NRI Guide Ver 3.00 20131

NRI GUIDE 2013
(Ver 3.00)
(A Comprehensive Guide for Indians residing outside India)
Prepared by
Prakash Nair
Prakash@yourownadviser.com
www.yourownadviser.com
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NRI Guide 2013 Ver 3.00
PREFACE
This Free NRI guide has been compiled with the help of information available on official website of
various government departments like Reserve Bank of India, Income Tax Department, various State
Governments, Department of Oversea Affairs, Ministry of Home Affairs, SEBI, and other reliable website
sources. I have taken adequate care to provide current and authentic information. This NRI Guide is
intended to serve as a ready reference book to guide NRIs on various matters affecting their financial
and other related subjects. This does not purport to be a legal document. So I am not sure that, any
errors occurred while compiling this reference guide. In case of any variation between what has been
stated in this NRI Guide and the relevant Act, Rules, Regulations, Policy Statements, Government
Orders/Circulars etc., the latter shall prevail. Kindly note that, rules related to NRIs and tax are subject to
change. Errors and omissions are expected.
This free e-book is circulated with the understanding that, neither the author nor the publisher will be
responsible for any action taken on the basis of contents of this book whether directly or indirectly for any
error or omission to any person whether a user of this e-book or not. The persons willing to accept this
disclaimer only required to read this e-book.
Prakash Nair
Date: 25-May-2013
The greatest reward the author can get the feedback good or bad from the readers. Any suggestions for
improvement are most welcome. In case I missed some important information or provided wrong
information, please let me know.
Your suggestions, comments, criticism may send to
pnair1966@yahoo.com The decision whether to reply to any query or not lies with the Author
or
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id
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INDEX
Sl
Nos
Chapters and contents

Abbreviations
Page Nos
17-18
CHAPTER - 1
Residential Status
1
A Non Resident Indian (NRI)
A Person of Indian Origin (PIO)
How to Determine the Residential Status of an Indiviudal
Resident and ordinarily resident- ROR
Importance of Residential Status
What is India DIASPORA
Residential Status Changes from Resident to Non-Resident (Tax, Social Security etc)
List of itmes to be completed before becoming an NRI
19-23
CHAPTER - 2
Various Types of Bank Accounts - NRIs are permitted to open
1
Various Types of Bank Account - NRIs are permitted to Open
Non-Resident Ordinary/ Rupee Account (NRO Account)
2.1
RBI Master Circular No. 2/2012-13 related to NRO Account
2.2
RBI Circular - Condtions for Opening NRO Account by Banglades Nationality
Non-Resident (External) Rupee Account (NRE Account)
Foreign Currency Non Resident (Bank) Account FCNR (B) Account
NRE Current Accounts
NRO Current Account
Resident Foreign Currency Accounts (RFS Accounts)
Foreign Currency Account
24-51
CHAPTER -3
Facilities Available to NRIs/PIO

1
Investment facilities for NRIs
NRIs are allowed, without limit, purchase on repatriation basis
NRIs are allowed, without limit, purchase on repatriation basis
An individual resident can borrow money from his close relatives outside India
6
7
Repayment of Housing Loan of NRI / PIOs by close relatives of the borrower in India
(RBI Circular)
Foreign Exchange Management (Deposit) Regulations, 2000 - Credit to Non Resident
(External) Rupee Accounts Loan given to non-resident
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52-55
CHAPTER - 4
Investment Options not Permitted for NRIs
1
NRIs are not permitted to invest in small savings or Public Provident Fund (PPF).
PPF (Public Provident Fund)
NSC (National Savings Certificate) 5 years and 10 years
Senior citizens savings account
Tax saving infrastructure bonds under section 80CCF
Post office time deposits are not available for NRIs.
Restritctions of Investments by NRIs/PIOs residing in US and Canada
FEMA Circular related to restircation for NRI's for Opening Small Savings Accounts
CHAPTER - 5
NRIs Investments in Immoveable Properties
1
Investment in immovable Property
NRI investment norms in real estate eased
RBI Circular - Acquisition & Transfer of Immovable Property in India by

NRIs/PIOs/Foreign Nationals of Non-Indian Origin
Press Release Ministry of Finance - Acquiring land by NRIs
56-59
60-70
CHAPTER - 6
NRI Taxation
1
1 a-b
Expatriates Working Abroad Tax Provisions

Residential Status for Taxation purposes
Income Tax Rates proposed in Union Budget 2013 for the financial year 2013-2014
Budget 2103 Income Tax Surcharge Rate Hiked for Higher Income Assessees
Additional Tax Rebate of Rs. 2,000.00 from Assessment Year 2014-2015
Particulars of Income Tax Incidence for various tax status
Tax Exemptions from Income Tax available for NRIs
Other Tax Aspects related to NRIs
What is tax on NSC Maturity ?
Special Provisions Relating to Non-Residents
10
Income Tax Clearance Certificate
11
Tax Exemption Certificate - Lower or Nil Rate of TDS:
12
Renting out of Property by an NRI in India
12a
Remittance of Rent
12b
Tax treatment of rental income
12c
Deemed rental income
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71-89
12d
13
Service Tax applicable to renting out of residential properties for commercial use
Taxability of immovable property received for Inadequate Consideration (Budget 2013)
14
NRI and Senior Citizen status for Income Tax calculation purposes
15
Tax Liabilities related to NRIs investments made in Joint basis
16
Bank Term Deposits - Tax aspects
17
Property Rental income Tax Aspects
18
Mutual Fund/Equity Investments Tax Aspects
19
NRI income and Applicability of TDS on the same
20
Tax Treatment of overseas Financial Assets.
21
Other Tax Aspects related to NRIs including Immovable Properties
22
Tax Treatment of selling property abroad
23
Tax Treatment of Rental Income Earned Abroad
24
Tax Treatment of Dividend on overseas Investments
25
One Time Financial Settlement
26
Capital Gains earned abroad

Compulsory filing of Income tax return in relation to assts located outside India
irrespective of income
27
28
Section 194E of the Act Tax deduction at source from payment to non-resident
entertainer, sports person etc
29
Tax Treatment of Interest on Bank Deposits

30.Savings bank interest upto Rs. 10,000.00 is exempted from tax (Section 80 TTA of
IT Act)
Deduction of interest paid on more than one loan borrowed for purchase or
construction of same house
30
31
CHAPTER - 7
Budget 2013 - Tax Proposals
90-98
Finance Bill 2012 - passed by Lok Sabha
CHAPTER - 8
Tax Deduction at Source (TDS)
1
Interest on Investments
Capital Gain on Securities (TDS)
TDS on salary payments to Non Residents & Expatriates
How NRI can claim TDS exemption
99-103
5 TDS on Transfer of Immovable Properties except Agricultural Land

6 Tax Deducted at Source related to NRIs
CHAPTER - 9
Double Taxation Avoidance Agreements (DTAA)
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104-114
Double Taxation in India - DTAA
Capital Gain tax rates under DTAA
The Countries with which India has DTAA
How to get relief in case of Double Taxation?
Where there is an DTAA agreement (Section 90)
Where there is an NO DTAA agreement (Section 91)
Misuse of DTAA, Treaty shopping and amendment made by Finance Act 2012
Tax rates applicable in India under DTAA Agreement
Amendments relating to DTAA provisions (Union Budget 2012)
10
Tax Residency Certificate (TRC) for Indian & Non Resident wef 01.04.2013
11
11.Finance Ministry clarification on tax residency certificate

CHAPTER -10
Form 15 G and Form 15H
115-116
From 15G & Form 15H - NRIs are not eligible to submit these forms
CHAPTER -11
Capital Gain Tax
1
Capital Asset
Short Term Capital Gain (STCG)
Long Term Capital Gain (LTCG)
Computation of Indexation Benefits
What is the indexed cost of acquisition?
Cost Inflation Index Form 1981 to 2013
Capital Gain Exemptions can be availed
What are the consequences if a new house is transferred within 3 years?
Exemption available on capital gains that arise from transfer of house property
10
11
12
How to avoid paying capital gains tax

Exemption of long term capital gains on transfer of residential property if invested in
plant machinery through small/medium enterprise, for 5 years (Budget 2012 proposal)
Relief from long-term capital gains tax on transfer of residential property if invested in a
manufacturing small or medium enterprise
13
Capital Gains Accounts Scheme
14
Who are eligible to take the advantage
15
List of Banks who can Accept Deposit
16
Opening a bank account for Capital Gains Account Scheme-
17
Capital Gain treatment of Inherited or gifted properties
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117-131
18
Please note that the long-term capital gains earned by you from inherited shares sold
on any recognized stock exchange in India by paying the applicable STT are exempt
from tax provided
CHAPTER - 12
Wealth Tax Implications of NRIs
1
What are all the assets included for Wealth Tax computation ?
Assets not included for Wealth Tax computation
No wealth tax on agriculture land
How Net Wealth in determinded
The Method of valuation of Assets
What are all the exceptions available
What about NRIs returning to India ?
How Should NIRs file Wealth Tax Retunrs ?
E- filing of annexures-less return of Wealth Tax - Budget 2013
132-136
CHAPTER - 13
Guide on filing of Income Tax Return by NRIs
1
Whi is a Non-Resient In India ?
Whi is liable to file Income Tax Returns
Are there any exemption from filing tax retuns ?
What is the deadline for filing Tax Returns ?
A guide to filing of Income Tax Retunrs online/offline
Detaisl required before logging into E-filing website
Steps to file Income Tax Return online
Benefits of e-filing over paper filing
Exemptions from filing of Income Tax Returns - Salaried Employees income upto five
lash Wh
10
Whi can't claim exemption
11
IT clarification dated 25/07/2011 - filing of tax returns - salaried employees
137-145
CHAPTER - 14
Clubbing of Incomes
146-148
CHAPTER - 15
Tax on Gifts - the facts need to know
149-150
CHAPTER -16
151-153
What is Advance Tax
CHAPTER - 17
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General Tax Deduction available for NRIs

1
NRI Tax-saving tips
Section 80C of Income Tax Act
2.1
Life Insurance and Retirement/Pension Plans
2.2
Tax-breaks in respect of Life Insurance Policies
2.3
Raising limit of percentage of eligibel premium for Life Insurance Polcies
2.4
Investment in House property
2.5
ELSS (Tax saving Equity Mutual Fund schemes)
3
3.1
154-160
Section 80D - Health Insurance Premium

NRIs- Deduction U/s 80D premium paid for Mediclaim Policy
Deductions u/s 80 G
Deduction under 80E
Bank Deposits and applicable tax - Sect 80TTA
Rajiv Gandhi Equity Savings Scheme

CHAPTER - 18
NRI Welfare Schemes
Pravasi Bharatiya Bima Yojana
Deserted NRI Women Welfare Scheme
Indian Community Welfare Fund (ICWF)
Facilitating investment in India
Know India Program (KIP)
Scholarship Programme for Diaspora Children
Migrant Resource Center, Kochi
NRIs - Facilities for Returning Indians
Investment facilitation and knowledge networking
10
11
Bilateral Labour Co-operation

Global Indian Network of Knowledge (Global Ink)
12
India Development Foundation of Overseas Indians
13
Scholarship Programme for diaspora Children (SPDC)
14
Direct Admission to Students Abroad (DASA)
15
Reservation for NRIs at Indian educational institutions
16
Assistance for problems relating to Overseas Indian Marriages
17
Voting Rights to Non-resident Indians
18
Double Taxation related maters
19
Recruitment of maid for Oman
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161-171
CHAPTER 19
State Governments Welfare Schemes
1
Government of Assam
Government of Bihar
Government of Gujarat
Government of Karnataka
Government of Kerala
5.a
Pravasi Pension Scheme for Non-Resident Keralites
5.b
Pravasi Identity Card
Government of Orissa
Government of Rajasthan
172-177
CHAPTER 20
NRI Investment Options
1
178-189
Investments in Shares and Securities listed in Indian Stock Market
1.a
Portfolio Investment Scheme (PIS) for NRIs
1.b
IPO Electronic Mode and Electronic Voting
1.c
Securities Transaction Tax (STT) (2012 Budget proposal)
NRIs investment in Mutual Funds Schemes
FDI (Foreign Direct Investment) in Partnership Firm / Proprietary Concern
Company Fixed Deposit Investments for NRIs
Non-Banking Financial Company (NBFC) Deposits
Investment in Commercial Papers (CD) by NRIs

CHAPTER 21
National Pension System (NPS) - NRIs are eligible to invest
190-197
CHAPTER - 22
PAN ( Permanent Account Number)
1
NRIs and PAN
Advantages of Having a PAN
How to apply for PAN
New PAN Application From 49A and 49AA w.e.f 01/11/2011
INSTRUCTIONS FOR FILLING FORM 49A
GENERAL INFORMATION FOR PAN APPLICANTS
198-206
CHAPTER - 23
Know Your Customer (KYC) Requirements
1
207-212
Background
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Key Changes in KYC Norms
Impact on investors
Who can carry out uniform KYC:
Impact on current arrangements with CVL:
Due diligence in the KYC process

CHAPTER - 24
NRIs Guide to deal the inherited properties
Inheriting immoveable properties
Inheriting Financial Assets and Investments in India
Remittance Exchange Control Regulations
4
5
213-216
Inheritance and Gifting rules in India

Exclusions to taxing of gifts in the hands of recipient CHAPTER 25
How its useful for NRIs to use Power of Attorney (POA) in India
217-219
CHAPTER 26
Top 10 Home Buying tips for NRIs
220-224
NRIs Tips to buy properties

CHAPTER - 27
Facilities for Returning NRIs
228-228
CHAPTER - 28
NRI's guide to selling property in India
229-231
CHAPTER - 29
CUSTOMS AND BAGGAGE RULES REALTED TO INTERNATINAL PASSENGERS
1
Clearance of arriving passengers:
Green Channel or Walk through Channel
Red Channel
Passenger crossing Green Channel with Dutiable Goods
Clearance of arriving passengers
Duty free allowances and entitlements for Indian Residents and
6.a
Duty Free Entitlements
6.b
Tobacco, Alcoholic liquor
6.c
Not Allowed Items
6.d
Applicable Customs Duty
6.e
225-228
232-267
Import of jewellery/gold/silver:
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Duty free allowances and entitlements for tourists
Item Permitted Quantity Present Duty
10
Category of Tourist Duty Free Allowance
11
Allowances and entitlements on Transfer of Residence (TR):
12
Import of baggage of deceased person
13
Import of unaccompanied baggage
14
Aircraft Crew Members
15
Import of foreign exchange/currency
16
Import of Indian currency
17
Import of fire arms as baggage
18
Import of pet animals as baggage
19
Detained baggage
20
Mishandled baggage
21
Clearance of departing passengers
22
Export of gold jewellery as baggage
23
Export of currency
24
International Passenger Facilitation
25
Import and Export through Courier
26
Categories of goods allowed import through courier:
27
Categories of goods allowed export through courier
28
Import and export of gems and jewellery
29
Import and Export through Post
30
Procedure in case of postal exports
31
Procedure for claiming Drawback on exports through post
32
Drawback in respect of goods re-exported through post:
33
Re-export of partial consignment

CHAPTER- 30
Baggage Rules at a Glance
CHAPTER - 31
All About Indian Passport
268-317
CHAPTER - 32
Home Loans for NRIs
318-320
CHAPTER - 33
Overseas Citizenship of India (OCI)
320-329
CHAPTER - 34
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Person of India Origin (PIO) Scheme
330-332
Person of Indian Origin Card (PIO Card)

CHAPTER - 35
The General Rules the NRIs should know
1
Non-Resident Indian (NRI) Pensioners:
Savings Bank account maintained by residents in India non-resident close relative

allowed as jointholder A.P. (DIR Series) Circular No.12 dated September 15, 2011
Account Scheme (NRE)/ Foreign Currency (Non-Resident) Account (Banks) Scheme

(FCNR(B))
Foreign Investments in India increase in limit for transfer of security by way of gift
333-335
A.P. (DIR Series) Circular No.14 dated September 15, 2011

5
Gift in Rupees by Resident Individuals to NRI close relatives
Meeting of Medical expenses of NRIs close relatives by Resident Individuals
FEMA Repayment of loans of Non-resident close relatives by residents
MASTER CIRCULAR ON ACQUISITION AND TRANSFER OF IMMOVABLE

PROPERTY IN INDIA BY NRIs/PIOs/FOREIGN NATIONALS OF NON-INDIAN
ORIGIN
CHAPTER -36
Emigration Clearance Indian and foreign persons
336-355
All About Emigration

1
What is Emigration
Statutory Framework
Salient Features of the Act
Instructions for Indian Passengers
Instruction For Foreigners Coming To India
Requirements concerning stay of Foreigners in India
Guidelines for Emigration Clearance System
Who Needs Emigration Clearance
Insurance policy- Pravasi Bhartiya Bima Yojana
10
ECNR/ECR/POE
11
Employment Guidelines for Emigrants
12
List of Registered Agents
13
Abolition of ECRS
14
How can one seek employment abroad
15
Guidelines for Departure to a foreign country for employment
16
CUSTOMS FORMALITIES
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CHAPTER -37
1
Inheritance Certificate
International Driving Licence
International Passport
356-363
CHAPTER -38
Islamic Fund -Sharia Law and Investment Structures
364-366
CHAPTER - 39
Master Circular on Foreign Investment in India
367-429
CHAPTER - 40
Forex Facilities for Residents (Individuals)
430-438
CHAPTER - 41
Air Travel Tips for NRIs
439-443
CHAPTER - 42
Baggage Insurance Policy

1
2
444-445
Loss of Checked Baggage Checked Baggage

Delay of the checked Baggage
CHAPTER - 43
Different Modes of Money Remittance - NRIs
446-449
CHAPTER - 44
P Notes (Participatory Notes) and NRIs
450
CHAPTER - 45
Passive Foreign Investment Company - PFIC
451-452
CHAPTER - 46
The Foreign Contribution (Regulation Act, 2010)
453-460
CHAPTER - 47
Will
461-466
CHAPTER 48
ADMISSION TO UNDERGRADUATE ENGINEERING PROGRAMME
467-470
CHAPTER 49
Exchange Earner's Foreign Currency (EEFC) Account
471-472
CHAPTER 50
EXIM Policies
473
CHAPTER 51
Compounding of Contraventions under FEMA, 1999
474-486
CHAPTER 52
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What is Consumer Court
487-488
CHAPTER 53
Duty Free Shops
489-490
CHAPTER 54
Import of Gold and Silver by NRIs (deleted)

CHAPTER 55
Acquisition of Indian Citizenship (IC)
491-498
CHAPTER 56
GENERAL REQUIREMENTS FOR REGISTRATION OF A FOREIGN NATIONAL
499-503
CHAPTER 57
What is AADHAAR ?
504-508
CHAPTER 58
PROCEDURE FOR THE ADOPTION OF AN INDIAN CHILD BY A FOREIGNER OR

NRI
CHAPTER 59
509-511
512-513
CHAPTER 60
NRIs properties disputes settlement
514-514
CHAPTER 61
Right to Information Act 2005
515-518
CHAPTER 62
NRIs and Financial Planning
519-537
Ten Tips for a good Financial Planning & Investments
Why you need an Emergency Saving Fund
How to plan for your Childs Higher Education
Victims of Bad Financial Advises
Impact of inflation in Retirement Planning
Why Health Insurance is important
How to choose the right Life Insurance Policy
Insurance cover for your bank deposits

13 Tips to avoid Investment Fraud
CHAPTER 63
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Impact of proposed Direct Tax Code on NRIs
538-578
Non-resident guarantee for non-fund based facilities entered between two resident
2 entities - RBI Circular

3 Facilities for Persons Resident outside India FIIs -RBI Circular
4
Loans to Non-Residents/Third Parties againt Security of NRE Account/FCNR DepositsRBI Circular

FDI Allotment of Shares to person resident outside India under MoA of an Indian
5 company Pricing guidelines

6 Import of gold in any form including jewellery FEMA Clarification
7
Establishment of Liaison Offices (LO) /Branch Offices (BO) / Project Offices (PO) in
India by Foreign Entities Reporting
8 Import of Pets as Baggage allowed only to persons transferring their residence to India
9 Form 15CA,15CB for remittance of payments to non-resident or foreign company
10
Clarification Prior intimation to RBI to raise aggregate FII / NRI limits for investments
under PMS
11 The limit of NRIs Inward Remittance

12 Money Transfer Service Scheme Master Circular No. 1/2012-13
13
Remittance Facilities for Non-Resident Indians/Persons of India Origin/Foreign

National
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Abbreviations
AD - Authorized Dealer
ADR- American Depository Receipts
BPO- Business Process Outsourcing
CBDT- Central Board of Direct Taxes
CBSE -Central Board of Secondary Education
CII- Confederation of Indian Industry
COC -Certificate of Coverage
DASA- Direct Admission to Students Abroad
DIN- Director Identification Number
DIPP -Department of Industrial Policy and Promotion
DMRC - Delhi Metro Rail Corporation
DP - Partner
DSC - Digital Signature Certificate
DTAA - Double Taxation Avoidance Agreement
DTC - Direct Taxes Code
ECNR - Emigration Check Not Required
ECR- Emigration Check Required
EdCIL- Education Consultants India Limited
EP -F Employees Provident Fund
ESIC- Employees State Insurance Corporation
ESOP - Employees Stock Option Plan
FCCB- Foreign Currency Convertible Bonds
FCNR -Foreign Currency (Non Resident) Account
FDI - Foreign Direct Investment
FEMA - Foreign Exchange Management Act
FRRO - Foreigners Regional Registration Office
GDR - Global Depository Receipts
ICWF - Indian Community Welfare Fund
IIM- Indian Institute of Management
IIT- Indian Institute of Technology
IPICOL -Industrial Investment Promotion Corporation of Orissa Limited
ISCE - Indian School Certificate Examination
IT - Information Technology
ITC -Industrial Training Centre
ITI - Industrial Training Institute
IW - International Worker
JV - Joint Venture
KYC - Know Your Customer
LLP - Limited Liability Partnership
LRS- Liberalized Remittance Scheme
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MCA - Ministry of Corporate Affairs

MHA - Ministry of Home Affairs
MNC - Multinational Company
MOIA - Ministry of Overseas Indian Affairs
MOU - Memorandum of Understanding
MRTS - Mass Rapid Transit System
NCR- National Capital Region
NGO - Non-Government Organization
NOR - Not Ordinarily Resident
NORKA- Non Resident Keralites Affairs Department
NR - Non Resident
NRB- Non Resident Bihari
NRE - Non Resident External account
NREGA- National Rural Employment Guarantee Act
NRG - Non Resident Gujaratis
NRGF- Non Resident Gujaratis Foundation
NRI- Non Resident Indian
NRK- Non Resident Keralites
NRO - Non Resident Ordinary Rupee account
NROFC - Non Resident Oriya Facilitation Centre
NSC - National Savings Certificate
OCI - Overseas Citizen of India
OIFC - Overseas Indian Facilitation Centre
OWRC - Overseas Workers Resource Centre
PAN- Permanent Account Number
PF- Provident Fund
PIO - Person of Indian Origin
PIS - Portfolio Investment Scheme
PPF- Public Provident Fund
PSU - Public Sector Company
RBI- Reserve Bank of India
RFC - Resident Foreign Currency
ROR - Resident and Ordinarily Resident
SEBI - Securities and Exchange Board of India
SME - Small and Medium Enterprises
SPDC - Scholarship Programme for diaspora Children
SSA - Social Security Agreement
STT - Securities Transaction Tax
TAN - Tax Deduction Account Number
VAT- Value Added Tax
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CHAPTER 1
Residential Status
In terms of the Foreign Exchange Management Act (FEMA), 1999 a person resident outside India means
a person who is not resident in India.
1. A Non Resident Indian (NRI) - is a person resident outside India, who is a citizen of India or is a
person of Indian origin.
2. A Person of Indian Origin (PIO) - is defined in Regulation 2 of FEMA Notification as a citizen of
any country other than Bangladesh or Pakistan, if (a) he at any time held Indian passport; or (b)
he or either of his parents or any of his grandparents was a citizen of India by virtue of the
Constitution of India or the Citizenship Act, 1955 (57 of 1955); or (c) the person is a spouse of an
Indian citizen or a person referred to in sub-clause (a) or (b).
3. How to Determine the Residential Status of an Indiviudal
The residential status of a person as refered in Sec. 2(31) of the Income Tax Act for each assessment
year under consideration to determine the scope of total income chargable to tax
According to Income Tax Act, an individual is said to be resident in India, if he satisfies at least one of the
following basic conditions
He is in India during the financial year for a period of 182 days or more
He is in India for a period of 60 days or more during the year and 365 days or more during 4
years immediately preceding the year in question
The second condition is not applicable to the following:
An Indian citizen who leaves India during the year for the purpose of taking employment outside
India or an Indian citizen leaving India during the year as a member of the crew of an Indian ship.
An Indian citizen or a person of Indian origin who comes on visit to India during the year (a
person is said to be of Indian origin if either he or any of his parents or any of his grandparents
was born in undivided India).
If he satisfies any of the above conditions a. and b., then there is further categorisation of his being an
Indian resident into:
Resident and ordinarily resident

Resident but not ordinarily resident
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4. Resident and ordinarily resident- ROR

If a resident further satisfies the following conditions, he will be a resident and ordinarily resident:
1. He has been resident in India in at least 2 out of 10 years [according to basic condition noted
above] immediately preceeding the relevant year.
2. He has been in India for a period of 730 days or more during 7 years immediately preceeding the
relevant year.
If he doesnt satisfy one or both of these conditions he is treated as a Resident but Not Ordinarily
Resident RBNOR.
If an individual doesnt satisfy either of the conditions a. or b. stated in the beginning, then he is a NonResident NR and since such an individual that we are talking of is Indian, he or she is a NRI Non
Resident Indian.
5. Importance of Residential Status

Total income of an assessee cannot be determined without knowing his residential status.
The residential status shall be determined for every person for each previous year independently.
The onus of responsibility to prove the residential status is on the assessee.
The criteria related to determination of residential status of an individual is described in details in the later
part of this guide (more details refer Chapter 6 NRI Taxation)
6. What is Indian DIASPORA ?
Diaspora is a word of Greek origin that means scattering or sowing of seeds. It is used to refer to
people who leave their native lands to live in other parts of the world for employment, business or
any other purpose. Indian Diaspora is a generic term used for addressing people who have
migrated from the territories that are currently within the borders of the Republic of India. It
constitutes NRIs (Non-resident Indians) and PIOs (Persons of Indian origins). The Indian
Diaspora is estimated to be over 30 million. The Government of India recognises the importance
of Indian Diaspora as it has brought economic, financial, and global benefits to India. The Indian
Diaspora today constitutes an important, and in some respects unique, force in world culture.
7. Residental status changes from Resident to Non-Resident Manage your Taxes, Social
Security and things to complete before going aborad for employment or short visit
Before you accept a job offer from outside India, first try to undertand the terms and conditions of the
employment. The employment contact is very important; carefully study each and evey terms mnetioend
in the employment contact. Understand the tax implications on your earnings abroad, the tax bilateral
agreements between India and other country given the monetary impact they may have on you. You will
also have a clear idea about the social security benefits and other service rules. In case you are going for
a short period employment and stay in the other country is less than 182 days, you will be treated like a
resident tax payer and subject to tax in India, again this depends upon various other factors. Therefore,
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ensure to monitor carefully your physical presence in India, a single additional day here or there can
change your tax liability.
The concept of International worker (IW) was introduced in India for the first time in October 2008 and
social security contributions were made mandatory for IWs in India. Please note that you may become an
International worker if you are moving to a country with which India has a social security agreement in
place, unless you have obtained a Certificate of Coverage. This is the outcome of the new provident
fund regulation for international workers in India. India has currently entered into social security
agreements with France, Denmark, Korea, Netherlands Belgium, Germany, Switzerland and
Luxembourg. The consequence of being an international worker is a higher contribution to the Pension
Scheme and withdrawal from your provident fund only upon reaching the age of 58 years. One of the
benefits of obtaining a Certificate of Coverage is to avoid social security contribution in your host country.
Hence, it is necessary that you plan in advance and concentrate on the essential tax and social security
regulations to avoid further complications and last minutes confussions. A cross-border worker who is
contributing to home country social security and goes to work in another country with which there is an
SSA (Social Security Agreement ) for a specified period as prescribed in the SSA can become a
detached worker/excluded worker by obtaining a certificate of coverage from the home country.
Employees Provident Fund Organisation (EPFO) has been identified as the Liaison agency to implement
the provisions of the agreement in India and has been authorized to issue Certificate of Coverage to the
eligible employees deputed to other countries.
8. Before you leave India to abroad for employment, please ensure to complete the following.
8.1 Term Insurance Policy - Take a Term Insurance Policy to cover your life adequeatly. This will
financaily protect your family in case of your untimely death. Term insurance plans are pure protection
plans. Most Term Insurnce Policies offered by insurance companies in India can be purchased by a Non
Resident Indian ( NRI) or a Person of Indian Origin(POI) simply by filling an additional NRI Questionnaire.
These policies are similar to the policies that are offered to resident Indians as well. However, only a few
insurance companies in Inda have actually formulated processes for issuing insurance policies to
NRIs/POIs. They will help you with documentations and other requirements for medical tests, etc. The
payment can be made from your NRO, NRE account or direct remittance from abroad.
It is not
mandatory for you to presenet within the geograohical area of India while purchasing the Term policy but
some insurance companies insitit for this along with medical examination, this all again depends on the
terms and conditions of respective insurance polices. So it is better to take the Term Insurance polcies
when you are present there in India o avoid lot of complications.
8.2 Health Insurnace It is essential to take sufficient cover which protects you and your entire family. It
is important to choose the right amount of sum insured depending on the past medical history of the
elderly family members as they would require higher health insurance coverage. Similarly, the location
where you reside should be taken into consideration. In case you are married and having children, better
opt for Family Floater. It is recommended to take health insurance at the early ages to avoid medical
check-ups and higher premiums. Even if you are getting medical benefits aborad, you can go for a
Health Insurnce plan in India. It is very important to understand the maximum acceptable age limit offered
by the health insurance company. The possibility of falling sick is much higher at an older age. Hence, it
is important that one is covered by a comprehensive health insurance plan even after retirement or return
21 | P a g e
from abroad. Also, you should choose a policy that can be renewed after the age of 65 because at an
older age it is difficult to purchase a new insurance policy.
8.3 Public Provident Fund (PPF)- NRIs are not allowed to invest in PPF, so before becoming an NRI
open a PPF account, but once you become NRI, you can continue to contribute upto the term of 15 years.
But further extnetion is not allowed. The income received from PPF is fully exempted from income tax (as
of now, this may change in future also) and also up to Rs. 100,000 you can reduced from your total
income u/c 80C of Income Tax Act while calculating the taxable income for income earned in India.
8.4 Convert Savings Bank Account to NRO Account - NRIs are not permitted to operatate Resident
Savings Bank Account. Once they become NRI, they are required to convert the Savings Bank account
to NRO Account (Non-Resident Ordinary Account) or close the Savings Bank Account. A NRO account
allows you to make payments on dues in India and receive rental and other income from your property
here, if you own any and it also allows credit of funds from your overseas account. However, funds in this
account can be repatriated within a limit of USD 1 million in a year on paying the applicable charges to
the banker; plus this limit includes any receipts arising out of sale of property and investments. Interest on
the NRO account is taxable with tax deducted at source of 30%. If you live in a country that has a Double
Taxation Avoidance Agreement (DTAA) with India, this TDS rate would be lower, but you would need to
submit a tax residency certificate to the bank. The DTAA between India and the US lays down a TDS rate
of 15% on interest from deposits in India (to know more about DTAA refer Chapter ). These deposits
may also be taxed in the country of your residence. The US, for instance, taxes global income of its
residents and citizens. However, if tax has been deducted at source in India, the investor will get a credit
in the US for taxes paid in India.
8.5 Open Non-Resident External Account Once you become an NRI immediately open an NRE
Account. This account will be used for crediting your remittance from abroad and also crediting of
dividend received from shares (PIS account), mutual funds (NRI status deposit) etc. . Accrued interest
income and balances held in NRE accounts are exempt from income-tax and wealth tax, respectively.
Interest on the NRE account and FCNR account are tax free in India. But if you are a resident or citizen of
the US, tax in levied on this income which will be a part of your global income. If you are a resident of the
Gulf countries, the NRE and FCNR option would be very profitable for you. For residents of the US, the
choice would depend on the tax slab applicable in the US.
8.6 Open PIS (Portfolio Investment Scheme) - Non-residents are not permitted to buy/sell shares in
their resdent share trading account. Immediately you become an NRI close all your local share trading
account and open PIS acccunt. NRIs are also not permitttd to deal in commodity market, in case you
have commodity trading account, close those accounts before you become an NRI.
8.7 Mutual Fund and other Investments Change your residential status from Resident to Non-resednt
for all your Mutual Fund and other investments.
8.8 Online Payment Option Activate online payment options for all your future financial commitments
realted to car loans, housing loans, investment commitments etc.
8.9 Power of Attroney - If required prepare a Power of Attroney document authorizing one of your
relatives or other trusted persons like your wife, father, mother, brother or friend to sign and execute
documents in your absence. There can be many things which require your presence in India after you
have become an NRI, like if you want to make any real estate transaction or want to operate your bank
account, investment in Mutual Funds etc. Power of attorney is a legal document giving power to someone
to act on your behalf. It is advisable to make a power of attorney which expires at certain future date. (for
more detils realted to Power of Attroney pleaes see Chapter )
22 | P a g e
8.10 Safe Custody Locker - Open a bank safe custody locker and keep all your valuable documents
there. If required you can add your wife or close relateives as joint holder for operating the safe custody
locker.
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23 | P a g e
CHAPTER 2
Various Types of Bank Accounts - NRIs are permitted to open
24 | P a g e
1. Types of accounts which can be maintained by an NRI / PIO in India
If a person is NRI or PIO, she/he can, without the permission from the
Reserve Bank, open, hold and maintain the different types of accounts given below with an Authorized
Dealer in India, i.e., a bank authorized to deal in foreign exchange. NRO Savings accounts can also be
maintained with the Post Offices in India. However, individuals/ entities of Bangladesh and Pakistan
require the prior approval of the Reserve Bank.
2.
Non-Resident (Ordinary) Rupee Account (NRO Account)
NRO accounts may be opened / maintained in the form of current, savings,

recurring or fixed deposit accounts.
Savings Account - Normally maintained for crediting legitimate dues /earnings / income such as
dividends, interest etc.The interest rates on NRO Savings deposits shall be at the rate applicable
to domestic savings deposits. Currently the interest rate is 4 - 7 per cent.(varies banks to banks)
NRO Term Deposits - Banks are free to determine the interest rates. (now banks are offering 89.5% interest depending the duration of the deposit)
Account should be denominated in Indian Rupees.
Permissible credits to NRO account are transfers from rupee accounts of non-resident banks,
remittances received in permitted currency from outside India through normal banking channels,
permitted currency tendered by account holder during his temporary visit to India, legitimate dues
in India of the account holder like current income like rent, dividend, pension, interest, etc., sale
proceeds of assets including immovable property acquired out of rupee/foreign currency funds or
by way of legacy/ inheritance.
Eligible debits such as all local payments in rupees including payments for investments as
specified by the Reserve Bank and remittance outside India of current income like rent, dividend,
pension, interest, etc., net of applicable taxes, of the account holder.
NRI/PIO may remit from the balances held in NRO account an amount not exceeding USD one
million per financial year, subject to payment of applicable taxes
The limit of USD 1 million per financial year includes sale proceeds of immovable properties held
by NRIs/PIO.
The accounts may be held jointly with residents and / or with non-resident Indian.
The NRO account holder may opt for nomination facility.
NRO (current/savings) account can also be opened by a foreign national of non-Indian origin
visiting India, with funds remitted from outside India through banking channel or by sale of foreign
exchange brought by him to India.
25 | P a g e
Loans to non-resident account holders and to third parties may be granted in Rupees by
Authorized Dealer / bank against the security of fixed deposits subject to certain terms and
conditions.
The interest rates offered is almost at par with resident fixed deposits
2.1 Non-Resident Ordinary Rupee (NRO) Account RBI Master Circular No. 2/2012-13
Non-Resident Ordinary Rupee (NRO) Account
Master Circular No. 2/2012-13, dated 2-7-2012
The acceptance of deposits by an Authorised Dealer/Authorised bank from persons resident

outside India are regulated by the provisions of sub-sections (1) and (2) of section 6 of
the Foreign Exchange Management Act, 1999 read with FEMA Notification No.5/2000 RB, dated
May 3, 2000, as amended from time to time.
2. This Master Circular consolidates the existing instructions on the subject of Non-Resident
Ordinary Rupee (NRO) Account at one place. The list of underlying circulars/notifications
consolidated in this Master Circular is furnished in the Appendix.
3. This Master Circular is being issued with a sunset clause of one year. This circular will stand
withdrawn on July 1, 2013 and be replaced with an updated Master Circular on the subject.
1. Definitions
Non-Resident Indian (NRI)
NRI for this purpose is defined in Regulation 2 of FEMA Notification No.5 dated May 3, 2000. In
terms of this Notification, an NRI is a person resident outside India, who is a citizen of India or is a
person of Indian origin.
Person of Indian Origin (PIO)
PIO for this purpose is defined in Regulation 2 of FEMA Notification ibid as a citizen of any
country other than Bangladesh or Pakistan, if (a) he at any time held Indian passport; or (b) he or
either of his parents or any of his grand parents was a citizen of India by virtue of the Constitution
of India or the Citizenship Act, 1955 (57 of 1955); or (c) the person is a spouse of an Indian
citizen or a person referred to in sub-clause (a) or (b).
2. Eligibility
(a) Any person resident outside India (as per Section 2 of FEMA), may open and maintain NRO
account with an Authorised Dealer or an Authorised bank for the purpose of putting through
bonafide transactions denominated in Indian Rupees, not involving any violation of the provisions
of FEMA, Rules and Regulations made thereunder.
26 | P a g e
(b) Opening of accounts by individuals/entities of Bangladesh/Pakistan nationality/ownership

require prior approval of the Reserve Bank.
3. Types of Accounts
NRO accounts may be opened/maintained in the form of current, savings, recurring or fixed
deposit accounts. Rate of interest applicable to these accounts and guidelines for opening,
operating and maintenance of such accounts shall be in accordance with directives/instructions
issued by the Reserve Bank from time to time.
4. Joint Accounts with Residents/Non- Residents
The accounts may be held jointly with residents and/or with non-residents.
5. Permissible Credits/Debits
A. Credits
(i) Proceeds of remittances from outside India through normal banking channels received in
foreign currency which is freely convertible.
(ii) Any foreign currency, which is freely convertible, tendered by the account holder during his
temporary visit to India. Foreign currency exceeding USD 5000 or its equivalent in the form of
cash should be supported by currencydeclaration form. Rupee funds should be supported by
encashment certificate, if they represent funds brought from outside India.
(iii) Transfers from rupee accounts of non-resident banks.
(iv) Legitimate dues in India of the account holder. This includes current income like rent,
dividend, pension, interest, etc.
(v)
Sale
proceeds
of
assets
including
immovable
property
acquired
out
of
rupee/foreign currency funds or by way of legacy/inheritance.
(vi) Resident individual may make a rupee gift to a NRI/PIO who is a close relative of the resident
individual [closerelative as defined in Section 6 of the Companies Act, 1956] by way of crossed
cheque /electronic transfer. The amount shall be credited to the Non-Resident (Ordinary) Rupee
Account (NRO) a/c of the NRI/PIO and credit of such gift amount may be treated as an eligible
credit to NRO a/c. The gift amount would be within the overall limit of USD 200,000 per financial
year as permitted under the Liberalised Remittance Scheme (LRS) for a resident individual.
(vii) Resident individual to lend to a Non resident Indian (NRI)/ Person of Indian Origin (PIO)
close relative [meansrelative as defined in Section 6 of the Companies Act, 1956] by way of
crossed cheque /electronic transfer, subject to conditions within the overall limit under the
Liberalised Remittance Scheme of USD 200,000 per financial year available for a resident
27 | P a g e
individual. The loan amount should be credited to the NRO a/c of the NRI /PIO. Credit of such
loan amount may be treated as an eligible credit to NRO a/c;
B. Debits
(i) All local payments in rupees including payments for investments in India subject to compliance
with the relevant regulations made by the Reserve Bank.
(ii) Remittance outside India of current income like rent, dividend, pension, interest, etc. in India
of the accountholder.
(iii) Remittance up to USD one million, per financial year (April- March), for all bonafide purposes,
to the satisfaction of the Authorised Dealer bank.
(iv) Transfer to NRE account of NRI within the overall ceiling of USD one million per financial
year subject to payment of tax, as applicable
6. Remittance of Assets
6.1 Remittance of Assets by a Foreign National of Non- Indian Origin
A citizen of a foreign state, not being a citizen of Nepal or Bhutan or a Person of Indian Origin
(PIO), who has retired from an employment in India, or has inherited assets from a
person referred to in sub-section (5) of Section 6 of the FEMA; or is a widow resident outside
India and has inherited assets of her deceased husband who was an Indian citizen resident in
India, may remit an amount, not exceeding USD one million per financial year out of the balances
in the account, on production of documentary evidence in support of acquisition, inheritance or
legacy of assets by the remitter and an undertaking by the remitter and certificate by a
Chartered Accountant in the formats prescribed by the Central Board of Direct Taxes vide their
circular No.10/2002, dated October 9, 2002.
6.2 Remittance of assets by an NRI/PIO
(a) NRI/PIO may remit an amount, not exceeding USD one million per financial year, out of the
balances held in NRO accounts/sale proceeds of assets/the assets in India acquired by him by
way of inheritance/legacy, on production of documentary evidence in support of acquisition,
inheritance or legacy of assets by the remitter, and an undertaking by the remitter
and certificate by a Chartered Accountant in the formats prescribed by the CentralBoard of Direct
Taxes vide their circular No.10/2002 dated October 9, 2002.
(b) NRI/PIO may also, within the overall limit of USD one million, as stated above, remit sale
proceeds of assets acquired under a deed of settlement made by either of his parents or a
close relative (as defined in Section 6 of the Companies Act, 1956) and the settlement taking
effect on the death of the settler, on production of the original deed of settlement and an
28 | P a g e
undertaking by the remitter and a certificate by a Chartered Accountant in the formats prescribed
by the Central Board of Direct Taxes vide their circular No.10/2002 dated October 9, 2002.
6.3 Assets acquired in India out of Rupee funds
NRI/PIO may remit sale proceeds of immovable property purchased by him as a resident or out of
Rupee funds as NRI/PIO, without any lock-in-period, subject to the above limit of USD 1 million,
per financial year.
6.4 Restrictions
(a) The remittance facility in respect of sale proceeds of immovable property is not available to
citizens of Pakistan, Bangladesh, Sri Lanka, China, Afghanistan, Iran, Nepal and Bhutan.
A person or his successor who has acquired immovable property in accordance with Section 6(5)
of FEMA, 1999 cannot repatriate sale proceeds of such property outside India except with prior
permission of the Reserve Bank.
(b) The facility of remittance of sale proceeds of other financial assets is not available to citizens
of Pakistan, Bangladesh, Nepal and Bhutan.
7. Foreign nationals of non-Indian origin on a visit to India
NRO (current/savings) account can be opened by a foreign national of non-Indian origin visiting
India, with funds remitted from outside India through banking channel or by sale of foreign
exchange brought by him to India. The balance in the NRO account may be converted by the
Authorised Dealer bank into foreign currency for payment tothe account holder at the time of his
departure from India provided the account has been maintained for a period not exceeding six
months and the account has not been credited with any local funds, other than interest accrued
thereon. In case the account has been maintained for a period more than six months, applications
for repatriation of balance will have to be made by the account holder concerned on plain paper
to the Regional Office concerned of the Reserve Bank.
8. Grant of loans/overdrafts by the Authorised Bank to account holders and third parties
(a) Loans to non-resident account holders and to third parties may be granted in Rupees by
Authorized Dealer/bank against the security of fixed deposits subject to the following terms and
conditions:
(i) The loans shall be utilised only for meeting borrowers personal requirements and/or business
purpose and not for carrying on agricultural/plantation activities or real estate business or for relending.
(ii) Regulations relating to margin and rate of interest, as stipulated by Reserve Bank, from time
to time, shall be complied with.
29 | P a g e
(iii) The usual norms and considerations as applicable in the case of advances to trade/industry
shall be applicable for such loans/facilities granted to third parties.
(b) Authorised Dealer/bank may permit overdraft in the account of the account holder subject to
their commercial judgement and in compliance with the interest rate etc. directives.
9. Change of resident status of account holder
(a) From Resident to Non-resident
(i) When a person resident in India leaves India for a country (other than Nepal or Bhutan) for
taking up employment or for carrying on business or vocation outside India or for any other
purpose indicating his intention to stay outside India for an uncertain period, his existing account
should be designated as a Non-Resident (Ordinary) Account. When a person resident in India
leaves for Nepal or Bhutan for taking up employment or for carrying on business or vocation or for
any other purposes indicating his intention to stay in Nepal or Bhutan for an uncertain period, his
existing account will continue as a resident account. Such account should not be designated as
Non-Resident (Ordinary) Account (NRO).
(ii) Foreign nationals who come to India on employment and become residents in terms of
section 2(v) of FEMA, 1999 and are eligible to open/hold a resident savings bank account are
permitted to re-designate their resident account maintained in India as NRO account on leaving
the country after their employment to enable them to receive their legitimate dues subject to
certain conditions.
(b) From Non- resident to Resident
NRO accounts may be re-designated as resident Rupee accounts on return of the account holder
to India for taking up employment, or for carrying on business or vocation or for any other
purpose indicating his intention to stay in India for an uncertain period. Where the account holder
is only on a temporary visit to India, the account should continue to be treated as non-resident
during such visit.
10. Treatment of loans /overdrafts in the event of change in the resident status of the
borrower
In case of a person who had availed of loan or overdraft facilities while resident in India and who
subsequently becomes a person resident outside India, the Authorised Dealer/bank may at their
discretion and commercial judgement allow continuance of the loan/overdraft facilities. In such
cases, payment of interest and repayment of loan may be made by inward remittance or out of
legitimate resources in India of the person concerned.
11. Payment of funds to Non-resident/Resident nominee
30 | P a g e
The amount due/payable to non-resident nominee from the NRO account of a deceased account
holder shall be credited to NRO account of the nominee with an Authorised dealer/bank in India.
The amount payable to resident nominee from the NRO account of a deceased account holder
shall be credited to resident account of the nominee with a bank in India.
12. Operation of NRO account by Power of Attorney holder
Powers have been delegated to the authorized dealers/banks to allow operations on an NRO
account by Power of Attorney granted in favour of a resident by the non-resident individual
account holder provided such operations are restricted to:
(i) All local payments in Rupees including payments for eligible investments subject to
compliance with relevant regulations made by the Reserve Bank; and
(ii) Remittance outside India of current income in India of the non-resident individual account
holder, net of applicable taxes;
(iii) The resident Power of Attorney holder is not permitted to repatriate outside India funds held
in the account other than to the non-resident individual account holder nor to make payment by
way of gift to a resident on behalf of the non-resident account holder or transfer funds from the
account to another NRO account.
13. Facilities to a person going abroad for studies
Persons going abroad for studies are treated as Non-Resident Indians (NRIs) and are eligible for
all the facilities available to NRIs. Educational and other loans availed of by them as residents in
India will continue to be available to them as per FEMA Regulations.
14. International Credit Cards
Authorised Dealer banks have been permitted to issue International Credit Cards to NRIs/PIO,
without prior approval of Reserve Bank. Such transactions may be settled by inward remittance or
out of balances held in the cardholders FCNR (B)/NRE/NRO Accounts.
15. Income-Tax
The remittances (net of applicable taxes) will be allowed to be made by the Authorised Dealer
banks on production of an undertaking by the remitter and a certificate from a Chartered
Accountant in the formats prescribed by the Central Board of Direct Taxes, Ministry of Finance,
Government of India vide their Circular No. 10/2002 dated October 9, 2002 [cf. A.P. (DIR Series)
Circular No. 56 dated November 26, 2002].
Annex-1
Statement/returns to be submitted to the Reserve Bank
31 | P a g e
Particulars of statement
Facilities to NRIs/PIO and Foreign Nationals
Liberalisation Remittance from NRO account.
Periodicity Relevant instructions

