the company at every stage to ensure that it is compliant and consistently growing. Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 09811322785/4 9555 5555 480)

REPORTING OF FORM FC-TRS TO RBI

REPORTING OF FORM FC-TRS TO RBI

www.carajput.com FC-TRS

www.carajput.com FC-TRS

RBI Circular No. 40 dated 1st February 2016; RBI has made it mandatory to report any transactions and filing of forms online in respect of issue and transfer of shares from an Indian Entity to outside India.

What is RBI Compliance under FORM-FC-TRS? 

  • Foreign currency transfer is the absolute full form of the Form FC-TRS.
  • It is a process used by shareholders residing outside India who are residing in India or vice versa when transferring their shares.
  • The FC-TRS form, together with the FC-GPR form, will be uploaded to its authorized dealer bank, which will send the very same form to the Reserve Bank Of India.
  • Foreign investors can invest in Indian companies by purchasing/acquiring existing shares from Indian shareholders or from other non-resident shareholders.
  • General permission has been granted to non-residents / NRIs for the acquisition of shares by way of transfer.
  • Any transfer of shares takes place between a resident and a non-resident, the resident individual or the entity has to report the transaction to RBI by filing of Form FC-TRS online at https://www.ebiz.gov.in. The reporting of Form FC-TRS should be submitted to the AD category bank within a period of 60 days from the date of receiving the money.

What is the process of Form FC-TRS 

a) Download form from Pre-filled Form FC-TRS from https://www.ebiz.gov.in

b)Fill the required details of the Investee Company

(i) Name of the Company

(ii) PAN of the Company

(iii) Address of the Company

(iv)Telephone Number of the Company

(v) Fax Number of the Company

(vi) Email ID of the Company

(vii) Main Business Activity of the Company as per the NIC Code  2008 series

c)Enter the details of the Buyer

(i) Name of the Buyer

(ii) Address of the Buyer

(iii) Telephone Number of the Buyer

(iv) Email ID of the Buyer

(v) Nature of the Investing Entity

(vi) Date and Place of Incorporation of the Investing Entity

d)Details of the Seller

(i) Address of the Seller

(ii) Telephone Number of the Seller

(iii) Email of the Seller

(iv) Name of the Disinvesting Entity

e)Enter the details of the Foreign Investment in the Company.

f)Mandatory Attachments

(i) Declaration by the Non-resident Buyer

(ii) KYC Form in respect of Non-resident Investor

(iii) Copy of FIRC (To be procured from Bank receiving the remittance)

(iv) Valuation Report by a Chartered Accountant or SEBI registered Merchant Banker

g)Once the form is completed in all respects without any error; the Name, Designation, Place, and Digital Signature of the Declarant is to be attached

After following all the above steps the form is now ready to be uploaded on the Ebiz portal. Upon uploading the Form an “Application Number” is generated instantly and it can be used to keep a track of the status of the Form.

It has to be well kept in mind that merely uploading the Form does not mean that all the compliances have been fulfilled, the compliance shall deem to be complete only after approval by the Reserve Bank of India (RBI).

General Instructions for filling the FC-TRS 

  • The electronic form (Form) can be accessed from service landing page and can be filled offline
  • If you choose “Load prefill data” option while opening the form, then some fields may get prefilled with data you have filled previously while applying for this service. You may change this data if you wish.
  • The saved draft can be accessed later from “My Saved Drafts” section in Menu options. This draft is available for 3 months or until the form is submitted.
  • Field marked with * are mandatory and needs to be filled in before a form can be submitted on e-Biz portal. You may not be able to leave some of the field’s blank in the e-Form. In case you wish not to enter data in a field, please input “NA” if it is a text/description field or a 0, if it is a numeric field.
  • The e-form needs to be digitally signed using a digital signature by the applicant. If an applicant wishes to make any modifications to an already signed e-Form, right-clicking on the signature field and choosing “Clear signature” will enable editing of the form and any modifications can be made to the form

Electronic Attachments required for FORM FC-TRS :

Upload the file using the attached link and if you wish to remove any file, use the remove link.

  • Reason for delay in submission: this attachment is required if the form is submitted after 30 days from the date of receipt of funds
  • CS Certificate
  • Certificate from SEBI registered Merchant Banker / Chartered Accountant indicating the manner of arriving at the price of the shares issued to the persons resident outside India.
  • Disclaimer certificate
  • Statutory Auditor Certificate
  • Board resolution
  • LRN(Loan Registration Number) allotted
  • Copy of FIPB approval (if required)
  • Transfer of shares details, if applicable

If the investor and remitter are separate entities, Than Give the following documents:

  • No objection certificate from the remitter for  the shares being allotted to the third party mentioning their relationship
  • Letter from the foreign investor explaining the reason for making a subscription to shares by the remitter on his behalf
  • Copy of agreement/Board resolution from the investee company for issue and allotment of shares to the foreign investor, other than the remitter
  • KYC report for the beneficiary

Any other attachments: Add any other document if required.