A.P. (DIR Series) Circular No.
Quarterly 12 dated November 16, 2006
Annex-2
Operational Instructions for Authorised Dealer Banks
1. General
Authorised Dealer banks may carefully study the provisions of the Act/Regulations/Notifications
issued under Foreign Exchange Management Act, 1999 (the Act).
Reserve Bank will not prescribe the documents which should be verified by the Authorised Dealer
banks while permitting remittances for various transactions.
In terms of the provisions contained in sub-section 5 of Section 10 of the Act, before undertaking
any transaction in foreign exchange on behalf of any person, Authorised Dealer is required to
obtain a declaration and such other information from the person (applicant) on whose behalf the
transaction is being undertaken that will reasonably satisfy him that the transaction is not
designed to contravene or evade the provisions of the Act or any of the Rules or Regulations
made or Notifications or directions or orders issued under the Act. Authorised Dealer banks
should preserve the information/documents obtained by them from the applicant before
undertaking the transactions for verification by the Reserve Bank.
In case the person on whose behalf the transaction is being undertaken refuses or does not give
satisfactory compliance of the requirements of an Authorised Dealer bank, he shall refuse in
writing to undertake the transactions. Where an Authorised Dealer bank has reasons to believe
that a contravention or evasion of the Act or the Rules or Regulations made or Notifications
issued thereunder was contemplated in the transaction that he has refused to undertake, he shall
report the matter to the Reserve Bank. With a view to maintaining uniform practices, Authorised
Dealer banks may consider requirements or documents to be obtained by their branches to
ensure compliance with the provisions of sub-section (5) of Section 10 of the Act.
2. Opening of accounts by Bangladesh/Pakistan individuals/entities.
Opening of accounts by individuals/entities of Bangladesh/Pakistan nationality/ownership requires

prior approval of the Reserve Bank. All such requests may be referred to the Chief General
Manager-in-Charge, Foreign Exchange Department, (Foreign Investment Division), Reserve
Bank of India, Central Office, Mumbai-400 001.
3. Remittance of current income
Remittance outside India of current income like rent, dividend, pension, interest, etc. in India of
the account holder is a permissible debit to the NRO account.
32 | P a g e
Authorised Dealer banks may allow repatriation of current income like rent, dividend, pension,
interest, etc. of NRIs who do not maintain an NRO account in India based on an appropriate
certification by a chartered accountant, certifying that the amount proposed to be remitted is
eligible for remittance and that applicable taxes have been paid/provided for.
4. Restrictions
(a) The remittance facility in respect of sale proceeds of immovable property is not available to
citizens of Pakistan, Bangladesh, Sri Lanka, China, Afghanistan, Iran, Nepal and Bhutan.
(b) The facility of remittance of sale proceeds of other financial assets is not available to citizens
of Pakistan, Bangladesh, Nepal and Bhutan.
5. Tax Compliance
Authorised Dealer banks can allow remittances to non-residents only on production of an

undertaking by the remitter and a certificate from a Chartered Accountant in the formats
prescribed by the Central Board of Direct Taxes, Ministry of Finance, Government of India vide
their Circular No. 10/2002, dated October 9, 2002. [cf. A.P. (Dir Series) Circular No. 56, dated
November 26, 2002].
APPENDIX
List of notifications/circulars which have been consolidated in this Master Circular NonResident Ordinary Rupee (NRO) Account
http://www.rbi.org.in/Scripts/BS_ApCircularsDisplay.aspx
http://www.rbi.org.in/Scripts/Bs_FemaNotifications.aspx
Sl. No. Circular No.
Date
1.
Notification No. FEMA 62/2002-RB May 13, 2002
2.
Notification No. FEMA 97/2003-RB July 8, 2003
3.
Notification No. FEMA 119/2004-RB June 29,2004
4.
Notification No. FEMA 133/2005-RB April 1, 2005
5.
Notification No. FEMA 156/2007-RB June 13, 2007
1.
A.P. (DIR Series) Circular No.45
May 14, 2002
2.
July 2, 2002
3.
July 15, 2002
4.
September 12, 2002
5.
September 28, 2002
6.
September 28, 2002
7.
November 26, 2002
8.
December 9, 2002
9.
January 13, 2003
10.
December 8, 2003
11.
December 8, 2003
12.
January 31, 2004
33 | P a g e
13.
14
15.
16.
17.
18.
19.

.P. (DIR Series) Circular No.12
May 13, 2005

November 16, 2006
May 25, 2007
June 09, 2011
September 16, 2011
September 16, 2011
May 7, 2012
NOTE
For the convenience of Authorised Dealers, a table of Statements/Returns to be submitted to

Reserve Bank and Operational Guidelines have been given in Annex-1 & 2, respectively.
It is also clarified for information of all users that the Master Circular need not necessarily be
exhaustive and a reference to the relevant A.P.(DIR Series) Circular is needed wherever further
information/ clarification is required.
2.2 Conditions for Opening of NRO accounts by individuals of Bangladesh Nationality without RBI
approval
RBI/2012-13/414
A.P.(DIR Series) Circular No. 82
February 11, 2013
To
All Authorised Dealer banks and Authorised banksMadam / Sir,
Opening of NRO accounts by individuals of Bangladesh Nationality
Attention of all the Authorised Dealer banks and Authorised banks (Authorised banks) is invited to
Paragraph 1 of Schedule-3 of Foreign Exchange Management (Deposit) Regulations, 2000 contained in
Notification No. FEMA.5/2000-RB dated May 3, 2000, as amended from time to time, in terms of which
opening of Non-Resident Ordinary Rupee (NRO) accounts by individuals/ entities of Bangladesh/
Pakistan nationality/ ownership requires approval of Reserve Bank.
2. The extant instructions have been reviewed and it has been decided that henceforth, Authorised banks
would be permitted to open NRO account of individual/s of Bangladesh nationality without the approval of
the Reserve Bank subject to the following conditions:
i.
The bank concerned should satisfy itself that the individual is holding valid visa and valid
residential permit issued by Foreigner Registration Office (FRO)/Foreigner Regional Registration
Office (FRRO) concerned;
ii.
The Authorised bank should put in place a system of quarterly reporting whereby each branch of the
Authorised bank shall maintain a record of the bank accounts opened by individual/s of Bangladesh
nationality and details of such account shall be forwarded to their Head Office. The Head Office of the
bank shall furnish details of such accounts on quarterly basis to the Under Secretary (Foreigners),
Ministry of Home Affairs, NDCC-II Building, Jai Singh Road, New Delhi 110 001. E Mail.
iii.
The report shall contain details of Name/s of the Individual/s, Date of arrival in India, Passport No. and
Place/Country of issue, Residential permit reference and date and place of issue, Name of the FRO/
34 | P a g e
FRRO concerned and the Complete address and contact number of the branch where the bank
account is being maintained.
3. Opening of accounts by entities of Bangladesh ownership shall continue to require approval of Reserve
Bank, as hitherto.
4. Necessary amendments to the Notification No. FEMA.5/2000-RB dated May 3, 2000 have been issued
vide Notification No.FEMA.253/2013-RB dated January 02, 2013.
5. Authorised banks may bring the contents of this circular to the notice of their constituents and
customers concerned.
6. The directions contained in the circular have been issued under sections 10(4) and 11(1) of theForeign
Exchange Management Act, 1999 (FEMA) (42 of 1999) and are without prejudice to permissions/
approvals, if any, required under any other law.
Yours faithfully,
(Rudra Narayan Kar)
Chief General Manager
3.
Non-Resident (External) Rupee Account (NRE Account)
NRE account may be in the form of savings, current, recurring or fixed

deposit accounts. Such accounts can be opened only by the non-resident himself and not through
the holder of the power of attorney.
Account will be maintained in Indian Rupees.
Account can be opened with resident join holder subject to terms and conditions
Balances held in the NRE account are freely repatriable.
Accrued interest income and balances held in NRE accounts are exempt from Income tax and
Wealth tax, respectively.
Authorised dealers/authorised banks may at their discretion/commercial judgement allow for a
period of not more than two weeks, overdrawing in NRE savings bank accounts, up to a limit of
Rs.50,000 subject to the condition that such overdrawings together with the interest payable
thereon are cleared/repaid within a period of two weeks, out of inward remittances through
normal banking channels or by transfer of funds from other NRE/FCNR accounts.
Savings - The interest rates on NRE Savings deposits shall be at the rate applicable to domestic
savings deposits. Currently the interest rate above >= 4 % (varies from banks to bank)
Term deposits Banks are free to fix the term deposit interest rates. On 16th Decemer,2011
with a view to providing greater flexibility to banks in mobilizing non-resident deposits and also in
view of the prevailing market conditions, RBI has decided to deregulate interest rates on NonResident (External) Rupee (NRE) Deposits and Ordinary Non-Resident (NRO) Accounts (the
interest rates on term deposits under Ordinary Non-Resident (NRO) Accounts are already
deregulated). Accordingly, banks are free to determine their interest rates on both savings
deposits and term deposits of maturity of one year and above under Non-Resident (External)
35 | P a g e
Rupee (NRE) Deposit accounts and savings deposits under Ordinary Non-Resident (NRO)
Accounts with immediate effect. However, interest rates offered by banks on NRE and NRO
deposits cannot be higher than those offered by them on comparable domestic rupee deposits.
Now banks are competing each other to attract NRE deposits and offering annual interest in the
range of 6.50 to 9.50%., earlier is was 3.25%. RBI direction is applicable for all Commercial and
Scheduled Banks, Foreign Banks and Regional Rural Banks functioning in India with the license
of RBI
The interest rates offered is almost at par with resident fixed deposits
Permissible credits to NRE account are inward remittance to India in permitted currency,
proceeds of account payee cheques, demand drafts / bankers' cheques, issued against
encashment of foreign currency, where the instruments issued to the NRE account holder are
supported by encashment certificate issued by AD Category-I / Category-II, transfers from other
NRE / FCNR accounts, interest accruing on the funds held in such accounts, interest on
Government securities/dividends on units of mutual funds purchased by debit to the
NRE/FCNR(B) account of the holder, certain types of refunds, etc.
Eligible debits are local disbursements, transfer to other NRE / FCNR accounts of person eligible
to open such accounts, remittance outside India, investments in shares / securities/commercial
paper of an Indian company, etc.
Loans up to Rs.100 lakh can be extended against security of funds held in NRE Account either to
the depositors or third parties.
Such accounts can be operated through power of attorney in favour of residents for limited
purpose of withdrawal of local payments or remittances through normal banking channels to the
account holder himself.
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4.
Foreign Currency Non Resident (Bank) Account FCNR (B) Account
FCNR accounts can be opened only as term deposits (fixed deposits/cash certificates).
FAQ - FCNR Account
What is an FCNR account?
An FCNR account is a term deposit account that can be maintained by NRIs and PIOs in foreign
currency. Thus, FCNRs are not savings accounts but fixed deposit accounts.
What foreign currencies can one maintain in FCNR accounts?
Prior to 2011, FCNR deposits were allowed to be maintained in six currencies: US dollar, Pound Sterling
(GBP), Euro, Japanese Yen, Australian dollar and Canadian dollar. However, in October 2011, the RBI
decided that authorised dealer banks in India may be permitted to accept FCNR deposits in any permitted
currency. 'Permitted currency' for this purpose would mean a foreign currency which is freely convertible
and popularly include Danish Krone, Swiss Frank and Swedish Krona among others.
How can one transfer funds to FCNR accounts?
The funds in an FCNR account must necessarily come from your overseas funds. There are several ways
in which you can open an FCNR account.
-You can transfer funds from your overseas bank account directly to open an FCNR account. You can do
this either as a wire transfer or a cheque transaction
-You can transfer funds from an existing NRE account
-You can open an FCNR account using foreign currency notes or travelers cheques when you visit India
What terms are available?
You can open an FCNR account for a minimum term of 1 year and maximum term of 5 years.
Is premature withdrawal available?
Yes, you can withdraw your FCNR before completion of the selected term. Premature withdrawal is
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subject to a penal interest of 1%. Moreover, no interest is payable if the deposit is closed within a year.
What is the current interest rate on FCNR account?
The interest rates vary between terms and from currency to currency. Rates may also vary between
banks. For instance, the rate for a 1 year FCNR deposit in US dollar would be in the range of 2.5-3%
while the same for a deposit in Australian dollar would be 5-6%.
It is important to note that this interest is tax free in India. However, you may be subject to tax in the
country of your residence for such interest.
Are balances in the FCNR accounts freely repatriable?
Yes, balances in FCNR can be freely repatriated outside India.
Can funds in the FCNR account be used for local India payments?
Yes, you can use the balance in FCNR account for making local payments in India.
"However, as FCNR can be maintained only as term deposits, it would be more convenient to make
payments after transferring the balance to NRE account," explains Rajesh Dhruva, a chartered
accountant and Chief Executive of Femaonline.com.
Can you hold FCNR accouns jointly?
Yes, the RBI, in 2011, permitted NRIs to hold FCNR accounts jointly with other NRIs or with residents
who are close relatives. In this case, the resident relative can operate the account as a power of attorney
holder.
Is nomination facility available?

Nomination facility is available in FCNR accounts and the nominee can be either an NRI or a resident
Indian.
"The balance in FCNR deposit of a deceased NRI can be credited to an NRI nominee's FCNR account
and such funds can be freely repatriated," Dhruva adds.
Can NRIs avail loans against FCNR deposits?
Rupee loans and foreign currency loans can be taken in India against the security of the deposit.
"Presently such loans are restricted to Rs 10 million. These loans can be repaid out of maturity proceeds
38 | P a g e
and/or local resources. Banks may also give loans to resident individuals, firms or companies against
collateral security of FCNR deposits," says Dhruva.
What is the procedure for opening FCNR account?
You can open an FCNR deposit from overseas. You would need to submit the following documents to the
bank:
-The account opening form with the signature verified by your overseas bank or the Indian embassy/
consulate/ high commission or a notary public
-Passport size photos
-Copies of your passport and visa duly attested
-Proof of foreign address
-Initial remittance
Several other documents such as cancelled cheque, overseas bank statement, income documents may
be required. Document requirements may also vary between countries. Check with your bank for details.
5.NRE Current Accounts
Transfer and repatriate funds easily with your NRE Rupee Current Account.
Convenient banking options make your account accessible to you from anywhere in the world.
o
o
o
o
o
o
o
o
39 | P a g e
Ideal for foreign nationals who have ESOPs Employee Stock Option Plan (ESOP) are the
shares offered to the employees of a company, wherein promoters decide to dilute their
stake. Employees are often given a share of the business after a certain length of
employment or they can buy shares at any time. issued by Indian companies
Repatriate your principal and interest amount fully
Remit funds easily through Quickremit, IndiaLink, Cheque LockBox, Telegraphic
Transfers and Cheque / Draft for free
Utilise account balance for repatriable investments as well as local payments in India
Deposit your overseas earnings in the non-interest bearing Rupee account
Avail of free ATM Card for the mandate holder in India
Get an International Debit Card
Get a personalized cheque book
Operate your account, anywhere, anytime with convenient banking channels like
NetBanking
o
To deposit money in your NRE Current Account, you can:
o Transfer funds from abroad in a freely convertible foreign currency These are foreign
currencies that can be exchanged easily with other currencies and are recognized by the
international market.
o Present foreign currency notes/travellers cheques brought in by you or another NRI
during a visit to India
o Directly remit the amount to us
o Transfer funds from an existing NRE/FCNR Account held in other Banks
Fees and Charges
Normally you need to maintain an Average Quarterly Balance (AQB) of Rs.5,000 - 25,000/- (this
conditions varies from banks to bank) In case your Average Quarterly Balance (AQB) dips below
the required amount, a fee of Rs 500 - 1000 per quarter (varies from banks to bank) will be
charged.
Documents Required
o
o
o
o
Photocopy of the pages of the passport containing passport details and personal details
of all applicants
Copy of valid visa / work permit
One passport photograph of each applicant
One document confirming either the overseas or Indian address. The address on the
document has to match the address mentioned in the application form.
In case, you cannot go to bank branch for account opening and you reside in a non FATF
country, all photocopies of the above documents to be attested by Indian Embassy or by a
Notary.
In case, you cannot go to any branch for account opening and you reside in a FATF country, then
either all photocopies of the above documents to be attested by an Indian Embassy or Notary or
by a Banker overseas If the documents are not certified then all documents need to be self
signed and submitted along with one additional documents required by the respective banks
Eligibility
You are eligible if you are a non-resident individual of Indian nationality or of Indian origin.
a) In what currency is my NRE Current Account be maintained?
Your NRE Current Account is maintained in Indian Rupees.

b) What is the minimum amount with which I can open an NRE Current Account?
The minimum amount required to open an NRE Current Account is INR 5,000- 25,000 or its
40 | P a g e
equivalent in foreign currency( this minimum amount varies from banks to bank). You would be
required to maintain an Average Quarterly Balance of INR 5,000 to 25,000/- only.
c) What is the frequency of interest payment on my NRE Current Account?
No interest is payable.
d) What do I get against my NRE Current Account?
You will get a cheque book and an International Debit Card against your NRE Current Account.
f) Can I repatriate funds in my NRE Current Account?
Yes. The principal and interest earned on NRE Current Account are fully repatriable.
g) What taxes am I liable to pay if I have an NRE Current Account?
As per current guidelines, funds in NRE Current Account are exempted from income tax in India.
h) Can I transfer funds between NRE Current Accounts?
Yes. Transfer of funds from NRE Current Accounts is allowed for bonafide personal purposes
such as personal expenses, education of children, and gifts.
i) If I am visiting India, can I use Travellers Cheques or foreign currency to open an account or credit my
existing NRE Current Account?
Travellers Cheques can be used to credit/open the account. If the foreign currency notes brought
by you exceed USD 5,000/- or the combined value of Travellers Cheques and notes exceed USD
10,000/-, then you have to submit a Currency Declaration Form (CDF) to the customs authorities
on arrival in India. You must produce the CDF for endorsement by the Bank when you submit the
money for opening/credit to an Account.
j) Can I appoint a mandate holder for my NRE Current Account?
Yes. You can appoint a mandate holder for NRE Current Account. You can also choose to
provide the mandate holder with an ATM Card.
k) What are the payment services available for my NRE Current Account?
With Bank's advanced Payment Services, you can bid goodbye to queues and paper work. Our
range of payment options makes it easy for you to pay for a variety of utilities and services.
l) How do I access my NRE Current Account while I am abroad?
You can access your NRE Current/Savings Account through NetBanking and PhoneBanking.
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6. NRO Current Account
Remit funds easily through Quickremit, IndiaLink, Cheque LockBox, Telegraphic

Transfers and Cheque / Draft
o Deposit your Rupee earnings in the non-interest bearing Rupee account
o Open an account jointly with an Indian resident
o Utilise account balance for repatriable investments as well as local payments in India
o Operate your account, anywhere, anytime with convenient banking channels
Transferring money to and from your account
To deposit money in your NRO Current Account, you can:
o
Transfer funds from abroad in a freely convertible foreign currency These are foreign
currencies that can be exchanged easily with other currencies and are recognised by the
international market.
o Present foreign currency notes / travellers cheques brought in by you or another NRI
during a visit to India
o Directly remit the amount to us
o Transfer funds from an existing NRE/FCNR Account held in other banks
o Make local payments in India
Documents required
o Photocopy of the pages of the passport containing passport details and personal details
of all applicants
o Copy of valid visa / work permit
o One passport photograph of each applicant
o One document confirming either the overseas or Indian address. The address on the
document has to match the address mentioned in the application form.
Incase, you cannot go to bank branch for account opening and you reside in a non FATF country,
all photocopies of the above documents to be attested by Indian Embassy or by a Notary.
In case, you cannot go to any bank branch for account opening and you reside in a FATF
country, then either all photocopies of the above documents to be attested by an Indian Embassy
or Notary or by a Banker overseas. If the documents are not certified then all documents need to
be self signed and submitted along with one additional document required by the bank.
Eligibility
o You are eligible if you are a non-resident individual of Indian nationality or of Indian origin.
Upon change of your status from NRI to RI, you need to inform the bank immediately.
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o
o
o
NRO account can be held in Rupees only

NRO accounts can be held jointly with Residents
In case of change of status from Resident to Non-Resident, the existing Resident
Account has to be designated as an NRO Account
FAQs
a) In what currency is my NRO Current Account maintained?
Your NRO Current Account is maintained in Indian Rupees.
b) What is the minimum amount with which I can open an NRO Current Account?
The minimum amount required to open an NRO Current Account is INR 5,000- 25,000 or its
equivalent in foreign currency. You would be required to maintain an Average Quarterly Balance
of INR 5,000- 25,000/- only. (minimum balance requirements varies from banks to bank)
c) What is the frequency of interest payment on my NRO Current Account?
No interest is payable.
d) What do I get against my NRO Current Account?
You will get a cheque book and an ATM Card against your NRO Current Account
e) What are the permissible debits/credits to the NRO Current Account?
There are no restrictions on the debits from NRO Current Account. Credit of funds representing
legitimate dues of the account holder from local sources for e.g. current income in India like rent,
etc. and proceeds of remittances received from abroad through normal banking channels can be
freely credited.
f) Can I repatriate funds in my NRO Current Account?
You can repatriate up to USD 1 million, for bonafide purposes, per calendar year from balances in
NRO Accounts subject to payment of applicable taxes. The limit of USD 1 million per year
includes sale proceeds of immovable properties held by NRIs/PIO (Person of Indian Origin)
remittance can be made if the sale proceeds have been held by the NRI/PIO for the balance
period in eligible investments. (more details about the repatriation of money abroad is provided
in the later part of this guide)
g) Can I have joint applicant for my NRO Current Account?
Yes. You can hold the account jointly with Resident or Non-Resident Indian(s). Alternately, you
can authorise an Indian Resident to operate your account by submitting a mandate letter.
h) If I am visiting India, can I use Travellers Cheques or foreign currency to open an account or credit my
existing NRO Current Account?
Travellers Cheques can be used to credit/open the Account. If the foreign currency notes brought
43 | P a g e
by you exceed USD 5,000/- or the combined value of Travellers Cheques and notes exceed USD
10,000/-, then you have to submit a Currency Declaration Form (CDF) to the customs authorities
on arrival in India. You must produce the CDF for endorsement by the bank when you submit the
money for opening/credit to an account.
i) How do I access my NRO Current Account while I am abroad?
You can access your NRO Savings Account through NetBanking and PhoneBanking
7. Resident Foreign Currency Accounts (RFS Accounts)
A scheme known as 'Resident Foreign Currency Accounts (RFC accounts) Scheme' has been
drawn up by Reserve Bank in pursuance of Government of India Notification No. F.10/22/90/NRI
Cell dated 17th July 1992 and Reserve Bank Notifications Nos. FERA.116, 117 and 118 /92-RB
dated 7th September 1992 to enable eligible returning Indians to open and maintain foreign
currency accounts with authorised dealers in India. Reserve Bank has also granted exemption
from the prohibition imposed under Section 24 of FERA 1973 in respect of gift of foreign
exchange held in India/abroad or of any property held abroad in certain cases referred to in its
Notification No. FERA 165/95-RB dated 28th April 1995.
Opening of RFC Accounts
(ii) RFC accounts may be maintained in the form of current, savings (without cheque facility) or
term deposit accounts and held singly or jointly only in the names of eligible persons
Note A -Persons who returned to India prior to 18th April 1992 after having been resident
outside India for a continuous period of not less than one year are also eligible to open RFC
accounts if (a) they are holding valid specific permission/licence from Reserve Bank as on
17th July 1992 to maintain foreign accounts or to hold other foreign currency assets abroad
or (b) they are in receipt of pension or other monetary benefits from their overseas
employers subsequent to their return to India even if they did not maintain foreign currency
44 | P a g e
accounts or hold other foreign currency assets abroad

Note B - Persons holding RIFEE permits or Reconversion facility have been given option to
continue those facilities or avail of RFC account facility (cf. paragraph 12.13). These options
can be exercised at one stroke or in part amounts during the validity period of RIFEE permit
or Reconversion facility. Accordingly, holders of RIFEE permit or Reconversion facility are
also eligible to open RFC accounts
Under the scheme, persons of Indian nationality or origin, who, having been resident outside
Inida for a continuous period of not less than one year, have become persons resident in
India on or after 18th April 1992 are eligible to open and maintain the accounts with
authorised dealers in India in any freely convertible foreign currency. Authorised dealers
may, on receipt of an application in form RFC, open RFC accounts in the names of eligible
persons. Persons who returned to India after a short assignment of less than one year
abroad desiring to have RFC accounts should apply through authorised dealers to Reserve
Bank in form RFC. RFC accounts opened with the specific approval of Reserve Bank will be
governed by the conditions stipulated by Reserve Bank while granting such approval.
Note: For arriving at the period of continuous stay abroad of not less than one year, short
visits to India on personal grounds like meeting family members/relatives or on health
grounds which do not indicate the person's intention to stay in India for an indefinite period
may be ignored.
45 | P a g e
Explanation: For the purpose of this Scheme -
A person (not being a citizen of Pakistan or Bangladesh) shall be deemed to be of Indian origin, if,
i)
he at any time held an Indian passport,
ii)
he or either of his parents or any of his grand parents was a citizen of India by virtue of the
Constitution of India or the Citizenship Act, 1955 (57 of 1955),
or
or
iii)
that person is the spouse of an Indian citizen or of a person of Indian origin (not being a citizen
of Pakistan or Bangladesh).
Eligible Assets
Assets acquired or held otherwise than in contravention of the Act by an eligible person ,while he was
resident outside India(non-resident), in the form of deposits in banks outside India, investments in foreign
currency shares or securities or immovable properties situated outside India or investments in business etc.
outside India and include foreign exchange earnings through employment, business or vocation outside
India taken up or commenced by such person while he was resident outside India.
Credits
Undernoted credit transactions may be allowed in RFC Accounts by authorised dealers.
(a)
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Remittance in convertible foreign currency from outside India through normal banking channels
representing
i)
Funds in bank accounts outside India forming part of eligible assets held by the
eligible person.
ii)
Income such as dividend, interest, profit, rent, etc. earned on eligible assets held by
the eligible person.
iii)
Sale proceeds of eligible assets.
(b)
Pension or other monetary benefits received from outside India in convertible foreign currency,
through normal banking channels, arising out of employment taken up outside India by the
eligible person prior to his returning to India.
(c)
Interest earned on RFC account.
(d)
Foreign currency notes/travellers cheques brought into India by the eligible person, provided
that where the amount tendered exceeds US$ 10,000 or its equivalent or where the value of
foreign currency/bank notes exceeds US$ 5,000 or its equivalent they have been declared on
the Currency Declaration Form (CDF) (cf. papragraph 7D.5).
(e)
Transfers from other RFC accounts of the account holder.
(f)
Balances in any NRE/FCNR Account (other than in NRE rupee accounts of persons resident in
the erstwhile Bilateral Group countries which have been funded in non-convertible rupees) in
the name of the eligible person standing to his credit at the time of his arrival in India. No
penalty would be payable for premature withdrawal of NRE/FCNR deposits in such cases.
(g)
Unutilised entitlement under any valid RIFEE permit or Reconversion facility granted by
Reserve Bank
(h)
Unspent foreign exchange surrendered by the RFC accountholders provided authorised dealer
is satisfied that the concerned foreign exchange/currency had in fact been released for travel
etc. abroad by debit to the same RFC accounts and the amount of foreign exchange/currency
is surrendered within the stipulated period as required under the Exchange Control regulations.
47 | P a g e
Debits
(i) The funds in the RFC account may be allowed to be freely utilised by the account
holder for any bona fide remittance outside India through normal banking channels including for investments
abroad provided the cost of such investments and/or any subsequent payments required therefor are met
out of RFC account.
(ii) Withdrawals/payments from such accounts, other than for remittances outside India, or
for payments in foreign currency authorised to be made in India by Reserve Bank, shall be permitted by the
authorised dealer only in equivalent Indian rupees.
Rate of Interest
Rate of interest payable on the funds held in RFC accounts may be decided by authorised dealers on the
basis of market rates. No interest shall be payable on balances held in the form of current accounts.
Nomination Facility
(i) RFC accounts shall have the nomination facility as in the case of resident rupee accounts.
(ii) On the death of a RFC account holder, the balance in the account may be repatriated to
nominees to the extent of his/their entitlement, if on the date of death of the account holder such nominees
are resident outside India. To the extent any nominee is a person resident in India on the date of the death
of account holder, the amount may be paid to him in equivalent Indian rupees.
Reserve Requirements
Funds held in RFC accounts are exempt from CRR/SLR requirements.
Loans/Overdrafts against the Deposits
No loan/overdraft shall be granted by authorised dealers against balances in RFC accounts.

Transfer of Balances on becoming Non-resident Funds held in RFC account may be freely remitted abroad or credited to fresh NRE/FCNR
The funds in RFC accounts are free from all restrictions regarding utilisation of foreign currency
balances including any restriction on investment in any form outside India.
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RFC accounts can be maintained in the form of current or savings or term deposit accounts,
where the account holder is an individual and in the form of current or term deposits in all other
cases.
If the individual subsequently goes abroad to become an NRI, the balance in the RFC account can be
converted to NRE/FCNR account. Interest income from RFC is exempt from income-tax till such time the
Returning Indian maintain the status of Resident but Not Ordinarily Resident (NOR). Hence, if the
Returning NRI had been non-resident for a continuous period of 2 years, he gets exemption from incometax for subsequent 9 years.
Interest income on RFC deposits is taxable when the NRI loses RNOR (resident not ordinarily resident)
status and becomes an ordinary resident. The balances in NRE or FCNR account can be credited to
RFC Account on the change of the status of the NRE or FCNR Account holder from a Non-Resident to a
Resident. Under the current FEMA regulations the Non-Resident Indian is not required to satisfy a
minimum period of stay of one year. A person can maintain an RFC Account, once he becomes a
resident for any length of time as long as he remains to be a resident. If his status changes once again
from Resident to Non-Resident, the funds held in RFC account are allowed to be freely remitted abroad
or credited to fresh NRE or FCNR account. However the current regulation under FEMA is silent about
the above provision.
The treatment of deducting tax at source on interest on RFC Account is similar to Domestic Term
Deposits. However it is possible for a person, whose status under the Income Tax Provision is Resident
but not Ordinarily Resident to claim that the interest on Term deposits is not liable to tax under the
provisions of Section 10 of the Income Tax Act, 1961. The individual should furnish Form 15AA if he does
not require the bank to deduct tax at source.
FAQ RFC Account

Who can open?
You can open an RFC account if you return to India permanently after residing abroad for a continuous
period of one year or more. In order to calculate this continuous period, any short trips to India for
personal visits would be ignored. Any authorised dealer or bank will help you open your account.
Currencies
You can open an RFC account in any freely convertible foreign currency. These are foreign currencies
that can be exchanged easily with other currencies and are recognized by the international market.
Type and form of account
RFC accounts can be opened as savings or term deposit accounts and can be held singly or jointly in the
names of those who are eligible. No loans are available against the RFC account.
Interest
Interest is credited quarterly and is taxable. However, if you are a Resident but not Ordinary Resident,
then you will be able to avail of a tax exemption on the interest on RFC accounts for the two year period
when you hold this status.
Currently RFC term deposit rates are in the range of 2.5-3.5% for terms over 1 year for the US dollar.
Interest rates vary by term and by currency.
49 | P a g e
Deposits and withdrawals

You can deposit funds from the following sources in your RFC account:
-Any balances brought from your overseas bank account including foreign exchange earnings through
employment, business or vocation outside India taken up or commenced while you were resident outside
India.
-Any foreign currency notes you bring from abroad; however, if the value of such notes exceeds $5,000 or
the combined value of Travelers'
Cheques and notes exceed $ 10,000, then you have to submit a Currency Declaration Form (CDF) to the
customs authorities on arrival in India.
You must produce the Currency Declaration Form for endorsement by the bank when you submit the
money for opening/credit to an Account.
-Any foreign exchange that you get on sale of eligible assets abroad; eligible assets include bank
accounts, overseas shares and securities, immoveable property and investment in business outside India
-Any income that you earn from your foreign assets such as dividends, interest
-You can transfer funds from your NRE or FCNR account into the RFC account once you become a
resident Indian; in such cases, no penalty for premature withdrawal will be levied on your NRE or FCNR
accounts
-Any person received from abroad
You can use funds in the RFC account for the following purposes:
-You can use RFC funds for any remittances or investment abroad; you can also use the funds for
maintenance of dependents or any personal purposes abroad
-You can also use these funds for expenses and investments to be made in India; withdrawals can be
made in rupees and are usually credited by the bank to the resident rupee bank savings account
RFC to NRE
If you decide to go abroad again for a long term, you can either remit the RFC balance abroad or transfer
funds from your RFC account into an NRE or FCNR account.
Nomination
You can nominate either a resident or a non resident for your RFC account. In case of death of the
accountholder where the nominee is a resident, the balance in the RFC account will be paid to the
nominee in Indian rupees. If the nominee is an NRI, such balance would be remitted abroad.
Documents needed for opening RFC account
The following documents are commonly needed:
-Photocopy of the pages containing passport details and personal details of all applicants
-Copy of valid visa and immigration stamps showing evidence of foreign stay for at least 1 year
-Your passport photograph
-RFC declaration form
Note: There is also an RFC (Domestic) account that can be opened by resident Indians. The features of
the RFC (Domestic) account are slightly different from the one disscussed here
50 | P a g e
8.
Foreign Currency Account
A person resident in India who has gone abroad for studies or who is on a visit to a foreign
country may open, hold and maintain a Foreign Currency Account with a bank outside India
during his stay outside India, provided that on his return to India, the balance in the account is
repatriated to India. However, short visits to India by the student who has gone abroad for
studies, before completion of his studies, shall not be treated as his return to India.
A person resident in India who has gone out of India to participate in an exhibition/trade fair
outside India may open, hold and maintain a Foreign Currency Account with a bank outside India
for crediting the sale proceeds of goods on display in the exhibition/trade fair. However, the
balance in the account is repatriated to India through normal banking channels within a period of
one month from the date of closure of the exhibition/trade fair.
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CHAPTER 3
Facilities available to NRIs/PIO
What are the facilities available to NRIs/PIO?
1. Investment facilities for NRIs
As a resident, you made some investments and redeemed them after becoming an NRI, these will be
treated differently. For instance, NRIs cannot extend the tenure of their PPF account. Capital gains longterm or short-term-will be applicable when you redeem/sell your past investments. If you sell shares that
are listed on a recognized stock exchange in India after holding them for more than a year, you will not
have to pay tax on the capital gain provided the securities transaction tax has been paid. If NRI wish to
buy/sell shares on Indian Stock Market, they need to open a special account called PIS.. NRIs can open
PIS account both repatriation (NRE) and non-repatriation basis. But capital gain tax will be deducted at
source for all sell transactions (this TDS is not applicable for resident share trading account) They are not
allowed to trade in ordinary resident share trading/depository account. NRIs are also not allowed to open
Commodity Trading account. NRIs are also allowed to invest in Tax Free Bonds.
2. NRIs are allowed, without limit, purchase on repatriation basis:
Government dated securities / Treasury bills

Units of domestic mutual funds;
Bonds issued by a public sector undertaking (PSU) in India.
Non-convertible debentures of a company incorporated in India.
Perpetual debt instruments and debt capital instruments issued by banks in India.
Shares in Public Sector Enterprises being dis-invested by the Government of India, provided the
purchase is in accordance with the terms and conditions stipulated in the notice inviting bids.
Shares and convertible debentures of Indian companies under the FDI scheme (including
automatic route & FIPB), subject to the terms and conditions specified in Schedule 1 to the FEMA
Notification No. 20/2000- RB dated May 3, 2000, as amended from time to time.
Shares and convertible debentures of Indian companies through stock exchange under Portfolio
Investment Scheme, subject to the terms and conditions specified in Schedule 3 to the FEMA
Notification No. 20/2000- RB dated May 3, 2000, as amended from time to time.
Infrastructure Tax Free Bonds
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3. NRIs are allowed , without limit, purchase on non-repatriation basis :
Government dated securities / Treasury bills

Units of domestic mutual funds
Units of Money Market Mutual Funds
National Plan/Savings Certificates (this is not National Savings Certificates- NSC)
Non-convertible debentures of a company incorporated in India
Shares and convertible debentures of Indian companies through stock exchange under Portfolio
Investment Scheme, subject to the terms and conditions specified in Schedules 3 and 4 to the
FEMA Notification No. 20/2000- RB dated May 3, 2000, as amended from time to time.
Exchange traded derivative contracts approved by the SEBI, from time to time, out of INR funds
held in India on non-repatriable basis, subject to the limits prescribed by the SEBI.
5. An individual resident can borrow money from his close relatives outside India
An individual resident can borrow sum not exceeding USD 250,000 or its
equivalent from his close relatives staying outside India, subject to the conditions that:
i)
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the minimum maturity period of the loan is one year;

ii) the loan is free of interest; and
iii) the amount of loan is received by inward remittance in free foreign exchange
through normal banking channels or by debit to the NRE/FCNR account of the NRI.
6. Repayment of Housing Loan of NRI / PIOs by close relatives of the borrower in India
Housing Loan in rupees availed of by NRIs/ PIOs from ADs / Housing Financial Institutions in India, can
be repaid by the close relatives in India of the borrower.
7. Foreign Exchange Management (Deposit) Regulations, 2000 - Credit to Non Resident
(External) Rupee Accounts
RBI/2011-12/465
A. P. (DIR Series) Circular No.95
March 21, 2012
To
All Category-I Authorised Dealer Banks and Authorised banks
Madam / Sir,
Attention of Authorised Dealer Category I (AD Category-I) banks is invited to Regulation 5(6)
of ForeignExchange
Management
(Borrowing
or Lending in Foreign Exchange) Regulations,
2000
notified vide Notification No. FEMA 3/2000-RB dated May 3, 2000, as amended from time to time, in
terms of which, an individual resident in India may borrow a sum not exceeding USD 250,000/- or its
equivalent from her / his close relatives outside India, subject to the conditions mentioned therein.
2. The Reserve Bank has received representations that the repayment of such loans may be allowed to
be credited to the Non Resident (External) Rupee (NRE) Accounts. On review, it has been decided that
AD Category-I banks may allow repayment of such loans to NRE / Foreign Currency Non-Resident
(Bank) [FCNR(B)] account of the lender concerned subject to the condition that the loan to the resident
individual was extended by way of inward remittance in foreign exchange through normal banking
channels or by debit to the NRE / FCNR(B) account of the lender and the lender is eligible to open NRE /
FCNR(B) account within meaning of the Foreign Exchange Management (Deposit) Regulations, 2000
notified vide Notification No. FEMA 5/2000-RB dated May 3, 2000, as amended from time to time. Such
credit shall be treated as an eligible credit to the NRE / FCNR(B) account in terms of Para 3(j) of
Schedule-1 read with Para 5 of Scheule-2 of Notification No. FEMA 5/2000-RB, ibid.
3. Authorized Dealer banks may please bring the contents of this circular to the notice of their
constituents concerned.
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4. The directions contained in this circular have been issued under Section 10(4) and 11(1) of the Foreign
Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions / approvals, if
any, required under any other law.
Yours faithfully,
(Meena
Chief General Manager-in-Charge
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Hemchandra)
CHAPTER 4
Investment Options not permitted for NRIs
1. NRIs are not permitted to invest in small savings or Public Provident Fund (PPF).
The following investments options are not available to NRIs
a)
PPF (Public Provident Fund)
b)
NSC (National Savings Certificate) 5 years and 10 years
c)
Senior citizens savings account
d)
Tax saving infrastructure bonds under section 80CCF (this tax savings scheme is
withdrawn from FY 2012-13)
e)
Post office time deposits are not available for NRIs.
NRIs are not allowed to invest in Public Provident Fund (PPF) and the Senior Citizens Savings Scheme
and Post Office Small Savings Schemes. If and when the accounts office comes to know of the anomaly,
the deposit will be returned to the investor, without any interest.
As per rules NRIs are not allowed to open Savings, Recurring Deposit, Term Deposit and Monthly Income
Scheme accounts or purchase of National Saving Certificates issued by Post Offices. The accounts
opened prior to this date are allowed to continue up to their maturity. As and when the irregularity comes
to the notice of the authorities, the money will be returned to you without any interest. Those NRIs who
have opened such accounts will do well by withdrawing the investment themselves or face the
consequence of the violation of the rules. NRIs can open NRO account with Post Office like other
nationalized and scheduled banks.
Those small savings accounts like MIS,NSC etc already opened can be continued till maturity. When an
Indian Resident goes abroad, there is no other choice other than leaves most of his/her investments
either financial or non-financial assets like property in India itself. These investments may include the
above mentioned prohibited investments in like PPF, NSC, Post Office MIS and other small savings
deposits etc. A resident Indian who subsequently becomes NRI during the currency of term of these
investments may continue the same till maturity. This means, they are not allowed to open a new account
or extend the scheme beyond its maturity. However, an already existing investment may be continued.
For those instruments that require periodic investments like PPF, the NRI may use either the NRE or the
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NRO as per his convenience for further investments, it is better to use the NRO account. The ex-minor
can take over the operations of the PPF account by registering his signature at the accounts office. The
guardian will have to attest the signature of the ex-minor. The PPF maturity proceeds belong to the minor
(or the minor holder who has turned major). The guardian has no right to the same.
7.Restritctions of Investments by NRIs/PIOs residing in US and Canada
Regulatory bodies in some countries require fund managers to be registered with them if they are
handling over a certain number of their residents accounts. The Dodd- Frank Act of the US, for example,
requires fund managers handling over 15 US-based investors funds to be registered with them and be
subject to their regulations . To avoid the hassle of dual regulators, many fund houses have stopped
taking investors from these countries. Fund houses like Templeton, HSBC. JP Morgan and Fidelity do not
take NRIs based in the US and Canada as these companies are based in the US and they are bound by
regulation to not exceed a certain number of Non-Resident Investors. as there is no solicitation by the
broker, NRIs can invest. "Trading accounts are opened by clients when they are in India and on a
voluntary and need basis. Generally there is no solicitation involved on the part of the Indian intermediary/
broker and it is customer initiated whilst in India. As a part of the general 'Know Your Client' (KYC)
guidelines, a copy of the prospective client's passport along with Visa details is kept by brokers as proof
that account was opened when the customer was in India on a visit." So you need to be in India to open
your securities accounts. But you will find that, because of these regulations, each broking/mutual fund
houses in India has its own policy and procedure on this. Most leading brokers will also have restrictions
on the online platform because the SEC interprets the use of internet website as being the same as a
telephone call to a client. In such cases, you will have to transact through an official of the broking house.
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9.FEMA Circular
. Foreign Exchange Management Act
Restriction for NRI's for opening an account in PPF scheme,
post office saving bank and purchase National Saving Certificates.
July 25, 2003
PUBLIC PROVIDENT FUND (AMENDMENT) SCHEME, 2003
Notification No. G.S.R. 585(E), dated 25-7-2003
In exercise of the powers conferred by sub-section (4) Section 3 of the Public Provident Fund Act, 1968
(23 of 1968), the Central Government hereby makes the following further amendment to the Public
Provident Fund Scheme, 1968, namely :
1. (1) This Scheme may be called the Public Provident Fund (Amendment) Scheme, 2003.
(2) It shall come into force on the date of its publication in the Official Gazette.
2. In the Public Provident Fund Scheme, 1968, in paragraph 3, after sub-paragraph (2), the following subparagraph shall be inserted, namely:
(3) Non-Resident Indians (NRIs) are not eligible to open an account under the Public Provident Fund
Scheme:
Provided that if a resident who subsequently becomes NRI during the currency of maturity period
prescribed under Public Provident Fund Scheme, may continue to subscribe to the Fund till its maturity on
a non-repatriation basis.
Post Office Savings Bank General (Amendment) Rules, 2003

In exercise of the powers conferred by section 15 of the Government Savings Banks Act, 1873 (5 of
1873), the Central Government hereby makes the following rules further to amend the Post Office
Savings Bank General Rules, 1981, namely :
1. (1) These rules may be called the Post Office Savings Bank General (Amendment) Rules, 2003.
(2) They shall come into force on the date of their publication in Official Gazette.
2. In the Post Office Savings Bank General Rules, 1981,
(i)
rule 3 shall be re-numbered as sub-rule (1);
(ii)
after sub-rule (1) as so re-numbered, the following sub-rule shall be inserted, namely:
(2) Non-Resident Indians (NRIs) are not eligible to open an account in a Post Office Savings Bank:
Provided that if a resident who opened an account in any Post Office Savings Bank, subsequently
becomes Non-Resident Indian during the currency of maturity period, may continue such account till its
maturity on a Non-Repatriation Basis.
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National Savings Certificates (VIII Issue) (Third Amendment) Rules, 2003

In exercise of the powers conferred by section 12 of the Government Savings Certificates Act, 1959 (46
of 1959), the Central Government hereby makes the following rules further to amend the National
Savings Certificates (VIII Issue) Rules, 1989, namely :
1. (1) These rules may be called the National Savings Certificates (VIII Issue) (Third Amendment) Rules,
2003.
2. In the National Savings Certificates (VIII Issue) Rules, 1989, in rule 4, after sub-rule (2), the following
sub-rule shall be inserted, namely :
(3) Non-Resident Indians (NRIs) are not eligible to purchase the National Savings Certificates :
Provided that if a resident who subsequently becomes NRI during the currency of maturity period, shall
be allowed to avail the benefits of the certificates on maturity on a non-repatriation basis.
Kisan Vikas Patra (Second Amendment) Rules, 2003

In exercise of the powers conferred by section 12 of the Government Savings Certificates Act, 1959 (46
of 1959), the Central Government hereby makes the following rules further to amend the Kisan Vikas
Patra Rules, 1988, namely :
1. (1) These rules may be called the Kisan Vikas Patra (Second Amendment) Rules, 2003.
2. In the Kisan Vikas Patra Rules, 1988, in rule 6, after sub-rule (2), the following sub-rule shall be
inserted, namely :
(3) Non-Resident Indians (NRIs) are not eligible to purchase the Kisan Vikas Patras :
Provided that if a resident who subsequently becomes NRI during the
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CHAPTER 5
NRIs Investment in immovable Properties
1. Investment in immovable Property
NRI / PIO / Foreign National who is a person resident in India (citizen of Pakistan, Bangladesh,
Sri Lanka, Afghanistan, China, Iran, Nepal and Bhutan would require prior approval of the
Reserve Bank) may acquire immovable property in India other than agricultural land/ plantation
property or a farm house out of repatriable and / or non-repatriable funds.
The payment of purchase price, if any, should be made out of
(i) funds received in India through normal banking channels by way of inward remittance from any
place outside India or
(ii) funds held in any non-resident account maintained in accordance with the provisions of the
Act and the regulations made by the Reserve Bank.
Note : No payment of purchase price for acquisition of immovable property shall be made either by
travellers cheque or by foreign currency notes or by other mode other than those specifically permitted as
above.
NRI may acquire any immovable property in India other than agricultural land / farm house
plantation property, by way of gift from a person resident in India or from a person resident
outside India who is a citizen of India or from a person of Indian origin resident outside India
NRI may acquire any immovable property in India by way of inheritance from a person resident
outside India who had acquired such property in accordance with the provisions of the foreign
exchange law in force at the time of acquisition by him or the provisions of these Regulations or
from a person resident in India
An NRI may transfer any immovable property in India to a person resident in India.
NRI may transfer any immovable property other than agricultural or plantation property or farm
house to a person resident outside India who is a citizen of India or to a person of Indian origin
resident outside India.
In respect of such investments, NRIs are eligible to repatriate:

8. The sale proceeds of immovable property in India if the property was acquired out of foreign
exchange sources i.e. remitted through normal banking channels / by debit to NRE / FCNR (B)
account.
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9. The amount to be repatriated should not exceed the amount paid for the property in foreign
exchange received through normal banking channel or by debit to NRE account (foreign currency
equivalent, as on the date of payment) or debit to FCNR (B) account.
10. In the event of sale of immovable property, other than agricultural land / farm house / plantation
property in India, by NRI / PIO, the repatriation of sale proceeds is restricted to not more than two
residential properties subject to certain conditions.
11. If the property was acquired out of Rupee sources, NRI or PIO may remit an amount up to USD
one million per financial year out of the balances held in the NRO account (inclusive of sale
proceeds of assets acquired by way of inheritance or settlement), for all the bonafide purposes to
the satisfaction of the Authorized Dealer bank and subject to tax compliance.
12. Refund of (a) application / earnest money / purchase consideration made by house-building
agencies/seller on account of non-allotment of flats / plots and (b) cancellation of booking/deals
for purchase of residential/commercial properties, together with interest, net of taxes, provided
original payment is made out of NRE/FCNR (B) account/inward remittances.
2. NRI investment norms in real estate eased
Among the various investment options available for non-resident Indians (NRIs), real estate plays a
dominant role due to its rate of appreciation and the periodical returns on the investment. Whether it is a
residential or commercial property investment, NRIs can invest through their representatives in India by
giving a power of attorney to act on their behalf.
A copy of the power of attorney should be notarised with the Indian consulate in the respective country
which will provide authenticity on their behalf for an investment in property in India. The property can be
registered in the name of the NRI, and the power of attorney holder can sign on their behalf by producing
a copy of the power of attorney to the appropriate authorities .
If a NRI decides to acquire a house through a power of attorney , he can still proceed abroad. This is
because, for the purposes of income tax and wealth tax, the power of attorney holder accompanied by
the actual possession of the property through the agreement to sell is deemed to be the owner of the
property for the purposes of Section 27 of the Income Tax Act.
A general power of attorney in favour of the NRIs relatives will enable them to sell the property and
arrange to repatriate the sale proceeds through an authorised foreign exchange dealer after payment of
the taxes due. They can also rent out the property and credit the proceeds to a NRO account.
Similarly, NRIs can seek home loans through their power of attorney holder and documents can be
signed on their behalf while investing in property. They can issue the EMI cheques on behalf of their
relatives here as the Reserve Bank of India (RBI) has relaxed the norms of operation of joint accounts
considerably recently.
A significant development is the proliferation of housing finance companies and banks in countries
abroad. In the Gulf, Dubai boasts of many housing finance companies and banks having arrangements
with exchange houses. Home loans can be processed through overseas representative offices for NRIs.
As a result, the power of attorney enables their relatives to interact directly with developers in India. A
number of nationalised banks have remittance arrangements with the exchange houses.
The RBI also said that any citizen who was earlier residing in a foreign country can own or transfer
property or other assets in that nation if it was acquired during the time of his residence there. A person
resident in India is free to hold, own, transfer or invest in foreign currency, foreign security or any property
situated outside India if such currency, security or property was acquired, held or owned when he was
resident outside India or inherited from a person who was resident outside India.
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Similarly, returning NRIs can retain and reinvest the income earned on investments made under the
Liberalised Remittance Scheme. There was lack of clarity earlier as to whether the income earned on
assets held abroad by NRIs who have returned to India for permanent settlement and assets held outside
India through Liberalised Remittance Scheme are required to be realised and repatriated to India. Now,
the RBI has clarified that income and sale proceeds of assets held abroad need not be repatriated to
India and can be retained and invested outside India.
3. RBI Circular - Acquisition & Transfer of Immovable Property in India by

NRIs/PIOs/Foreign Nationals of Non-Indian Origin
Master Circular No. 4/2012-13, dated 2-7-2012

Acquisition and transfer of immovable property in India by NRIs/PIOs/Foreign Nationals of Non-Indian
Origin is regulated in terms of sub-sections (3), (4) and (5) of section 6 of theForeign
Exchange Management Act, 1999, read withNotification No. FEMA 21/ 2000-RB, dated May 3, 2000. The
regulatory framework and instructions issued by the Reserve Bank in this regard have been compiled in
this Master Circular. The list of underlying circulars/notifications is furnished in Appendix.
2. This Master Circular is being issued with a sunset clause of one year. This circular will stand withdrawn
on July 1, 2013 and be replaced by an updated Master Circular on the subject.
1. Introduction
The Foreign Exchange Management Act, 1999 (FEMA) empowers the Reserve Bank to frame regulations
to prohibit, restrict or regulate the acquisition or transfer of immovable property in India by certain persons
residents outside India. The regulations governing acquisition and transfer of immovable property in India
is notified underNotification FEMA No.21/2000-RB of May 3, 2000, as amended from time to time.
2. Acquisition and Transfer of Immovable Property in India
A Non- Resident Indian (NRI)1
(i) Purchase of immovable property
A NRI can acquire by way of purchase any immovable property (other than agricultural land/ plantation
property/farm house) in India.
(ii) Transfer of immovable property
A NRI may transfer any immovable property in India to a person resident in India. He may transfer any
immovable property (other than agricultural land or plantation property or farm house) to an Indian Citizen
resident outside India or a PIO resident outside India.
(iii) Payment for Acquisition of Immovable Property
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NRIs can make payment for acquisition of immovable property (other than agricultural land/ plantation
property/farm house) out of:
a. Funds received in India through normal banking channels by way of inward remittance from any
place outside India or by debit to his NRE/FCNR(B)/NRO account.
b. Such payments cannot be made either by travellers cheque or by foreign currency notes or by other
mode except those specifically mentioned above.
(iv) A NRI who has purchased residential/commercial property under general permission is not
required to file any documents with the Reserve Bank.
B Person of Indian Origin (PIO)
(i) Purchase of immovable property

A PIO can acquire by way of purchase any immovable property (other than agricultural land/ plantation
property/farm house) in India.
(ii) Gift/ Inheritance of immovable property
(a) A PIO may acquire any immovable property (other than agricultural land/ plantation property/farm
house) in India by way of gift from a person resident in India or a NRI or a PIO.
(b) A PIO may acquire any immovable property in India by way of inheritance from a person resident in
India or a person resident outside India who had acquired such property in accordance with the
provisions of the foreign exchange law in force or FEMA regulations, at the time of acquisition of the
property.
(iii) Transfer of immovable property
A PIO can transfer any immovable property in India (other than agricultural land/farm house/plantation
property) by way of sale to a person resident in India. He may transfer agricultural land/farm
house/plantation property in India, by way of gift or sale to a person resident in India, who is a citizen of
India. He may also transfer residential orcommercial property in India by way of gift to a person resident in
India or to a person resident outside India, who is a citizen of India or to a Person of Indian Origin resident
outside India.
(iv) Payment for Acquisition of Immovable Property in India
A PIO can make payment for acquisition of immovable property in India (other than agricultural land/farm
house/plantation property):
a. By way of purchase out of funds received by inward remittance through normal banking channels or
by debit to his NRE/FCNR(B)/NRO account.
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b. Such payments cannot be made either by travellers cheque or by foreign currency notes or by other
mode other than those specifically mentioned above.
(v) A PIO who has purchased residential/commercial property under the general permission, is not
required to file any documents with the Reserve Bank.
3. Acquisition of immovable Property by Foreign Embassies/ Diplomats/ Consulate Generals
In terms of Regulation 5A of the Foreign Exchange Management (Acquisition and Transfer of Immovable
Property in India) Regulations, 2000, Foreign Embassy/ Diplomat/ Consulate General, may purchase/ sell
immovable property (other than agricultural land/ plantation property/ farm house) in India provided (i) Clearance from the Government of India, Ministry of External Affairs is obtained for such
purchase/sale, and
(ii) The consideration for acquisition of immovable property in India is paid out of funds remitted from
abroad through the normal banking channels.
4. Acquisition of immovable property by person resident outside India for carrying on a permitted
activity
A person resident outside India who has established a Branch, Office or other place of business,
excluding a Liaison Office, for carrying on in India any activity in accordance with the Foreign
Exchange Management (Establishment in India of Branch or Office or other Place of Business)
Regulations, 2000 may (a) acquire any immovable property in India, which is necessary for or incidental to carrying on such
activity, provided that all applicable laws, rules, regulations or directions for the time being in force are
duly complied with; and the person files with the Reserve Bank a declaration in the form IPI (Annex-2),
not later than ninety days fromthe date of such acquisition; and
(b) transfer by way of mortgage to an Authorised Dealer as a security for any borrowing, the immovable
property acquired in pursuance of clause (a) above.
5. Repatriation of sale proceeds of immovable property
(A) Immovable property acquired by way of purchase
(a) A person referred to in sub-section (5) of section 6 of the Foreign Exchange Management Act3, or his
successor shall not, except with the prior permission of the Reserve Bank, repatriate outside India the
sale proceeds of any immovable property referred to in that sub-section.
(b) In the event of sale of immovable property other than agricultural land/farm house/plantation property
in India by a person resident outside India who is a citizen of India or a person of Indian origin, the
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Authorised Dealer may allow repatriation of the sale proceeds outside India, provided the following
conditions are satisfied, namely:
(i) the immovable property was acquired by the seller in accordance with the provisions of the foreign
exchangelaw in force at the time of acquisition by him or the provisions of these Regulations;
(ii) the amount to be repatriated does not exceed:
the amount paid for acquisition of the immovable property in foreign exchange received through normal
banking channels, or
the amount paid out of funds held in Foreign Currency Non-Resident Account, or
the foreign currency equivalent (as on the date of payment) of the amount paid where such payment
was made from the funds held in Non-Resident External account for acquisition of the property; and
(iii) in the case of residential property, the repatriation of sale proceeds is restricted to maximum two such
properties.
(B) Immovable property acquired by way of inheritance/ legacy/ out of Rupee funds
A Non-Resident Indian (NRI)/Person of Indian Origin (PIO) may remit an amount, not exceeding US $
1,000,000 (US Dollar One million only) per financial year out of the balances held in NRO accounts/sale
proceeds of assets by way of purchase/the assets in India acquired by him by way of inheritance/legacy/
out of Rupee funds. This is subject to production of documentary evidence in support of acquisition,
inheritance or legacy of assets by the remitter, and a tax clearance/no objection certificate from the
Income Tax Authority for the remittance. Remittances exceeding US $ 1,000,000 (US Dollar One million
only) in any financial year requires prior permission of the Reserve Bank.
In cases of deed of settlement made by either of his parents or a close relative (as defined in section 6 of
the Companies Act, 1956) and the settlement taking effect on the death of the settler, the original deed of
settlement and a tax clearance/No objection certificate from the Income-Tax Authority should be
produced for the remittance.
Where the remittance as above is made in more than one installment, the remittance of all such
installments shall be made through the same Authorised Dealer.
6. Refund of purchase consideration
Refund of application/earnest money/purchase consideration made by the house building agencies/seller
on
account
of
non-allotment
of
flat/plot/cancellation
of
bookings/deals
for
purchase
of
residential/commercial property, together with interest, if any (net of income tax payable thereon) may be
allowed by the Authorised Dealers by way of credit to NRE/FCNR (B) account, provided the original
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payment was made out of NRE/FCNR (B) account of the account holder or remittance from outside India
through normal banking channels and the Authorised Dealer is satisfied about the bonafides of the
transaction.
7. Prior permission to the citizens of certain countries for acquisition or transfer of immovable
property in India
A citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan, whether resident
in India or outside India, cannot acquire or transfer immovable property in India, without the prior
permission of the Reserve Bank. This restriction is not applicable where the immovable property is taken
on lease for a period not exceeding five years.
8. Purchase of Immovable Property in India by a Foreign National of Non-Indian Origin resident
outside India
(i) Foreign nationals of non-Indian origin resident outside India are not permitted to acquire any
immovable property in India unless such property is acquired by way of inheritance from a person who
was resident in India. However, they can acquire or transfer immovable property in India, on lease, not
exceeding five years without the prior permission of the Reserve Bank.
(ii) Foreign Nationals of non-Indian origin, other than a citizen of Pakistan, Bangladesh, Sri Lanka,
Afghanistan, China, Iran, Nepal or Bhutan, can acquire immovable property in India on becoming resident
in India in terms of section 2(v) of the Foreign Exchange Management Act, 1999. In this connection, he
has to satisfy the condition of period of stay. The type of visa granted should clearly indicate the intention
to stay in India for an uncertain period to determine his residential status in terms of section 2(v) FEMA,
1999. (Press Release dated February 1, 2009 issued by Government of India is enclosed as Annex-1).
(iii) Foreign nationals of non-Indian origin who have acquired immovable property in India by way of
inheritance with the specific approval of the Reserve Bank or have purchased the immovable property
with the specific approval of the Reserve Bank cannot transfer such property without the prior permission
of the Reserve Bank.
ANNEX-1
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4. PRESS RELEASE OF GOVERNMENT OF INDIA

Ministry of Finance
February 1, 2009
Governments advice on acquiring land by persons residing outside India
15:8 IST
Government of India has advised State Governments to be extra vigilant in matters of acquisition and
transfer of immovable property in India by a person resident outside India and satisfy themselves about
the eligibility under FEMA before registering a sale or purchase of immovable property in India. The
enquiries may include both the intending buyers and sellers. The relevant travel documents and the
nature of visa may also be verified before registering such sale/purchase. Government has further
advised all including concerned authorities in the State Governments that wherever appropriate, the
authorities may consider reviewing registration of sale/purchase already made to determine their
compliance with legal requirements. Further, persons acquiring immovable property have to fulfil the
requirements, if any, prescribed by the State authorities.
A foreign company which has established a Branch Office or other place of business in India under the
provisions of Foreign Exchange Management (Establishment in India of Branch or Office or Other Place
of Business) Regulations, 2000 (FEMA 22/2000-RB, dated the 3rd May, 2000) can acquire immovable
property in India which is necessary for or incidental to carrying on such activity, subject to the conditions
stipulated in Regulation 5 of Foreign Exchange Management (Acquisition and Transfer of Immovable
Property in India) Regulations, 2000 (Notification No. 21/2000-RB, dated the 3rd May, 2000).
Apart from above, a foreign national who is residing in India for more than 182 days during the course of
the preceding financial year for taking up employment or carrying on business/vocation or for any other
purpose indicating his intention to stay for an uncertain period can acquire immovable property in India as
he would be a person resident in India as per section 2(v) of FEMA, 1999. To be treated as a person
resident in India under FEMA, a person has not only to satisfy the condition of the period of stay (being
more than 182 days during the course of preceding financial year) but also his purpose of stay as well as
the type of Indian visa granted to him to clearly indicate the intention to stay in India for an uncertain
period. In this regard, to be eligible, the intention to stay has to be unambiguously established with
supporting documentation including visa.
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As per the provisions contained in Foreign Exchange Management (Acquisition and Transfer of
Immovable Property in India) Regulation 21/2000 (Notification No. 21/2000-RB, dated the 3rd May, 2000),
an Indian citizen resident outside India and a Person of Indian Origin resident outside India may acquire
immovable property in India other than agricultural land, plantation or a farm house.
It has come to the notice of the Central Government that foreign nationals are buying immovable property
illegally in some parts of the country, particularly in Goa, which has raised concerns. Many organisations
and social groups have also made representations to the Central Government expressing their serious
concerns in this regard. It has also been observed that foreign nationals coming to India and staying
beyond 182 days on a tourist or other visa meant for a certain period are illegally acquiring immovable
property in India in violation of the extant rules and regulations under FEMA.
ANNEX-2
FORM IPI
(See Regulation 5)
Declaration of immovable property acquired in India by a person resident outside India
Instructions:
The declaration should be completed in duplicate and submitted directly to the Chief General Manager,
Foreign Exchange Department, (Foreign Investment Division), Reserve Bank of India , Central Office ,
Mumbai 400 001 within 90 days from the date of acquisition of the immovable property.
Documentation:
Certified copies of letter of approval from Reserve Bank obtained under section 6(6) of FEMA, 1999 (42
of 1999).
1
Full name and address of the acquirer who has acquired the immovable property
2 (a) Description of immovable property
Details of its exact location stating the name of the state , town and municipal/survey
(b) number , etc
3 (a) Purpose for which the immovable property has been acquired
(b) Number and date of Reserve Banks permission , if any
4
Date of acquisition of the immovable property
5 (a) How the immovable property was acquired i.e. whether by way of purchase or lease
(b) Name , citizenship and address of the seller/lessor
(c) Amount of purchase price and sources of funds
(a)
(b)
(a)
(b)
(a)
(b)
(c)
I/ We hereby declare that(a) the particulars given above are true and correct to the best of my/our knowledge and belief;
68 | P a g e
(b) no portion of the said property has been leased /rented to, or is otherwise being allowed to be used
by, any other party.
Encls:
-
(Signature of Authorised official)
Stamp
Place: Date: -
Name:
Designation:
APPENDIX
LIST OF NOTIFICATIONS/A.P.(DIR SERIES) CIRCULARS WHICH HAVE BEEN CONSOLIDATED IN
THIS MASTER CIRCULAR
Sl. No. Notification/Circular Date
1.
FEMA 21/2000-RB May 3, 2000
2.
FEMA 62/2002-RB May 13, 2002
3.
FEMA 65/2002-RB June 29, 2002
4.
FEMA 64/2002-RB June 29, 2002
5.
FEMA 93/2003-RB June 9, 2003
6.
FEMA 146/2006-RB February 10, 2006
7.
FEMA 200/2009-RB October 5, 2009
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
A.P.(DIR Series) Circular No.1 July 2, 2002

A.P.(DIR Series) Circular No.5 July 15, 2002
A.P.(DIR Series) Circular No.19 September 12, 2002
A.P.(DIR Series) Circular No.35 November 1, 2002
A.P.(DIR Series) Circular No.67 January 13, 2003
A.P.(DIR Series) Circular No. 5 August 16, 2006
A.P.(DIR Series) Circular No.25 January 13, 2010
____________
1. Non-Resident Indian (NRI) is a citizen of India resident outside India.
2 A Person of Indian Origin means an individual (not being a citizen of Pakistan or Bangladesh or Sir
Lanka or Afghanistan or China or Iran or Nepal or Bhutan) who
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(i) at any time, held an Indian Passport or

(ii) who or either of whose father or mother or whose grandfather or grandmother was a citizen of India by
virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955).
3 A person resident outside India may hold, own transfer or invest in Indian currency, security
or immovable property situated in India if such currency, security or property was acquired, held or
owned by such person when he was resident in India or inherited from a person who was resident in
India.
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CHAPTER 6
NRI Taxation
1. Expatriates Working Abroad Tax Provisions
The tax liability related to expatriates working outside the India

would be determined based on their residential status. The following are the main categories of
Non-Resident Indians as per Income Tax Act, 1961
1.a) Non-Resident Indian (NRI)
a) He/She is not in India for 182 days or more during the relevant previous year
b) He/She india for 60 days or more during the previous year and he/she is not in India
for 365 days or more during the 4 years prior to the previous year
c) In the case of an individual on visit to India or a member of the crew of an Indian
ship or a person leaving India for employment outside India, the requirement of stay
in India of 60 days in condition 2 above is extended to 182 days.
1.b) Resident but not Ordinarily Resident (RNOR)

A NRI who has returned to India for good is covered under the provisions of section 6(6) of the
Income-tax Act. He is given a special status of RESIDENT BUT NOT ORDINARILY RESIDENT
(RNOR) if he satisfies one of the following conditions:
a) He is not a resident, as per the above provisions, for at least 9 out of 10 previous years
prior to the previous year under consideration.
b) His stay in India during the 7 previous year prior to the previous year under
consideration should not be 730 days or more
Tax Liabilities Thus according to condition in clause (a) a new comer to India would remain not
ordinarily resident in India for the first 9 years of his stay in India. Similarly, in case where a person
who is resident in India goes abroad and ceases to be a resident in India for atleast 2 years, he shall,
on his return, be treated as not ordinarily resident for the next 9 years. ies of each category of
Individuals
Based on the residential status of payer, his/her tax liability will be as follows:-
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a) Resident - All income of the previous year wherever accruing or arising or received by him
including incomes deemed to have accrued or arisen.
b) Non-Resident Indian - All income accruing, arising to or deemed to have accrued or arisen or
received in India.
c) Resident but not Ordinary Resident - All Income accruing or arising or deemed to have accrued
or arisen or received in India. Moreover, all income earned outside India will also be included if
the same is derived from a business or profession controlled or set up in India.
The residential status of a person as refered in Sec. 2(31) of the Act. for each assessment year
under consideration to determine the scope of total income.
Importance
Total income of an assessee cannot be determined without knowing his residential status.
The residential status shall be determined for every person for each previous year
independently.
The onus of responsibility to prove the residential status is on the assessee.
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2. The Income Tax Slab rates for Assessment Year 2014-2015 (Financial Year 2013-2014)
Proposed basic exemption and

Assessee
Existing basic exemption and Income

Slabs (FY 2012-13)
Income Slabs (FY 2013-2014)
Total Income
Tax Rate
Total Income
Tax Rate
uptoRs.2,00,000/-
Nil
uptoRs.2,00,000/-
Nil
Rs.2,00,001/toRs.5,00,000/-
10% of income above

Rs.2,00,000/-
Rs.5,00,001/toRs.10,00,000/-
Rs.30,000/- plus 20%

of income above
Rs.5,00,000/-
Rs.2,00,001/toRs.5,00,000/-
Rs.5,00,001/toRs.10,00,000/All Individuals,
HUF, AOP and
BOI (except
those stated
below)
Rs.1,30,000/plus 30% of
income above
Rs.10,00,000/-
Rs.2,00,001/toRs.5,00,000/-
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Rs.1,30,000/- plus
30% of income above
Rs.10,00,000/-
AboveRs.10,00,000/-
uptoRs.2,00,000/-
Individuals,
being resident
woman, upto
the age of 60
years
10% of income
above
Rs.2,00,000/Rs.30,000/- plus
20% of income
above
Rs.5,00,000/-
Rs.5,00,001/toRs.10,00,000/-
AboveRs.10,00,000/-
AboveRs.10,00,000/-
Nil
10% of income
above
Rs.2,00,000/Rs.30,000/- plus
20% of income
above
Rs.5,00,000/Rs.1,30,000/plus 30% of
income above
Rs.10,00,000/-
uptoRs.2,00,000/-
Nil
Rs.2,00,001/toRs.5,00,000/-
10% of income above

Rs.2,00,000/-
Rs.5,00,001/toRs.10,00,000/-
Rs.30,000/- plus 20%

of income above
Rs.5,00,000/-
AboveRs.10,00,000/-
Rs.1,30,000/- plus
30% of income above
Rs.10,00,000/-
uptoRs.2,50,000/-
uptoRs.2,50,000/-
Nil
Rs.2,50,001/toRs.5,00,000/-
10% of income above

Rs.2,50,000/-
Rs.5,00,001/toRs.10,00,000/-
Rs.25,000/- plus 20%

of income above
Rs.5,00,000/-
AboveRs.10,00,000/-
Nil
10% of income
above
Rs.2,50,000/Rs.25,000/- plus
20% of income
above
Rs.5,00,000/Rs.1,25,000/plus 30% of
income above
Rs.10,00,000/-
AboveRs.10,00,000/-
Rs.1,25,000/- plus
30% of income above
Rs.10,00,000/-
uptoRs.5,00,000/-
Nil
uptoRs.5,00,000/-
Nil
Rs.5,00,001/toRs.10,00,000/-
20% of income above

Rs.5,00,000/-
AboveRs.10,00,000/-
Rs.1,00,000/- plus
30% of income above
Rs.10,00,000/-
Rs.2,50,001/toRs.5,00,000/Individuals,
being resident,
and Senior
Citizen (i.e.
above 60
years) upto the
age of 80
years
Individuals,
being resident,
and Very
Senior Citizen
i.e. of age 80
years and
above
Rs.5,00,001/toRs.10,00,000/-
Rs.5,00,001/toRs.10,00,000/-
AboveRs.10,00,000/-
20% of income
above
Rs.5,00,000/Rs.1,00,000/plus 30% of
income above
Rs.10,00,000/-
In addition to the above surcharge called the Education Cess on income-tax and Secondary and Higher
Education Cess on income-tax shall continue to be levied at the rate of two per cent. and one per cent.,
respectively, on the amount of tax computed, inclusive of surcharge, in all cases. No marginal relief shall
be available in respect of such Cess.
3. Budget 2103 Income Tax Surcharge Rate Hiked for Higher Income Assessees
The Finance Bill 2013-14 proposes a surcharge of 10 per cent on persons whose taxable income exceed
Rs. 1 crore per year. This will apply to individuals, HUFs, firms and entities with similar tax status.
In all other cases, such as dividend distribution tax or tax on distributed income, the current surcharge of
5 per cent is being increased to 10 per cent. The additional surcharges will be imposed for only one year,
i.e., financial year 2013-14. The education cess for all taxpayers shall continue at 3 per cent.
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4. Additional Tax Rebate of Rs. 2,000.00 from Assessment Year 2014-2015

The new section 87A has been inserted with effect from the 1st day of April, 2014 ( applicable for
Assessment Year 2014-15 and thereafter). A deduction is given under Chapter VI from the gross total
income, but this is a rebate under Paragraph A of Chapter VIII of the Income Tax Act, 1961 which is
deducted from the income-tax payable
This new section says
An assessee, being an individual resident in India, whose total income does not exceed five hundred
thousand rupees, shall be entitled to a deduction, from the amount of income-tax (as computed before
allowing the deductions under this Chapter) on his total income with which he is chargeable for any
assessment year, of an amount equal to hundred per cent of such income-tax or an amount of two
thousand rupees, whichever is less.
Tax Rebate of Rs. 2,000/- is also available to a senior citizen, if the total income is Rs. 5 Lakh or less.
Effectively, it means, a senior citizen, both male and female, need not pay any tax on total income of upto
Rs. 2,70,000/-. However, this benefit is not available to a super senior citizen (age 80 or above) as his
total income up to Rs. 5 Lakh is already fully exempted
Rebate under section 87A is not available to non resident Indians. This additional benefits is
available only to resident Indians subject to the conditions stated above.
Also note that for taxation purposes of NRIs, there is no differentiation between senior citizens and
normal individual, irrespective of their ages NRIs basic tax exemption limit is Rs. 200,000.00
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5. Particulars of Income Tax Incidence for various tax status
Particulars of Income Tax incidence in case of
Resident
Resident
but not
ordinarily
resident
a. Income received in India whether accrued in India or outside India
YES
YES
YES
b. Income deemed to be received in India whether accrued in India or

outside India
YES
YES
YES
c. Income accruing or arising in India whether received in India or

outside India.
YES
YES
YES
d. Income deemed to accrue or arise in India, whether received in India

or outside India.
YES
YES
YES
e. Income received and accrued outside India from a business

controlled in profession set up in India
YES
YES
NO
f. Income received and accrued outside India from a business

controlled from outside India or profession set up outside India.
YES
NO
NO
g. Income earned and received outside India but later on remitted to

India.
NO
NO
NO
6.
NonResident
Tax Exemptions from Income Tax available for NRIs
Income from the following investments made by NRIs/PIOs out of convertible foreign exchange is totally
exempt from tax:
(a) Deposits in under mentioned bank accounts
(i) Non Resident External Rupee Account (NRE)
(ii) Foreign Currency Non Resident Account (FCNR)
(b) Units of specified mutual funds, other specific securities, bonds and savings
certificates (subject to conditions prescribed under the Income-tax laws and regulations).
(c) Dividend declared by Indian company.
(d) Long term capital gains arising from transfer of equity shares in a company and/or equity oriented
schemes of Mutual Funds, which are subject to Securities Transaction Tax.
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It should be noted that the tax exemptions relating to NRE bank deposits will cease immediately upon the
NRI/PIO becoming a resident in India whereas the interest on FCNR bank deposits will continue to be tax
free as long as the NRI maintains the status of Resident but Not Ordinarily Resident or until maturity,
7.Other Tax Aspects related to NRIs

A person who is non-resident is liable to tax on that income only which is earned by him in India. Income
is earned in India if
1.
2.
It is directly or indirectly received in India; or

It accrues in India or the law construes it as having accrued in India..
The following are some of the instances when the law construes and income to have accrued in India:
1)
2)
3)
4)
5)
6)
7)
8)
9)
income from property if such property is situated in India;

income from any asset or source if such asset or source is in India;
income from salaries if the services are rendered in India. In such cases salary for rest period
or leave period will be regarded as earned in India if it forms part of service contract,.
income from salaries payable by the Government to a citizen of India even though the services
are rendered outside India;
income from dividend paid by an Indian company even if the same is paid outside India;
income by way of interest payable by Government or by any other person in certain
circumstances ;
income by way of Royalty if payable by the Government or by any other person in certain
circumstances;
income by way of fees for technical services if such fees is payable by the Government or by
any other person in certain circumstances.
Income from business arising through any business connection in India (refer Chapter X of
Income Tax Act);
Non-resident, having annual taxable income in India more than Rs. 200,000.00 should pay tax The return
can be filed in the ITR applicable for this purpose. NRIs must also obtain Income tax PAN Number not
only for filing Income Tax Returns, but PAN requires for so many other purposes also.
Income which is earned outside India by an NRI is not taxed in Inida. An NRI doesn't have to pay tax on
the interest income in a non-resident external (NRE) account or foreign currency nonresident (FCNR)
account, dividend received from Mutual Funds and share investments. Long term capital gain arising
from sale of equity mutual fund schemes and share investments are also exempted from tax (minimum
holding period for these assets 12 months). Short term capital gain will be added to their total income
and tax needs to be paid at the applicable tax slab which the NRI belongs. Long Term capital gain on
sale of bonds, mutual funds schemes other than equity will be taxed @ 20% with indexation and benefits
and @ 10% without indexation benefits
8.What is tax on NSC Maturity ?
Interest income from NSC investment is taxable. The annual accrued interest is not paid to the investor,
but, instead, gets accumulated in the account itself. So, each year's interest for the first five years is
considered reinvested. Since it is deemed reinvested, it qualifies for a fresh deduction under Section 80C,
thereby making it tax-free. The interest so earned is added in other income and treated as part of
77 | P a g e
deduction under Sec 80C. Only the sixth years interest, when the NSC matures, does not receive a tax
deduction as it doesnt get reinvested. The reinvested amount after maturity is not taxable.
9. Special Provisions Relating to Non-Residents

Chapter XIIA of the Income Tax Act deals with special provisions relating to certain incomes of nonresidents. Sec. 11 5D deals with special provisions regarding computation of investment income of NRIs.
Section 11 5E relates to investments income and long term capital gains of NRIs, such income being
taxed at concessional flat rates. As per section 11 5F, capital gain is not chargeable on transfer of foreign
exchange assets under certain circumstances. The NRIs need not file their return of income if their total
income consist only of investment income or long term capital gains or both and proper tax has been
deducted from this income(Sec. 11 5G). Benefits under this chapter are available even after the assessee
becomes a resident (Sec. 11 5H). The provisions of this chapter would not apply if the assessee so
chooses (Sec. 115I).
10. Income Tax Clearance Certificate
A resident Indian proceeding overseas for employment has to apply

for an Income Tax Clearance Certificate on Form 31, as per Section 230 (I) of the Income Tax Act 1961.
The Assessing Officer assessing the applicants form would provide Form 32 which authorises the
application.. An expatriate before leaving the territory of India is required to obtain a tax clearance
certificate from a competent authority stating that he does not have any outstanding tax liability. Such a
certificate is necessary in case the continuous presence in India exceeds 120 days. An application is to
be made in a prescribed form to the Income Tax Authority having jurisdiction for assessment of the
expatriate to grant a tax clearance certificate. This is to be exchanged for final tax clearance certificate
from the foreign section of the Income Tax Department. Tax Clearance certificate is valid for a period of 1
month from the date of issue and is necessary to get a confirmed booking from an airline or travel agency
and may be required to be produced before the customs authorities at the airport
The following categories of persons are required to produce a tax clearance certificate from the
concerned assessing officer prior to their departure:
persons who are not domiciled in India, and in whose case the stay in India has exceeded 120
days;
persons of Indian or non-Indian domicile whose names have been communicated to the
airlines/shipping Companies by the Income Tax authorities;
persons who are domiciled in India at the time of their departure; but
i.
intend to leave India as emigrants; or
ii.
intend to proceed to another country on a work permit with the object of taking any
employment or other occupation in that country; or
iii.
in respect of whom circumstances exist, which in the opinion of the income tax authorities
render it necessary for him to obtain the Tax Clearance Certificate.
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11. Foreigners working in India can get one-time tax clearance: There are many foreign employees
not domiciled in India. To save them the hassles of obtaining a tax clearance each and every time
such employees travel abroad, there is a provision where they can get a onetime clearance
certificate that covers a period of up-to five years. This type of one-time clearance is given in
those cases where their employers give a guarantee in the prescribed form that if any tax is found
due against the employee during the entire period of the contract of service plus two years the
same shall be paid by the employer. Such a guarantee may also cover the tax liabilities of the
spouse and dependents of the foreign employee.
11.Tax Exemption Certificate - Lower or Nil Rate of TDS:
The rate prescribed for TDS from NRI's income is the maximum rate of
tax at which relevant Income is taxable in India. However, in majority of the cases of NRI, the actual
tax liability is lower than this. However, the higher deduction of tax so made is generally not claimed
as refund by filing Income Tax Returns In order to assist such a situation, the Income-tax Act has
provided procedure under section 197 whereby a NRI can apply to the Assessing officer (in
prescribed form) to issue specific certificate authorising the payer of income (who normally deducts
tax at highest prescribed rate) to deduct tax at a lower rate or nil rate as the case may be. The NRI
should estimate his income, tax liability and likely TDS and then apply for partial or complete Tax
Exemption Certificate. The payer shall deduct tax in accordance with the certificate of the Assessing
officer. Such a certificate would be binding on the payer.
Any NRI who has obtained Exemption Certificate needs to submit it to the Payer of the income who
will follow the certificate and not deduct tax or may deduct at a lower rate as given.
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12.Renting out of Property by an NRI in India
As an NRI who has rented out his/her house in India, you will
need to adhere to a number of FEMA and RBI guidelines, the following are the various provision related
to renting out a house or residential flat in India by an NRIe. Read on to find out more about renting out a
house/residential flat in India.
An NRI can rent out property that he owns in India without any special permission from RBI. The monthly
rent amount can be credited to the NRE or NRO account. Rental income received in these accounts can
be freely repatriated. If the NRI do not have an NRE or NRO account, the proceeds can also be directly
remitted abroad but you would need an appropriate certificate from a chartered accountant certifying that
all taxes have been duly paid.
9(a) Remittance of Rent
NRIs/PIOs can freely rent out their immovable property in India without the prior permission of the RBI. If
the house rented by the NRI/PIO is financed by the way of a housing loan, the entire rental income (even
if it is more than the prescribed installment) has to be adjusted towards the repayment of the loan. If the
rental income is less than the prescribed installment, the borrower should remit the outstanding loan
amount from abroad or from his NRE, FCNR or NRO account in India.
9(b)Tax treatment of rental income
The rental income is earned in India; hence it is subject to income tax. As per the Income Tax rules the
tenant is liable to, deduct tax at source before paying the monthly rent to the NRI.. The payer of the rent,
in this case, must obtain a TAN number and deduct TDS of 30 per cent + applicable cess from the rent
amount. He must also provide appropriate TDS certificate to the NRI. The responsibility of deducting tax
is on the payer. So in case the payer does not deduct tax and the NRI too fails to declare the income and
pay the tax, the income tax authorities if required can hold the payer responsible. Even if the tenant
deduct the tax or not, finally it is responsibility of the owner to pay tax on the rental income he earned
during a financial year.
9(c) Deemed rental income
According to the Indian Income Tax Act 1961, if a person (applicable for both resident and NRI) owns
more than one house property (either in India or aboard), only one of them will be deemed as selfoccupied. There will be no income tax on a self-occupied property. The other one, whether you rent it out
or not, will be deemed to be given on rent. If you have not given the second property on rent, you will
have to calculate deemed rental income on the second property based on certain valuations prescribed
by the income tax rules and pay the tax thereof. In other words NRIs who own more than one property in
India only one property can be declared as a self-occupied property. A tax on a calculated rent amount
will need to be paid on all other property that is owned by such an individual. In case NRI won a
residential house in India and one in abroad, and NRI stays in his/her house abroad, if the house in India
is vacant, for the tax calculation purposes, the house in India is considered as rented out and he/she
needs to pay tax on the deemed rental income. Likewise, the property in India is inherited by him/her, the
inherited property is also considered as his second house and will be liable to pay tax, even if it is kept
80 | P a g e
vacant (in case he/she owns another house at the time of inheritance). In case the rental income is
taxable abroad where the NRI is presently staying for such cases, we need to refer to the Double
Taxation Avoidance Agreements that India has entered into with respective countries. It is better to check
the tax laws of the country that you are resident of or contact a expert tax consultant for proper guidance.
13.Taxability of immovable property received for Inadequate Consideration (Budget 2013)
Provisions of clause (vii) of sub-section (2) of section 56 proposed to be amended

Existing provisions covered only taxability of immovable properties received for without
consideration, in hands of the individual or HUF as income from other sources.
Now the section has been amended to cover the cases of transfer of immovable properties at
concessional rate too.
Further, in case difference in dates of agreement for fixing the value of consideration & date of
registration, the value as on date of AGREEMENT to be revoked for this section.
However, above exception shall be applied only in case consideration is received in any mode
other than CASH.
14.NRI and Senior Citizen status for Income Tax calculation purposes
As per Indian tax laws, the initial basic exemption income limit below which
tax is not payable is Rs 200,000.00. For senior citizens, this limit is enhanced to Rs 250,000 as per
Union Budget 2013. However, this enhanced limit is not applicable to NRIs, notwithstanding the fact that
they may be senior citizens (above 60 years of age). In other words, regardless of the age, the general
limit of Rs 200,000.00 would be applicable to NRIs.
15.Tax Liabilities related to NRIs investments made in Joint basis
Non-resident Indians are now allowed to open bank accounts jointly with a resident relative (resident
family member).
Non-resident Indians (NRIs) and their investments or incomes earned in India are governed by a separate
set of rules, compared to resident Indians. Matters could be simple if these investments were to be held
singly. However, if held jointly with a resident-Indian family member, things may get complicated for the
latter. Broadly, your residential status for the next financial year depends on the number of days spent in
India during the current year. If one has stayed in India for less than or up to 182 days (period of stay may
not be continuous) during the current financial year, his/her residential status would change to that of an
NRI the next year. So, if you are on your way to becoming an NRI, here are some taxation-related
complications you may have to face for jointly-held investments.
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16. Bank Term Deposits Tax Aspects

NRIs cannot hold a resident fixed deposit (FD) in India. But, if you are already holding one jointly with an
NRI family member, the bank may allow you to hold the deposit till maturity and not renew it further. If you
still wish to hold a deposit jointly, then the NRI can open a nonresident ordinary or NRO deposit, with the
resident family member as a second holder. There will, however, be a difference in the TDS rates
applicable. For regular FDs, the TDS is calculated at 10 per cent. The entire interest amount is added to
the overall income and taxed according to the slab. One can then claim a TDS credit for it while filing
returns. For NRO deposits, though, the TDS rate is a flat 30 per cent. If you fall in the highest tax bracket,
this may not change matters. But, if you fall in a lower bracket, instead of claiming a credit, you must now
ask for a refund.
17 Property Rental income Tax Aspects

Rental income earned by a resident Indian is not subject to tax deducted at source (TDS). One simply
adds it to the overall income and pays the tax according to the slab. However, all income earned by an
NRI is subject to TDS, typically at a flat 30 per cent rate, which is the tenants legal obligation. That is, he
must deduct the amount and issue you a TDS certificate. In case of a joint property, though, the
applicability of TDS will depend on who the first owner is the NRI or the resident Indian family member.
"For all investments, taxes are the first holders obligation. So, if the first holder is a resident Indian, there
need not be any TDS," Both would then have to bear the tax liability independently.
18 Mutual Fund/Equity Investments Tax Aspects
Similar to bank accounts and deposits, NRIs can hold mutual fund investments jointly with their family
members. However, the shares cannot be held jointly, as NRIs who want to trade in the Indian stock
markets have to register with a bank offering portfolio investment schemes, specially designed for NRIs
With regard to mutual funds, again there will be a first and second holder concept. Taxation remains the
same for both NRIs and residents. Except, in case of short-term capital gains (STCG) for NRIs, flat 15 per
cent is deducted for any gains from equity mutual funds and 30 per cent for debt funds. "Adjustments
against short term capital losses, if any, can be made at the time of filing returns. The STCG tax for equity
funds is at par with that levied for residents. For debt funds, though, the gains are added to income and
taxed according to slab. The 30 per cent TDS rate could be higher than your income
19. NRI income and Applicability of TDS on the same

The income tax is applicable for most of the income earned by NRIs in India and more over, tax would
be deducted at source. And the rates for tax deducted at source (TDS) are widely different from the rates
applicable to resident Indians. It is pertinent to note that, that tax will be deducted at source only on
incomes that are liable to tax in India. If the income is tax free in India like long term capital gains from
equity shares or income earned on NRE deposits there would be no TDS. Another important thing to
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remember is that you should be an NRI at the time of receiving the income. For instance, you may have
purchased affixed income security when you were a resident Indian. But any interest that you receive
during the period after becoming an NRI will be subject to TDS. So necessarily you need to inform the
company regarding your residential status after you become the NRI
20. Tax Treatment of overseas Financial Assets.