Step Required for Form FC-TRS

Following below step required for filling FC-TRS following below actions:

Step 1: Apply the registration for Business Users

Step 2: Logging in to the FIRM USER

Step 3: Signing in to the SMF and connecting to your workplace.

Step 4: Choose the type of return.

Step 5: Details of Selected common investment

Step 6: Specific information or details to be filed as required

Step 7: Details of particular Transfer as specified

Step 8: Complete details of Remittal as per specified required.

Step 9: Complete details of Shareholding pattern to be enter

Step 10: Submit an Online form

Verification required for FORM FC-TRS:

Enter the following details in this section:

  1. Name of the Person
  2. Name of the Place
  3. Date of signing the electronic form
  4. Designation.
  5. Digital Signature of Authorized signatory of the investee company.

Disclaimer: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. carajput.com is committed to helping entrepreneurs and small business owners to start, manage and grow their business with peace of mind. Our goal is to support the entrepreneur on legal and regulatory requirements and to be a partner throughout the entire business life cycle, offering support to the company at every stage to ensure that it is compliant and consistently growing. Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 09811322785/4 9555 5555 480)

REPORTING OF FORM FC-GPR TO RBI

REPORTING OF FORM FC-GPR TO RBI

fcgpr www.carajput.com

fcgpr www.carajput.com

RBI Circular No. 40 dated 1st February 2016; RBI has made it mandatory to report any transactions and filing of forms online in respect of issue and transfer of shares from an Indian Entity to outside India.

www.carajput.com; NRI; OCI; NR; FCTRS

www.carajput.com; NRI; OCI; NR; FCTRS

Form FC-GPR comes into use whenever there is a new issue of shares. The onus to submit the form or comply with the laws is on the resident entity.

Any Company or Organization receiving foreign investment must report the transaction to the RBI within a stipulated timeline. Similar to the filing of FC-TRS which is filed online, the Form FC-GPR is also required to be filed online.

What is TimeLine of Form FC-GPR

www.carajput.com;FC-GPR

www.carajput.com; FC-GPR

The timeline is briefly described below:

  1. a) Foreign funds received
  2. b) Within 30 days of receiving the money file ARF (Advance Remittance Form) with the RBI
  3. c) RBI will issue UIN (Unique Identification Number) after submission of ARF
  4. d) Within 180 days from the date of receiving the money, allot the shares
  5. e) File FC-GPR within 30 days from the date of allocation of shares.

    www.carajput.com;FC-GPR(SMF)

    www.carajput.com; FC-GPR(SMF)

Before reporting the transaction, the applicant needs to obtain the following:

  • Unique Identification Number from RBI by reporting of Advanced Foreign Remittance.
  • KYC report for the beneficiary if the beneficiary and remitter are different entities.
  • CS certificate
  • Certificate from SEBI registered Merchant Banker / Chartered Accountant indicating the manner of arriving at the price of the shares issued to the persons resident outside India
  • Disclaimer Certificate
  • Statutory Auditor Certificate
  • Board resolution
  • LRN(Loan Registration Number) allotted
  • Copy of FIPB approval (if required)
  • Details of Transfer of shares if any
  • No objection certificate from the remitter for the shares being allotted to the third party mentioning their relationship
  • Letter from the foreign investor explaining the reason for making subscription to shares by the remitter on his behalf
  • Copy of agreement/Board resolution from the investee company for issue and allotment of shares to the foreign investor, other than the remitter
  • Reason for delay in submission (if required)

Once all the above documents are obtained, the applicant shall duly fill the Form FC-GPR and complete it in all respects without any error, attach the Digital Signature of the applicant and upload the form online at https://www.ebiz.gov.in. In this case also, it is to be noted that merely filing the Form FC-GPR does not discharge an entity of its duties in regard to compliance of the relevant laws, the same shall be considered complete only after it is approved by the RBI.

www.carajput.com;FC-GPR; FDI

www.carajput.com; FC-GPR; FDI

Document required for FCGPR 

The following documents shall be required for FCGPR Filing
1 MOA of the Company
2 Board resolution for allotment of shares  
3 FIRC 
4 KYC form Bank
5 CS Certificate
6 Valuation report

General Instructions

  • The electronic form (Form) can be accessed from service landing page and can be filled offline
  • If you choose “Load prefill data” option while opening the form, then some fields may get prefilled with data you have filled previously while applying for this service. You may change this data if you wish.
  • The saved draft can be accessed later from “My Saved Drafts” section in Menu options. This draft is available for 3 months or until the form is submitted.
  • Field marked with * are mandatory and needs to be filled in before a form can be submitted on e-Biz portal. You may not be able to leave some of the field’s blank in the e-Form. In case you wish not to enter data in a field, please input “NA” if it is a text/description field or a 0, if it is a numeric field.
  • The e-form needs to be digitally signed using a digital signature by the applicant. If applicant wishes to make any modifications to an already signed e-Form, right-clicking on the signature field and choosing “Clear signature” will enable editing of form and any modifications can be made to the form.

Electronic Attachments:

Upload the file using the attached link and if you wish to remove any file, use the remove link.