Foreign exchange and overseas assets (such as bank accounts, stocks/securities, life insurance policies,
loans, company deposits, debentures, bonds etc.) acquired/held/owned by NRI while he was abroad can
be continued to be so held and owned even after the NRI returns to India for permanent settlement. Such
foreign exchange and overseas assets can accumulate or accrue income outside India and the balances
can be utilized for reinvestment or repatriated to India at any time (without attracting Wealth tax in India)
within 1 year immediately preceding the date of his return or later. This exemption period is limited to 7
successive years which immediately follow the year in which the NRI permanently returns to India.
21. Other Tax Aspects related to NRIs including Immovable Properties
NRIs can continue to hold immovable properties outside India. Such properties can be rented out and
rentals can be credited to overseas bank accounts. The properties can be sold and the sale proceeds
credited to overseas bank accounts. Expenses relating to such properties, such as maintenance,
insurance premium etc. can be paid out of the overseas balances.
a) as per the FEMA, any person resident in India may hold, own, transfer or invest in foreign
currency, foreign security and immovable property situated outside India; if the person had
acquired, held, owned or inherited the same while he was resident outside India. Further, the
FEMA also requires that where any amount of foreign exchange is due or has accrued to a
person resident in India, such person shall take reasonable steps to realise and repatriate the
same within such period and manner as specified by RBI.
b) Even after returning to India, the NRI can continued remitting funds out of India and investing in
overseas markets, these remittances under the Liberalised Remittance Scheme (LRS) of the
RBI. LRS has liberalised and globalised many Indian investors in the true sense. It has allowed
Indian resident individuals to remit funds upto USD 200,000 per financial year outside India
freely, without the prior approval from RBI for permissible transactions, including acquisition of
immovable property, shares, debt instruments and any other assets subject to certain
conditions
c) As per the Indian income-tax laws, NRs are taxable in India only on income which accrues in
India or is received in India. In the case of an NR, once an income is earned and received
outside India and it is brought to India at a later date, it would not be taxable in India.
d) It is beneficial to persons could sell his residential property in aboard, while he is an NR or a
Not Ordinarily Resident (NOR) in India, and he would not be taxable in India on the gain that he
makes from the sale. Similarly, he would not be taxable in India on the income earned and
received by him in abroad from his investments till he qualifies as a NR or NOR in India. Once
he/she loses the status of a NR or NOR and qualifies as an Ordinary Resident in India, he/she
would be taxable in India on his global income.
e) The provisions for determining residency under the wealth tax laws are the same as that of the
Income Tax laws. In the case of NRs and NORs, the current wealth tax provisions provide that
any assets located outside India would be excluded from the ambit of wealth tax in India.
Hence, the returned NRIs will not be required to pay wealth tax in India on the assets that are
located outside India, as long as he qualifies as a NR or NOR in India
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f)
If the returned NRI intends to reside in India permanently, she/he would not be required to pay
wealth tax on money and the other assets brought by him into India from abroad, within one
year immediately preceding the date of his return or later. This exemption is limited to seven
successive years which immediately follow the year in which she/he returns to India. Under
wealth tax law, wealth tax is payable at the rate of 1% for the net wealth in excess of Rs 30
lakhs. However, assets located outside India owned by NRI shall not come under wealth tax
bracket. Further, a NRI returning to India for good can claim wealth tax exemption for the
assets brought by him /her to India or assets acquired by such money up to seven years
commencing from the year in which such person returned to India subject to fulfillment of other
conditions
g) As per Baggage Rules, 1998, since, the used car in the abroad for personal purposes for more
than a year and he/she is transferring residence to India now, he/she could bring his/her car
with him but would be required to pay customs duty on the same. However, considering the
quantum of custom duty liability likely to arise due to the import, it may be a better idea to buy a
new car in India subsequent to shift of his residence. In addition to the car, he/she would be
able to get certain specified used personal effects upto a specified threshold without payment
of customs duty.
h) With regards to exchange control implications, the returned NRI would be able to open a
Resident Foreign Currency Bank Account (RFC Account). He/she could then transfer, through
appropriate banking channels, the amount that he has in his/her foreign Bank account into such
RFC account without any limit. He/she can continue to hold his other investments in abroad,
since he/she had acquired these when he/she was a resident outside India. The dividend from
the foreign companies and mutual funds and interest income from his/her foreign bank account
which he/she receives from his investment that he continues to hold in the foreign country can
also be credited to the RFC account.
i) There are some special provisions under Indian tax laws wherein NRIs can opt for special tax
rates (instead of progressive slab rates applicable in India) for specific investment incomes or
capital gains from foreign exchange assets (eg: Shares in Indian company purchased in
convertible foreign exchange). Further, the interest earned by NRI on his NRE, FCNR or RFC
account is tax free subject to certain conditions.
j)
Further, an Indian Citizen or Person of Indian origin who is outside India visits India in any year,
would be regarded as Resident, even if he stays in India for less than 182 days, but 60 days or
more in the relevant tax year and 365 days or more in preceding four tax years, (the extended
stay benefit of 181 days shall be removed under DTC which is expected to be implemented in
future).
22. Tax Treatment of selling property abroad
"As a returning Indian, try to sell your overseas property while you are still a 'not ordinarily resident' (NOR)
or 'non-resident' (NR). As a NOR or NR, if you sell any overseas assets and receive the sale proceeds
outside India, you do not have to pay any taxes in India. If you need to buy a house in India out of the
sale proceeds, you can first receive the sale proceeds in a foreign bank account and thereafter remit part
or whole of the proceeds back to India without creating any Indian tax liability. Keep in mind that the sale
of property at a profit will probably create tax liability in the country where the property is situated. In some
countries, it creates sales tax and other liabilities as well.
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"If you have become an Indian resident, selling the house liable for taxes both in the country where the
property is situated as well as in India. The country where the property is situated will generally have the
primary taxing rights ie, the right to collect the tax while India will have the obligation to provide a credit for
taxes paid in the foreign country and collect only the balance tax, if any. The precise tax treatment will be
guided by the domestic tax laws of India and the foreign country as well as the tax treaty between the two
countries
For an Indian tax resident, long-terms capital gains from a property outside India will ordinarily be subject
to tax that can be mitigated to some extent by claiming the credit for taxes, if any, paid overseas or by
making investments in specified bonds or acquiring a residential property in India and holding such bonds
or property for a specified period of time.
23. Tax Treatment of Rental Income Earned Abroad
While such rental income is taxable in India, returning Indians should note that the 'notional rental income'
from more than one self-occupied property is also treated as taxable. This is because an exemption is
allowed for only one self-occupied house property irrespective of where it is situated.
"A notional valuation would need to be made of the rent that the self-occupied property would have
fetched and offered to tax in India. The saving grace is that the individual has the choice of selecting one
among his several self-occupied properties for claiming the exemption, and he may, therefore, select the
property that has the higher rental value as self-occupied Further, a deduction of 30% of the net rent
(after deduction of tax levies by a local authority) is allowed. Also, the interest due on loans taken to
finance the purchase or construction of the house is also allowed as deduction from the rental income."
24. Tax Treatment of Dividend on overseas Investments
"Dividends of interest from overseas investments will be taxable in India as ordinary income. Dividends
from shares held in an Indian company are not taxable in the hands of the recipient. Generally, losses
incurred from the sale of one investment can be set off against gains from sale of another investment
subject to the setoff and carry-forward rules provided in the Income Tax Act
25. One Time Financial Settlement

If the financial settlement relates to the employment exercised overseas, it should not be taxed in India
generally. But, if the individual is an Indian resident at the time of settlement, there is a possibility of the
settlement being taxed in both countries. The double tax treaty will help mitigate double taxation
depending on the effective rates of taxes in the two countries.
26. Capital Gains earned abroad
Assets would either qualify as 'long-term capital assets' (if held for 36 months or more) or as 'short-term
capital assets' (if held for less than 36 months). As an exception, shares held in a company qualify as
long-term capital asset if held for 12 months. With long-term capital assets, the cost of purchasing or
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improving them are allowed to be indexed and the indexed cost is permitted to be reduced from the sale
value. In the case of short-term capital assets, the costs cannot be indexed. The indexation benefit is
meant to take into account the inflationary trends between the year of purchase and the year of sale. The
costs incurred on the sale (such as brokerage charges) are allowed as deduction while calculating gains
from the sale of both short-term and long-term assets.
India tax laws allow tax exemptions if the sale proceeds or the gains from the sale are re-invested in
specific assets. "For example, an exemption can be claimed in respect of gains from the sale of a house
property where the gain is re-invested in the purchase or construction of another house property, subject
to certain conditions and timelines, Income received in foreign currency should be converted into Indian
rupees at the rates provided by the SBI as on the specified date. The specified date differs depending on
the type of income earned.
Juggling finances in one country is bad enough; having to do it in two can be baffling. When it comes to
filing taxes, NRIs find themselves in this unenviable position. The income tax rules that apply to NRIs are
different from those that are valid for residents. "Certain incomes resulting from remittances and
investments in the home country are either exempt or taxed at concessional rates
27. Compulsory filing of Income tax return in relation to assts located outside India
irrespective of income
Under the existing provisions of section 139, every person is required to furnish a return of income if his
income during the previous year relevant to the assessment year exceeds the maximum amount which is
not chargeable to tax. The return of income has to be furnished in the prescribed form and verified in the
prescribed manner and setting forth such other particulars as may be prescribed.
It is proposed to amend the provisions of section 139 so that furnishing of return of income under section
139 may be made mandatory for every resident having any asset (including financial interest in any
entity) located outside India or signing authority in any account located outside India. Furnishing of return
by such a resident would be mandatory irrespective of the fact whether the resident taxpayer has taxable
income or not.
This amendment will take effect retrospectively from the 1st day of April, 2012 and will accordingly apply
to assessment year 2012-13 and subsequent assessment years.
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28. 28. Section 194E of the Act Tax deduction at source from payment to nonresident entertainer, sports person etc.
Section 115BBA of the Income Tax Act provides a concessionary tax regime in the case of income of
sports persons who are non-citizen and non-resident. The provision covers income received by way of
participation in any game or sport, advertising or contribution of article in any newspaper etc. The income
of such sportsmen is taxed at the rate of 10% of the gross receipts. The same regime is also available to
a non-resident sports association or institution for guarantee money payable to such institution in relation
to any game or sport played in India.
Under the Double Tax Avoidance Agreement (DTAAs), there is parity between a non-resident sportsman
and a non-resident entertainer. A similar tax regime i.e. taxation on basis of gross receipts rather than net
income would simplify the process of taxation in the case of entertainer. The special treatment in respect
of entertainer is required because determination of deductible expenses for performance is complicated,
especially when the production expenses of an international tour need to be allocated across
performances in various countries.
Internationally, similar tax rates exist for both entertainer and sportsperson. International comparisons
also reveal that the tax rate ranges between 10% to 30% in case of entertainer and sportsperson.
Therefore, rate of 20% on gross receipts is a reasonable rate of tax in case of non-resident, non-citizen
entertainer. The tax rate in case of non-resident, noncitizen sportspersons and non-resident sports
associations also needs to be raised to 20%.
It is proposed to amend section 115BBA (Union Budget 2012) to provide that income arising to a noncitizen, non-resident entertainer (such as theatre, radio or television artists and musicians) from
performance in India shall be taxable at the rate of 20% of gross receipts. It is also proposed to increase
the taxation rate, in case of non-citizen, non-resident sportsmen and non-resident sports association,
from 10% to 20% of the gross receipts.
This amendment will take effect from 1st April, 2013 and will, accordingly, apply in relation to the
assessment year 2013-14 and subsequent assessment years.
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Consequential amendment is proposed in section 194E to provide for withholding of tax at the rate of
20% from income payable to non-resident, non-citizen, entertainer, or sportsmen or sports association or
institution.
29. Interest on bank deposits
Interest earned on Non Resident External (NRE) accounts and Foreign

Currency Non Resident (FCNR) accounts are exempted from income and hence no tax is deducted at
soruce. However, interest earned on the Non Resident Ordinary Account (NRO) is taxable and will be
subject to a TDS of 30 per cent plus applicable cess+shec even if the interest earned is only Re. 1, tax
will be deducted at source, there is no basic exemption limit. In case you wanted to avail the benefits of
lower TDS rate under the respective DTAA (Double Taxation Avoidance Agreement), you need to submit
a declaration form with your banker with in the specified time limit of the respective financial year. More
details regarding DTAA will be discussed in details in the later part of this NRI Guide.
30.Savings bank interest upto Rs. 10,000.00 is exempted from tax (Section 80 TTA of IT Act)
From Assessment Year 2013-2014 ownwards deduction of up to Rs. 10,000 for interest from savings
bank accounts (interest from bank term deposits are not allowed). Under the new section 80TTA of the
Income-tax Act, a deduction up to an extent of ten thousand rupees in aggregate shall be allowed to an
assessee, being an individual or a Hindu undivided family, in respect of any income by way of interest on
deposits (not being time deposits) in a Scheduled Commercial Banks, Co-operative societies, Post
Office. From Assessment year 2013-2014. Benefits under this new section is not available for NRO SB
accounts.
31.Deduction of interest paid on more than one loan borrowed for purchase or construction of
same house
There is no bar in section 24 of the Income Tax Act regarding the number of loans on which interest is
allowable simultaneously. In fact ,the simple rule of the deduction of interest u/s 24 of the Income Tax Act
is that whatever be the interest paid or due on loan borrowed for purchase or construction of house is
allowable as deduction. So, whether you take loan from one bank or five banks , all loan should be
utilised for buying or constructing the house for allowance of interest paid to all the banks. However, as
far as self occupied house is concerned, the allowance of interest is limited to Rs 1, 50,000 per owner.
The respective share in the property is determined based on proportion of the ownership mentioned in
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these documents with the co-owners. If this proportion or share of ownership is not specifically mentioned
in the registration document, the ownership would be deemed to be 50 : 50. Each co-owner is assessed
for income from house property separately . Therefore, allowance of interest u/s 24 is also given
separately. But interest is deductible only if the same is borrowed by co-owners i.e even if one is joint
owner but not a borrower of the loan is not allowed any deduction of interest. Only the person borrowing
the loan is allowed deduction. In case of joint loan , each co-owner gets 1.5 lakh of maximum interest
deduction u/s 24 of the I T Act.
From AY 2014-2015 Additional one-time deduction of Rs.1,00,000 in respect of interest on housing loan
not exceeding Rs.25 lakhs taken from any financial institution in respect of the first house property
acquired by an individual, provided the value of the property does not exceed Rs.40 lakhs. However, the
deduction is only on loan taken for acquisition of house property, and not for construction.
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CHAPTER - 7
Budget 2013 Tax Proposals

th
The Honorable Finance Minister of India the Union Budget 2013-2014 on the 28 February,2013, and
thereafter presented the Finance Bill, 2013 before the Parliament. For the easy reference and information
important budget proposals mostly affecting NRIs and common men are also included in this guide at the
relevant places. As of date, these are proposals only and if adopted by the Parliament and passed
as Finance Act; will come into force for and from Assessment Year 2014-2015 relevant to Financial Year
2013-14, unless specifically provided otherwise.
Budget 2013-14
1. Personal Income Tax -nominal relief of Rs. 2,000
Exisitng Taxation Slabs not revised
Extra tax relief of Rs. 2,000 for Tax Payers for their income upto Rs. 500,000.
Relief available to Individuals having total income upto 5 lacs. This relief is not available for NRIs
2. Personal Income Tax: Surcharge Re-introduced
Surcharge to be levied at the rate of 10%, If the taxable income of following persons exceeds Rs.
1 Crore for Individuals, HUFs, Firms and enitites with silimar tax status
3. Surcharge Increased on Companies
Existing
Surcharge
Proposed Surcharge
Domestic Companies
5 % on domestic companies
whose taxable income exceed
Rs. 10 crore.
Foreign Companies
2 % on foreign companies whose
taxable income exceed Rs. 10
crore.
10 % on domestic companies
whose taxable income exceed
Rs. 10 crore.
5 % on foreign companies whose

taxable income exceed Rs. 10
crore.
4. Surcharge Increased on Distribution of profits also
Dividend distribution tax or tax on distributed income, surcharge increased from 5 to 10 %

Applicable for one year i.e. Financial Year 2013-14
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5. Raising the limit of percentage of eligible premium for life insurance policies of persons with
Disability or Disease
Under existing provisions, in section 10(10D) and section 80C(3A) the benefit is available to such
policy, whose premium does not exceed 10% of the actual capital sum assured
Now this limit has raised to 15% in case of life insurance policies for persons suffering from
disability and certain ailments.
6. Section 80D: Deduction Expanded to Other schemes
Earlier this benefit was available to Central Government Health Scheme (CGHS) only;
Now this deduction has been extended to other health schemes of the Central and State
Governments, which are similar to the CGHS, as may be notified by the Central Government
7. Section 80G: 100% deduction for donation to National Childrens Fund

Existing the deduction is allowable at the
rate of 50% of the amount donated.
Now proposed to increase the deduction to

100% of the amount of donation.
8. Rajiv Gandhi Equity Savings Scheme liberalized

Expanding the scope of deduction and its eligibility u/s 80CCG
Existing it is available to Equity shares of
listed companies
Now available in respect of listed equity

shares as well as units of mutual funds i.e.
equity oriented fund
Eligibility limit of the investors income was Rs. 10 Eligibility limit of the investors income raised to
Rs. 12 Lacs
lacs
It was allowed for One assessment Year
Now it shall be allowed for THREE consecutive
assessment Years
Maximum Deduction amount : Rs. 25,000 i.e.
50% of the investment
9. Tax Rate on Royalty or Fees for Technical Services, increased
Section 115A proposed to be amended

Tax rate on income by way of royalty and fees for technical services u/s 115A increased from
10% to 25%.
Above rate is further subject to the tax rate as specified in the treaty with the other country
10. Investment Allowance @ 15%

Incentive for acquisition and installation of new plant or machinery by manufacturing company
New Section 32AC proposed to be inserted
To encourage substantial investment in plant or machinery by a Manufacturing Company
Conditions:-
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a)
Investment of Rs. 100 Crore or more in new assets (plant or machinery), as defined in this section
b)
during the period from 1st April, 2013 and ending on 31st March, 2015
c)
Lock in Period of 5 Years
Investment Allowance
a)
15% of the investment in AY 2014-15, cost of such assets exceeds Rs. 100 Crore;
b)
15% of aggregate amount of actual cost of new assets, acquired and installed on 1st April, 2013
and ending on 31st March, 2015, as reduced by the deduction allowed, if any, for assessment year
2014-15
This is over & above Normal & Additional Depreciation.
11. Extension of the sunset date under section 80IA for the Power Sector
Section 80IA(4)(iv)
Proposed to provide further time to the undertakings to commence the eligible activity to avail the
tax incentive
By extending the terminal date by a further period of one year i.e. up to 31st March, 2014
But benefit available to Power Sector Only
12. Owning your First House
New Section 80EE proposed to be inserted - For Additional Deduction in respect of interest on
loan sanctioned during financial year 2013-14 for acquiring residential house property
Allowable deduction:-
a)
Amount of interest paid subject to maximum of Rs. 1 Lac in AY 2014-15;
b) Amount of interest payable for the subsequent years is less than one lakh rupees, the balance
amount shall be allowed in the AY 2015-16.
Conditions:-
a)
Loan must be sanctioned during the period from 1st April, 2013 and ending on 31st March, 2014
b)
The amount of home loan does not exceed Rs. 25 Lacs;
c)
the value of the residential house property does not exceed Rs. 40 Lacs
d) the Assessee does not own any residential house property on the date of sanction of the loan, this
must be the first house
13. Extension for one more year - Lower rate of tax on dividends received from foreign companies
Section 115BBD
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Taxation of gross dividends received by an Indian company from a specified foreign company (in
which it has shareholding of 26% or more) at the rate of 15%
To incentive for attracting repatriation of income earned by residents from investments made
abroad
In order to continue the tax incentive for one more year, this section proposed to extent for one
more year i.e. AY 2014-15.
14. Removal of the cascading effect of Dividend Distribution Tax (DDT) on Dividend from Foreign
Subsidiary Company
Section 115-O proposed to be amended

Earlier this covered exemption of DDT in case of holding company on dividend received from
DOMESTIC Subsidiary Company
Now this section proposed to extend the same provisions to Foreign Subsidiary Company of a
Domestic Parent Company
Applicable with Effect from 01/06/2013

15. Section 194LC extended to long-term infrastructure (Rupee Denominated) bonds
Withholding tax on interest of such borrowings @ 5%

In order to facilitate subscription by a non-resident in the long term infrastructure bonds issued by
an Indian company in India (rupee denominated bond ),
Concessional rate of withholding tax on interest in case of certain rupee denominated long-term
infrastructure bonds
Where a non-resident deposits foreign currency in a designated bank account and such money
as converted in rupees is utilised for subscription to a long-term infrastructure bond issue of an
Indian company, then, for the purpose of this section, the borrowing by the company shall be
deemed to be in foreign currency.
16. Introduction of TDS : On transfer of Immovable Properties, Except Agricultural Land
New Section 194-IA proposed to be inserted

Every transferee, at the time of making payment or crediting of any sum as consideration for
transfer of immovable property (other than agricultural land) to a resident transferor, shall
deduct tax, at the rate of 1% of such sum.
No deduction if consideration less than 50 lakh rupees.

17. Additional Income-tax on distributed income by company for Buy-back of unlisted shares
New Chapter XII-DA, proposed to be inserted

to provide that the consideration paid by the company for purchase of its own unlisted shares
which is IN EXCESS OF THE SUM received by the company at the time of issue of such shares
(distributed income) will be charged to tax
the company would be liable to pay additional INCOME-TAX @ 20% of the distributed income
paid to the shareholder
The additional income-tax payable by the company shall be the final tax on similar lines as
dividend distribution tax.
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The income arising to the shareholders in respect of such buy back by the company WOULD
BE EXEMPT where the company is liable to pay the additional income-tax on the buy-back of
shares.
Older Provisions:Section 46A reads with section 48 of the Act, provided for taxability of the difference of buy back
value & sale consideration as Capital Gain in the hands of the shareholders
These gain was taxable as long term or short term capital gain as depending upon the holding
period.
18. Logic of Section 50C, now Imported to the Profits and gains of business or profession
New section 43CA proposed to be inserted

where the consideration for the transfer of an asset (other than capital asset), being land or
building or both, is less than the stamp duty value, the value so adopted or assessed or
assessable shall be deemed to be the full value of the consideration for the purposes of
computing income under the head Profits and gains of business of profession.
registration, the value as on date of AGREEEMNT to be revoked for this section.
other than CASH.
19. Taxability of immovable property received for Inadequate Consideration
Provisions of clause (vii) of sub-section (2) of section 56 proposed to be amended

Existing provisions covered only taxability of immovable properties received for without
consideration, in hands of the individual or HUF as income from other sources.
Now the section has been amended to cover the cases of transfer of immovable properties at
concessional rate too.
registration, the value as on date of AGREEMENT to be revoked for this section.
other than CASH.
20. GAAR Postponed to AY 2016-17
GENERAL ANTI-AVOIDANCE RULE (GAAR), as inserted into the Income-tax Act by the
Finance Act, 2012
These amendments will take effect from 1st April, 2016 and will, accordingly, apply in relation to
the assessment year 2016-17 and subsequent assessment years.
21. Definition of Agricultural Land for Capital Gains amended
Amendment in Section 2(14)(iii)(b);

Corresponding amendments in section 2(1A) of Income Tax Act & Section 2(ea) of the Wealth
Tax Act.
To include, any land situated in any area within the distance, measured aerially (shortest aerial
distance)
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(I) not being more than two kilometers, from the local limits of any municipality or cantonment board
referred to in item (a) and which has a population of more than ten thousand but not exceeding one lakh;
or
(II) not being more than six kilometers, from the local limits of any municipality or cantonment board
referred to in item (a) and which has a population of more than one lakh but not exceeding ten lakh; or
(III) not being more than eight kilometers, from the local limits of any municipality or cantonment
board referred to in item (a) and which has a population of more than ten lakh, shall form part of capital
asset.
Now nature of the land, is linked with Populations
22. Section 10(10D) Amended
Definition of Keyman insurance policy, amended

to provide that a keyman insurance policy which has been assigned to any person during its term,
with or without consideration, shall continue to be treated as a keyman insurance policy
23. No deduction for CASH PAYMENTS u/s 80GGB & 80GGC
With a view to discourage cash payments by the contributors

No deduction shall be allowed in respect of cash contributions under above sections
24. Merely Tax Residency Certificate, Not sufficient
Sub-section (4) of sections 90 and 90A of the Income-tax Act inserted by Finance Act, 2012
makes submission of Tax Residency Certificate containing prescribed particulars, as a condition
for availing benefits of the agreements referred to in these sections
It is proposed to amend sections 90 and 90A in order to provide that submission of a tax
residency certificate is a necessary but no a sufficient condition for claiming benefits under the
agreements referred to in sections 90 and 90A.
Retrospective amendment w.e.f. AY 2013-14
Scope of Verification Widen

25. Section 132B: Term Existing Liability clarified
The existing provisions contained in section 132B of the Income-tax Act, inter alia, provide that
seized assets may be adjusted against any existing liability under the Income-tax Act, Wealth-tax
Act, the Expenditure-tax Act, the Gift-tax Act and the Interest-tax Act and the amount of liability
determined on completion of assessments pursuant to search, including penalty levied or interest
payable and in respect of which such person is in default or deemed to be in default
Now, it is proposed to amend the aforesaid section so as to clarify that the existing liability does
not include advance tax payable in accordance with the provisions of Part C of Chapter XVII of
the Act

Negative Impact of Interest, in Seizure case
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26. Return of Income filed without payment of self- assessment tax to be treated as defective
return
Explanation to Section 139(9) amended

It is proposed to amend the aforesaid Explanation so as to provide that the return of income shall
be regarded as defective unless the tax together with interest, if any, payable in accordance with
the provisions of section 140A has been paid on or before the date of furnishing of the return.

Caution: Do not file return without paying taxes
27. Amendment in section 142(2A)
Existing Conditions
Proposed Conditions
Assessing Officer having regard to the nature and if at any stage of the proceedings before him, the
complexity of the accounts of the assessee and the Assessing Officer, having regard to the NATURE
interests of the revenue
AND COMPLEXITY OF THE ACCOUNTS,
VOLUME OF THE ACCOUNTS, DOUBTS ABOUT
THE CORRECTNESS OF THE ACCOUNTS,
MULTIPLICITY OF TRANSACTIONS IN THE
ACCOUNTS OR SPECIALIZED NATURE OF
BUSINESS ACTIVITY OF THE ASSESSEE, AND
THE INTERESTS OF THE REVENUE, is of the
opinion that it is necessary so to do, he may, with
the previous approval of the Chief Commissioner or
the Commissioner, direct the assessee to get his
accounts audited by an accountant and to furnish a
report of such audit.
28. Assessment of Foreign transactions:

Period of limitation u/s 153 & 153B Amended
With a view to clarify the above situation, it is proposed to amend the aforesaid clause (viii) of
Explanation I to section 153 so as to provide that the period commencing from the date on which
a reference or first of the references for exchange of information is made by an authority
competent under an agreement referred to in section 90 or section 90A and ending with the date
on which the information requested is last received by the Commissioner or a period of one year,
whichever is less, shall be excluded in computing the period of limitation for the purposes of
section 153.
Also Applicable to Search Assessments
Similar amendments are also proposed in the Explanation to section 153B
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29. Penalty under section 271FA for non-filing of Annual Information Return
fails to furnish such return within time as
prescribed in 285BA(2)
Rs. 100 per day for the days the default
continues
fails to furnish such return within time as prescribed in

notice issued 285BA(5)
Rs. 500 per day for the days the default continues
30. Commodities Transaction Tax (CTT) Introduced
A new tax called Commodities Transaction Tax (CTT) is proposed to be levied on taxable
commodities transactions entered into in a recognised association
It is proposed to define taxable commodities transaction to mean a transaction of sale of
commodity derivatives in respect of commodities, other than agricultural commodities, traded in
recognised associations
Payable by Seller of commodities only
This CTT is allowable expenditure u/s 36 of the Income Tax Act, 1961
31. E-filing of annexure-less return of WEALTH TAX
New section 14A & 14B (similar to section 139C & 139D of Income Tax Act) proposed to be
inserted into the Wealth Tax Act, 1953
Consequential amendment to section 46 Wealth Tax Act, 1953
Now E-filing Wealth Tax Returns possible
FINANCE BILL 2013

The details of Finance Bill 2013 Passed by Lok Sabha
1. Trading in commodity derivatives is not be treated as a speculative transaction
2. No wealth-tax on agriculture land subject to certain conditions
3. Gold coins weighing less than 10 gms will be subject to TCS on Jewellery With effect from
June 1, 2013, consideration of any coin or any other article weighing 10 grams or less shall not
be excluded while calculating the monetary limit of Rs. 2,00,000.
4. TAN not required to deduct tax from payment made for purchasing an immovable
property: The Finance Bill, 2013 approved of the provisions of Section 194-IA. However, it
provided an exemption to the transferee from obtaining a TAN, which is otherwise a mandatory
requirement for deduction of tax at source.
5. Normal TDS rate for Non-resident referred to in Section 194LC even not having PAN:
Under the amended provisions of Section 206AA, in respect of payment of interest on long-term
infrastructure bonds to a non-resident (as referred to in Section 194LC), tax will be deducted at
the normal rate of 5%, even if the non-resident-recipient does not have PAN.
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6. Concessional withholding rates on certain rupee denominated long-term infrastructure

bonds is changed : This amendment has been withdrawn in the Finance Bill, 2013. However, a
new provision is inserted in Section 194LD which provides as under:
1. Tax under this section shall be deducted in respect of interest on a rupee denominated
bond of an India company or Government security which is payable after May 31, 2013
but before June 1, 2015;
2. Tax at concessional rate shall be deducted if payment is made to a FII or a qualified
foreign investor;
3. Tax to be deducted at 5%;
4. If tax is deducted under Sec. 194LD, provisions of Sections 195 and 196D will not be
applicable.
7. Tax Residency Certificate Can be a conclusive evidence but has to be supported by
prescribed documents: Considering these apprehensions of the taxpayers, the provision
proposed by the Finance Bill, 2013 that TRC was a necessary but not a sufficient condition for
claiming benefit under DTAA has been removed.As per the amended version, apart from the
submission of a TRC (which is a necessary condition), the assessee shall also provide such other
documents and information as may be prescribed for claiming benefits under the DTAAs.
8. Scope of Sec. 10(48) widened to include other prescribed income also and not just income
arising from sale of crude oil : The Finance Bill, 2013 as passed by the Lok Sabha (herein after
referred to as 'the Finance Bill, 2013') enlarges the scope of Section 10(48). With effect from the
assessment year 2014-15, the exemption will also be available in respect of income arising on
account of sale of any other goods or rendering of services as notified by the Central
Government.
9. Service tax on services provided by railway From 01.07.2012 to 30.09.2012 is also exempted
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CHAPTER - 8
TAX DEDUCTION AT SOURCE
1.Interest on all other investments

Interest earned on all other investments like corporate deposits and bonds will be subject to TDS at 20
per cent. In all these cases, the company or party making the payment will deduct this tax.
a. Rental Income Rental Income is also subject to tax deduction
b. Dividends
Dividends from equity shares, equity mutual funds and debt mutual funds are exempt in the hands of the
share or unit holder.
2. Capital gains on securities
- Equity shares and equity mutual funds (mutual funds with more than 50 per cent in equities)
Long term capital gains, that is profits made on sale after 1 year from date of purchase, on
equity shares and equity mutual funds are exempt from tax. There will be no TDS applicable.
Short term capital gains, that is, profits on sale within one year of date of purchase, will be
subject to a TDS of 15 per cent.
- Debt mutual funds, corporate debentures
Long term capital gains from debt mutual funds and corporate debentures (when sold in the secondary
market) will be subject to TDS at 10 per cent.
Short term capital gains will be subject to a TDS of 30 per cent.
Capital gains on other assets like house property, gold
Long term capital gains will be subject to a TDS of 20 per cent.
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Short term capital gains will be subject to a TDS of 30 per cent.

The treatment of deducting tax at source on interest on RFC Account is similar to Domestic Term
Deposits. However it is possible for a person, whose status under the Income Tax Provision is Resident
but not Ordinarily Resident to claim that the interest on Term deposits is not liable to tax under the
provisions of Section 10 of the Income Tax Act, 1961. The individual should furnish Form 15AA if he does
not require the bank to deduct tax at source.
3.TDS on salary payments to Non Residents & Expatriates
As per Section 192 of the IT Act, any person responsible for paying any amount under the head salaries
is required to deduct tax at source at the time of payment. This section unlike some other provisions,
does not distinguish between payment of salary, to a resident, non resident or expatriate. Thus all
payments which are taxable under the head salaries, are also covered by the provisions of TDS,
irrespective of the residential status of the recipient. However, the residential status of an individual is
pertinent in determining whether the receipt itself is taxable in India or not.
4. How NRIs can claim TDS exemption
There are two circumstances in which you might be eligible for TDS exemption:
1) If the DTAA between the country of your residence and India allows a lower rate of TDS
2) If your total income is lower than the basic exemption limit of Rs 2 lakh
So the next question is: What does an NRI need to do in order to take the benefit of this exemption or
reduced rate of tax?
If the DTAA between the country of your residence and India allows a lower rate of TDS
In certain cases incomes like interest income or royalty income, the DTAA for US and UK allows a
reduced rate of TDS for NRIs. For instance, in case of interest income, while TDS is deducted at 30 per
cent for NRIs, where there is a DTAA, the TDS rate is reduced to 15 per cent.
Similarly, there is a complete waiver of TDS in case of fees for professional services. So if you are an NRI
providing services to someone in India and are receiving payment thereof, you can get a waiver of TDS.
However, in order to claim the reduced rate of TDS or waiver of TDS under the DTAA, you would need to
submit a tax residency certification from the country of your residence. This will certify that you are a tax
paying resident in that other country and that tax on that income is being duly paid in that country,
ensuring no leakage of tax revenue for either countries.
In the US, the tax residency certificate is called Form 6166 and the application needs to be made to the
Internal Revenue Service (IRS) in Form 8802. Complete details of the procedure are available here. In
the UK you would need to get the tax residency certificate from the HM Revenue and Customs.
If your total income is lower than the basic exemption limit of Rs 2 lakh
It may happen that your total income in India is less than the basic exemption limit of Rs 2 lakh per
financial year. In such cases, you may apply to the Income Tax Officer in your jurisdiction in India,
requesting for a waiver of TDS. If the Tax Officer grants you the waiver, you may submit this to the payers
such as your bank and claim TDS exemption.
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"Granting waiver depends on the discretion of the Tax Officer and may or may not come through easily.
So if you are faced with such a circumstance, it is best to file your tax returns and claim a refund of the
TDS. Remember that any claim for reduced rate of TDS or exemption from TDS will be available only if
you have a Permanent Account Number (PAN), so make sure you have one.
5. Introduction of TDS : On transfer of Immovable Properties, Except Agricultural Land
New Section 194-IA proposed to be inserted

Every transferee, at the time of making payment or crediting of any sum as consideration for
transfer of immovable property (other than agricultural land) to a resident transferor, shall
deduct tax, at the rate of 1% of such sum.
No deduction if consideration less than 50 lakh rupees.
6.Tax Deducted at Source related to NRIs comparison with Resident Indiviudals
Basic exemption limit for NRIs

For resident Indians, tax is deducted at source only when the income exceeds a certain limit. There are
different thresholds for different income sources. For instance, TDS on rent is applicable only when the
total rental income exceeds Rs 1.2 lakh per annum.
TDS on bank interest is applicable only where interest earned from a particular branch exceeds Rs
10,000 per annum. In case of NRIs however, every single rupee earned is subject to TDS, that too, at a
rate of 30%. In case of bank interest, if India has a Double Taxation Avoidance Agreement (DTAA) with
the NRI's country of residence, the NRI may claim a lower TDS rate of 15% (this rates varies country to
country please refer the Chatper DTAA for more details)
Individuals need not have to deduct TDS on payments to NRIs
In case of rental income or capital gains from sale of property, the person who pays either the rent or the
sale consideration to the NRI is liable to deduct tax at source. Even if that person is an individual, he is
expected to obtain a TAN number (Tax Deduction and Collection Account number) and deposit the TDS
with the Government.
There is no such requirement in case of rent paid or sale consideration paid to a resident Indian. The
income tax laws clearly state that if it is an individual or an HUF who is paying the rent to a Resident, no
TDS needs to be deducted.
Easy route to claim exemption
If a resident Indian expects his total income for the year to be less than the basic exemption limit of Rs 2
lakh, he can submit form 15G and 15H to his bank and get exemption from TDS on his interest. However,
for NRIs, the process is not so simple.
An NRI might want an exemption under two circumstances: either his Indian income is exempt due to
benefit available under a DTAA or his total income in India is expected to be less than the threshold of Rs
2 lakh.
If the DTAA between the country of an NRI's residence and India allows a lower rate or zero rate of TDS,
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the NRI would need to submit a tax residency certification from the tax department of the country of his
residence.
This will certify that he is a tax paying resident in that other country and that tax on that income is being
duly paid in that country. In countries like the US, if an Indian resident is earning income from a US
source, and he wants to claim exemption from US withholding tax, he does not need to submit a tax
residency certificate issued by the Indian tax authority. He must only fill up a form W8Ben to his payer.
Income source
Nature of Income
Rate of TDS
Bank interest
NRE, FCNR
No TDS
NRO
30% or DTAA applicable

rate
Interest from other

investments
20%
Dividends
Shares and mutual

funds
No TDS
Capital gains
Equity shares,
mutual funds
No TDS on long term

gains; 15% on short
term gains
Debt mutual
funds, debentures
Property, gold
10% on long term

gains, 30% on short
term gains
20% on long term
gains, 30% on short
term gains
Rent
30%
Professional
services and royalty
Varies between 1020%. Click here for

details
All other income
30%
If an NRIs total income is lower than the basic exemption limit of Rs 2 lakh, the process is even more
complicated. In such cases, the NRI may apply to the Income Tax Officer in his jurisdiction in India,
requesting for a waiver of TDS. If the Tax Officer grants the waiver, the NRI may submit this to the payers
such as your bank and claim TDS exemption.
But the process is not very easy. "Granting waiver depends on the discretion of the Tax Officer and may
or may not come through easily. So if you are faced with such a circumstance, it is best to file your tax
returns and claim a refund of the TDS.
TDS for NRIs living in countries where there is no tax
There is a peculiar scenario of DTAAs that India has signed with countries that do not have personal tax.
"The basis of a DTAA is that a particular income is taxed in both countries. However there are instances
where a foreign country may not levy personal tax on its residents, yet India has a DTAA with those
countries that allows NRIs of those countries to avail a reduced rate of TDS. This is a grey area."
In such cases, currently each bank might have its own way of handling this. Some banks like the State
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Bank of India require NRIs to submit a self-declaration form if they reside in a country that has zero tax,
but has a DTAA with India that offers a lower rate of TDS. On submitting this self declaration, the bank will
deduct tax at source at the reduced rate instead of the mandated 30% rate.
The declaration however states that the NRI 'shall be fully responsible to State Bank of India for any
Indian Income tax liability including interest, penalty etc. that may arise on account of the bank applying a
lower rate for tax deduction at source based on this declaration.
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CHAPTER - 9
Double Taxation Avoidance Agreement
1. Double Taxation in India DTAA (Double Taxation Avoidance Agreement)
Double taxation occurs when an individual is required to pay two or more

taxes for the same income, asset, or financial transaction in different countries. Double taxation occurs
mainly due to overlapping tax laws and regulations of the countries where an individual operates his
business. Double taxation Agreement is the systematic imposition of two or more taxes on the same
income. When an Indian businessman makes a profit or some other type of taxable gain in another
country, he may be in a situation where he will be required to pay a tax on that income in India, as well as
in the country in which the income was made! To protect Indian tax payers from this unfair practice, the
Indian government has entered into tax treaties, known as Double Taxation Avoidance Agreement
(DTAA) with other countries. The double liability is often mitigated by tax agreements, known as
treaties, between countries. These agreements provides for relief from the double taxation in respect of
incomes by providing exemption and also by providing credits for taxes paid in one of the countries.
These treaties are based on the general principles laid down in the model draft of the Organization for
Economic Cooperation and Development (OECD) with suitable modifications as agreed to by the other
contracting countries. In case of countries with which India has double taxation avoidance agreements,
the tax rates are determined by such agreements and are indicated for various countries as under:
The Central Government acting under the authority of Law (Sec. 90) has entered into DTAAs with more
than 82 countries including U.S.A, Canada, U.K, Japan, Germany, Australia, Singapore, U.A.E, and
Switzerland. DTAA ensures that India's trade and services with other countries, as well the movement of
capital are not adversely affected.. Such treaties serve the purpose of providing protection to the tax
payers from double taxation. As per section 90(2), in relation to an assessee to whom any DTAA applies,
the provisions of the Act shall apply only to the extent they are more beneficial to the assessee. The
provisions of these DTAAs thus prevail over the statutory provisions. For availing the benefits under
DTAA the NRIs need to complete certain formalities for example for getting the reduced rate of tax
deduction from bank interest (NRO deposits), they need to submit certain declaration with their banks
before the starting of the financial year.
To avail benefit of lower rates of tax as per double taxation avoidance treaty entered in by India, NRIs
need to submit certain declarations and forms with his banker. These documents should be submitted to
the designated bank branch at the time of opening the bank account and subsequently each financial
year. The reduced TDS rate shall be applied only after the submission of the required declarations by the
NRIs with the designated banker.
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1) Indian Residents posted abroad for employment

Indian residents who have taken up employment in countries with which India has got DTAA are entitled
to the benefit of the DTAA entered into by India with the country of employment. Accordingly, their tax
liability is decided.
Indian expatriates working abroad have been granted several special tax concessions under the Act.
Professors, teachers and research workers working abroad in any university or any educational
institutions are entitled to deduction of 75% of their foreign remuneration provided the same is brought
into India in convertible foreign exchange within a period of 6 months from the end of the previous year or
such extended time as may be allowed(Sec. 80-R). Similarly, in case of an Indian Citizen having received
remuneration for services rendered outside India, 75% of his foreign remuneration is deductible from his
taxable income provided such remuneration is brought to India in convertible foreign exchange within the
time specified above (Sec. 80 RRA).
From assessment year 2001-2002 onwards, there has been a change in the amount of deduction
available under sections 80R/ 80RRA. For details, reference may be made to the sections concerned of
the Income Tax Act. No deduction u/s 80R/80RRA shall be allowed in respect of A.Y. 2005-06 onwards.
It may also be mentioned here that as per section 9(1)(iii) income chargeable under the head Salary
payable by the Government to a citizen of India for services rendered outside India is deemed to accrue
or arise in India. However, allowances or perquisites paid or allowed outside India by the Govt. to a
citizen of India for rendering services abroad is exempt from taxation u/s 10(7).
2.Capital gain tax rates

Under Section 90 and 91 of the Income Tax Act, relief against double taxation is provided in two ways:
Unilateral Relief
Under Section 91, the Indian government can relieve an individual from double taxation irrespective of
whether there is a DTAA between India and the other country concerned. Unilateral relief may be offered
to a tax payer if:
1. The person or company has been a resident of India in the previous year.
2. The same income must be accrued to and received by the tax payer outside India in the previous
year.
3. The income should have been taxed in India and in another country with which there is no tax
treaty.
4. The person or company has paid tax under the laws of the foreign country in question.
Bilateral Relief
Under Section 90, the Indian government offers protection against double taxation by entering into a
DTAA with another country, based on mutually acceptable terms. Such relief may be offered under two
methods:
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1. Exemption method This ensures complete avoidance of tax overlapping.

2. Tax credit method This provides relief by giving the tax payer a deduction from the tax payable
in India.
3. The Countries with which India has DTAA

India has entered into DTAA with more than 80 countries including countries like U.S.A., U.K., Japan,
France, Germany, etc. These agreements provides for relief from the double taxation in respect of
incomes by providing exemption. The Countries with which India has DTAA are given below:
Country
Year
Country
Year
Australia
1993-94
Mongolia
1995-96
Austria
1963-64
Namibia
2000-01
Bangladesh
1993-94
Nepal
1990-91
Belarus
1999-2000
Netherlands
1990-91
Belgium
1989-90; 1999-2000
New Zealand
1988-89
Brazil
1994-95
Norway
1988-89
Bulgaria
1997-98
Oman
1999-2000
Canada
1987-88; 1999-2000
Philippines
1996-97
China
1996-97
Poland
1991-92
Cyprus
1994-95
Portugal
2000-01
Czechoslovakia
1986-87; 2001-02
Qatar
2001-02
Czech Republic
1998-99
Romania
1989-90
Denmark
1991-92
Russian Federation
2000-01
Egypt
1970-71
Singapore
1995-96
Finland
1985-86; 2000-2001
South Africa
1999-2000
France
1996-97
South Korea
1985-86
Germany
1996-97
Spain
1997-98
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Greece
1964-65
Sri Lanka
1981-82
Hungary
1989-90
Sweden
1990-91; 1999-2000
Indonesia
1989-90
Switzerland
1996-97
Israel
1995-96
Syria
1983-84
Italy
1997-98
Tanzania
1983-84
Japan
1991-92
Thailand
1988-89
Jordan
2001-02
Trinidad and Tobago
2001-02
Kazakhstan
1999-2000
Turkey
1995-96
Kenya
1985-86
Turkmenistan
1999-2000
Korea
1985-86
United Arab Emirates
1995-96
Kyrgyzstan
2001-02
United Kingdom
1995-96
Libya
1983-84
United States
1992-93
Malaysia
1973-74
Uzbekistan
1994-95
Malta
1997-98
Vietnam
1997-98
Mauritius
1983-84
Zambia
1979-80
Morocco
2000-01
Double Taxation Avoidance Agreement (DTAA) is an agreement entered into by India with various
countries. Under the current DTAA provisions, you can enjoy the benefit of concessional rates for Tax
Deducted at Source (TDS), providing you a higher yield as compared to the regular NRO FD offered
today.
In case the NRIs who wish to avail the reduced rate of TDS from NRO deposits as per DTAA they need to
submit the required declaration with their banks along with their PAN number before the cut of date
specified by the bank for each financial year
PAN updation is mandatory to avail of DTAA. One set of the below documents is required per
Customer ID.
o
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Declaration that the client was an NRI during the year in which tax is sorted to be
deducted & that he does not have any permanent establishment in India.
Original or certified true copies of the tax residency certificate from income tax authorities
to be obtained from the client OR
ii) In case of non-taxpaying countries, any valid proof issued by the government,
certifying that the client is a resident of that country OR
o
o
iii) If the client is unable to obtain the residency certificate in (i) above, and has been
assessed as a resident earlier, then he may obtain a certificate from any CA firm
registered in India). However, in such cases, the CA certificate should be supported by
certified true copies of documentation from tax authorities, e.g., assessment order, notice
from the tax authorities clearly indicating the residential status of the customer as a
'resident' under the local tax laws.
Self attested copy of passport & visa. (not required in case the client is submitting Tax
Residency Certificate).
For UAE and KUWAIT ONLY- photocopy of the passport pages which give the details of
entry and exit.(to ascertain 183 days stay in a calendar year for UAE and 183 days in a
financial year for Kuwait)
If your PAN is not updated with the Bank/financial institution, then the DTAA rate or applicable TDS (Income
tax will be deducted at source under Section 195 of the Income Tax Act, 1961, at the rates in force) rate
whichever is higher will be applicable. For more details, please contact your bank.
4. How to get relief in case of Double Taxation?

In any country the tax is levied based on 1) Source Rule and 2) the Residence Rule. The source rule holds that
income is to be taxed in the country in which it originates irrespective of whether the income accrues to a
resident or a non-resident whereas the residence rule stipulates that the power to tax should rest with the
country in which the taxpayer resides. If both rules apply simultaneously to a business entity and it were to
suffer tax at both ends, the cost of operating on an international scale would become prohibitive and would
deter the process of globalisation. It is from this point of view that Double Taxation Avoidance Agreements
(DTAA) becomes very significant.
In India the residential status is the key point for determination of income tax. In case of Residents their global
income (i.e Indian Income as well as Foreign Income) is taxable in India whereas in case of non-residents only
Indian Income is taxable. So we can say that in India residence rule is applied for residents whereas source
rule is applied for Non-residents. The residential status of a person is determined based on the provisions of
Section 6 of Income Tax Act 1961.
Many a times, it is seen that in case of residents, the income tax has been paid in other countries on their
income abroad (i.e Foreign Income) and on the same income they are also required to pay tax in India. In such
cases, there are provisions of providing relief from double tax. Basically there are two sections (i.e section 90
and section 91) in Income Tax Act 1961, which provides relief from Double tax.
The application of section 90 and 91 can be explained with the help of the following diagram.
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As can be seen from the above diagram that section 90 is applicable in cases where India has entered into a
Bilateral agreement with other country and section 91 is applicable in case where there is no such bilateral
agreement (i.e there is unilateral agreement)
As of now there are 192 UN member countries out of which India has entered into Bilateral agreement with 82
countries till 07.05.2012 (i.e day of Finance Budget 2012). Hence in respect of these 82 countries Section 90
will apply and in respect of remaining 110 countries section 91 will apply.
5.Where there is an DTAA agreement (Section 90)
U/s 90 there are two methods of granting relief under Double Taxation Avoidance Agreement.
1) Exemption method A particular income is taxed in one of the both countries and exempted in the other
country. (For example- For the Income from Dividend, Interest, royalty and fees for technical services source
rule is applicable in treaty with Greece, Libyan and United Arab Republic. So for a citizen of these 3 countries if
the dividend, interest, royalty or fees for technical services is arising in India, then it will be solely taxable in
India only and if for a resident if such income is arising in any of these 3 countries then the income will solely
be taxed in these 3 countries and it will not be at all taxable in India).
2) Tax Credit method- The income is taxed in both the countries as per the treaty and the country of residence
will allow the tax credit / reduction for the tax charged in the country of source. For example- Mr A (an Indian
resident) has received salary from a US company for job in US. Since Mr A is a resident so his global Income
will be taxable. In this case source country is US (since the service has been rendered in US) and resident
country is India. So at the time of computation of tax liability of Mr A the tax paid in US will be allowed as set off
against his total tax liability but limited to the tax payable on such foreign income at Indian tax rates.
In case where Bilateral agreement has been entered u/s 90 with a foreign country then the assessee has an
option either to be taxed as per the Double Taxation Avoidance Agreement (hereinafter referred as DTAA) or
as per the normal provisions of Income Tax Act 1961, whichever is more favourable to assessee. [CIT Vs ITC
Ltd (2002)]
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For example: As per DTAA between Indian and Germany, tax on Interest is specified @ 10% whereas under
Income Tax Act 1961, it depends on slab rates for individuals & HUF and flat rates (generally 30%) for other
kind of assessees (like firm, company etc). Hence one can follow DTAA and pay tax @ 10% only.
6.Where there is an NO DTAA agreement (Section 91)
In case there is no DTAA then the relief u/s 91 is available only to Resident and not to Non-resident. The
resident tax payer shall be entitled to the deduction from the Indian income-tax payable by him of a sum
calculated on such doubly taxed income at the Indian rate of tax or the rate of tax of the said country,
whichever is the lower, or at the Indian rate of tax if both the rates are equal.
7.Misuse of DTAA, Treaty shopping and amendment made by Finance Act 2012
Treaty Shopping occurs when the resident of a third country takes advantage of the provisions of DTAA
between two countries.
As per the DTAA with Mauritius, Capital Gain accruing in India to a resident of Mauritius is not taxable in India
subject to certain exception. Again there is no capital gain tax applicable in Mauritius. Hence it leads to tax
exemption in both the countries.
FIIs (Foreign Institutional Investors) in order to take advantage of such treaty get themselves incorporated in
Mauritius and becomes the resident of Mauritius. As held by the Supreme Court in the case of UOI Vs Azadi
Bachao Andolan (2003) and via CBDT Circular No 789 dated 13.04.2000 it has been clarified that wherever a
certificate of residence is issued by Mauritius Authority, such certificate will constitute sufficient evidence for
accepting the status of residence as well as beneficial ownership for applying DTAA accordingly. Hence a
number of cases of treaty shopping has been observed which is very legal.
In order to curb this treaty shopping section 90 has been amended by Finance Act 2012, by which now
submission of Tax Residency Certificate (TRC) will be a necessary but not sufficient condition for availing the
benefit of the agreements referred to in this section. The format of TRC will be notified by board. It appears
that after notification of the format of TRC it will be difficult for an intermediate country like Mauritius to issue
TRC to certify that a global company has significant operation in Mauritius.
The details of DTAA can be extracted from the site www.incometaxindia.gov.in
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8.Tax rates applicable in India under DTAA Agreement

The following are the Tax rates applicable in India under DTAA Agreement)
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Country
Tax %
Country
Tax %
Armenia
10%
Namibia
10%
Australia
15%
Nepal
15%
Austria
10%
Netherlands
10%
Bangladesh
10%
New Zealand
10%
Belarus
10%
Norway
15%
Belgium
15%
Oman
10%
Botswana
10%
Philippines
15%
Brazil
15%
Poland
15%
Bulgaria
15%
Portuguese Republic
10%
Canada
15%
Quatar
10%
China
10%
Romania
15%
Cyprus
10%
Russian Federation
10%
Czeck Republic
10%
Saudi Arbaia
10%
Denmark
15%
Serbia
10%
Germany
10%
Slovenia
10%
Finland
10%
Singapore
15%
France
10%
South Africa
10%
Greece
20%
Spain
15%
Hungary
10%
Srilanka
10%
Iceland
10%
Sudan
10%
Indonesia
10%
Sweden
10%
Ireland
10%
Swiss
10%
Israel
10%
Syria
10%
Italy
15%
Tanzania
12.50%
Japan
15%
Thailand
20%
Jordan
10%
Trinidad and Tobago
10%
Kazakstan
10%
Turkey
15%
Kenya
15%
Turkmenistan
10%
Korea
15%
Uganda
10%
Kuwait
10%
Ukraine
10%
Kyrgyz Republic
Libyan Arab
Jamahiriya
Malaysia
Malta
10%
20%
United Arab Republic (Egypt)
20%
10%
10%
United Kingdom
United States
15%
15%
Mangolia
15%
Uzbekistan
15%
Mauritius
20%
Vietnam
10%
12.50%
Morocco
10%
Zambia
10
9. Amendments relating to DTAA provisions (Union Budget 2012)

Section 90 (2) provides that in case of a person resident in any country with which India has a Double Tax
Avoidance Agreement (DTAA), the more beneficial provisions between such DTAA and the Act shall
apply.
It is proposed that the GAAR will override the DTAA provisions, even if they are not more beneficial than
the DTAA. But Government deferred the final implementation of GAAR
Moreover, it is also proposed that the benefit of the DTAA shall not be allowed to any non-resident
unless he/it provides a certificate from the government of the country of its/his residence of he/it
being resident of that country.
Section 90(3) provides that where certain term is not defined either in the DTAA or the Act, then the same
shall have the meaning assigned to it by notification issued in that respect.
It is now proposed to provide, effective from 1st October 2009, that when such notification assigning
meaning to any term is issued, then the same shall be effective in interpreting the DTAA, from the date
such DTAA became effective. Similar amendments are also proposed in section 90A containing
provisions of adoption by Central Government of agreement between specified associations for double
tax relief
10.Tax Residency Certificate (TRC) for Indian & Non Resident wef 01.04.2013
Tax Residence Certificate (TRC) for Indian & Non Resident w.e.f. 01-04-2013
Tax Residency Certificate (TRC) For Indian Resident Assessee
From 01.4.2013 the India Residents who earns Income from Countries with which India have a DTAA can
obtain a Tax Residency Certificate from Income Tax Department. The same may be submitted to the
Payer to claim DTAA Benefit.
An assessee, being a resident in India, shall, for obtaining a certificate of residence for the purposes of an
agreement referred to in section 90 and section 90A, make an application in Form No. 10FA to the
Assessing Officer.
The Assessing Officer on receipt of an application referred to in sub-rule (3) and being satisfied in this
behalf, shall issue a certificate of residence in respect of the assessee in Form No. 10FB.
Tax Residency Certificate (TRC) For Non Resident Assessee
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An assessee, not being a resident in India, shall obtain Tax Residency Certificate (TRC) from the
Government of the country or the specified territory of which Assessee claims to be resident , which shall
contain the following particulars, namely:(i) Name of the assessee;
(ii) Status (individual, company, firm etc.) of the assessee;
(iii) Nationality (in case of individual);
(iv) Country or specified territory of incorporation or registration (in case of others);
(v) Assessees tax identification number in the country or specified territory of residence or in case no
such number, then, a unique number on the basis of which the person is identified by the Government of
the country or the specified territory;
(vi) Residential status for the purposes of tax;
(vii) Period for which the certificate is applicable; and
(viii) Address of the applicant for the period for which the certificate is applicable;
(2) The certificate referred to in sub-rule (1) shall be duly verified by the Government of the country or the
specified territory of which the assessee, referred to in sub-rule (1), claims to be a resident for the
11.Finance Ministry clarification on tax residency certificate

Finance Ministry of India has given clarification on tax residency certificate. A press release has been
issued dated 1 March 2013. Full press release is as under.
FINANCE MINISTRY'S CLARIFICATION ON TAX RESIDENCY CERTIFICATE (TRC)

PRESS RELEASE, DATED 1-3-2013
Concern has been expressed regarding the clause in the Finance Bill that amends Section 90 of the
Income-tax Act that deals with Double Taxation Avoidance Agreements. Sub-section (4) of section 90
was introduced last year by Finance Act, 2012. That subsection requires an assessee to produce a Tax
Residency Certificate (TRC) in order to claim the benefit under DTAA.
DTAAs recognize different kinds of income. The DTAAs stipulate that a resident of a contracting state will
be entitled to the benefits of the DTAA.
In the explanatory memorandum to the Finance Act, 2012, it was stated that the Tax Residency
Certificate containing prescribed particulars is a necessary but not sufficient condition for availing benefits
of the DTAA. The same words are proposed to be introduced in the Income-tax Act as sub-section (5) of
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section 90. Hence, it will be clear that nothing new has been done this year which was not there already
last year.
However, it has been pointed out that the language of the proposed sub-section (5) of section 90 could
mean that the Tax Residency Certificate produced by a resident of a contracting state could be
questioned by the Income Tax Authorities in India. The government wishes to make it clear that that is not
the intention of the proposed subsection (5) of section 90. The Tax Residency Certificate produced by a
resident of a contracting state will be accepted as evidence that he is a resident of that contracting state
and the Income Tax Authorities in India will not go behind the TRC and question his resident status.
In the case of Mauritius, circular no. 789, dated 13-4-2000 continues to be in force, pending ongoing
discussions between India and Mauritius.
However, since a concern has been expressed about the language of sub-section (5) of section 90, this
concern will be addressed suitably when the Finance Bill is taken up for consideration.
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CHAPTER - 10
From 15G & Form 15H - NRIs are not eligible to submit these forms
Form 15G is meant for non-senior citizens whereas Form 15H is meant to be used by senior citizens. If
this form is submitted by the deposit holder in respect of his deposit, the bank does not deduct tax while
paying interest. Most of us are aware that Form 15G and form 15H are used for avoiding the TDS
deduction while computing the interest earned during the financial year. There are some conditions
which, if the deposit holder complies with, these forms can be submitted. NRIs are not eligible to
submit Form 15G and Form 15H.
Form 15H :- Declaration under sub-section (1C) of section 197A of the Income-tax Act, 1961, to be made
by an individual who is of the age of sixty-five years or more (Sixty Years from A.Y. 2012-13) claiming
certain receipts without deduction of tax.
Form 15H can be submitted only by Individual above the age of 65 years. (Age limit reduced to
60 Years from A.Y. 2012-13)
Estimated tax for the previous assessment year should be nil. That means he did not pay any tax
for the previous year because his income is not coming under the taxable limit.
This form should be submitted to all the deductors to whom you advanced a loan. For example
you have deposit in three HDFC Bank branches Rs.2,00,000 each. You must submit the Form
15H to each branch
Submit this form before the first payment of your interest. It is not mandatory but it will avoid the
TDS deduction. In case of the delay, the bank may deduct the TDS and issue TDS certificate at
the end of year.
You need to submit form 15H to banks if interest from one branch of a bank exceeds 10,000/- in a
year.
You need to submit for 15H If interest on loan ,advance, debentures , bonds or say Interest
income other then interest on bank exceeds 5000/-.
Form 15G:- Declaration under sub-sections (1) and (1A) of section 197A of the Income-tax Act, 1961, to
be made by an individual or a person (not being a company or a firm) claiming certain receipts without
deduction of tax of tax.
Form 15G can be submitted by Individual below the age of 65 years (Age limit reduced to 60
Years from A.Y. 2012-13)) and Hindu Undivided family.
The above points are applicable to the Form 15G as well, except the Form 15H is only for the
senior citizen.
Form 15G should be submitted before the first payment of interest on fixed deposit.
Difference between form 15G and 15H:1. Form 15G can be submitted by individual below the Age of 65 Years while form 15H can be
submitted by senior citizens i.e. individuals above the age of 65 years. (60 Years from
Assessment year 2012-2013).
2. Form 15G can be submitted by Hindu undivided families but form 15H can be submitted only by
Individual above the age of 65 years. ( 60 Years from Assessment year 2012-2013).
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3. 15G CAN NOT BE filed by any person whose income from interest on securities/interest other
than interest on securities/units/amounts referred to in clause (a) of sub-section (2) of section
80CCA exceeds maximum amount not chargeable to tax.
Please note that, you are eligible to submit From 15G and 15H provided your estimated taxable income
that particular financial year is NIL. This is declaration, so you have to be very careful while submitting
this form. The deductor will tell you that, submit this form, we will not deduct tax, but remember the
ultimate responsibility is yours
However, both the concept of a senior citizen as well as submission of these forms is not applicable in
case of NRIs. In other words, NRIs, irrespective of their age, are not eligible to file Form 15G or 15H as
the case may be.
New format for 15H and 15G with effect from 1st April, 2013 i.e. AY 2013-14 / FY 2012-13
The Income Tax department has been modified the Form 15H and Form 15G as per amended notification
No. 11/2013 [F.NO.142/31/2012-SO(TPL)]/SO 410(E) Dated 19.02.13 for the Assessment Year 2013-14.
The New Form No. 15G and 15H is applicable to all Taxpayee who do not want TDSDeduction on their
Income or other under section 203 of the Income-tax Act, 1961.
FORM NO. 15G is used to Declaration under section 197A(1) and section 197A(1A) of the Income-tax
Act, 1961 to be made by an individual or a person (not being a company or firm claiming certain receipts
without deduction of tax.
FORM NO. 15H is applicable to Declaration under section 197A(1C) of the Income-tax Act, 1961 to be
made by an individual who is of the age of 60 years or more claiming certain receipts without deduction of
tax.
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CHAPTER - 11
Capital Gain Tax
How many of us are really paying the capital gain tax for the shares/mutual fund
units/land/house, jewellery etc sold and gained a profit out of this deal. As per the Income Tax Law you
are liable to pay tax on such gains even if you have no other income. Most of the people are not bothered
to pay this tax, either because of ignorance or deliberately avoid paying tax.
Capital gain, as the word denotes, some kind of financial benefits gained as a result of sale of some
capital assets. Profit or gain arising from the transfer/sale of a capital asset made in a previous year is
taxable under the head Capital Gains. The important ingredients for capital gains are, therefore,
existence of a capital asset, transfer of such capital asset and profits or gains that arise from such
transfer. If you sell an asset such as bonds, shares, mutual fund units, property (house, land, and
apartment) etc, you are liable to pay tax on the profit earned out of it. This profit is called Capital Gains.
The tax paid on this amount of capital gains is called capital Gains tax. On the contrary, if you make a
loss on sale of assets, it is treated as capital loss.
1) Capital Asset
Capital asset generally means a property house, an apartment, office space, factory, godown,jewellery
or a plot of land or financial assets like shares, mutual fund units, bonds etc
For tax computation purpose the capital gain is dividend in two categories.
2)
Short Term Capital Gain (STCG)
If Shares, Bonds or Equity Mutual Funds are held for less than 12 months before selling, the gain arising
out of it is classified as Short Term Capital Gain. The only condition here is that the shares / equities
should be sold on a recognized stock exchange (for example, BSE or NSE If the sale of shares is offmarket (that is, if the sale is not on a stock exchange), the gain would be classified like that for other
capital assets. In case of other capital assets like land, building,jewellery etc. the minimum holding
period is 36 months. If those assets are held for less than 36 months before selling, the gain arising out
of this deal also classified as Short Term Capital Gain. Capital gains from the sale of Equity Mutual
Funds and Equity shares are fully exempted from the tax provided the STT (Securities Transcations Tax)
has been already deducted from the sale proceeds.
This short term capital gain is clubbed with your income for the year, and is taxed at a rate as per the
applicable tax slabs / brackets.
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Short Term Capital Gain = Sale Price - Purchase Price

Example:
Full Value of Consideration (Sale Price)
Less: Cost of Acquisition (usually the purchase value of the capital asset)
Less: Cost of Improvement (the cost incurred for the improvement of the asset, if
any)
Less: Transfer Expenses (expenditure incurred wholly and exclusively in
connection with transfer. (Includes the brokerage or commission paid, cost of stamp
fee and registrations fee, traveling expenses etc.)
Short Term Capital Gain
3)
10,00,000.00
500,000.00
100,000.00
25,000.00
375,000.00
Long Term Capital Gain (LTCG)
If shares, bonds or mutual fund units held more than 12 months and other capital assets for 36 months
before selling, the again arising out of this transaction is classified as Long Term Capital Gains. In
practice Long Term Capital Gains is applied for Sale of two types of Capital Assets. One is properties like
house, building, land etc and the other is financial assets like shares / mutual funds units, Zero coupon
bond etc. Any monetary benefits thus gained as a result of sale of either type of Capital Asset attract
Capital Gains Tax.
Example:
Full Value of Consideration (Sale Price)
Less: Indexed Cost of Acquisition (usually the purchase value of the capital asset)
Less: Indexed Cost of Improvement (the cost incurred for the improvement of the
asset, if any)
Less: Transfer Expenses (expenditure incurred wholly and exclusively in connection
with transfer. (Includes the brokerage or commission paid, cost of stamp fee and
registrations fee, traveling expenses etc.)
Lees: Exemption Available
Short Term Capital Gain
10,00,000.00
680,000.00
110,000.00
25,000.00
185,000.00
In Short
Capital Asset
Shares held in a company, listed
securities, units of Mutual Fund or
zero coupon bonds.
All other Capital Assets like,
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Short-term
If held for a period not
exceeding 12 months
from the date of
acquisition.
If held for period not
Long-term
Capital Asset which is not a short term
capital asset is long term capital asset.
Capital asset which is not a short term
immovable property, Jewellery etc
exceeding 36 months
from the date of
acquisition
capital asset is long term Capital Asset.
Cost Inflation Index

As we are all aware the value of money decrease over a period of time due the effect of inflation. The real
value of Rs. 100.00 during 1995 will be different from the value now. The Income Tax laws allows to you
to reduce the net taxable gain allowing you to pay lower capital gain tax by way of adjustments against
inflation. This is the general rule that, the inflation reduces the real value of the asset over a period of
time. In other words this provision allows to you increase the purchase price of assets that you have sold.
This indexation benefit provided by Income Tax laws is called indexation.
4) Computation of Indexation Benefits
As per the Indexation procedure, the income tax assessee is allowed by

Income Tax Laws to inflate the cost of his/her asset by a RBI/Government notified inflation factor. This
inflation factor is called the Cost Inflation Index. This inflation index is used to compute the cost price of
the Asset adjusted against the cumulative inflation on year-on-year basis. This helps to counter the
erosion of value in the price of an asset and brings the value of an asset at par with prevailing market
price. Our India Government every year notifies this cost inflation index factor. This index is in the form of
a numerical value and is announced every year. The base year for Cost Inflation Index has been
determined by Indian Income Tax Department as 1981 and had assigned 100 points for this year
The purchase price of the asset that needs to be used for calculating the long term capital gains is termed
as Indexed Cost of Acquisition.
5)
What is the indexed cost of acquisition?
S 48 defines "indexed cost of acquisition" as the amount, which bears to the cost of acquisition the same
proportion as Cost Inflation Index for the year, in which the asset is transferred, bears to the Cost Inflation
Index for the first year in which the asset was held by the assessee or for the year beginning on the 1st
day of April, 1981, whichever is later.
The Cost Inflation Index, in relation to a previous year, means such Index as the Central Government
may, having regard to 75% of average rise in the Consumer Price Index for urban non-manual employees
for the immediately preceding previous year to such previous year, by notification in the Official Gazette.
Indexed Cost of Acquisition = Actual Purchase Price * (Cost Inflation Index during the year of sale /
Cost Inflation Index during the year of purchase)
indexed cost of improvement
S 48 defines indexed cost of improvement as the amount, which bears to the cost of improvement the
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same proportion as Cost Inflation Index for the year, in which the asset is transferred, bears to the Cost
Inflation Index for the year in which the improvement to the asset takes place.
Cost Inflation Index, in relation to a previous year, means such Index as the Central Government may,
having regard to 75% of average rise in the Consumer Price Index for urban non-manual employees for
the immediately preceding previous year to such previous year, by notification in the Official Gazette,
specify in this behalf.
Long Term Capital Gain = (Sale Price Indexed Cost of Acquisition)
b)
The following example will give you a clear idea about, how the long term capital gain tax is
worked out using Cost Inflation Index (CII)
An apartment was purchased in FY 1993-94 for Rs. 10,00,000.00
This asset was sold in FY 2009-10 for Rs. 32,00,000.00

Cost Inflation Index in 1993-94 was 244 and in 2009-10 it was 632
So, indexed cost of acquisition would be:
Rs. 10,00,000.00* (632/244) = Rs. 25,90,163.00

Long Term Capital Gains would be calculated as follows
Capital Gains = Selling Price of an asset Indexed Cost
i.e. Rs. 32,00,000.00 Rs. 25,90,163.00 = Rs. 6,09,837.00.
Therefore tax payable will be 20% of Rs. 6,09,837.00 which comes to Rs. 1,21,967.00
In case you have not opted for indexation. The Capital Gains tax would be as follows
Selling Price of an asset Cost of acquisition
i.e. Rs. 32,00,000.00 Rs. 10,00,000.00 = Capital Gains is Rs.22,00,000.00
Therefore tax payable @ 10% of Rs. 22,00,000.00 would have come to Rs. 2,20,000.00
So you saved Rs. 98,033.00 in taxes by using the benefit of indexation.
The treatment of Capital Gain for Agricultural Land and Inherited Property is different from other assets.
List the circumstances in which benefit of indexation is not available
Nature of LTCA Transferred
Bonds/Debentures except Capital Indexed Bonds Issued by
Govt
All Assesses
Shares/Debentures of Indian Company acquired by using

Convertible Forex under First Proviso to Section 48
Non-Residents
Depreciable Assets
All Assesses
Slump Sale
All Assesses
Units Purchased in Foreign Currency u/s 115AB
Off Shore Fund
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Assessee Not Eligible for
GDRs purchased in Foreign Currency u/s 115AC Individual
Non-Residents and Resident
Securitas u/s 115AD
Foreign Institutional Investors.
Foreign Exchange Asset u/s 1150

Non-Resident Indian
Note: CAPITAL GAINS U/S 50B in case of SLUMP SALE U/S 2(42C)
Slump Sale means the transfer of one or more undertakings as a result of the sale for a lump sum
consideration without values being assigned to the individual assets and liabilities in such sales. Cost of
acquisition and cost of improvement in case of slump sale: Net Worth of the undertaking or the division.
(NO INDEXATION OF SUCH COSTS WILL BE ALLOWED).
6)Cost Inflation Index Form 1981 to 2013
COST INFLATION INDEX FROM 1981 TO 2011
Financial Year
Financial Year
1981-1982
100
1995-1996
281
1982-1983
109
1996-1997
305
1983-1984
116
1997-1998
331
1984-1985
125
1998-1999
351
1985-1986
133
1999-2000
389
1986-1987
140
2000-2001
406
1987-1988
150
2001-2002
426
1988-1989
161
2002-2003
447
1989-1990
172
2003-2004
463
1990-1991
182
2004-2005
480
1991-1992
199
2005-2006
497
1992-1993
223
2006-2007
519
1993-1994
244
2007-2008
551
1994-1995
259
2008-2009
582
2010-2011
711
2009-2010
632
2011-2012
785
2012-2013
852
Tax treatment of Capital Gain on transfer of shares, debentures of Indian Company held by nonresidents. [Section 48 (Proviso) read with Rule 115A].
Applicability: 1) All Non-Residents Including Foreign Companies except persons covered u/s 115AC
&115AD.
2. Assets Transferred: Shares or Debentures In an Indian Company.
3. Nature of Capital Gain: Short Term or Long Term
4. Average TT Rate = (Buying Rate + Selling Rate adopted by State Bank of India)/2
Exemption from long-term capital gains on transfer of foreign exchange asset
by a Non-Resident Indian [Section 115F]
1. Condition : Long-term capital gain on transfer of foreign exchange asset Is entitled for exemption If the
whole or part of the net consideration is Invested within 6 months after the date of such transfer in
prescribed assets.
2. Prescribed Assets:
(a) Shares of an Indian Company or debentures of an Indian Public Limited Company.
(b) Deposit with an Indian Public limited Company.
(c) Central Government securities.
(d) National Savings Certificates VI and VII issue.
3. Exemption: If the whole of the net consideration is invested, then entire capital gain is exempt. If a
part of the net consideration is invested, then the deduction shall be computed as follows:
Amount Exempted = Capital Gains Amount Invested/Net consideration
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4. Holding period of the asset: 3 years from the date of acquisition.

5. Sale/conversion within the holding period: Amount exempted shall be chargeable to tax as Long
Term Capital Gain In the year of transfer.
Capital gain Gains by an NR on the sale of assets (i.e. shares and debentures of an Indian company
acquired in foreign currency re computed differently. Capital Gains are computed by converting the full
value of consideration, expenses incurred in connection with the transfer, and the cost of acquition in the
same currency as was initially utilized for purchase. This conversion takes care of exchange- rate
fluctuations.
Long term capital gain will be charged @ 10% plus applicable cess on the net capital gain. From gains
on such transfers, only expenses incurred in connection with the transfer are allowed as a deduction to
determine net capital gain. The valuation under these provisions is not in foreign currency. Therefore
exchange rate fluctuations are not considered.
Capital gain arising on the transfer of specified assets are completely exempted from tax on following
conditions are full filled
The asset transferred must be long term capital asset

Net consideration must be invested in specified assets
Net investment should be made within 6 months of the transfer
Where only a portion of net consideration is reinvested, proportionate exemptions allowed
New asset must be held for at least three years
7) Capital Gain Exemptions can be availed:
1) Residential house property purchase a house /residential property within one year or
construct a house within two years
2) Any long term capital asset- Specified bonds NABARD, NHI, REC, SIDBI within six
months. The maximum amount allowed to invest in these types of bonds are Rs.
50,000,000.00
3) Any log term capital asset other than residential house - invest in residential house (net
consideration to be invested not gains. Purchase within one year before or two years
after the date of transfer or construct within three years. The pending unutilized amount
can be deposited in a specified capital gain account
Under S 54, capital gains, arising from transfer of house property, are exempt from tax provided the
following conditions are satisfied
1. The house is a residential house whose income is taxable under the head "income form house
property" and transferred by an individual or a Hindu Undivided Family.
2. The house property, which may be self-occupied or let out, is a long term capital asset (i.e. held
for a period of more than 36 months before sale or transfer.)
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3. The assessee has purchased a residential house within a period of 1 year before the transfer (or
within 2 years after the date of transfer) or has constructed a residential house property within a
period of 3 years after the date of transfer. In case of compulsory acquisition, the above time limit
of 1-year, 2 years and 3-years is applicable from the date of receipt of compensation (whether
original or additional).
4. The house property, so purchased or constructed, has not been transferred within a period of 3
years from the date of purchase or construction.
The following points should also be kept in mind:a. Construction of the house should be completed within 3 years from the date of transfer. The date
of construction is irrelevant. Construction may be commenced even before the transfer of the
house.
b. A case of allotment of a flat under the self-financing scheme of DDA (or similar schemes of cooperative societies and other institutions) is taken as construction of house for this purpose.
8) What are the consequences if a new house is transferred within 3 years?
If the new house is transferred within a period of 3 years from the date of its purchase or construction, the
amount of capital gain that arise, together with the amount of capital gains exempted earlier, will be
chargeable to tax in the year of the sale of the new house property.
It is also provided that if the new house is transferred within 3years from the date of its acquisition or date
of completion of construction, the amount of exemption under S 54 shall be reduced from the cost of
acquisition of the new house, while calculating short-term capital gain on the transfer of the new asset.
9) Exemption available on capital gains that arise from transfer of house property
If the amount of capital gain is less than the cost of the new house property, including cost of land, the
entire amount of capital gains is exempt from tax. Alternatively, if the amount of capital gains is more than
the cost of the new house property, the difference between the amount of capital gains and the cost of the
new house is chargeable to tax as capital gains.
Full value of consideration: Whole price without any deduction whatsoever.
Expenditure incurred wholly and exclusively in connection with such transfer: Expenditure incurred which
is necessary to effect such transfer e.g. stamp duty, registration etc.
Cost of acquisition of an asset: Value for which it was acquired. Expenses of capital nature for completing
or acquiring the title to the property may be included in the cost of acquisition.
Cost of improvement:
a. In relation to goodwill of a business or a right to manufacture, produce or process any article or
thing, the cost of improvement is taken to be nil.
b. In relation to any other capital asset1. Where the capital asset became the property of the assessee before April 1, 1981 the
cost of improvement includes all expenditure of capital nature incurred in making any
addition/alteration to the capital asset on or after April 1, 1981 by the owner.
2. In any other case, the cost of improvement refers to all expenditure of a capital nature
that is incurred in making any additions or alterations to the capital asset by the assessee
or the previous owner.
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10) How to avoid paying capital gains tax

The Income Tax Act grants total/partial exemption of capital gains under Ss- 54, 54B, 54D, 54EC, 54F,
54G and 54H.
a. Under S 54 capital gains, arising from transfer of house property, are exempt from tax provided
certain conditions are satisfied. (Refer to Q5)
b. Under S 54B capital gains, arising from transfer of land, being used by an individual or his
parents for agricultural purposes for a period of 2 years, immediately preceding the date of
transfer, are exempt from tax, provided the assessee has purchased another land for agricultural
purpose within a period of 2 years from the date of such transfer. In the case of compulsory
acquisition, a period of 2 years from the date of receipt of compensation (whether original or
additional) is applicable.
c. Under S 54D, capital gains, arising on compulsory acquisition of any land or building forming part
of an industrial undertaking, is exempt from tax, provided such land or building was used by the
assessee for the purpose of the industrial undertaking for at least 2 years preceding the date of
compulsory acquisition and, the assessee has, within a period of 3 years after that date,
purchased any other land or building or right in any other land/ building or constructed any other
building for the purpose of shifting or reestablishing the said undertaking or setting up another
industrial undertaking.
d. Under S 54E, where the capital gain arises from the transfer of a long-term capital asset before
the 1st day of April, 1992, and the assessee has, within a period of six months after the date of
such transfer, invested or deposited the whole or any part of the net consideration in any
specified asset.
e. Under S 54EA, where the capital gain arises from the transfer of a long-term capital asset before
the 1st day of April, 2000 and the assessee has, at any time within a period of six months after
the date of such transfer, invested the whole or any part of the net consideration in any of the
bonds, debentures, shares of a public company or units of any mutual fund referred to in clause
(23D) of section 10, specified by the Board in this behalf by notification in the Official Gazette.
f. Under S 54EB, where the capital gain arises from the transfer of a long-term capital asset before
the 1st day of April, 2000, and the assessee has, at any time within a period of six months after
the date of such transfer invested the whole or any part of capital gains, in any of the assets,
specified by the Board in this behalf by notification in the Official Gazette. (l) Under S 54 F where,
in the case of an assessee being an individual or a Hindu undivided family, the capital gain arises
from the transfer of any long-term capital asset, not being a residential house, and the assessee
has, within a period of one year before or two years after the date on which the transfer took
place purchased, or has within a period of three years after that date constructed, a residential
house.
g. S 54 G provides exemption on transfer of assets in the case of shifting of industrial undertaking
from an urban area, provided the capital asset (being plant, machinery, land or building or any
right in land or building), used for the purpose of the industrial undertaking situated in an urban
area, is transferred in the course of or, in consequence of the shifting of such industrial
undertaking to any area other than an urban area, and the assessee has, within a period of 1
year ,before or 3 years after the date on which the transfer took place, purchased a new
machinery or plant for the purposes of business of the industrial undertaking in the area to which
the said undertaking is shifted or, has acquired building or land or constructed a building for the
purposes of his business in the said area or shifted the original asset and transferred the
establishment of such under-taking to such area; and incurred expenses on such other purpose
as may be specified in a scheme, framed by the Central Government for the purposes of this
section.
h. S 54H, provides that where the transfer of the original asset is by way of compulsory acquisition
under any law and the amount of compensation, awarded for such acquisition, is not received by
the assessee on the date of such transfer, the period of acquiring the new asset under S 54, 54B,
54D, 54EC and 54F by the assessee or the period for depositing or investing the amount of
capital gain shall be extended in relation to such amount of compensation as is not received on
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the date of transfer. The extended period shall be reckoned from the date of receipt of the amount
of compensation. Moreover, when the compensation in respect of transfer of the original asset by
way of compulsory acquisition under any law is received before April 1, 1991, the period(s)
aforesaid, if expired, shall extend up to December 31, 1991.
11) Exemption of long term capital gains on transfer of residential property if invested in
plant machinery through small/medium enterprise, for 5 years (Budget 2012 proposal)
Section 54 GA is proposed to be inserted so as to provide exemption of long term capital gains
arising toindividuals and HUFs from transfer of residential property (house or a plot of
land) between 1st April 2012 and 31stMarch 2017, proportionate to the sale consideration thereof
invested in a newly incorporated Indian company (to be owned atleast 50% by the concerned
assessee, and engage in the business of manufacture and covered as small or medium business
enterprise under Micro, Small and Medium Enterprises Act, 2006) from which such company
purchases new plant or machinery; subject to fulfillment of the other conditions as prescribed
therein
12) Relief from long-term capital gains tax on transfer of residential property if invested in
a manufacturing small or medium enterprise
The Government had announced National Manufacturing Policy (NMP) in 2011, one of the goals
of which is to incentivise investment in the Small and Medium Enterprises (SME) in the
manufacturing sector. It is proposed to insert a new section 546B so as to provide rollover relief
from long term capital gains tax to an individual or an HUF on sale of a residential property
(house or plot of land) in case of re-investment of sale consideration in the equity of a new startup SME company in the manufacturing sector which is utilized by the company for the purchase
of new plant andmachinery. This relief would be subject to the conditions that(i)
the amount of net consideration is used by the individual or HUF before the due date of
furnishing of return of income under sub-section (1) of section 139, for subscription in equity
shares in the SME company in which he holds more than 50% share capital or more than 50%
voting rights.
(ii) The amount of subscription as share capital is to be utilized by the SME company for the
purchase of newplant and machinery within a period of one year from the date of subscription in the
equity shares.
(iii) If the amount of net consideration subscribed as equity shares in the SME company is not utilized by
the SME company for the purchase of plant and machinery before the due date of filing of return by the
individual or HUF, the unutilised amount shall be deposited under a deposit scheme to be prescribed in
this behalf.
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(iv) Suitable safeguards so as to restrict the transfer of the shares of the company, and of
the plant andmachinery for a period of 5 years are proposed to be provided to prevent diversion of
these funds. Further, capital gains would be subject to taxation in case any of the conditions are
violated.
(v) The relief would be available in case of any transfer of residential property made on or
before 31st March, 2017.
i.
The proposed amendments in the provisions of the Income-tax Act shall be effective from 1st
April,
2013
and
would
accordingly
apply
to assessment year
2013-14
and
subsequent assessment years.