  • Reason for delay in submission: this attachment is required if the form is submitted after 30 days from the date of receipt of funds
  • CS Certificate
  • Certificate from SEBI registered Merchant Banker / Chartered Accountant indicating the manner of arriving at the price of the shares issued to the person resident outside India.
  • Disclaimer certificate
  • Statutory Auditor Certificate
  • Board resolution
  • LRN(Loan Registration Number) allotted
  • Copy of FIPB approval (if required)
  • Transfer of shares details, if applicable
  • If the investor and remitter are separate entities, please provide the following documents:
  • No objection certificate from the remitter for the shares being allotted to the third party mentioning their relationship
  • Letter from the foreign investor explaining the reason for making subscription to shares by the remitter on his behalf
  •  Copy of agreement/Board resolution from the investee company for issue and allotment of shares to the foreign investor, other than the remitter
  •  KYC report for the beneficiary
  • Any other attachments: Add any other document if required.
Enter the following details in this section:
  • Name of the Person
  • Name of the Place.
  • Date of signing the electronic form
  • Designation.
  • Digital Signature of Authorized signatory of the investee company.

After the New Process of RBI :

FC-GPR; www.carajput.com; Timeline

FC-GPR; www.carajput.com; Timeline

FIRMS has decreased the number of phases via which any reporting is carried out by constraining its response to: pending approval & approval or refusal as opposed to eBiz, where there have been multiple phases with the possibility of resubmission. It should therefore be noted that under FIRMS, there is no possibility of resubmitting, resending, or affixing any clarification as soon as the report is generated. The Authorized Dealer Bank must take due to precaution whilst also approving or dismissing the form and therefore can not take more than 5 – 7 business days doing the same.

Disclaimer: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. carajput.com is committed to helping entrepreneurs and small business owners to start, manage and grow their business with peace of mind. Our goal is to support the entrepreneur on legal and regulatory requirements and to be a partner throughout the entire business life cycle, offering support to the company at every stage to ensure that it is compliant and consistently growing. Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 09811322785/4 9555 5555 480)

10 things to know when Unauthorized banking transactions in banks resulting in erroneous debits to accounts of customers.

Unauthorized banking transactions: 10 things to know

www.carajput.com; RBI

www.carajput.com; RBI

RBI has issued a draft Circular to review the criteria for determining customer’s liability, considering the recent surge in unauthorized transactions in banks resulting in erroneous debits to accounts of customers.

The highlights of the draft circular are given here under:

  1. RBI has proposed zero liability for customers where fraud or negligence is on the part of bank.
  2. In case of third party breach (i.e., where the fault lies neither with the bank nor the customer but lies elsewhere in the system)the liability for customer is summarized as follows:
  3. A) Fraudulent transaction is reported Within 3 working days – Customer’s liability is zero
    B) Fraudulent transaction is reported Within 4-7 working days of receiving the communication – Customer’s liability is the transaction value or Rs 5,000 , whichever is lower
    C) Fraudulent transaction is reported Beyond 7 working days of receiving the communication – Customer’s liability is as per bank’s board approved policy
  4. Where negligence is on the part of customer, e.g., as where he has shared the payment credentials, he will bear the entire loss until he reports the unauthorized transaction to the bank. Any loss occurred after reporting of unauthorized transaction shall be borne by bank.
  5. Banks at their discretion may also waive off any customer’s liability in case of unauthorized electronic banking transactions even in cases of customer’s negligence.
  6. In case of zero liability or limited liability of customer, the bank shall credit the amount involved in the unauthorized electronic transaction to the customer’s accountwithin 10 days from date of notification by such customer.
  7. Burden of proving customer’s liability in case of unauthorized electronic banking transactions shall lie on the bank.
  8. Banks shall ask their customers to mandatorily register for alerts for electronic banking transactions. The alerts shall be sent to the customers through different channels(email or SMS) offered by banks.
  9. Banks must provide customers 24×7 access through multiple channels for reporting of fraudulent transactions.
  10. The loss or fraud reporting system shall also ensure that immediate response (including auto response) is sent to the customers acknowledging the complaint along with the registered compliant number.
  11. The communication system used by banks to send alerts and receive responses thereto must record the time and date of delivery of the message and receipt of customer’s response, if any, to them.

RBI Updates:-

RBI issued a Master Directions on Core Investment Companies (Reserve Bank) Directions, 2016 vide Master Direction DNBR. PD. 003/03.10.119/2016-17 dated 25/08/2016.

RBI issued a master direction on Exemption from the provision of RBI Act, 1934 vide Master Direction No. DNBR.PD. 001/03.10.119/2016-17 dated 25/08/2016.
Continue reading

Disclaimer: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. carajput.com is committed to helping entrepreneurs and small business owners to start, manage and grow their business with peace of mind. Our goal is to support the entrepreneur on legal and regulatory requirements and to be a partner throughout the entire business life cycle, offering support to the company at every stage to ensure that it is compliant and consistently growing. Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 09811322785/4 9555 5555 480)