13) Capital Gains Accounts Scheme
Capital gains arise when the consideration received on transfer or sale of a property is more than its
indexed cost. The amount of capital gains that is not appropriated by an assessee towards the purchase
of another property within one year from the date of transfer of the original property, or that is not utilised
by him for the purchase or construction of a new property before the date of furnishing the return of
income, should be deposited by him in a specified nationalised bank. The amount should be invested in a
Capital Gains Account Scheme under the Capital Gains Account Scheme, 1988. The scheme is
applicable to all assessees having capital gains. The deposits may be made in one lump sum or in
installments at any time. The amount should be deposited before the due date for filing income tax
retunrs.
14) Who are eligible to take the advantage? Mainly, the advantage of Capital Gains Account Scheme
can be derived by individuals and Hindu Undivided Family. To be more precise, all those tax payers who
would like to invest in buying a residential property or in constructing a residential property so as to save
tax in respect of long-term capital gain can find much advantage in this scheme known as Capital Gains
Accounts Scheme 1988.
Before analysing the salient features of this scheme, it may be recalled here that to save tax on capital
gain various provisions are contained in the Income Tax Act, 1961 whereby if investment is made within
two years from the date of sale one can save capital gain tax in respect of long-term gain, especially if the
investment is made in acquiring another residential property.
Similarly, if the tax payers were to construct a residential property then the time period for completing the
construction is within three years from the date of sale. Now, in between comes the role of Capital Gains
Accounts Scheme.
All those tax payers who are taking advantage of the above mentioned schemes of making investment in
residential property are advised to take advantage of the Capital Gains Accounts Scheme, especially if
they are not able to make investment in residential property by the last date of filing the income tax
returns
For example, if a person derives long-term capital gain on April 10, 2010, in that event he must make the
investment in acquiring new residential property within two years from the date of sale or when the said
property is proposed to be constructed then within three years from the date of sale.
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However, there is also a condition that if the tax payer is not able to buy or construct the said property by
the last date of filing the income tax return, in that event the amount has to be deposited in the Capital
Gains Accounts Scheme. For example , as mentioned above, if the property is sold on April 10, 2010, the
tax payers can buy or construct the property by July 31, 2011, which happens to be the last date of filing
the income tax return.
In a situation where such purchase or construction is not completed by July 31, 2011 in that event the
money must be deposited on or before July 31, 2011, that is, the last date of filing the income tax return in
terms of the Capital Gains Accounts Scheme.
15) List of Banks who can Accept Deposit The account under Capital Gains Accounts Scheme
cannot be opened in all the branches and with all the banks. The government has identified the following
28 banks to accept the deposit under Capital Gains Accounts Scheme 1988. These banks are: State
Bank of India, State Bank of Bikaner & Jaipur, State Bank of Hyderabad, State Bank of Indore, State
Bank of Mysore, State Bank of Patiala, State Bank of Saurashtra, State Bank of Travancore, Central
Bank of India, Bank of India, Punjab National Bank, Bank of Baroda, UCO Bank, Canara Bank, United
Bank of India, Dena Bank, Syndicate Bank, Union Bank of India, Allahabad Bank, Indian Bank, Bank of
Maharashtra , Indian Overseas Bank, Andhra Bank, Corporation Bank, New Bank of India, Oriental Bank
of Commerce, Punjab & Sind Bank & Vijaya Bank. All branches of these banks except the rural branches
are authorized to receive the deposit and maintain account under Capital Gains Accounts Scheme, 1988.
Other than the above, no other bank is authorized to accept the deposit under Capital Gains Accounts
Scheme.
Account Type Under Capital Gains Accounts Scheme- Under the scheme there can be two types of
accounts.
Deposit Account A: This account is like a savings deposit account. Withdrawals may be made from the
account from time to time, subject to other conditions of the scheme. This account is suitable for
assessees who are planning to construct a house over a period of time.
Deposit Account B: This account is like a term deposit that is payable after a fixed period of time. The
interest earned on the deposit may either be withdrawn periodically or it may be reinvested.
In order to open the account, an assessee must fill up the prescribed application form in duplicate.
Further, the type of account A or B is to be specified. In case Deposit Account B is opted for, it has to
be specified whether the account will be cumulative or non-cumulative. The proof of such deposit should
be attached with the income tax returns.
Both the accounts will be eligible to interest as per the guidelines of the Reserve Bank of India. Moreover,
a depositor may make or change nominations to the account by filling in the relevant forms.
The amount can be utilised in accordance with the scheme which the Central Government may frame.
The amount withdrawn should be utilised for the purpose of purchase or construction of a house.The
amount withdrawn should be utilised for the purpose within sixty days of the withdrawal. Any unutilised
amount should be redeposited in Deposit Account A.
The amount already utilised by an assessee for the purpose of purchase or construction of a new
property together with the amount deposited will be deemed to be the cost of the new property. In case
the amount deposited is not utilised wholly or partly for the purchase or construction of the new property
within the period specified, then the unutilised amount will be charged as income of the previous year in
which the period of three years from the date of the transfer of the original property expires.
Further, an assessee will be entitled to withdraw the amount in accordance with the provisions of the
scheme.
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The withdrawals from Deposit Account A can be made through a prescribed form. In case of Deposit
Account B, a depositor will first have to transfer the amount to Deposit Account A,and then make the
withdrawal. The amounts can be transferred from one branch of a bank to another branch of the same
bank only. A depositor may close the account with the approval of the assessing officer.
Forms C and D Similarly, it is possible to convert the deposit Account B to the deposit Account A. As
and when the money is required to be withdrawn for the purposes of making payment for the residential
property, the assessee shall apply in form No C. After receiving the application the bank shall permit the
withdrawal of the amount. It may also be noted here that where the amount of withdrawal exceeds Rs
25,000, the bank will make the payment by way of crossed demand draft drawn in favour of the person to
whom the depositor intends to make the payment. Tax payers should also note that other than the initial
withdrawal later on when the withdrawals are made by the tax payers, they shall furnish in Form No D in
duplicate, the details regarding the manner and the extent of utilizing of the amount in respect of the
immediately preceding withdrawal. The bank after receiving two copies of Form D from the accountholder
will retain one copy and return the other copy to the tax payer.
Forms E and G- The scheme further provides that the amount which has been withdrawn should be
utilized for purchase or construction of the property within 60 days from the date of such withdrawal. The
facility of nomination is also available to the deposit holder by filling up Form No E. Finally, when the
property has been purchased or the construction has been completed and now the tax payer desires to
close his Capital Gains Account Scheme then he shall make an application with the approval of the
assessing officer. The application for closure of the account will be in Form G. Whenever you are
contemplating to make a deposit in respect of Capital Gains Account Scheme, either by way of a savings
account or a fixed deposit account , then please remember that you do not open the normal savings bank
account or a normal saving bank deposit but specifically fill up No A and then make the deposit with the
concerned bank under the Capital Gains Accounts Scheme.
16) Opening a bank account for Capital Gains Account Scheme- Once the deposit is made by you
either in the savings account or in the fixed deposit account, please ensure that it is clearly mentioned in
the account opened that it is for Capital Gains Account Scheme. A large number of tax payers commit the
mistake of just opening a bank account with a bank to save capital gains and later on use the money for
buying or constructing the residential property. But please do remember that the income tax law very
specifically provides that the money which has not been used for buying or constructing a residential
property, such money should be kept exclusively under Capital Gains Accounts Scheme under a
separate bank account in terms of Capital Gains Accounts Scheme. Also do remember that the deposits
in these accounts can be made in one lump sum or in installment.
Things to Keep in Mind
CGAS does not allow any withdrawals, except for the specified purpose (of buying the house),
even of interest. More, the investor is required to pay tax on this interest (to which he has no
access) on an accrual basis out of his other income.
Even if the sale is effected in, say, the first month of the financial year (say, April 2011), the
taxpayer may deposit the amount in CGAS on the last date for filing returns. In other words, he
can freely utilize this money for 15 months (April 2011 to July 2012) as he likes.
We have already discussed the fact that if the amount is not utilised wholly or partly for the
desired purpose, within the specified period, the unutilised amount shall be treated as capital
gains of the year during which the specified period expires.
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17) Capital Gain treatment of Inherited or gifted properties
The provision of capital gain tax does not attract any transfer of a capital
asset under a gift or a will or received by way of inheritance. In other words, one cannot be liable to pay
capital gains tax just because of the fact that he/she has inherited a property from their relatives. But If
the inheritor wish to sell the inherited property he/she needs to pay applicable capital gain tax.
S 49(1) states where the asset has been inherited by the assessee or gifted to the assessee, the cost of
acquisition of the asset for which the previous owner acquired it, shall be deemed to be the cost of
acquisition of the asset as increased by the cost of improvement of the assets if any, incurred or borne by
the previous owner or the assessee as the case may be.
DEEMED COST OF ACQUISITION
a) Cost to the Previous owner u/s 49 (1): where the capital asset became property of the assesee, the
cost of acquisition of the asset shall be deemed to be cost for which the previous owner of the property
acquired it, in the following cases:
(i) on the distribution of assets on total or partial partition of HUF;
(ii) under a gift or will;
(iii) by succession, inheritance or devolution;
(iv) distribution of assets on the liquidation of a company;
(v) transfer to a revocable or Irrevocable trust;
(vi) transfer by a wholly owned Indian subsidiary company to Its holding company or vice versa;
(vii) transfer In the scheme of amalgamation of two Indian companies u/s 47(vl);
(viii) transfer in the scheme of amalgamation between two foreign companies;
(ix) transfer of capital asset by a banking company to a banking Instltutition In. the scheme of
amalgamation;
(x) transfer in the case of business reorganization by a predecessor cooperative bank to the successor
cooperative bank
(xi) on the conversion of a self acquired property of a member of an HUF to the joint property of the HUF.
The cost and the date of acquisition to calculate this capital gains tax are to be taken as that of the the
previous owner. For example, if you have inherited the property from say your father, you will have to
consider the cost that your father paid originally when he first purchased the property.
Indexed Cost of Acquisition (ICA) and Indexed Cost of Improvement (ICI) [Section 48]
When asset is acauired by assessee himself
(a) Acquired prior to 1.4.1981
Indexed Cost Acquisition
Fair Market Value on 01.04.1981 or cost of acquisition whichever is high Cost of Inflation Index for the
year of transfer/100.
(b) Acquired after 1.4.1981,
Indexed cost of Acquisition
CII for year of acquisition Cost of Acquisition ? CII for year of transfer ?
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Indexed Cost of Improvement in both the above cases

CII for year of Improvement Cost of Improvement? CII for year of transfer ?
ICI can be computed only if it is incurred after 01.04.1981
As per Section 48 explanation (iii) defines indexed cost of acquisition to mean an amount which bears to
the cost of acquisition the same proportion as the cost inflation index for the year in which the asset is
transferred bears to the cost inflation index for the first year in which the asset was held by the assessee
or for the year beginning April 1, 1981, whichever is later. This means that for calculating long-term
capital gains, you may use indexed cost or the cost on 1.4.81, whichever is higher.
There is also another component of cost, which is the cost of improvement of the asset. Explanation (iv)
defines indexed cost of any improvement to mean an amount which bears to the cost of improvement
the same proportion as the cost inflation index for the year in which the asset is transferred bears to the
cost inflation index for the year in which the improvement to the asset took place.
The following example will give more idea about how to calculate the capital gain on the inherited
property. Mr. X father had bought a house on July 6, 1983, for Rs1 lakh. On July 6, 1986, he spent Rs2
lakh for adding another room to the house. It was on July 6, 1990, that he passed away leaving the house
to his son. The market value of the property at that time was Rs10 lakh. Mr. X eventually sold this house
on July 6, 2011, for a net consideration of Rs50 lakh. Now, lets work out the capital gains.
Let us first compute the indexed cost of the house. We shall come to the indexed cost of the improvement
(adding the room) a little later. There is a bit of mathematics involved, but its really simple multiplication
and division. And it is not the numbers that are important but the principle behind the issue.
The market value in FY 1990-91, the first year in which the asset first came into Mr. Xs possession was
Rs10 lakh. This value is of no consequence. His cost of acquisition, thanks to Sec 47(iii) is evidently Rs1
lakh, the same that his father paid in FY83-84.
Consequently, Mr. Xs date of acquisition would also be July 6, 1983.
The cost inflation index of FY11-12 is 785 and that of FY 83-84 is 116. Therefore, the indexed cost is
Rs6,12,931 (1,000,00 x 785/116). This calculation seems all right at face value. However, there is an
oversight. Without reading further, try and guess what it is. Thats the real challenge.
Examine the above mentioned explanation (iii) once again. Yes, the date of acquisition for the son is
certainly July 6, 1983, but it does not come into the picture at all for any purpose whatsoever, including
computation of indexed cost. The index for the year in which the son first held the asset is required to be
taken for computation. The son came into possession of the house in FY 1990-91 and the index for that
year is 182. Therefore, the indexed cost is Rs4,31,318 (1,00,000 x 785/182) and not Rs6,12,931 as
computed earlier.
Now, let us work out the indexed cost of improvement. Ironically, if we extend the same principle here, we
would be making a mistake. Re-examine explanation (iv) above. A minute reading will tell you that here,
unlike in the previous case, the index to be considered is that of FY 1986-87, the year in which the
improvement of Rs2,00,000 was carried out. The index for 86-87 is 140 and the indexed cost is
Rs11,21,429 (200000 x 785/140).
Ergo, the total indexed cost is Rs15,52,747 (4,31,318+11,21,429).
It is this computed cost that will be reduced from the net sale proceeds. The tax will be 20% applicable
cess of this amount.
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(Here it must be noted that in the case of DCIT v Manjula J Shah - 318 ITR (AT) 417 (Bombay Special
Bench), it was held if the cost and date of an acquisition had to be taken to be that applicable to the
previous owner, indexation should also be available from the same date when the previous owner
acquired the property.
However, this is what was decided in a judgment and the relevant laws have not been amended.
Therefore, the taxpayer will have to defend his stand if the income tax department were to raise an
objection).
The character of long or short-term of the property would also depend upon the date of acquisition of the
original holder. In case this original holder has also acquired the property by way of gift or inheritance,
then it will be the date on which the very first holder purchased or constructed the property.
18) Please note that the long-term capital gains earned by you from inherited shares sold on any
recognized stock exchange in India by paying the applicable STT are exempt from tax provided:
.
(2) Where the capital asset is a share(s) in an amalgamated company, which is an Indian company,
became the property of the assessee in consideration of a transfer in a scheme of amalgamation, the cost
of acquisition of the asset shall be deemed to be the cost of acquisition to him of the shares(s) in the
amalgamating company.
(2A) Where the capital asset, being a share or debenture in a company became the property of the
assessee in consideration of a transfer by way of conversion of bonds or debentures, debenture-stock or
deposit certificates in any form, the cost of acquisition of the asset to the assessee shall be deemed to be
that part of the cost of debenture, debenture- stock or deposit certificates in relation to which such asset
is acquired by the assessee.
(2AA) Where the capital gain arises from the transfer of the shares, debentures or warrants, the value of
which has been taken into account while computing the value of perquisite under clause (2) of section 17,
the cost of acquisition of such shares, debentures or warrants shall be the value under that clause.
(2C) The cost of acquisition of the shares in the resulting company shall be the amount which bears to the
cost of acquisition of shares, held by the assessee in the demerged company, in the same proportion as
the net book value of the assets transferred in a demerger bears to the net worth of the demerged
company immediately before such demerger.
(2D) The cost of acquisition of the original shares held by the shareholder in the demerged company shall
be deemed to have been reduced by the amount as so arrived at under sub-section (2C).
What is the rule regarding period of holding if the assessee has inherited the property only six
months ago? Can this be considered to be a short-term capital asset?
Under the definition of short-term capital asset, given in section 2(42A), it is specifically provided in subclause (b) that in the case of an acquisition by the modes provided in Section 49, there shall be included
the period for which the previous owner held the asset. Thus, if the present holder inherited it only 6
months ago, but the previous holder had held it for three years, it will be deemed that the present holder
has held it for three and a half years
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CHAPTER 12
Wealth Tax implications of NRIs
Wealth tax is not a very important or high revenue tax in view of various
exemptions. Wealth tax is a socialistic tax. It is not on income but payable only because a person is
wealthy. Wealth tax is an annual tax like income tax. It is another type of direct tax by which tax is
imposed on individuals coming within its purview. Pensioners, retired persons or senior citizens have not
been accorded any special benefits under this Act. The valuation date for wealth tax computation is
31st March, The twelve months immediately before the computation date is considered as previous year
for which wealth tax is calculated. Net wealth means taxable wealth. It means the amount by which the
aggregate value of all assets (excluding exempted assets) belonging to the assessee on the valuation
date including assets required to be included in the net wealth, is in excess of the aggregate value of all
debts owed by the assessee on the valuation date which have been incurred in relation to the taxable
assets. The wealth tax needs to be paid at the rate of one per cent (1%) of the amount by which net
wealth exceeds Rs. 30 lakhs. No surcharge or education cess is payable.
The liability to pay tax in the case of an individual depends upon his residential status and nationality.
Residential status is decided as per the provisions of the Income-tax Act
The scope of liability to wealth tax is as follows:
1. In the case of an individual who is a citizen of India and resident in India, a residentHUF and
company resident in India;
Wealth tax is chargeable on net wealth comprising of
a) All assets in India and outside India;
b) All debts in India and outside India are deductible in computing the net wealth.
2. In the case of an individual who is a citizen of India but non-resident in India or not ordinarily
resident in India, HUF, non-resident or not ordinarily resident in India and a company nonresident in India;
a) All assets in India except loan and debts interest whereon is exempt from income-tax
under section 10 of the Income-tax Act are chargeable to tax.
b) All debts in India are deductible in computing the net wealth.
c) All assets and debts outside India are out of the scope of Wealth Tax Act.
3. In the case of an individual who is not a citizen of India whether resident, non-resident or not
ordinarily resident in India:
Same as in (b):
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The credit balance in a Non-resident (External) Account is exempt from wealth tax provided the depositor
is a person resident outside India as defined in the Foreign Exchange Regulation.
Most of the people are bothered about preparation of Income Tax Returns but they are least bothered
about while dealing with Wealth Tax aspects and most of the people are not aware of the Wealth Tax
provisions..
If you are a Non Resident Indian with net wealth from assets in India aggregating more than Rs 30 lakh in
a financial year as per the prevailing rules, you may be liable to pay wealth tax.
1. What are all the assets included for wealth tax Computation ?
Assets include:
a) Urban Land (that is, non agricultural land)
b) Residential or commercial property
c) Jewellery, bullion, furniture, utensils and any other article made wholly or partly of gold, silver, platinum
or any other precious metal
d) Cars, Aircrafts, Yachts
e) Cash in excess of Rs 50,000 (this is cash in hand and not in the bank)
Only if these assets are located in India would you fall under the purview of Wealth Tax in India. Any of
these assets acquired through gift inheritance will also be considered as assets for Wealth Tax purpose.
It is very easy to identify the ownership of land, property and vehicles with the help of the related title
deeds, in the case of gold or other precious metals "There are no specific criteria for deciding the
ownership of gold under the Wealth Tax Act. Hence on a general basis, if you have purchased the gold
and you are legal owner, it will be considered as your asset. If it has come through gift or inheritance then
you will be considered as the legal owner because it your property."
Assets also include those assets that are transferred to the spouse, minor child or wife of son without
adequate consideration. So if you have gifted property to your spouse or transferred property in the name
of your minor child or in the name of your son's wife, without any consideration, the asset will be
considered to be held by you for Wealth Tax Purpose.
In case an asset is held by an individual's minor child, such asset shall be included in the wealth of the
parent. If a minor has earned on account of any manual work done by him or any activity involving
application of his skill, talent or specialised knowledge and experience it shall not be included in the
wealth of the parent."
2. Assets not included for Wealth Tax purposes
If you hold any of the above assets as stock-in-trade, they will not be considered your assets for Wealth
Tax purposes. So if a developer holds apartments that he proposes to sell, they will not be considered
assets for the purpose of Wealth Tax. Financial assets such as bank balance, stocks, mutual funds,
bonds and deposits are not included in assets. Additionally, a property which is given out on rent for at
least 300 days in a year is not considered to be an asset. Agricultural land also not included for the
wealth tax computation purposes subject to certain condtions
3. No wealth tax on agriculture land
Finance bill 2013-14 has passed in Lok Sabha on Tuesday 30 April 2013 and there are some
amendments in the rules of taxation. The new amendment rules are as under. In this contrast, Finance
bill explain that no wealth tax will be levy on agriculture land. New and old rules are as follows.
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Old rule
The urban land is not chargeable to wealth-tax if it is a land:

(1) On which construction of a building is not permissible under any law for the time being in force in the
area in which such land is situated; or
(2) occupied by any building which has been constructed with the approval of the appropriate authority;
or
(3) being an unused land held by the assessee for industrial purposes for a period of two years from the
date of its acquisition by him; or
(4) held by the assessee as stock-in-trade for a period of 10 years from the date of its acquisition by him.
New rule
Land classified as agricultural land in the records of the Government and used for agricultural purposes,
will not be treated as an 'asset' under Section 2(ea) with retrospective effect from the AY 1993-94.
Consequently, such land will not be chargeable to wealth-tax, even if such land is situated in an urban
area.
As per the amended provision, following lands will not be chargeable to wealth-tax:
(1) Land classified as agricultural land in the records of the Government and used for agricultural
purposes; or
(2) Land on which construction of a building is not permissible under any law for the time being in force in
the area in which such land is situated; or
(3) Land occupied by any building which has been constructed with the approval of the appropriate
authority; or
(4) An unused land held by the assessee for industrial purposes for a period of two years from the date of
its acquisition by him; or
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(5) Land held by the assessee as stock-in-trade for a period of 10 years from the date of its acquisition by
him.
4.How net wealth is determined?
Net wealth is the aggregate value of all the above assets minus any loans
taken in order to purchase these assets. So if you have taken a home loan to purchase a property, the
outstanding value of the loan will be reduced from the value of the property while arriving at net wealth.
Another important inclusion to net wealth is Interest in Partnership. If you are a partner of a firm in India,
the value of your interest in the assets of the firm will be included in your net wealth.
Wealth tax is then calculated at the rate of 1% over and above the limit of Rs 30 lakh. While income tax is
a tax on the income earned in a particular year, wealth tax is a tax on the value of assets held in a
particular year. So if you sell a property before the 31st of March of a financial year, you would not have
to include that asset while calculating wealth tax. But the gains from the sale would be included in income
tax.
5.The method of valuation of assets
There are different valuation mechanisms for each asset. In the case of property, a multiplier factor is
applied to the net rent. In the case of jewellery, value of jewellery shall be estimated to be the price which
it would fetch if sold in the open market on the valuation date. If the value exceeds Rs 5 lakh a report of a
registered valuer must be attached. In case of all other assets, the Assessing Officer may conduct the
valuation himself or refer the valuation to a Valuation Officer. Valuation can be a complicated and tedious
process and it would be best to consult a professional for this.
6.What are all the expectations available
Any property that is given out on rent for at least 300 days in the year is exempt from Wealth Tax. So
suppose you are an NRI and own 2 properties in India. One property is given out on rent for the entire
year and the second one is vacant. "The property which is let out for the full year will not be considered
as an asset. The vacant property can be claimed as exempt under the provisions of the Wealth tax Act."
Therefore, neither of these properties will be considered while arriving at the net wealth threshold of Rs
30 lakh.
7.What about NRIs returning to India?
NRIs returning to India with the intention to stay on permanently have some concessions with respect to
Wealth Tax. "The exemption is available only to an Indian citizen or to a person of Indian origin who was
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ordinarily residing in a foreign country and has returned to India with the intention of permanent stay. In
case of such individual, any asset brought by him or any property acquired out of the money brought by
him within one year immediately preceding the date of his return and at any time thereafter, shall be
exempt from wealth tax and such exemption shall be available for a period of 7 successive years starting
from the date of his return."
8.How should NRIs file Wealth Tax Returns?
The due date for filing wealth tax returns is the same as the due date for filing income tax returns, that is,
31st July. Unfortunately for NRIs, there is no facility to file your Wealth Tax returns online. However, the
return can be signed by a person holding due power of attorney in India.
The penalty for filing wealth tax returns is 1% per month from the due date.
9.E-filing of annexure-less return of WEALTH TAX (Budget 2013)
New section 14A & 14B (similar to section 139C & 139D of Income Tax Act) proposed to be
inserted into the Wealth Tax Act, 1953
Consequential amendment to section 46 Wealth Tax Act, 1953
Now wealth tax returns can be filed online
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CHAPTER 13
Guide on filing of Income Tax Returns by NRIs in India
Filing of tax returns in India by a Non Resident Individual depends on the taxability of income earned by
the individual which in turn depends on his/her residential status (as per tax laws). Here are some tips for
you.
1.Who is a Non resident in India?
As per the provisions of the Income Tax Act, 1961 (Act), an individual is considered to be a tax resident of
India if he is:
a) Physically present in India for 182 days or more in that tax year; OR
b) Physically present in India for 60 days in that tax year and 365 days or more in the preceding four tax
years. However, if an Indian citizen leaves India during the previous year for the purpose of employment
outside India or as a member of the crew of and Indian ship, the period of 60 days is extended to 182
days.
The above two conditions are termed as the basic conditions of residency. If neither of these two basic
conditions are satisfied, the individual is classified as a NRI.
The first step to filing the Return would be making an application for allotment of Permanent Account
Number PAN (Permanent Account Number). PAN is mandatory for filing income tax returns also
quoting PAN is now a days mandatory for most of the financial and non-financial transactions in India.
Normally July 31st of every year is fixed as the last date for filing of income tax returns in India, but most
of the cases, this dead line has been extended by a notification from Income Tax Department. If you are
a Non Resident Indian (NRI) and are looking at the best way to file your tax returns, here is a quick guide
on various options, including e-filing.
If the value of transactions of purchase of immoveable properties exceeds Rs. 3,000,000.00 that should
be mentioned in the tax returns
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2.Who is liable to file Income Tax Returns

If you are an NRI, you would have to file your income tax returns as per the present rules if you fulfill
either of these conditions:
a) Your taxable income in India during the year financial year is the above the basic exemption as per
the Income Tax Act, 1961. For the year 2013-2014 the basic the basic exemption limit is Rs. 200,000.00
OR
b) You have earned short-term or long-term capital gains from sale of any investments or assets
(moveable or immovable properties) , even if the gains are less than the basic exemption limit.
Note: The enhanced exemption limit for senior citizens and women is applicable only to residents and not
to non-residents. As per Indian tax laws, the initial basic exemption income limit below which tax is not
payable is Rs. 200,000 from FY 2013-14 For senior citizens, this limit is enhanced to Rs 250,000 as per
Budget 2013. However, this enhanced limit is not applicable to NRIs, notwithstanding the fact that they
may be senior citizens. other words, regardless of your age, the general limit of Rs 200,000 for FY 201314 would be applicable to NRIs. The basic tax exemption available for women below the age of 60 years
is at par with men from FY 2012-13.
3.Are there any exemptions from filing tax returns?
The following are the two exceptions:
a) If your taxable income consisted only of investment income (interest) and/or capital gains income and
if tax has been deducted at source from such income, you do not have to file your tax returns.
b) If you earned long term capital gains from the sale of equity shares or equity mutual funds, you do not
have to pay any tax and therefore you do not have to include that in your tax return
Tip: You may also file a tax return if you have to claim a refund. This may happen where the tax deducted
at source is more than the actual tax liability. Suppose your taxable income for the year was below Rs
200,000.00 FY 2013-14 but the bank deducted tax at source on your interest amount, you can claim a
refund by filing your tax return.
Another instance is when you have a capital loss that can be set-off against capital gains. Tax may have
been deducted at source on the capital gains, but you can set-off (or carry forward) capital loss against
the gain and lower your actual tax liability. In such cases, you would need to file a tax return.
4. What is the dead line for filing tax returns?
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The last date to file returns for the financial year is normally 31st July . However,
remember the following:
a) If you do not have any tax payable (that is all your tax has been deducted at source), you can still file
your tax return by 31st March of the next year without any penalties
b) you do have tax payable, you can still file your returns by 31st March of next year but you will be
charged an interest of 1% per month for every month of delay starting from 31st July till the time you file
your tax returns
c) If you do not file your tax returns even by the 31st of March of next year , you may be charged a
penalty of Rs 5,000 for every year of delay.
What's the best way to file returns?
Traditionally, you could file your return either by giving a power of attorney to someone in India or by
sending your form and documents to a tax expert in India who would then file returns on your behalf.
But nowadays, the easiest option for NRIs to file their Indian tax returns is by using the online platform.
There are several options to file online.
Online return filing - Income tax website
The income tax website allows you to efile your return. But the process maybe a bit cumbersome. You
would need to download a software, fill in your details and upload an XML file. You would then need to
print and send a copy of the acknowledgement (known as ITR-V it is now proposed to change the ITR
filing format for AY 2013-14, format not pubished by CBDT at the time of preparing this guide) to the tax
office in Bangalore within 30 days. You can do this for free.
5.A guide to filing of Income Tax Returns Online
Who can use SAHAJ (ITR-1) and Who cant use SAHAJ for Assessment Year 2013-2014
5.1.
Scope of ITR-1 (Sahaj) form has been reduced in AY 2013-14 significantly .In comparison to last
year, Two main points has been added under restriction ,first persons is that assessees who have
negative income under head "Income from other sources" cant use this form and second main point is
that if assessee's exempted income is more than 5000/ then that assessee cant use Sahaj (ITR-1) .Most
of the person using Sahaj form last year may have more than 5000/- exempted income ,so now they cant
use this form ?
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For example :
Salaried person getting transport allowance which is exempted 800 per month (more than 5000)
cant use ITR-1
Salaried person getting HRA exemption (>5000) are also not eligible.
Other allowances which are exempted also not eligible.
If you have agriculture income >5000 Not eligible.
if you have received maturity amount of insurance ,exempted at the time of receipt > 5000 also
not eligible.
and so many other instances where exempted income is more than 5000/- then ITR-1 cant be used .so
basically 70-80 % persons who have used ITR-1 earlier technically out from its preview. Details is given
below.
5.2. Who can use this Return Form

This Return Form is to be used by an individual whose total income for the assessment year 2013-14
includes:(a) Income from Salary/ Pension; or
(b) Income from One House Property (excluding cases where loss is brought forward from previous
years); or
(c) Income from Other Sources (excluding Winning from Lottery and Income from Race Horses)
NOTE Further, in a case where the income of another person like spouse, minor child, etc. is to be
clubbed with the income of the assessee, this Return Form can be used only if the income being clubbed
falls into the above income categories.
5.3. Who cannot use this Return Form
This Return Form should not be used by an individual whose total income for the assessment year 201314 includes:(a) Income from more than one house property; or
(b) Income from Winnings from lottery or income from Race horses; or
(c) Income under the head "Capital Gains" E.g., short-term capital gains or long-term capital gains from
sale of house, plot, shares etc.; or
(d) Income from agriculture/exempt income in excess of Rs. 5,000; or
(e) Income from Business or Profession; or
(f) Loss under the head 'Income from other sources'; or
(g) Person claiming relief of foreign tax paid under section 90, 90A or 91; or
(h) Any resident having any asset (including financial interest in any entity) located outside India or
signing authority in any account located outside India.
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5.4. Annexure-less Return Form

No document (including TDS certificate) should be attached to this Return Form. All such documents
enclosed with this Return Form will be detached and returned to the person filing the return.
5.5. Manner of filing this Return Form
This Return Form can be filed with the Income-tax Department in any of the following ways, (i) by furnishing the return in a paper form;
(ii) by furnishing the return electronically under digital signature;
(iii) by transmitting the data in the return electronically and thereafter submitting the verification of the
return in Return Form ITR-V;
(iv) by furnishing a Bar-coded return.
Where the Return Form is furnished in the manner mentioned at 5(iii), the assessee should print out two
copies of Form ITR-V.
NOTE One copy of ITR-V, duly signed by the assessee, has to be sent by post to - Post Bag No. 1,
Electronic City Office, Bengaluru-560100, Karnataka. The other copy may be retained by the assessee
for his record.
5.6 Filling out the acknowledgment
Only one copy of this Return Form is required to be filed. Where the Return Form is furnished in the
manner mentioned at 5(1) or at 5(iv), the acknowledgment slip attached with this Return Form should be
duly filled.
5.7 Obligation to file return
Every individual whose total income before allowing deductions under Chapter VI-A of the Income-tax
Act, exceeds the maximum amount which is not chargeable to income tax is obligated to furnish his return
of income. The deductions under Chapter VI-A are mentioned in Part C of this Return Form. The
maximum amount not chargeable to income tax in case of different categories of individuals is as follows:-
In case of individuals below the age of 60 years : Rs 2,00,000/-
In case of individuals who are of the age of 60 years or more at any time during the financial year
2012-13 : Rs 2,50,000/-
In case of individuals who are of the age of 80 years or more at any time during the financials
year 2012-13: 5,00,000/-
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5.8 E-Filing of Income Tax Return is compulsorily if your income exceeds Rs. 500,000.00
A major change has been done in mode of filing of Income Tax return for assessment year 2013-14. Now
E filing of Income tax return is mandatory for all persons having income more than Rs 5,00,000. Further if
you have claim double taxation benefit under section 90 ,90A, or section 91, return filing through online
mode is mandatory . In previous year almost 1.00 crore assessees, who income is less than 10 lakh has
filed voluntary e filing of income tax return . After analyzing these stats ,CBDT has reduced the e filing
Income Limit for all assessees to Rs 500000/- from assessment year 2013-14
List of forms to be used by different persons for filing of return of income for the
Assessment Year 2013-14
Individual and HUF
Nature of income
ITR 1
(Sahaj)
ITR 2
ITR 3
ITR 4
ITR 4S
(Sugam)
Income from salary/ pension
Yes
Yes
Yes
Yes
Income from one house property

(excluding losses)
Income or losses from more than
one house property
Income not chargeable to tax
which exceeds Rs. 5,000
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Income from other sources (other

than winnings from lottery and
race horses or losses under this
head)
Income from other sources
(including winnings
from lotteryand race horses)
Capital gains/loss on sale of
investments/ property
Share of profit of partner from a
partnership firm
Income from proprietary business/
profession
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Income from presumptive

business
Details of foreign assets
Yes
Yes
Yes
Yes
Claiming relief of tax under

sections 90, 90A or 91
Yes
Yes
Yes
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Filing income tax returns is not a laborious ordeal anymore. E-filing or filing tax returns online
has made the process a whole lot simpler. E-filing of tax returns acts as one
of the options for the direct tax payers in India. There are three different ways of filing returns online:
1.
File returns using a digital signature. By this option there is no need for a paper return to be
submitted.
2.
File without using the digital signature. By this option the ITR-V form has to be filled. This form is a
one-page receipt but also serves as a verification form.
3.
Take help from an E-filing intermediary who makes the filing returns and filling the ITR-V form a
whole lot easier.
6.Details required before logging in to the site
You will need an account with a bank that has net-banking facility. The bank must be one that has epayments. If you are a first time user, i.e if you have never e-filed your returns you will need to register
with this website www.incometaxindiaefiling.gov.in and create a user name and password. You will need
your PAN card number for the same. Your address details are extracted from the PAN. You must enter
other personal details carefully. The email address is important as all communication regarding this will be
through the email address you provide. Once you have registered, an e-mail will be sent to you
confirming registration after you activate your account. Once this is done, you are ready to file your
income returns online. You must now download the appropriate ITR form.
7.Steps to file Income Tax Return online
Log into www.incometaxindiaefiling.gov.in and create a username and password.

Go through all the heads of income under which you will be taxed and select the relevant Income
Tax Return.
Download the Return Preparation software and fill in the details of your ITR. The Income Tax
India website also provides an instruction sheet on how to fill the ITR form.
If there is any tax to be paid then make an online payment and generate the challan counterfoil
along with the CIN. Now complete the Income Tax Return form with the details from the challan
and CIN along with the payment details and the details of the bank through which the e-payment
has been made.
After this generate an XML file from the filled return using the software downloaded earlier. An
XML is a format that helps the IT Department enter the details into its database.
Now select the appropriate form on the left side of the page and click Submit return. Select the
XML file and click Upload. Once the uploading is successful it will be acknowledged on the
screen.
Click on Print to get a copy of the ITR-V form.
If the return has a digital signature then the filing process is complete upon the acknowledgement
notification and the print out is required only to keep a personal copy. But if it does not have a digital
signature then the ITR-V form needs to be printed out by the tax payer. As mentioned earlier, this is an
acknowledgment as well as a verification form and all the details need to be filled in and verified. The tax
payer has to fill-up the verification part and verify the same. A duly verified ITR-V form should be mailed
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to Income Tax Department CPC, Post Bag No 1, Electronic City Post Office, Bangalore 560100,
Karnataka, BY ORDINARY POST OR SPEEDPOST ONLY within 120 days after the date of transmitting
the data electronically.
8.Benefits of e-filing over paper filing
One of the foremost benefits of e-filing is the flexibility of filing your returns anywhere / anytime with
access to the internet. Online tax returns are processed much faster than paper returns and the tax is
worked out automatically as the payee completes the form. With this the payee also gets the
acknowledgment slip immediately. Also online filing is a safe and secure mode.
9.Exemption from filing of Income Tax Retunrs Salaried Employees income upto five lakh
CBDT has issued a notification 9/2012 by which Income tax return for salaried class persons has been
exempted if total income is less than 5,00,000 ,subject to certain conditions . This exemption is available
only to specific category of employees subject to the following conditions
This exemption is available to Individual assessee only

1. Exemption is available for Assessment year 2013-14
2. Total Income (after deduction 80C to 80U) of Individual must be up to Five Lakh Rupees only.
3. Income must be earned from Salary and/or Saving Bank Interest up to Rs 10000/- .Pension is
also covered under salary head.
4. Individual must have reported his PAN to his employer.
5. He has earned salary only from one employer during the year.
6. He has reported his income from saving Bank Interest to his employer for TDS deduction
purposes.
7. Employer has deducted the tax on his full income,salary plus interest (if any),and TDS has been
deposited in Govt account by the employer.
8. No refund is due to assesse .
9. Individual has received Form 16 From the employer ,which mention PAN, Income detail and Tax
deducted and deposit detail.
10.Who Cant claim exemption
1. If His Total taxable income after deduction u/s 80C to 80U is more than 5 (five) Lakh rupees.
2. If refund is due to him .
3. If his total income includes any one of following Incomes
1. Income from House property Including minus Income from interest on House Loan.
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2. Income from Business/profession

3. Income from capital gain
4. Income from Interest other than Interest from saving bank up to 10000.Suppose you have
earned interest from FDR then you can not claim exemption from return filing.
5. Saving Bank interest is more than 10000 rupees.
6. Any other Income under "Income from other source"
4. If He has not offered his Saving Bank interest income to his employer for tax deduction.
5. If he has discharged His tax liability through advance tax or self assessment challan.
6. If he has received salary from two employers during the year.
7. If he has not submitted his PAN to his employer.
8. If Form 16 has not been issued to him by his employer.
9. If notice u/s 142(1) or section 148 or section 153A or section 153C of the Income-tax Act has
been issued for filing a return of income
10. If assessment year is other than 2013-14.
11.Clarification dated 25.07.2011
The exemption is optional for Assessee and he/she may or may not avail this exemption, this means that
even you are elible for non-filingof tax returns; you can file your returnif you wish to do so
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CHAPTER 14
WHAT IS CLUBBING OF INCOME?
Certain provisions are included in the act as anti tax avoidance measures.
Provisions for inclusion in assessees income, income of some other person, who is not at arms length,
are a kind of such provisions. Such provisions arrest tax leakage likely to result from certain transactions
with relatives or diversion of title without loosing control over the same, etc.
In the Indian Income Tax Act there are provisions of Clubbing of Income. Clubbing of income means
Income of other person included in assessees total income, for example: Income of husband which is
shown to be the income of his wife is clubbed in the income of Husband and is taxable in the hands of the
husband. Income of a minor child is taxable in the hands of his parents. Under the Income Tax Act a
person has to pay taxes on his income. A person cannot transfer his income or an asset which is his one
of source of his income to some other person or in other words we can say that a person cannot divert his
income to any other person and says that it is not his income. If he do so the income shown to be earned
by any other person is included in the assessees total income and the assessee has to pay tax on it. For
example: Mr . X purchased a residential apartment in the name of his wife Ms. Y. X let out this apartment.
The rental income earned by X in name of his wife Y is taxable in the hands of X Clubbing of Income
takes place in the following situations: 1) Income of a minor child All income which arises to the minor
shall be clubbed in the income of his parents. Income will be included in the income of that parent whose
total income is greater.
This case has two exceptions.
(1) Income of minor child suffering from specified disability.
(2) Income of minor child on account of manual work or involving application of his skill/talent etc.
3) Remuneration to Spouse An individual is chargeable to tax in respect of any remuneration received by
the spouse from a concern in which the individual has substantial interest. This provision has an
exception. If the remuneration is received by spouse by the application of technical or professional
knowledge or experience clubbing provisions will not take place. For example, X has substantial interest
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in A ltd. and Mrs. X is employed by A ltd. without any technical or professional qualification. In this case
salary income of Mrs. X shall be taxable in the hands of X. 3) Transfer of income without transfer of Asset
If any person transfers income without transferring the ownership of the asset, such income will be
taxable in the hands of the transferor. Eg. A owns 15,000, 10% NCD of XYZ Ltd., he transfers interest
income to his friend B without transferring the ownership of Debentures. In this case although interest will
be received by B but it is taxable in the hands of A.
4) Revocable transfer of Asset If any person transfers any asset to any other person in such form and
condition that such transfer is revocable at any time during the lifetime of the transferee, the income
earned through such asset is chargeable to tax as the income of the transferor. For eg. A transfers a
house property to B. However, A has right to revoke the transfer during the life time of B. It is a revocable
transfer and income arising from the house property is taxable in the hands of A.
5) Income from asset transferred to sons wife If an individual, directly or indirectly transfers asset, without
adequate consideration to sons wife, income arising from such asset is included in the income of the
transferor. For example, Mr. X transfers 250 TISCO shares to his sons wife without adequate
consideration, Interest income on these shares will be included in the income of Mr.X.
6) Income from asset transfer to a person for the benefit of spouse/ sons wife If an individual, directly or
indirectly transfers asset, without adequate consideration to a person or an association of persons for the
benefit of his/her spouse /sons wife, income arising from such asset directly or indirectly is included in the
income of the transferor. For example, X transfers 8% Government of India Bonds without consideration
to an association of persons, subject to the condition that, the interest income from these bonds will be
utilized for the benefit of Mrs. X or Mrs. X sons wife. Interest from bonds will be included in the income of
X.
7) Income from assets transferred to spouse Where an asset is transferred by an individual to his spouse
directly or indirectly, otherwise than for adequate consideration or in connection with an agreement to live
apart, any income from such asset is deemed to be the income of the transferor. For example, Mr. X
transfers 1500 Shares of Reliance to his wife without adequate consideration. Dividend income on these
shares will be included in the income of Mr. X. Note:
1.INCOME FROM THE ACCRETION TO ASSETS
In the above mentioned cases the income arising to the transferee from the property transferred, is
taxable in the hands of the transferor. However, income arising to the transferee from such property is not
includible in the total income of the transferor. Thus, if Mr. A transfers. 60,000 to his wife without any
adequate consideration and Mrs. A deposits the money in a bank, the interest received from the bank on
such deposits is taxable in the hands of Mr. A. If however, Mrs. A purchases shares in a company from
the accumulated interest, the dividend received by Mrs. A, will be taxable in her hands and will not be
clubbed with the income of Mr. A.
Another example, NRI transfer money from his NRE account or direct remittance to his spouse account in
India and his spouse (wife) placed this money in demotic bank term deposits. The interest earned on
these deposits will be treated as the income earned by NRI and clubbed with his total income and liable
to pay tax on it. Now a days NRE Term Deposits are offering the interest rates at par with domestic term
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deposits and income earned on these deposits are absolutely free from income tax. So it is advisable to
place deposits from NRE account instead of domestic savings bank accounts.
2.CLUBBING OF NEGATIVE INCOME
The income of a specified person is liable to be included in the total income of the individual in the
circumstances mentioned earlier. For the purposes of including income of the specified person in the
income of the individual, the word income includes a loss.
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CHAPTER 15
Tax on Gifts facts need to know
High value gifts were a safe mode to show one's love to others financially. But the tax
authorities have made rules to tighten the provisions related to gifts. In fact
the rule has become so strict to end the high value gifts people normally used to make to escape from
paying tax. The rule thus effectively prevents money laundering in the in the name of high value gifts, on
October 1, 1998, the gift tax was demolished entirely and Clause (vii) has been inserted in section 56(2)
by the Finance (No. 2) Act, 2009. Under this clause if an individual or a HUF receives on or after October
1, 2009 a gift (which falls in any of the following five categories), it is chargeable to tax in the hands of the
recipients under the head Income from other sources. . Under section 56 (2) of the Act, gifts received by
an individual in excess of Rs.50, 000 during one assessment year would be taxable.
The 'any gift' clause means that not only cash but all gifts of any value. So if someone receives a gift of a
house worth Rs 20 lakh ,then he/she is automatically in the highest income bracket and has to pay 30% +
surcharge on value of the house as tax.
According to the law, individuals can receive gifts from the following sources:
Relatives or Blood Relatives

At the time of Marriage
As inheritance
In contemplation of death
1.Gifts Exempted from Tax

There is exemption for gifts received from certain people. The gifts that one receives from relatives on the
occasion of marriage, the gifts receives from parents and grandparents, the gift received by a daughterin-law from her parents-in-law, and gifts received by way of a will and inheritance are exempt. The gifts
received by a son-in-law from his parent-in-law will be taxed.
A Non-Resident Indian can gift to his/her parents in India from their NRE (Non-Resident External) account
without their parents suffering any tax.
The gifts received in the names of one's minor children will be clubbed with the parents' income for
taxation purpose. Also the tax authorities alert in saying that, in case of both parents having income,
clubbing will be done with that parent who is earning more. So one cannot hide under the cover of their
minor children receiving the gifts.
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Not only gifts, but any real estate deal done for values lower than the state governments fixed rates, will
also be taxed. Here the tax will be charged on the difference between the state government's rate and
purchase price. The tax needs to be paid by the buyer of the property.
Movable properties outside the country, unless the donor

a)
Individual:is an Indian citizen, who is originally a resident of India, or
b)
No-individualis resident of India during the year of gift
c)
Out of balance gift by NRI (Non-Resident Indian) in his Non-resident account.
d)
Foreign currency gift of convertible foreign exchange, remitted from overseas by an NRI to a
resident relative.
e)
Foreign exchange asset gifted by NRI to his/her relatives.
f)
Special Bearer Bonds, 1991.
g)
Saving certificates issued by the Central Government (notified as exempted).
h)
Capital Investment Bonds up to ` 10, 00,000 per year.
i)
Relief Bonds gifts by an original subscriber.
j)
Gifts of Certain bonds from the NRI to his/her relatives, which are subscribed in foreign currency
(specified by the Central Government).
k)
Gift to government or any local authority.
l)
Gifts to any charitable institutions.
m)
Gifts to notified temples, churches, mosques, gurudwaras and other places of worship.
n)
Gift to children for educational purpose (Reasonable amount).
o)
Gifts by an employer to its employees in the form of bonus, gratuity or pension.
p)
Gifts under will.
q)
Gifts in contemplation of death.
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CHAPTER 16
WHAT IS ADVANCE TAX?
1.What is Advance Tax?

It is obligatory to pay tax on every rupee you earned as income provided total income for a particular
financial year exceeds the minimum income limit specified in the Income Tax Act, 1961 for various
categories of assessee. Also, it is mandatory to pay tax in advance (in four installments) if your estimated
tax liability is above Rs. 10,000.00 in a particular financial year. Advance Tax is part payment of ones tax
liability before the end of the fiscal year, on 31st March. The provisions of the Income Tax Act make it
obligatory for every individual, self-employed professional, businessman and corporate to pay Advance
Tax, on any income on which TDS is not paid. So how much Advance Tax does one pay and what are its
deadline?
2.Who Needs To Pay Advance Tax?
Advance Tax is to be paid on income which has not been subject to tax deduction at source, and where
the tax liability is over and above Rs. 10,000 in a financial year. The tax that is calculated is paid in three
or four installments depending upon the category the assessee belongs to. All individuals, corporate, self
employed professionals, small scale businesses and HUF come under the purview of Advance Tax. For
individuals with employer salary as the sole source of income, Advance Tax would not be applicable as
tax deducted at source would be taken care of by the employer. In case of other sources of income of an
individual assessee, such as, income from capital gains, shares and mutual funds, lottery jackpot, income
from house property, etc Advance Tax is mandatory if the tax liability exceeds the stipulated amount of
Rs. 10,000(Rupees Ten Thousand), in a single financial year. Steps to Calculate Advance Tax While
calculating Advance Tax payable, assessee needs to make only a projection or estimate of his income,
as the actual income could be calculated only by the fiscal year end
. 1) Using the projected income for the fiscal year, the tax payable is to be calculated as per the tax slabs
applicable for the current financial year.
2) From the tax so computed, subtract the tax deducted at source.
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3) Include surcharge and educational cess while calculating advance tax.

4) The amount arrived at is the advance tax payable, in installments. Deadlines for Advance Tax The
Income Tax Regulations have extended certain deadlines for payment of Advance Tax.
a) For Corporate Entities Date Net Payable By 15 June Up to 15% of estimated tax payable By 15
September Up to 45% of estimated tax payable By 15 December Up to 75% of estimated tax payable By
15 March 100% Tax
b) For Non Corporate Entities Date Net Payable By 15 September Up to 30% of Estimated tax payable
By 15 December Up to 60% of Estimated Tax payable By 15 March 100% Tax Penalties for Non
Payment of Advance Tax If you have failed to pay your Advance Tax or, if you have paid less than the
stipulated percentage, you would be liable to pay a penal interest amount. This interest is calculated at
1% simple interest per month on the defaulted amount for three months. The interest penalty would
continue up to the next deadline. If even after the last deadline of 15 March, the tax is not paid, then the
1% would be on the defaulted amount for every month, until the tax is fully paid. In case the last day for
payment of any installment is a holiday, the payment can be made on the next working day. In such a
case, penal interest would not be applicable for the delay.
An individual is required to pay advance tax in three installments as per Section 234C of the Act. So, if
you have just realized that you have missed the December 15 timeline of the second installment, you still
have a chance. As per the provisions of the Act, you can discharge your balance advance tax liability by
March 15 with interest of 1% per month. The interest will be calculated for six months if due taxes were
not paid by September 15 and three months if taxes were not paid by December 15. In Case of Excess
Advance Tax Paid In case the Advance Tax paid is a higher amount than the actual tax liability, then the
excess amount is refunded back to the assessee. Also an interest of 6% on the excess amount is paid, if,
the excess amount is 10% more than the actual tax. Where to Pay Advance Tax Advance Tax could be
paid using a Tax Payment Challan at designated branches of banks empanelled with the Income Tax
Department. Branches of ICICI, HDFC and SBI accept Advance Tax Payment Challans. Alternatively,
individuals could pay Advance Tax online through the Income Tax Dept / NSDL website.
https://onlineservices.tin.nsdl.com/etaxnew/tdsnontds.jsp and use CHALLAN NO. /ITNS 280
NRIs are also liable to pay Advance Tax as explained above
3.Exemption for Senior Citizens from payment of advance tax (Budget Proposal 2012)
Under the existing provisions of Income-tax Act, every assessee is required to pay advance tax if the tax
liability for the previous year exceeds ten thousand rupees. In case of senior citizens who have passive
income of the nature of interest, rent, etc., the requirement of payment of advance tax results in raising
compliance burden.
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In order to reduce the compliance burden of such senior citizens, it is proposed that a resident senior
citizen (not applicable to NRIs), not having any income chargeable under the head Profits and gains
of business or profession, shall not be liable to pay advance tax and such senior citizen shall be allowed
to discharge his tax liability (other than TDS) by payment of self assessment tax.
This amendment will take effect from the 1st April, 2012. Accordingly, the aforesaid senior citizen would
not be required to pay advance tax for the financial year 2012-13 and subsequent financial years.
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CHAPTER 17
General Tax deductions available for NRIs
The Section 80C deduction up to Rs100,000 is applicable for certain

investments made in tax saving mutual funds, insurance plans, PPF, post office instruments and the GOI
schemes such as Senior Citizen Saving Scheme (SCSS). In this case note that NRIs/ PIOs are eligible to
claim the 80C benefit. However, certain investments such as PPF, SCSS, PO instruments, etc are not
open for NRIs/PIOs. Putting it differently, from the tax law point of view, Section 80C deduction may be
claimed but certain investments are not allowed under Section 80C. If, however, these investments have
been done as a resident, then these can be continued till maturity (and deduction claimed) even after
changing the resident status
1. NRI Tax-saving tips
NRIs can save on these taxes by investing in pension plans, life insurance
policies and tax-saving mutual funds(ELSS Equity Linked Savings Schemes). The repayment by an NRI
towards principal amount of home loan is eligible for deduction up to 1 lakh, while the interest payment is
also allowed as a deduction. NRIs can also buy a health insurance policy in India for themselves, their
family and dependent parents , and claim deduction up to 35,000 for the annual premium paid.
2.Section 80C of Income Tax Act
2.1 Life Insurance and Retirement/Pension Plans NRIs can buy retirement plan with or without life
cover and also choose between a traditional plan (endowment, money-back) and a unit-linked plan
depending upon your risk appetite. There is also a facility available with few insurers like LIC for NRIs to
obtain insurance cover from their present country of residence where all formalities are completed in their
present country of residence, subject to fulfillment of certain rules and restrictions on sum insured
amounts and add-on riders. For more details please contact the Insurance Company or your Insurance
Agent.
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2.2.Tax-breaks in respect of Life Insurance Policies allowable only if yearly premium not more
than 10% of sum assured, as against existing 20%
Section 10(10D) provides exemption of the amount received under any life insurance policy provided that
the premium on such policy for year during its term does not exceed 20% of the sum assured.
Section 80C provides for deduction of Insurance Premium paid, subject to maximum of 20% of the sum
assured.
This limit of 20% in both the aforesaid sections, is now proposed to be reduced to 10% for policies issued
st
after 31 March 2012, that is to say, in respect of policies issued after that date, the deduction u/s.80C
shall be restricted to actual premium paid, subject to 10% of sum assured; and if any of the years
premium exceeds 10% of the sum assured, then the maturity amount shall be taxable.
2.3 Raising limit of percetnage of eligible premium for life insurance policies of persons with
disability or disease (Budget 2013)
Under the existing provisions contained in clause (10D) of section 10, any sum received under a life
insurance policy, including the sum allocated by way of bonus on such policy, is exempt, subject to the
condition that the premium paid for such policy does not exceed ten per cent of the actual capital sum
assured. Similarly as per the existing provisions contained in subsection (3A) of section 80C,
the deduction under the said section is available in respect of any premium or other payment made on
an insurance policy of up to ten per cent of the actual capital sum assured.
The above limit of ten per cent was introduced through the Finance Act, 2012 and applies to policies
issued on or after 1st April, 2012. Some insurance policies for persons with disability or suffering from
specified diseases provide for an annual premium of more than ten per cent of the actual capital sum
assured. Due to the limit of ten per cent, these policies are ineligible for exemption under clause (10D) of
section 10. Moreover, the deduction under section 80C is eligible only to an extent of the premium paid
up to 10 % of the actual capital sum assured.
It is proposed to provide that any sum including the sum allocated by way of bonus received under an
insurance policy issued on or after 01 .04.2013 for the insurance on the life of any person who is
(i) a person with disability or a person with severe disability as referred to in section 80U, or
(ii) suffering from disease or ailment as specified in the rules made under section 80DDB,
shall be exempt under clause (10D) of section 10 if the premium payable for any of the years during the
term of the policy does not exceed 15% of the actual capital sum assured.
It is also proposed to amend sub-section (3A) of section 80C so as to provide that the deduction under
the said section on account of premium paid in respect of a policy issued on or after 01.04.2013 for
insurance on the life of a person referred to above shall be allowed to the extent the premium paid does
not exceed 15% of the actual capital sum assured.
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st
This amendment will take effect from 1 April, 2014 and will, accordingly, apply in relation to the
assessment year 2014-15 and subsequent assessment year
2.4 Investment in House property Buying a house or flat in India availing of a home loan from Banks
or Housing Finance Companies is a good investment/tax savings option for NRIs. The principal and
interest payments made every year for a home loan availed in India are allowed as deductions subject to
an overall limit of Rs 1 lakh per year on principal payments (under section 80C) and full interest payments
made during the year (under section 24b) - in case of let-out property.
Additional deduction of interest on housing loan of upto Rs.1 lac to first time home buyers
Section 80EE is proposed to be enacted so as to allow to an individual, a deduction of upto Rs. 1 lac
in respect of loan taken from a financial institution (banking company or housing finance company) of
upto Rs.25 lacs between 1st April 2013 and 31st March 2014 to acquire a residential property valued
upto Rs. 40 lacs, provided she does not own any residential house property as on the date of
sanction of loan.
It is also proposed that if the deduction entire of Rs. 1 lac as above could not be claimed in Financial
Year 2013-14, then the balance can be claimed in Financial Year 2014-15.
It may be noted that the above deduction is over and above the existing entitlement of housing loan
interest deduction of Rs.1.5 lacs. However, while the existing deduction of upto Rs.1.5 lacs can be of
interest on housing loan taken from anyone, the aforesaid deduction can be allowed only on
housing loan taken from financial institution.
Section 80EE Deduction in respect of interest on loan sanctioned during financial year
for acquiring residential house property
201 3-14
Under the existing provisions of section 24 of the Income-tax Act, income chargeable under the head
Income from House Property is computed after making the deductions specified therein. The deductions
specified under the aforesaid section are as under:1. A sum equal to thirty per cent of the annual value;
2. Where the property has been acquired, constructed, repaired, renewed or reconstructed with
borrowed capital, the amount of any interest payable on such capital.
It has also been provided that where the property consists of a house or part of a house which is in the
occupation of the owner for the purposes of his own residence or cannot actually be occupied by the
owner by reason of the fact that owing to his employment, business or profession carried on at any other
place, he has to reside at that other place in a building not belonging to him, then the amount of deduction
as mentioned above shall not exceed one lakh fifty thousand rupees subject to the conditions provided in
the said section.
2. 5 ELSS (Tax saving Equity Mutual Fund schemes) ELSS are equity-oriented mutual fund
schemes that directly invest in a diversified portfolio of shares in the Indian Stock Market. The tax savers
can buy units of ELSS schemes directly from the respective Mutual Funds of can be purchased online, if
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they have enabled that facility with the Mutual Fund. There is lock-in-period of three years in the ELSS
investments. These schemes are e ideal for long-term tax-free savings
3. Section 80D - Health Insurance Premium
NRIs can buy health insurance policy in India for themselves, their family and also dependant parents and
claim deduction for the premium paid up to Rs 35,000 per annum Please note that, these deductions are
available for a maximum amount of Rs 15,000 in case of non-senior citizens and Rs 20,000 for senior
citizens.
S 80D CGHS benefit extended to other similar schemes Deduction for contribution
to Health Schemes similar to CGHS (Budget 2013)
The existing provisions of section 80D, inter alia, provide that the whole of the amount paid in
the previous year out of the income chargeable to tax of the assessee, being an individual, to effect or to
keep in force an insurance on his health or the health of the family or any contribution made towards the
Central Government Health Scheme (CGHS) or any payment made on account of preventive
health check-up of the assessee or his family, as does not exceed in the aggregate fifteen thousand
rupees, is allowed to be deducted in computing the total income of the assessee.
It has been noticed that there are other health schemes of the Central and State Governments, which are
similar to the CGHS but no deduction for such schemes is available to the subscribers of such schemes.
In order to bring such schemes at par with the CGHS, it is proposed to amend section 80D, so as to allow
the benefit of deduction under this section within the said limit, in respect of any payment or contribution
made by the assessee to such other health scheme as may be notified by the Central Government.
This amendment will take effect from 1st April, 2014 and will, accordingly, apply in relation to the
assessment year 2014-15 and subsequent assessment years.
Reduction of the eligible age for senior citizens for certain tax reliefs (From FY 2013-2014 )
For the purposes of section 80D [deduction in respect of health insurance premia] and section 80DDB
[deduction in respect of medical treatment, etc.], age for defining a senior citizen has been reduced from
65 years to 60 years.
3.1 NRIs Deduction U/s 80D premium paid for Mediclaim Policy
Deduction in respect of Medical Insurance Premium (Mediclaim) paid to keep in force insurance by
individual either on his own health or on the health of spouse, dependent parents and children or HUF on
the health of any members of the family.
The benefits of Tax deduction U/s 80D is available for Non-Resident Indians also. Policy can be taken for
the benefits of following persons
Dependent Children (i.e. legitimate or legally adopted children). Children above 18 years, if
employed, can not be covered. Male children, if not employed, but a bonafide student can be
covered upto age of 25 years. Female children, if not employed, can be covered until the time she
is married.
parents need not be dependent on the Assessee.
parents of Individual or Spouse both are covered.
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The amount of deduction available under Section 80D
Basic deduction: Mediclaim premium paid for Self, Spouse or dependant children. Maximum
deduction Rs 15,000. In case any of the persons specified above is a senior citizen (i.e. 65 years
or more as of end of the year up to F.Y. 2010-11 and 60 years from F.Y. 2011-12) and Mediclaim
Insurance premium is paid for such senior citizen, deduction amount is enhanced to Rs. 20,000.
Additional deduction: Mediclaim premium paid for parents. Maximum deduction Rs 15,000. In
case any of the parents covered by the Mediclaim policy is a senior citizen, deduction amount is
enhanced to Rs. 20,000.
Section 80 D Within the existing limit for deduction allowed for health insurance, budget 2012
proposed propose to allow a deduction of upto Rs. 5,000 (with in the overall limit) for preventive
health check-up. Section 80D -Amendment -01.04.2013 -Additional rebate of Rs. 5000/- for
expenditure on preventive health checkup of self, spouse, dependent children or parents.
Payment by any other mode other than cash is now eligible for paying health insurance premium
Note : Tax deduction (Rs. 20,00.00) applicable for investment under section 80CCF in Long
Term Infrastructure Bonds will not be available from FY 2012-13
Section 80D allows deduction, inter alia, in respect of mediclaim premium as well as contribution to
Central Government Health Schemes, subject to fulfillment of other conditions therein. It is now proposed
to extend the benefit of the deduction thereunder to contributions to such other schemes of Central and
State governments as may be notified by Central Government (Budget 2013)
4.
Deductions u/s 80 G
a) Deduction u/s 80G Donations made to certain specified charitable institutions are only eligible to
claim deduction under this section.
Donations - Section 80G, which allows deduction in respect of donations, @ 100% in respect of certain
funds and @ 50% for rest, subject to other conditions therein; is proposed to be amended so as to allow
100% deduction in respect of donations to the National Childrens Fund (which was hitherto entitled for
50% deduction) Budget 2013
Sections 80 GGB and 80 GGC allow deduction respectively to company and non-company assessees, of
contributions given to a political party or electoral trsut. It is proposed to amend these sections so as not
to allow deductions of amounts contributed in cash.- Budget 2013
Deduction of donations above Rs.10,000/- allowable only if paid by any mode other than cash
(Budget 2012)
Section 80G allows deduction in respect of donations made to specified/approved trusts/institutions etc.
Section 80GGA allows deduction in respect of donations for scientific research or rural development.
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Section 80G: 100% deduction for donation to National Childrens Fund (Budget 2013)
Existing the deduction is allowable at Now proposed to increase the
the rate of 50% of the amount
deduction to 100% of the amount of
donated.
donation.
S 80G 100 deduction for donation to National Childrens Fund
One hundred per cent deduction for donation to National Childrens Fund
Under the existing provisions of section 80G an assessee is allowed a deduction from his total income in
respect of donations made by him to certain funds and institutions. The deduction is allowed at the rate of
fifty per cent of the amount of donations made except in the case of donations made to certain funds and
institutions specified in clause (i) of sub-section (1) of section 80G, where deduction is allowed at the rate
of one hundred per cent. In the case of donations made to the National Childrens Fund, deduction is
allowed at the rate of fifty per cent of the amount so donated.
Donations to Funds which are of national importance have been generally provided a deduction of one
hundred per cent of the amount donated. Since the National Childrens Fund is also a Fund of national
importance, it is proposed to allow hundred per cent deduction in respect of any sum paid to the Fund in
computing the total income of an assessee.
This amendment will take effect from 1st April, 2014 and will, accordingly, apply in relation to assessment
year 2014-15 and subsequent assessment years.
5 Deduction under 80E for interest payment towards Educational loan taken from any bank/approved
financial institution for higher studies (comprising full time as well as vocational studies pursued after
passing senior secondary examinations studies) for self or any of immediate family members (children,
spouse)
NRIs can put their money in tax-saving bonds too. Capital gains up to 50 lakh earned from selling a
capital asset can be invested in bonds of NHAI or REC. Investment income foreign currency bonds, are
subject to tax at 20% as against the maximum rate of 30%. NRIs can invest in such assets and benefit
from the lower rate. Also, an NRI can avail of lower tax rates on interest income through beneficial treaty
provisions.
Note : The overall limit of deductions available on section 80C, 80CCC is Rs 1 lakh per annum.
6. Bank Deposits and applicable tax
As per section 206AA introduced by Finance (No. 2) Act, 2009 wef 01.04.2010, every person who
receives income on which TDS is deductible shall furnish his PAN, failing which TDS shall be deducted at
the rate of 20%(as against 10% which is existing TDS rate) in case of Domestic deposits and 30.90% in
case of NRO deposits. Interest Income from NRE deposit is fully exempted from income tax and also no
TDS is applicable.
Section 80TTA - Interest income upto Rs. 10,000/- of Individuals/HUFs from Savings Account with
Bank/Post Office not taxable
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As per Section 80TTA allow deduction upto Rs.10,000/-, to individuals and HUFs, in respect of interest
on savings bank account with banks (including co-operative banks) or post office. The benefits of this
section is not available for NOR account.
7) Rajiv Gandhi Equity Savings Scheme liberalized (Budget 2013)
Deduction of 50% to new retail investors with annual income below Rs.12 lacs, investing in
equities upto Rs.50,000/-
It is proposed in 2012 Union Budget to introduce a scheme to be called Rajiv Gandhi Equity Savings
Scheme, wherein a deduction of 50% would be allowed to new retail investors investing upto Rs. 50,000/directly in equities, and whose annual income is below Rs.10 lacs, with a lock-in period of 3 years.
Expanding the scope of deduction and its eligibility u/s 80CCG
Existing it is available to Equity shares of
listed companies
Now available in respect of listed equity

shares as well as units of Mutual Funds i.e.
equity oriented fund
Eligibility limit of the investors income was Rs.

10 lacs
Eligibility limit of the investors income raised to

Rs. 12 Lacs
It was allowed for One assessment Year
Now it shall be allowed for THREE consecutive

assessment Years


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CHAPTER 18
NRIs WELFARE SCHEMES
1) Pravasi Bharatiya Bima Yojana
cover In an effort to further safeguard the interests of emigrant workers from India, the Government of
India has introduced the Pravasi Bharatiya Bima Yojana (PBBY), an insurance scheme compulsory for
all workers going abroad on ECR passports (except to countries for which emigration check is not
required) for employment. Every day, thousands of Indians are travelling to different parts of the world
for employment . But at the same time they are exposed to several perils like illness, accidents and
various other misfortunes. In order to help cover such contingencies, with the help of various Insurance
companies India Government launched this insurance policy. This policy is specially designed for
emigrant Indians who are abroad on a valid visa for purposes of employment. This scheme was
announced during the year of 2003. The scheme was revised in February 2006 to increase the
insurance cover from Rs. 2 lakh to Rs. 5 lakh and add other benefits for the workers. In 2008 the cover
was further enhanced to Rs 10 lakh. It is an indicator of the Governments commitment to look after the
interests of Indian workers employed abroad.
Key Benefits
a)
b)
c)
d)
e)
f)
g)
h)
Unique policy offering exhaustive coverage against different risks that emigrant Indians are
exposed to
Reimburses expenses towards hospitalization of the Insured in his/her country of employment and in
India
Medical expenses extension available for family members of the Insured residing in India
Covers maternity expenses of women emigrants
Reimburses expenses incurred for traveling back to India on grounds of the Insured being permanent
disabled or adjudged to be medically unfit to continue employment
Provides for reimbursement of legal expenses in a litigation relating to the Insured's employment
Reimbursement of expenses related to covered contingencies can be claimed from country of
employment or while in India
Optional additional Personal Accident
What are the other salient features of PBBY?
Besides offering a cover of Rs. 10 lakh, the insurance scheme offers several other benefits to the
emigrant worker and his/her dependants. In case of death, besides the cost of transporting the body, the
cost incurred on the one-way airfare of one attendant is reimbursed by the insurance company. If a
worker is not received by the employer on his arrival at the destination abroad or there is any substantive
change in the employment contract to his disadvantage or if the employment is prematurely terminated
within the period of employment for no fault of the emigrant, the insurance company reimburses one way
economy class airfare provided the grounds of repatriation are certified by the Indian Mission/post
concerned. In cases where the repatriation is arranged by the Indian Mission/post, the insurance
company reimburses the actual
expenses to the Indian Mission/post
concerned.
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Personal Accident Benefits

a)
Compensation for accidental bodily injury resulting in death or permanent total disablement of the
Insured Person, while he/she is abroad. It can be extended to cover the Insured's family
members, residing in India
b) Provides for reimbursement of expenses incurred for repatriation of the mortal remains in the event of
accidental death of the Insured Person whilst abroad
c) It provides for reimbursement of transportation expenses to India on account of
o Permanent total disability of the Insured Person following an accident
o The Insured Person falling sick or being declared medically unfit to continue working
o It provides for reimbursement of repatriation / transportation expenses to India in the event of termination
of contract of employment of Insured Person
Hospitalisation
a) It provides reimbursement of Hospitalization expenses incurred by the Insured Person in the country
of his/her employment or in India, due to any disease contracted or illness suffered or bodily injury
sustained due to accident by the Insured Person, whilst abroad.
b) The Policy also covers maternity expenses for a female Insured Person incurred in a Hospital/Nursing
home in her country of employment or in India.
Reimbursement of legal expenses The Policy provides for reimbursement of legal expenses incurred
by the Insured Person in any litigation relating to his/her employment.
Actual Premium to be charged (without any hidden costs- subject to change )
Rs. 475/- for the contract period

Rs. 275/-for 2 years policy period.
Rs. 375/- for 3 years policy period.
This policy is available from undernoted Insurance Companies:1. Oriental Insurance Company Ltd.
2. United Insurance Company Ltd.
3. National Insurance Company Ltd.
4. ICICI Lombard.
5. Star Health & Allied Insurance Co. Ltd.
6. IFFCO Tokyo
7. Bajaj Allianz General Insurance Co. Ltd.
8. Reliance General Insurance Co. Ltd.
Claim Procedure
Insured worker is supposed to have the copy of PBBY insurance policy with him. Name of the nominee is
so mentioned on the policy, in view of the eventuality of death of insured.
In the event of claim, insured worker/claimant has to lodge a claim under the policy, with the respective
insurance companys office wherefrom the policy was issued, if not specifically provided by the insurance
company otherwise. While doing so, claimant has to indicate the policy number and details of accident. In
the event of death, nominee has to lodge the claim.
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After intimation of reported claim, insurance company intimates the insured/claimant the details of
documents required to settle the claim. After processing such requisite documents, claim amount is paid
to the insured worker/claimant, as the case may be.
2) Deserted NRI Women Welfare Scheme
Ministry of Overseas Indian Affairs has brought out a guidance booklet on Marriages to Overseas
Indians which contains information on safeguards available to women deserted by their NRI spouses,
legal remedies available, authorities that can be approached for redressal of grievances. A pamphlet
entitled Thinking of the marriage of your daughter with an NRI? has also been brought out by the
Ministry highlighting the precautions to be taken before entering into marriage alliance. Apart from this,
National Commission for Women (NCW), the coordinating agency at the National level for dealing with
the issues pertaining to NRI marriages has brought out a pamphlet entitled Problems Relating to NRI
Marriages-Dos and Donts. It describes the problems related to NRI marriages and suggests
precautionary dos and donts for Indian women considering marriage to a Non-Resident Indian (NRI) or a
Person of Indian Origin (PIO). NCW has also brought out a report on problems relating to NRI marriages,
titled The No where Brides.
Beside this, a scheme was launched in 2007 to provide legal /financial assistance to the deserted or
divorced overseas Indian women through the Indian Missions/Posts. It was revised and the revised
scheme came into effect from November, 2011. The scheme would be available to Indian women who
have been deserted by their overseas Indian / foreign husbands or are facing divorce proceedings in a
foreign country, subject to the following conditions: The marriage of the woman has been solemnized in India or overseas with an overseas Indian or a
foreigner
The woman is deserted in India or overseas within fifteen years of the marriage; or
Divorce proceedings are initiated within fifteen years of the marriage by her overseas Indian / foreign
husband; or
An ex-parte divorce has been obtained by the overseas Indian / foreign husband within twenty years of
marriage and a case for maintenance and alimony is to be filed by her.
The scheme would not be available to a woman having a criminal case decided against her, provided that
a criminal charge of Parental Child Abduction shall not be a bar if the custody of the child has not yet
been adjudicated upon. The assistance will be limited to US$ 3000 per case in developed countries and
US$ 2000 per case in developing countries and will be released to the empanelled legal counsel of the
applicant or Indian Community Association / Womens organization / NGO concerned to enable it to take
steps to assist the woman in documentation and preparatory work for filing
Scheme for Deserted Indian Women
This scheme has been initiated by the Ministry of Overseas Indian Affairs, Government of India for the
welfare of Indian women abroad. The scheme aims to provide financial, counselling and legal assistance
to women deserted by overseas Indian spouses.
In the current year the Ministry of Overseas Indian Affairs would initially sanction Rs. 40 lakhs each to the
Indian Missions in USA, UK, Canada, Australia, and the Gulf subject to review next year. Thus, in the
current year the budget provision for this scheme is Rs. 2 crore.
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Scope of and Eligibility for the Scheme:

The scheme would be available to the women who have been deserted by their overseas Indian spouses
or are facing divorce proceedings in a foreign country subject to the following conditions:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
The woman is an Indian passport holder.

The marriage of the woman has been solemnised and registered in India.
The woman is deserted in India or after reaching abroad within two years of the marriage.
Divorce proceedings are initiated within two years of the marriage by her overseas Indian spouse.
An ex-parte divorce has been obtained by the overseas Indian spouse and a case for
maintenance and alimony is to be filed.
The scheme would not be available to a woman facing criminal charges or having a criminal case
decided against her.
The domicile of the woman seeking relief under the scheme is not relevant for allowing the
benefit. The woman may be domiciled in the country of her overseas Indian spouse or in India at
the time of making the application.
Preference may be given to applicants on the basis of financial needs.
Assistance will be limited to meeting initial cost and incidental charges for documentation and
filing of the case by the Indian womens organisation/NGO on the womans behalf.
The women organisation/NGO will make efforts to enlist community advocates, preferably women
advocates, to extend further legal assistance/ appearance in court etc on a pro-bono basis.
Whom to contact?
In case of assistance or filing complaint against the exploitation at the hands of their husbands or in-laws,
Indian women overseas can contact Indian Missions in the country where they are residing. Indian
Womens organisations, Indian Community Associations, and NGOs abroad can also be contacted by the
Indian women. These organisations provide legal aid to the victims in distress and whose names have
been approved by the Ministry of Overseas Indian Affairs. The applications for providing legal aid
received by the Missions would be examined by an officer designated by the Head of the Mission on
case-to-case basis and approved by Head of Mission/Deputy Chief of the Mission.
3) Indian Community Welfare Fund (ICWF)
Ministry of Overseas Indian Affairs has established the Indian Community Welfare Fund (ICWF) in the 43
Indian Missions across the world in countries that have a significant overseas Indian population.
2. The Indian Community Welfare Fund (ICWF) is aimed at providing on site' welfare services on a
means tested basis in the most deserving cases including:
(i) Boarding and lodging for distressed overseas Indian workers in Household / domestic sectors and
unskilled labourers;
(ii) Extending emergency medical care to the overseas Indians in need;
(iii) Providing air passage to stranded overseas Indians in need;
(iv) Providing initial legal assistance to the overseas Indians in deserving cases,
(v) Expenditure on incidentals and for airlifting the mortal remains to India or local cremation/burial of the
deceased overseas Indian in such cases where a sponsor is unable or unwilling to do so as per the
contract and the family is unable to meet the cost.
3. Overseas Indian workers duped by unscrupulous intermediaries in the host countries, runaway house
maids, those who become victim of accidents, deserted spouses of overseas Indians or undocumented
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overseas Indian workers in need of emergency assistance or any other overseas Indian citizens who are
in distress would be the main beneficiaries of the Fund. The Fund will also be utilized to meet the
expenditure for airlifting the mortal remains of overseas Indian citizens to India on a means tested basis,
on the recommendation of respective Heads of Missions.
4. The ICWF would be funded through budgetary support from the Ministry of Overseas Indian Affairs,
funds raised by the Indian Missions by levying a nominal service charge on consular services and through
Voluntary contributions from the Indian community.
5. Currently the Fund is administered by the following Heads Missions of to provide various on-site
welfare services to the Indian citizens who are in dire distress:
UAE, Saudi Arabia, Qatar, Oman, Kuwait, Bahrain, Malaysia, Libya, Jordan, Yemen, Sudan, Afghanistan,
Indonesia, Syria, Lebanon, Thailand, Iraq and Maldives, Australia, Canada, Mauritius, Singapore, South
Africa, Trinidad and Tobago, UK and USA, Fiji, Reunion Island, Guadeloupe/St. Martinique, France,
Germany, Guyana, Israel, Italy, Jamaica, Kenya, Netherlands, New Zealand, the Philippines, Portugal,
Suriname, Tanzania and Egypt
Both the Centre and the States in India are committed to the common interests and concerns of NRIs.
Various programs have been initiated for the engagement and welfare of the NRI community.
Initiatives:
4) Facilitating investment in India
1)The MOIA and the CII have set up the Overseas Indian Facilitation Centre (OIFC) for the following:
2) To promote Overseas Indian investments in India and facilitating business partnerships
3)
Establishing
and
maintaining
a
Diaspora
knowledge
network
4) Assisting States in India to project investment opportunities for Overseas Indians and
5) Offering a host of advisory services to PIOs and NRIs.
The governments of Gujarat, Karnataka, Kerala, Orissa and Punjab have partnered with the OIFC to
apprise the Diaspora of investment opportunities in their respective States.
5 Know India Program (KIP)
The KIP is a three-week orientation program for Diaspora youth in the age group of 1826 years. It
provides awareness around the diverse facets of the country and the progress the country has made in
various fields.
These are conducted in partnership with one or two State Governments.
The participants, PIOs, are selected based on recommendations received from heads of Indian missions
and posts abroad. As part of the program they get the opportunity to interact with high dignitaries as well
as faculty and students at prestigious institutions. 90% of the cost of air ticket is refundable on the
successful completion of the program.
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6. Scholarship Programme for Diaspora Children

Under this scheme, 100 PIO and NRI students are awarded scholarships of up to US$ 3,600 per annum
for undergraduate courses in engineering, technology, humanities, liberal arts, commerce, management,
journalism, hotel management, agriculture and animal husbandry, among other courses. The scheme is
being implemented through EdCIL (India) Ltd. It is open to NRIs and PIOs from more than 40 countries
with a substantial Indian population.
Tracing their roots
PIOs who want to trace the roots of their ancestors in India can apply through the Indian mission or post
in the country of their residence.
Reservation of seats at Indian educational institutions
The government has approved a scheme enabling the supernumerary quota of 15% seats in all
institutions of higher education or universities offering higher and technical courses for foreign nationals,
or PIOs and children of Indian workers in the Gulf countries.
It has also been envisaged that one-third of the 15% supernumerary quota shall be reserved across
different disciplines for the children of Indian workers in the Gulf countries.
Further, the concerned State Government or Union Territory shall notify the tuition and other fee for
candidates to be admitted under the foreign national/ PIO category. There shall be no NRI fee. The
children of Indian workers in the Gulf countries shall be treated at par with resident Indian citizens.
7. Migrant Resource Center, Kochi
1. The Migrant Resource Centre (MRC) has been established in Kochi, Kerala to work as a walk-in
counselling centre and provide telephonic helpline for information dissemination and grievance
redressal of the Overseas Indian Workers.
Shri Vayalar Ravi, Honble Minister Overseas Indian Affairs, inaugurated the Migrant Resource
Centre (MRC) on 15th December, 2008. The centre has been established by the International
Organization for Migration and Ministry of Overseas Indian Affairs at Kochi, as an institutional
framework under the EC funded project Regional Dialogue and Program on Facilitating Managed
and Legal Migration between Asia and the European Union (EU).
The primary idea behind the establishment of MRC is to disseminate information on legal,
organized and humane migration; risks involved in the illegal migration and diversify the emigration
base by informing intending emigrants about the various opportunities available in the member
states of the European Union and the entry requirements for the same.
The MRC can be contacted at 0484 2372040, 2372044.
2. Two more MRCs are also functional at Hyderabad (Andhra Pradesh) and Panchkula (Haryana).
3. OWRC at Delhi is functioning as information hub for the MRCs.
Major Activates Assigned to MRC
Walk-in counselling for face-to-face interaction and provision of information/ advice on legal
migration, specific migration related procedures for EU countries and available opportunities.
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Information is also provided on available job openings, country of destination, qualification, skill
and entry requirements. Information is provided regarding risks of irregular migration to EU states
in order to empower potential migrants and encourage them to make informed choices.
Telephone helpline to provide same information as provided through walk-in counselling to
potential migrants. A tie-up with OWRC helpline of MOIA has been done to operate the MRC help
lines.
Material dissemination including a basic facts brochure on migration, Emigration and You
handbook, country specific information flyers, press releases, posters, books and short films.
Verification Centre: of recruiters, foreign employers, procedures,fees to pay etc.
Centre for provision of pre-departure assistance including visa and travel assistance, language
training and cultural orientation.
Counselling/Crisis Centre to handle complaints on recruitment and employment contract, first aid
remedies to overcome crisis situations involving migrants and their families
Network Centre wherein the MRC will work in close coordination with a network of selected NGOs
and other social partners in order to be more effective and reach out to a larger number of
migrants. Information will therefore also be disseminated through the local structures of NGOs,
and their capacities enhanced through training on labour migration opportunities, procedures, risks
of irregular migration and migration laws in selected countries.
Referral Centre to provide advice on where to go for documentation, certification etc.
8. NRIs - Facilities for Returning Indians
A returning NRI should know and understand various aspects of Foreign Exchange Regulations (FEMA),
Indian Taxation and Banking Regulations in order to rearrange his financial affairs in India and outside
India. The decision to return to India would have both direct and indirect tax implications, such as income
tax, wealth tax and customs duty. He would also need to take note of implications from an exchange
control regulations perspective. The overseas investments by Indian residents are regulated by the
Foreign Exchange Management Act (FEMA), which is implemented by the Reserve Bank of India (RBI).
The FEMA has a wide network of notifications and circulars, which lay down permissible avenues for
each category of individual. The decision to return to India may not be just an emotional one, but also
needs to be made taking into account the current regulatory environment and proposed changes being
made to them. With a proper understanding, efficient planning and utilization of the benefits provided
under the tax laws in India, home-coming would not only feel good on the heart but also relatively easier
on the pocket.
If your stay in India during the Financial Year is 182 days or more, your residential status will be as
Resident Indian.
There is a transitional status of RNOR between being an NRI and becoming a full-fledged Resident after
returning to India permanently. An RNOR is not required to pay tax in India on his forex income. Anyone
who returns after 9 or more years of being an NRI will become RNOR for 2 years.
Resident but not Ordinarily Resident (RNOR) is a person who satisfies one of the following conditions
a) he has been a non-resident in India in nine out of the ten previous years preceding that year, or
b) has during the seven previous years preceding that year been in India for a period of, or periods
amounting in all to, seven hundred and twenty-nine days or less.
NRI benefits are available to a person till the time he holds the NRI status in India; a person loses his NRI
status in the same year when he returns to India or within 2 years from the date of arrival to India,
depending on the number of days of stay in India. A returning Indian who has been a Non Resident for 9
years or more, shall be a Not Ordinarily Resident (NOR) for 2 successive years upon permanently
returning to India.
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Immediately on return to India, NRIs should inform their bank to change the status of their accounts as
domestic Resident accounts or transfer the balance in their NRE/FCNR accounts to Resident Foreign
Currency (RFC) accounts, but FCNR accounts can be continued till the date of maturity and upon
maturity, can be converted to RFC accounts. Resident Foreign Currency (RFC) Accounts Scheme - This
is a Scheme approved by Reserve Bank of India permitting persons of Indian nationality or origin, who
have returned to India on or after 18th April 1992 for permanent settlement (Returning Indians), after
being resident outside India for a continuous period of not less than 1 year, to open foreign currency
accounts with banks in India for holding funds brought by them to India.
Whether RFC is tax-free or not, withholding tax will be applied @30.6% and if the interest is over Rs. 10
lakhs, the rate will be 33.99%.
The NRE SB and NRO SB accounts will be re-designated as Ordinary SB accounts.
It is also necessary to inform all the companies/Depository Participants (DPs)
investments about the change in your residential status.
where you have
The tax liability of each person in India is basically determined based on his residential status. The
following are the tax liability of different categories of people
Resident liable to pay tax on income earned in India as well as abroad
Non-Resident (NRI) liable to tax on the income earned in India
Not Ordinary Resident (NOR) - liable to tax on the income earned in India
Ordinary Indian Resident (ROR) - is liable to tax on his global income
A) Overseas Assets
All kind of Foreign exchange / Overseas assets such as properties, bank deposits, stocks and
securities, life insurance policies, loans, company deposits, debentures, bonds etc. acquired, held or
owned by an NRI while he was abroad can be continued to be so held and deal in any manner even
after the NRIs return to India for permanent settlement.
The Central Government has launched various initiatives for the welfare of the non-resident Indians.
These are carried out through the MOIA which is the nodal Ministry for all matters relating to Overseas
Indians. The measures are intended to promote a mutually beneficial engagement between the Overseas
Indians and India in economic, social and cultural arena.
Besides, various State Governments have also put welfare measures in place for Overseas Indians
especially those from their respective states. All these and more are captured in the ensuing pages for
your ready reference.
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Central Government initiatives

Initiatives:
9. Investment facilitation and knowledge networking
The MOIA has set up an Overseas Indian Facilitation Centre (OIFC) in partnership with Confederation of
Indian Industry (CII) as a one stop shop for the following:
Promoting Overseas Indian investment into India and facilitating business partnerships by giving
authentic and real-time information.
Establish and maintain a diaspora Knowledge Network
Functioning as clearing house for all investment elated information
Assisting States in India to project investment opportunities for Overseas Indians; and
Providing a host of advisory services to PIOs and NRIs including consular questions, stay in India,
investment and financial issues. The governments of Assam, Bihar, Gujarat, Karnataka,
Kerala, Orissa and Punjab have partnered with OIFC to appraise the diaspora about investment
opportunities in their respective states.
10.Bilateral Labour Co-operation
India has entered into bilateral MOU with all the major destination countries for the protection and welfare
of Indian emigrants. Besides, the MOIA has also signed SSAs with 13 countries and is
conducting/concluding negotiations with many others. The Government is also entering into Human
Resource Mobility Partnerships to position international labour mobility as a win-win for the countries of
origin, the countries of destination and the migrant workers.
11.Global Indian Network of Knowledge (Global Ink)
MOIA has developed a diaspora knowledge network called Global Indian Network of Knowledge (Global
INK) as an electronic platform that seeks to connect people of Indian Origin from a variety of disciplines,
recognized as leaders in their respective fields, not just in their country of residence but globally as well,
with knowledge users at the national and sub-national levels in India.
12.India Development Foundation of Overseas Indians
India Development Foundation of Overseas Indians provides a credible window for Overseas Indian
Philanthropy in Indias social development. The objective of the Foundation is to facilitate philanthropic
activities by Overseas Indians including through innovative projects and instruments such as micro-credit
for rural entrepreneurs, self-help groups for economic empowerment of women, best practice
interventions in primary education and, technology interventions in rural health care delivery.
13.Scholarship Programme for diaspora Children (SPDC)
The SPDC was launched in 2006-07 and is open to NRIs/PIOs from 40 countries with significant diaspora
population. Under this scheme, 100 scholarships of up to USD 3,600 per month are awarded to PIO and
NRI students for undergraduate courses in engineering, technology, humanities, liberal arts, commerce,
management, journalism, hotel management, agriculture and animal husbandry, besides other courses.
The SPDC scheme is open to NRIs and PIOs from more than 40 countries with a substantial Indian
population. It is implemented by Educational Consultants India Limited EdCIL (India) Ltd., which is an
autonomous body under the Ministry of Human Resource Development. The students have to apply for
the scholarship and applications of those who meet the eligibility criteria are evaluated and shortlisted by
a selection committee of officer from the concerned departments, viz. the Ministry of Human Resource
Development, EdCIL (India) Ltd. and MOIA. Besides, the Government has also decided to scrap the
Common Entrance Test for selecting the eligible candidates for the scholarship.
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14.Direct Admission to Students Abroad (DASA)

DASA is a Government of India run scheme that provides deserving foreign nationals/PIOs/NRIs direct
admission to undergraduate programs. EdCIL administers the scheme, which offers students the
opportunity to pursue programs at the National Institute of
Technology and other centrally funded institutes (other than the Indian Institutes of Technology, or IITs).
15.Reservation for NRIs at Indian educational institutions
The Government of India has approved a scheme to enable a supernumerary quota of 15% seats at all
higher education institutes for foreign nationals/PIOs/children of Indian workers in the Gulf countries.
There shall be no NRI fee and, in fact, the children of Indian workers in the Gulf countries shall be treated
as equal to resident Indian citizens. For this purpose, the Government has drawn up a list of institutes
along with the courses offered. The same can be viewed in the MOIA website.
16.Assistance for problems relating to Overseas Indian Marriages
The issue of Overseas Indian marriages falls within the purview of private international law that requires
careful and meticulous handling. MOIA has taken initiatives to create awareness of problems associate
with Overseas Indian marriages. The Ministry has brought out a report
on problems relating to NRI marriages titled Nowhere Brides that contains information on issues with
NRI marriages, Indian legal precedence and so on. MOIA has launched a scheme to provide financial
assistance to women deserted by their Overseas Indian spouses for obtaining counseling and legal
services. These services would be provided through Indian Womens Organizations/Indian community
Associations and NGOs that are on the panel of the Indian Missions/Posts in the USA, UK, Canada,
Australia, New Zealand and the Gulf. The Ministry has empanelled 25 NGOs with the Indian
Missions/Posts overseas for this purpose and has
disbursed a sum of `2,753,696 to the NGO through whom 47 women have benefited.
17.Voting Rights to Non-resident Indians
The Government has taken steps to have the Representation of People (Amendment) 2010 notified to
provide voting rights to Overseas Indians. Through this, Overseas Indian passport holders can register
their names in the electoral roll of the constituency where address mentioned in their passport falls.
Pursuant to this, the overseas electors can participate in the Indian electoral process. For registering in
the electoral rolls, overseas Indian passport holders have to apply in the prescribed form to the concerned
registration officer either directly or
through post. The registration rules permit the overseas Indians to attest the supporting documents
themselves.
Dual nationality has been a persistent demand of the Indian diaspora that was addressed through the
OCI scheme in 2005. This scheme provides for registration of all PIOs provided
they were citizens of India on or after 26th January, 1950; or they were eligible to become citizens of
Indian on 26th January, 1950 and are citizens of other countries, except Pakistan and
Bangladesh. Under the OCI scheme, a registration certificate is given together with Universal visa sticker
to the PIOs. The OCI scheme facilitates multiple entry, multi-purpose life-long visa to a registered PIO for
visiting Indian and also provides exemption from registration with FRRO.
The OCI registration provides other benefits also such as parity with NRIs in inter-country adoption of
Indian children, entry fee for visiting national monuments and museums, practicing specified professions
[doctors,dentists, nurses, pharmacists, advocates, architects and chartered accountants] and with
resident Indians in domestic air tariffs. However, it is to be noted that OCI is not dual PIO University The
PIO University would be set up under the Innovation Universities Act (after approval) with support coming
in the form of research support and student scholarships.
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18. Double Taxation related maters

Dual taxation of income residence vs. citizenship Another concern for the returning Indian, having
stayed abroad for many years is taxability in both the host country where he/she has lived, and in India,
where he/she intends to settle down permanently. This issue is particularly relevant where the individual
retains the citizenship or permanent resident status of the country
he/she has left, and when he continues to earn income in that country. While India follows physical
presence as the residency criteria, many countries treat citizenship or permanent residence as the
benchmark for determining the residency.
On returning to India to settle here permanently, the individual would become a ROR as per the Act,
generally in the third or fourth year of returning. In that event, he/she becomes liable to pay taxes on
global income in India. However, the returning Indian can avail credit for taxes on the doubly taxed
income if India has a DTAA with the concerned overseas country.
To take an example - Mr. X (holding a US passport) is moving to India for good from the US, along with
his family. He would continue to be taxed globally in US, based on his citizenship. He would become a
ROR after a period of time in India. Once his residential status in India changes to ROR, he would be
taxed globally in two countries, in India and the US. Under the India-US DTAA, tax relief in the form of
foreign tax credit may be availed in one of the two countries, for taxes paid in the other country, so as to
avoid double taxation. Even in the absence of a DTAA with the concerned country, foreign tax credit may
be claimed on the doubly
19. Recruitment of maid for Oman

The Indian government has tightened service contract regulations to protect Indian housemaids, taking up
employment in the GCC (Gulf Cooperation Council), from abuses. "The Ministry of Overseas Indian
Affairs has decided to introduce changes to the service agreements of housemaids being brought from
India to Oman with effect from June 20, 2011. Under the new regulations it has been made mandatory for
prospective employers to submit salary certificate of minimum monthly wages of 1,000 Omani riyals.
"Irrespective of employers' nationality those below 1,000 riyals monthly salary will not be able to hire
Indian housemaids, however the combined salary of husband and wife would be considered for the
minimum 1,000 riyals wage also employers will be required to provide a bank guarantee of 1,100 riyals
while recruiting a housemaid. "Every employer, including Indian nationals residing in Oman, will have to
furnish bank guarantee if they wish to recruit an Indian housemaid,".
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CHAPTER 19
STATE GOVERNMENT WELFARE SCHEMES
1) Government of Assam
To bring the NRI from Assam closer to the people of the State and reinforcing their emotional bonds, the
Govenrment of Assam is proposing to start an NRI cell. The progressive NRI community of the state
desires to actively participate in the development of the state and work as a goodwill ambassador for the
region. The State Government welcomes investment initiatives by the NRIs of the State.
Useful contact details:The Industrial Investment Secretariat Cell (IISC)
Department of Industries & Commerce
Government of Assam, Block C, 3rd Floor,
Assam Secretariat, Dispur, Guwahati - 781 006
Phone/Fax: +91-361-2237256
E-mail: info@investinassam.com
Website: http://investinassam.com
2) Government of Bihar
There is a Bihar Foundation which is an initiative of the Government of Bihar to realize the dream of a
Better Bihar through the participation of Non Resident Biharis (NRB), NRIs, PIOs and others. Conceived
to act as a platform to facilitate interaction between the Government of Bihar and the diaspora at multiple
levels, the Foundation solicits ideas, investments and knowledge resources across sectors and verticals
that can help in the development of Bihar.
The Foundation endeavors to unite Biharis and form local chapters of NRBs in regions which have
substantial population of people of Bihari origin. Policy reforms undertaken by the administration has
enabled the people of Bihar to embrace a better and brighter future. The Foundation works with an
objective to communicate realities in Bihar and endeavors to let the user know, why and how. It has, in a
very brief period of the time become one of the fastest growing economies in India.
Useful contact details:Bihar Foundation
6th Floor, Indira Bhawan, R.C.S. Path, Patna
Phone: +91-612-2521371
Email: satyajit@biharfoundation.in
Website: www.biharfoundation.in
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3) Government of Gujarat
There is a NRI Division set up by the Government of Gujarat with a view to establish effective
communication with NRIs of Gujarati origin in various parts of the world. The main objectives of the
Division are to: Prepare and maintain a comprehensive database about NRIs of Gujarati origin.
Study from time to time social and cultural issues of NRI of Gujarati origin and take steps to formulate
schemes for meeting their requirements.
Take effective steps to survey and assess the technical and professional skills of NRIs and to dovetail
the same in the developmental efforts of the State.
Create a database on Non-Resident Gujaratis (NRGs), highlighting the professional areas of interest.
Enable Government of Gujarat and its agencies to communicate with NRGs with relevant interest.
Facilitate Government of Gujarat to initiate steps to address the specific needs of NRGs in different
fields.
Tap the technological, managerial and financial resources of the NRI so as to upgrade the technical and
professional skills and the human resources of the State, for the economic and industrial development of
the State.
Channelize the savings and surplus financial
resources of the NRIs in to the developmental efforts of the State for mutual benefits.
Monitor the general welfare of the NRI and, in times of crisis, identify specific problems of Gujarati Non
Resident Indians groups and take up the same with and through Government of India. In order to facilitate
the achievement of above objectives, the Government has in addition set up the 'Gujarat State NonResident Gujaratis' Foundation(NRGF)'.
Useful contact details:Gujarat State Non-Resident Indian Department
General Administration Department
Block No.7/1st Floor, Sardar Bhavan
Sachivalaya, Gandhinagar
Ph: +91 79 23250474, 23250478
Email: ds-nri-gad@gujarat.gov.in
Website: www
4) Government of Karnataka
The Government of Karnataka has set up NRI Forum to forge a symbiotic relationship between
Karnataka and its diaspora. The Forum will provide information on socioeconomic activities of Karnataka
State and its development and also coordinate investment in the state across
all potential sectors. India has emerged as the country which attracts the largest quantum of investment
from its diaspora. With the State having earned a reputation as the most sought after destination for
multinational corporations, especially in the technology area, the NRI forum has been formed to attract
more investment to the State. The NRI Forum will facilitate investors among NRIs (Non-Resident Indians)
in setting up their ventures in the state.
The main aim of NRI Forum is to assist NRIs:
With their requirements in India;
Motivate NRIs for development and promotion of Karnataka's literature, cultural and heritage activities
overseas; and,
Encourage NRIs for adoption of Educational Institutions in the backward areas of Karnataka so as to
provide quality education to the children. The NRI Forum also hopes to draw up on the knowledge
reservoir of diaspora for development of the State.
Useful contact details:NRI Forum Karnataka
No. 6 & 7, Vikasa Soudha,
Bangalore 560 001
Ph: +91 80 22034057, 22034058
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Email: info@nriforumkarnataka.org
Website: www.nriforumkarnataka.org
For more information, log on to www.karnataka.
gov.
5) Government of Kerala
In order to ensure the welfare of the Non Resident Keralites, redress their grievances and safeguard their
rights the NORKA, the Non Resident Keralites Affairs Department was set up by the Government of
Kerala in 1996. Since then, NORKA has been playing a vital role in the lives of NRKs, supporting them in
times of need and lending them a helping hand in every possible means. Norka-Roots is the field agency
of the Department of NORKA, set up in 2002. It acts as an interface between the Non-Resident Keralites
and the Government of Kerala and a forum for addressing the NRKs problems, safeguarding their rights
and rehabilitating the returnees major objectives are:
Welfare of NRK's
Heritage village for parents of NRK's
Promotion of Malayalam language and culture
Cultural exchange programme between the nativesand Malayalees settled abroad.
Promotion of regional development with the active participation of NRK's
Social Security Network for NRK's
A relief fund for rendering immediate assistance to NRK's in need
Organization of annual meets for NRK's
Resettlement and reintegration of NRKs returning to Kerala
Employment mapping
To facilitate the creation of a high calibre human resource pool
Upgrading of skills of jobseekers
Data Bank of NRK's
Channelising investments to the State
Prevention of illegal recruitment.
Useful contact details
NORKA Department, Government Secretariat
Thiruvananthapuram 695 001
Ph: +91 471-2518182, 2518061
Email: ds@norka.kerala.gov.in
Website: www.norka.gov.in
NORKA-ROOTS
4th Floor, Centre Plaza, Vazhuthacaud
Thiruvananthapuram 695 014
Ph: +91 471- 2332416, 2332452
Email: mail@norkaroots.net
Website: www.norkaroots.net
For more information, log on to www.kerala.gov.in
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5.a Pravasi Pension Scheme for Non-Resident Keralites

There are a large number of people who are living outside India. Among them a good percentage belong
to lower or middle income group. This large group of middle-lower income group face many fundamental
problems during their life in the Gulf and when they return to their homeland. The saving habits and
rehabilitation facilities available to them are also not very promising. Similarly a good percentage of
keralites are living outside kerala and within India for their being. These Non-Resident Keralites (NRKs)
are
also
facing
similar
circumstances
as
the
NRIs.
Realizing such circumstances, Kerala State came forward with an unique initiative, first of its kind in the
country, to setup a welfare fund to provide welfare schemes to NRIs and NRKs. Kerala Non-Resident
Keralites Welfare Board came in to existence as per government Kerala Non-Resident Keralites Wlefare
Fund Act -2008. More than fifty thousand NRIs and NRKs in together are members of the welfare fund.
Current NRIs and NRKs , NRIs returned to India if having at least two years of NRI status can avail
membership in this welfare fund. The Board organized many welfare schemes such as pension schemes,
family pension schemes, medical aid, death assistance etc.
The Act envisages the formation of the Welfare Fund through contribution from the registered members
@ of Rs. 300/- per month as contribution from each Non Resident Keralite (abroad). Every Non Resident
Keralite (abroad) member when returned and settled down permanently in the State has to pay Rs. 100
only. Non Resident Keralites (India) member has to pay Rs. 100 as contribution per month. Every
deemed member shall contribute Rs. 50 per month.
Benefits to Member
Pension to members and deemed members who had completed 60 years of age and had
remitted contribution for not less than five years
Family pension on the death of a member or a deemed member who had remitted
contribution for not less than five years.
Financial assistance on the death of a member due to illness or accident.
Financial assistance for medical treatment of the members affected with serious illnesses
Financial assistance for marriage of women members and daughters of the members and
for maternity benefit to women members.
Financial assistance or loans or advances to members for the construction of dwelling
houses or for the purchase of land and building or for the purchase of land or for the
maintenance of house.
Financial assistance for education including higher education to the children of members.
Self employment assistance to reputed persons
Financial assistance to members incapacitated to attend work due to permanent physical
disability
Financial assistance investment in any company or firm or co-operative society or
institution constituted under the Act.
In case you need further information please visit
http://www.pravasiwelfarefund.org/index.php/
For downloading application form, please click the following link
http://www.pravasiwelfarefund.org/index.php/application-forms
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5.b Pravasi Identity Card

The government of Kerala has instructed NORKA-ROOTS to issue photo identity cards for the nonresident Keralites working for a minimum of 6 months in a foreign country. The ID Card will be issued to
all the NRKs working abroad across the globe. The ID Card will be used as a base material for long-term
policy formulation of Government. This is for the first time that a state government is implementing such a
major scheme for its people.
The NRK who are either residing or working abroad atleast 6 months and have completed 18 years of
age are eligible for applying the card. The validity of the card is of 3 years. NRKs can apply for the ID
Cards by submitting their application form duly verified and attested by the peoples representative,
concerned embassies or the gazzetted officers of Government of Kerala. Copies of the relevant pages of
passport and visa are to be enclosed along with the application. The registration fee is only Rs. 200/- per
person.
The New India Insurance Company will provide insurance coverage to the card holders. The coverage is
given for accidental death, permanent or total and partial disability of the card holder. A unique master
policy number is depicted in each card. NRK Identity Card Cells have been constituted in
Thiruvananthapuran, Kochi and Kozhikode districts for receiving the applications of the NRKs. The
districts are classified into three zones and the districts pertaining to each zone as detailed below can
submit their applications in the three regional centers of NORKA-ROOTS
Northen Zone Kasargod, Kannur,Kozhikode,Malapuram,Wynad Middle Zone Thrussur, Ernakulam,
Palakkad, Kottayam, Alappuzha, Idukki Southern Zone Pathanamthitta, Kollam, Thiruvananthapuram
The applicants pertaining to the Northern Zone has to submit their application forms in the Kozhikode,
Regional Office of NORKA-ROOTS, Middle zone in the Ernakulam office and the applicants pertaining to
the Southern Zone can submit their application in the Head Office of NORKA-ROOTS
The address and phone number of the ID Cells of NORKA-ROOTS are detailed below.
Norka- Roots Regional Office
Certificate Authentication Centre
Lotus Villa, Sasthamangalam
Thiruvananthapuram
Phone: 0471- 2317950, 2317951
e_mail: idcelltvm@norkaroots.net
Norka- Roots Regional Office

Door No. 41/1313- B,
V.M Complex, C.P.Ummer Road
Ernakulam
Phone: 0484 2371830, 2371810
e_mail: idcellekm@norkaroots.net
Norka Roots Regional Office

2nd Floor, Zamorine Squire
Link Road, Kozhikkode
Phone: 0495- 2304882, 2304885
e_mail: idcellclt@norkaroots.net
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6) Government of Orissa
In Odisha, the Non Resident Oriya Facilitation Center (NROFC) is an organization that works in liaison
with the NRO Cell of Government of Odisha to help the Non-Resident Oriyas (NROs) in the following
ways:
Collection of information on NROs and creation of database, mailing lists, discussion forum etc.,
Exchange of information of all manner with NROs,Government and people of the locality, representation
of the interests of the Members including providing information,
Voluntary gathering of all Oriyas residing outside Odisha and abroad interested in the development of
the state of Odisha in all conceivable forms,
Organization of designated events such as Pravasi Oriya Divas, Annual Orissa Development
Symposium,
Facilitation of NRO projects by providing relevant information and help with Government interface All
other related activities with active support of the Government via the NRO cell in the Government
departments.
Useful contact details:Team Odisha
IPICOL House, Janpath, Bhubaneswar-751022
Orissa (India) Ph: +91 674-2542601/02/03
E-mail: info@teamorissa.org
Website: www.teamorissa.org
Non-Resident Oriya Facilitation Center
D-3,B.J.B. Nagar, Bhubaneswar-751014
Ph: +91 674 2432251, Email: sahadevas@yahoo.com
Website: www.nrofc.org
For more information, log on to www.orissa.gov.in
7) Government of Rajasthan
Rajasthan Foundation, an organization set up by Government of Rajasthan that works in the noble
direction of strengthening bonds between Non Resident Rajasthani community and the state of their
origin. Rajasthan Foundation is a platform through which eminent pravasi Rajasthanis like Shri L.N Mittal,
Shri Kumar Mangalam Birla, Shri Rahul Bajaj have participated
in the journey of Socio-Economic development of the state. Today there is hardly any field of activity, be it
business, public welfare, education, art, literature, culture, sports, politics, science, medicine or
engineering where Rajasthanis have not achieved remarkable and unprecedented success. No matter,
where they went, Rajasthan remained in their hearts and emotions; their
deep attachment to Rajasthan has kept the bond strong between the land and its people. The
establishment of Rajasthan Foundation reflects the state government's determination to nurture its
interaction with its noble sons and they are committed to promote and facilitate every step taken by our
Non Resident Rajasthanis to contribute into the growth and development of Rajasthan.
Useful contact details:Rajasthan Foundation,
Government of Rajasthan
Yojana Bhavan, Yudhister Marg, C-Scheme,
Jaipur, Rajasthan, India
Ph: +91-141-2229111, 2229444, 2229091
Email: rajfound-rj@nic.
Website: www.rajasthanfoundation.gov.in
For more information, log on to www.rajasthan.gov.in
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CHAPTER 20
NRI INVESTMENT OPTIONS
1) Investments in Shares and Securities listed in Indian Stock Market
1.a. Portfolio Investment Scheme (PIS) for NRIs
Reserve Bank of India (RBI) permits an NRI to invest in Indian Share Market
through Portfolio Investment Scheme (PIS) Account. The NRI investor must obtain permission from the
RBI before investing in Indian capital market. Normally this permission is obtained through a designated
schedule commercial bank where the NRI investor has the NRE/NRO account. This permission allows
NRIs to invest in shares of Indian companies, in secondary market, under repatriation or non-repatriation
basis in respect of shares or convertible debentures sold or purchased through a registered stock broker
on a recognized stock exchange. Any other modes of acquiring shares are not covered under this
scheme ie, shares purchased through IPOs, as resident individuals, bonus shares etc.
NRIs have to designate a branch of an Authorized Dealer (Bank) for routing the transactions relating to
purchase and sale of shares/ convertible debentures under PIS, and route all such transactions only
through the branch so designated. The NRI has to sign an agreement with an approved share broker to
open the share trading account/depository account. The share broker will buy/sell shares on behalf of the
NRIs as per the agreed terms and all the reports related to the buy/sell of shares and securities will be
provided to the investor either manually or electronically, the mode opted by the NRIs. In case the
investor opted for online trading, the investors are given a login ID and password to access their web site
to do the buy/sell transactions, cash transfer, verify the portfolio positions, transactions details etc.
In short the following accounts are opened on behalf of the NRI investor
1)
2)
3)
NRE/NRO Account with any branches of a commercial Bank

PIS account with the designated braches of the same bank
Depository account with Share broker
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4)
Share Trading account with a Share Broker
The investor has to open a NRE account if he requires his investments to be repatriated and an NRO
account if he does not want the repatriation facility. The broker will help the investor to open the
NRE/NRO/PIS account.
Capital Gains (profits)
Capital gains realized from shares that are held for more than one year is treated as long term capital
gains and are tax free. Gains realized within a period of less than one year will attract short term capital
gains at the applicable rate (presently @ 15% Plus Surcharge) which will be deducted at source by Bank.
Tax is calculated and deducted for each transaction separately. In other words, the gains made in one
transaction cannot be set off against the loss made in another. In case you are not liable to pay tax in a
particular financial year, you can file your tax return and get the tax refund from the Income Tax
Authorities.
Dividend Income
As per the present Income Tax rules, the dividend received from equity shares are exempted from
income tax, so its fully tax-free in the hands of the investor.
NRIs needs to complete the following applications for opening the PIS and Share Trading Accounts
1. Agreement with Broker
2. Trading Account application
3. Depository Account opening form
4. KYC Application
5. PAN Application (if not already held by the investor)
6. PIS Application form
Documents required:
1.
2.
3.
4.
5.
6.
7.
Six passport size colour photograph of the NRI

Copy of PAN card
Copy of passport with Visa page
Overseas Address proof
Indian Address proof
Bank Statement
One Canceled Cheque Leaf
Schedule 2 and 3 of the Notification No. FEMA 20/2000 RB contains

provisions relating to Portfolio Investment by NRIs. OCBs are not allowed to make fresh investments in
India under the Portfolio Investment Scheme vide Notification No. FEMA 46 dated 29th November 2001.
Further, in September 2003, RBI has banned OCBs from investing in any manner in India. In fact, the
category of OCB has been abolished. However, they can continue to hold and sell shares purchased
before 29th November 2001. Portfolio investment is covered by general permission subject to following
condition/provisions.
(i) Investment is permitted on repatriation as well as non-repatriation basis.
(ii) Purchases, sale of shares (Preference and Equity) and/or convertible debentures are covered.
(iii) Purchase/sale is done through a registered broker of a recognized stock exchange.
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(iv) One bank branch must be designated by NRIs and all purchase/sale must be routed through that
designated bank branch only.
(v) All transactions of sales and purchase must be delivery based. Speculative transactions are not
allowed.
(vi) Mode of investment may be in any of the following ways:
(a) For investment on Repatriation basis
- inward remittances through normal banking channels
- out of FCNR/NRE account.
(b) For investment on non-repatriation basis
Besides the above two, investment can be made out of NRO account.
(vii) Ceiling on Investment
(a) Per investor (Each NRI)
- 5% of the paid-up value of shares of an Indian Company on both repatriation and nonrepatriation basis.
- 5% of the value of each issue of convertible debenture of an Indian Company on both
repatriation and non-repatriation basis.
(b) Per investee Company
(Total holding by all NRIs put together on both repatriable as well as non-repatriable basis.) 10% of paidup value of shares of an Indian Company.
RBI/2011-12/453
A.P. (DIR Series) Circular No. 94
March 19, 2012
To
All Category I Authorised Dealer banks
Madam / Sir,
Clarification Prior intimation to the Reserve Bank of India for raising the
aggregate Foreign Institutional Investors / Non-Resident Indian limits for
investments under the Portfolio Investment Scheme
Attention of Authorised Dealers Category I (AD Category I) banks is invited to the provisions of
Schedules 2 and 3 to the Notification No. FEMA 20/2000-RB dated May 3, 2000, viz., Foreign Exchange
Management (Transfer or issue of Security by a Person Resident outside India) Regulations, 2000, as
amended from time to time, in terms of which registered Foreign Institutional Investors (FII) and NonResident Indians (NRI) are allowed to purchase/sale shares and convertible debentures of an Indian
company (through registered brokers) on recognized stock exchanges in India subject to, inter-alia,
aggregate investment limit of 24 per cent and 10 per cent, respectively, of the paid up equity capital or
value of each series of convertible debentures of the Indian company.
2. It is hereby clarified that the Indian company raising the aggregate FII investment limit of 24 per cent to
the sectoral cap/ statutory limit, as applicable to the respective Indian company or raising the aggregate
NRI investment limit of 10 per cent to 24 per cent, should necessarily intimate the same to the Reserve
180 | P a g e
Bank of India, immediately, as hitherto, along with a Certificate from the Company Secretary stating that
all the relevant provisions of the extant Foreign Exchange Management Act, 1999 regulations and the
Foreign Direct Policy, as amended from time to time, have been complied with.
3. It may also be noted that the Reserve Bank of India monitors the ceilings on FII/ NRI/ PIO investments
in Indian companies on a daily basis. For effective monitoring of foreign investment ceiling limits, the
Reserve Bank has fixed cut-off points that are two percentage points lower than the actual ceilings. Once
the aggregate net purchases of equity shares of the company by FIIs/NRIs/PIOs reaches the cut-off point
of 2 per cent below the overall limit, the Reserve Bank cautions all the designated bank branches not to
purchase any more equity shares of the respective company on behalf of any FIIs/ NRIs/ PIOs without
prior approval of the Reserve Bank. The link offices are then required to intimate the Reserve Bank about
the total number and value of equity shares/ convertible debentures of the company proposed to be
bought on behalf of their FIIs /NRIs /PIOs clients. On receipt of such proposals, the Reserve Bank
gives clearances on a first-come-first served basis till such investments in companies reaches the
respective limits (such as, 10 / 24 / 30 / 40/ 49 per cent limit or the sectoral caps/statutory ceilings), as
applicable. On reaching the aggregate ceiling limit, the Reserve Bank advises all designated bank
branches to stop purchases on behalf of their FIIs/ NRIs/ PIOs clients. The Reserve Bank also informs the
general public about the `caution and the `stop purchase in these companies through a press release
and an updated list regarding the same is placed on the RBI website (www.rbi.org.in).
4. AD banks are advised to bring the above changes to the notice of their customers and constituents
immediately.
5. The directions contained in this circular have been issued under sections 10(4) and 11(1) of the
Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions /
Yours faithfully,
(Meena Hemchandra)
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1.b IPO Electronic Mode and Electronic Voting

The Budget 2012 proposes tax incentive for new investors as well as tries to broaden the investor base
and reach of IPOs. IPO equity offer above Rs 10 crore to be made electronically is a big step ahead.
Allowing Electronic Voting facility shall provide opportunities for wider shareholder participation.
Simplification of process of issuing Initial Public Offers (IPOs) and lowering of cost would improve the
investment climate in the country.
1.c Securities Transaction Tax (STT) (2013 Budget proposal)
Reduction in Securities Transaction Tax (STT) Rates

The STT rates are proposed to be reduced as under effective from 1st June 2013:
On sale of equity futures from 0.017% to 0.01% (payable by seller as hitherto);

On sale of unit of an equity oriented fund to the mutual fund (redemption at fund counters) from
0.25 to 0.01 % (payable by seller);
On sale of unit of equity oriented fund through recognized stock exchange, settled by delivery or
actual transfer of units from 0.1% to 0.001% (payable only by seller, as against current levy on
both seller and purchaser)
2)
NRIs investment in Mutual Funds Schemes
Investments by NRIs in Mutual Funds can be made on a repatriable or on

a non-repatriable basis, as preferred by the investor.
Repatriable Basis
To invest on a repatriable basis, you must have an NRE Bank Account in India. The Reserve Bank of
India (RBI) has granted a general permission to Mutual Funds to offer mutual fund schemes on
repatriation basis, subject to the following conditions:
1. The mutual fund should comply with the terms and conditions stipulated by SEBI.
2. The amount representing investment should be received by inward remittance through normal
banking channels, or by debit to an NRE
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account of the non-resident investor.

3. The net amount representing the dividend / interest and maturity proceeds of units may be
emitted through normal banking channels or credited to NRE/ account of the investor, as desired
by him subject to payment of applicable tax.
Non-Repatriable Basis
The Reserve Bank of India (RBI) has granted a general permission to Mutual Funds to offer
mutual fund schemes on non-repatriation basis, subject to the following conditions:
1. Funds for investment should be provided by debit to NRO account of the NRI investor.
Alternatively, funds may be invested by inward remittance or by debit to NRE Account.
2. The current income in the form of dividends is allowed to be repatriated.
As an NRI one does not need any specific approval from the RBI for investing or redeeming from Mutual
Funds. Only OCBs and FIIs require prior approvals before investing in Mutual Funds.
There are no investment restrictions on NRIs for investing in mutual funds. RBI does not restrict
investment in mutual funds either on repatriable or non-repatriable basis.
Although SEBI regulations allow Mutual Funds to offer guaranteed returns subject to the Fund meeting
certain conditions, most Mutual Funds in India do not provide a guaranteed return on their schemes. In
such cases, the sponsor, the AMC, or any other person, guarantees a minimum level of return and makes
good the difference if the actual returns are less than the guaranteed minimum. The name of the
guarantor and the manner in which the guarantee shall be met must be disclosed in the offer document
by the Mutual Fund. Investment in mutual funds is not guaranteed by the Government of India, the
Reserve Bank of India or any other government body.
If the investment is made on a repatriation basis, the net income or capital gains (after tax) arising out of
investment are eligible for repatriation subject to regulatory guidelines in force at the time of repatriation. If
the investment is made on a non-repatriation basis, only the net income, that is, dividend, arising out of
investment is eligible for repatriation.
If the investment is made on a repatriation basis, the net income or capital gains (after tax) arising out of
investment is eligible for repatriation subject to regulatory guidelines in force at the time of the
repatriation. If the investment is made on a non-repatriation basis, only the net income, that is, dividend,
arising out of investment is eligible for repatriation.
NRIs can redeem their units by signing on the tear-off portion of the account statement & sending it to any
of the AMC or your personal MF investment advisor through post or by sending a letter requesting
redemption with the signatures and the amount to be redeemed. The redemption request would be
processed at the applicable NAV based price. The redemption proceeds will be sent directly to the bank
branch where NRE/NRO account depending upon whether repatriable or non-repatriable account within
three business days. The redemption proceeds will be net of tax deduction at source on the profits.
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Tax Liability . Mutual Funds
Under Section 2(42A) of the Income Tax Act, units of the Scheme held as a
capital asset, for a period of More than twelve months immediately preceding the date of transfer, will be
treated as a long term capital asset for the computation of capital gains thus attracting long term capital
gains tax rate. Tax at source is deducted, if you redeem units within a period of twelve months form the
investments (short gain capital gian). In all other cases it would be treated as a short-term capital asset
and would attract short-term capital gains tax rate. Hence depending on the period of investments, long
term or short capital gains and tax thereon is applicable on redemption. Though there is currently no longterm capital gain tax liability for redemptions from equity schemes, there is a liability at the time of
redeeming from the debt schemes.
As per Section 10(35) of the Income Tax Act, 1961, income received from mutual fund units specified
under Section 10(23D) is exempt from income tax in India and the mutual funds are subject to deduction
of distribution tax in debt oriented schemes. Hence all dividends are tax-free in the hands of non-resident
investors and no TDS is applicable on the same.
Wealth Tax - Units issued to FIIs/NRIs will not be treated as assets as defined under section 2(ea) of the
Wealth-Tax Act, 1957 and hence will not be liable to wealth tax.
FAQ
Can an NRI fax a request followed by the original documents?

Redemption original documents - Units cannot be redeemed or allotted on the basis of fax
applications. A request that lacks a valid signature cannot be processed due to legal restrictions.
Those who are having online account can redeem units online
Can a Power of Attorney (POA) invest on behalf of the NRI investor?
Yes, Unlike banks where a POA holder cannot open an account on behalf of the NRI/FIIs, in a
mutual fund the POA has the authority to invest on behalf of the investor and sign documents for
initial and additional purchases as well as redemptions. While applying for purchase of units the
POA holder needs to submit the original POA or a copy duly notarized should be submitted. The
Power of attorney should contain the signature of both the first holder and the POA holder. Only
when the POA is registered does the POA holder have the right to transact on behalf of the
NRI/FII investor. His signature will be verified for processing any transaction/request.
Is nomination by NRIs allowed in Mutual Funds?
Yes, It is allowed only for Individuals/HUFs.
Can a resident Indian have an NRI as nominee?
Yes, The same rules apply for nominees to resident Indian accounts. An NRI can be a nominee
to an account which is in the name of a resident Indian.
Will the fund accept an NRI application with an overseas bank account detail? No.
You need PAN and also you need to complete the KYC (Know your client) formalities before investing in
184 | P a g e
mutual funds schemes in India. Please note that, investments in Mutual Funds are subject to market risk.
Please take advice from your Financial Adviser before investing in mutual fund schemes
3) FDI (Foreign Direct Investment) in Partnership Firm / Proprietary Concern:
(i) A Non-Resident Indian (NRI) or a Person of Indian Origin (PIO) resident

outside India
can invest by way of contribution to the capital of a firm or a proprietary concern in India
on non-repatriation basis provided;
(a) Amount is invested by remittance or out of NRE/FCNR(B)/NRO account maintained with
Authorized Dealers / Authorized banks.
(b) The firm or proprietary concern is not engaged in any agricultural/plantation or realestate business or
print media sector.
(c) Amount invested shall not be eligible for repatriation outside India.
(ii) Investments with repatriation benefits: NRIs/PIO may seek prior permission of Reserve Bank for
investment in sole proprietorship concerns/partnership firms with repatriation benefits. The application will
be decided in consultation with the Government of India.
(iii)Investment by non-residents other than NRIs/PIO: A person resident outside India other than
NRIs/PIO may make an application and seek prior approval of Reserve Bank for making investment by
way of contribution to the capital of a firm or a proprietorship concern or any association of persons in
India. The application will be decided in consultation with the Government of India.
(iv)Restrictions: An NRI or PIO is not allowed to invest in a firm or proprietorship concern engaged in any
agricultural/plantation activity or real estate business (i.e. dealing in land and immovable property with a
view to earning profit or earning income there from) or engaged in Print Media.
NRI, POI are also permitted to set up private/public limited companies in India subject to certain terms
and conditions
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4) Company Fixed Deposit Investments for NRIs
Deposits from Non-Resident Indians and Persons of Indian Origin resident

outside India holding PIO Card are accepted in accordance with the regulations governing the
acceptance of deposits from NRIs. . NRIs are permitted to keep deposits with public limited companies in
India for a period ranging from 12-36 months
subject to ceilings prescribed under the Companies
(Acceptance of Deposits) Rules,1975. Application for the purpose is required to be made by the company
receiving the deposits through an authorised dealer. Permission for placement of funds in fixed deposits
with firms/ companies in India is granted by Reserve Bank on application by the depositor or the deposit
accepting firm/company, on non-repatriation basis. The total deposits received by the firm/company from
non-residents/residents, however, should be within the ceiling prescribed under the Companies
(Acceptance of Deposits) Rules, 1975.
TAX DEDUCTION AT SOURCE
Income tax will be deducted at source under Section 195 of the Income Tax
Act, 1961, at the rates in force. Wherever there exists a Double Taxation Avoidance Agreement (DTAA)
between the Government of India and government of other countries (country of residence of the
respective NRI), the rate of tax deducted at source will be applied as per the DTAA. The NRI has to give
the declaration every financial year in two respects, viz., that he is a resident of a foreign country and he
is not resident in India during the relevant Financial Year, failing which TDS will be deducted at normal
rates. Where income tax is deducted at source on the monthly interest, a consolidated TDS certificate
maybe issued for the financial year. Sub-section 5A to Section 139A of the Income Tax Act, 1961,
requires every person receiving any sum or income from which tax has been deducted, to intimate his
Permanent Account Number (PAN) to the person responsible for deducting such tax. Further, Sub186 | P a g e
section 5B to section 139A requires the person deducting such tax to indicate the PAN on the TDS
certificate. Please mention your PAN in the application form.
5) Non-Banking Financial Company (NBFC) Deposits
A non-banking financial company (NBFC) is a company registered under the

Companies Act, 1956 and is engaged in the business of loans and advances, acquisition of
shares/stock/bonds/debentures/securities issued by government or local authority or other securities of
like marketable nature, leasing, hire-purchase, insurance business, chit business, but does not include
any institution whose principal business is that of agriculture activity, industrial activity,
sale/purchase/construction of immovable property. A non-banking institution which is a company and
which has its principal business of receiving deposits under any scheme or arrangement or any other
manner, or lending in any manner is also a non-banking financial company (residuary non-banking
company).
Effective from April 24, 2004, NBFCs cannot accept deposits from NRI except deposits by debit to NRO
account of NRI provided such amount do not represent inward remittance or transfer from NRE/FCNR (B)
account.
However, the existing NRI deposits can be renewed. Tax will be deducted from the interest due on
deposits as per the prevailing tax laws.
All NBFCs are not entitled to accept public deposits. Only those NBFCs holding a valid certificate of
registration with authorisation to accept public deposits can accept/hold public deposits. The NBFCs
accepting public deposits should have minimum stipulated net owned fund and comply with the directions
issued by the bank.
i) The NBFCs are allowed to accept/renew public deposits for a minimum period of 12 months and
maximum period of 60 months. They cannot accept deposits repayable on demand.
ii) NBFCs cannot offer interest rates higher than the ceiling rate prescribed by RBI from time to time. The
present ceiling is 11 per cent per annum. The interest may be paid or compounded at rests not shorter
than monthly rests.
iii) NBFCs cannot offer gifts/incentives or any other additional benefit to the depositors.
iv) NBFCs (except certain AFCs) should have minimum investment grade credit rating.
v) The deposits with NBFCs are not insured
vi) The repayment of deposits by NBFCs is not guaranteed by RBI.
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vii) There are certain mandatory disclosures about the company in the Application Form issued by the
company soliciting deposits.
Please ensure the following while depositing in NBFCs

(i) Public deposits are unsecured.
(ii) A proper deposit receipt which should, besides the name of the depositor/s state the date of deposit,
the amount in words and figures, rate of interest payable and the date of maturity should be insisted.
The receipt shall be duly signed by an officer authorised by the company in that behalf.
(iii) The Reserve Bank of India does not accept any responsibility or guarantee about the present
position as to the financial soundness of the company or for the correctness of any of the statements or
representations made or opinions expressed by the company and for repayment of deposits/discharge
of the liabilities by the company.
(iv) Only deal with trusted NBFCs having long good track records
The details applicable to rating of NBFCs
An unrated NBFC, except certain Asset Finance companies (AFC), cannot accept public deposits. An
exception is made in case of unrated AFC companies with CRAR of 15% which can accept public deposit
up to 1.5 times of the NOF or Rs 10 crore whichever is lower without having a credit rating. A NBFC may
get itself rated by any of the four rating agencies namely, CRISIL, CARE, ICRA and FITCH Ratings India
Pvt. Ltd.
The symbols of minimum investment grade rating of the Credit rating agencies are:
Name of rating agencies: Level of minimum investment grade credit rating (MIGR)
CRISIL: FA- (FA MINUS)

ICRA: MA- (MA MINUS)
CARE: CARE BBB (FD)
FITCH Ratings India Pvt. Ltd: tA-(ind)(FD)
It may be added that A- is not equivalent to A, AA- is not equivalent to AA and AAA- is not equivalent to
AAA.
NBFC cannot accept deposit without rating except an EL/HP company complying with prudential norms
and having CRAR of 15%, though not rated, may accept public deposit up to 1.5 times of NOF or Rs 10
crore whichever is less.
Word of caution: In case you wish to deal with NBFCs, please ensure the credibility and good track
records over and above the incentives and gift offered by them unofficially to attract customers.
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6) Investment in Commercial Papers (CD) by NRIs

General permission has been granted by Reserve Bank to Indian companies to issue CP to
NRI individuals subject to the conditions that the amount invested will not be repatriated
outside India and the CP will not be transfer.
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CHAPTER 21
National Pension System (NPS) NRIs are eligible to invest
(Pension Fund Regulatory and Development Authority Government of India)
The National Pension System (NPS)) is a defined contribution based pension system
launched by Government of India with effect from 1 January 2004. Like most other
developing countries, India does not have a universal social security system to protect the
elderly against economic deprivation. As a first step towards instituting pension reforms,
Government of India moved from a defined benefit pension to a defined contribution based
pension system. Apart from offering wide gamut of investment options to employees, this
scheme would help government of India to reduce its pension liabilities. Unlike existing
pension fund of Government of India that offered assured benefits, NPS has defined
contribution and individuals can decide where to invest their money. The scheme is
structured into two tiers:
Tier-I account: This NPS account does not allow premature withdrawal and is available
from 1 May 2009
Tier-II account: The tier-II NPS account permits withdrawal.
Since 1 April 2008, the pension contributions of Central Government employees covered by
the National Pension System (NPS) are being invested by professional Pension Fund
Managers in line with investment guidelines of Government applicable to non-Government
Provident Funds. A majority of State Governments have also shifted to the defined
contribution based National Pension System from varying dates. 27 State/UT Governments
have notified the NPS for their new employees. Of these, 6 states have already signed
agreements with the intermediaries of the NPS architecture appointed by Pension Fund
Regulatory and Development Authority (PFRDA) for carrying forward the implementation of
the National Pension System. The other States are in the process of finalization of
documentation.
Regulator
Pension Fund Regulatory and Development Authority (PFRDA) is the prudential regulator for
the NPS. PFRDA was established by the Government of India on 23 August 2003 to promote
old age income security by establishing, developing and regulating pension funds. PFRDA
has set up a Trust under the Indian Trusts Act, 1882 to oversee the functions of the PFMs.
The NPS Trust is composed of members representing diverse fields and brings wide range of
190 | P a g e
talent to the regulatory framework.

Coverage and eligibility
NPS was made available to all citizens of India on voluntary basis and is mandatory for
employees of central government (except armed forces) appointed on or after 1 January
2004. All Indian citizens between the age of 18 and 55 can join the NPS.
Tier-I is mandatory for all Govt. servants joining Govt. service on or after 1.1.2004. In Tier I,
Govt. servants will have to make a contribution of 10% of his Basic Pay, DP and DA which
will be deducted from his salary bill every month. The Govt. will make an equal matching
contribution. Since 1 April 2008, the pension contributions of Central Government employees
covered by the NPS are being invested by professional Pension Fund Managers in line with
investment guidelines of Government. However, there will be no contribution from the
Government in respect of individuals who are not Government employees. The contributions
and returns thereon would be deposited in a non-withdrawable pension account.
In addition to the above pension account, each individual can have a voluntary tier-II
withdrawable account at his option. Government will make no contribution into this account.
These assets would be managed in the same manner as the pension. The accumulations in
this account can be withdrawn anytime without assigning any reason. Its estimated that 8
crore citizens of India are eligible to join the NPS.
Operational structure
NPS is designed to leverage network of bank branches and post offices to collect
contributions and ensure that there is seamless transfer of accumulations in case of change
of employment and/or location of the subscriber. It offers a basket of investment choices and
Fund managers. Dhirendra Swarup is one of the founders.
There will be one or more CRA, several PFMs to choose from which will offer different
categories of schemes. The participating entities (PFMs, CRA etc.) would give out easily
understood information about past performance & regular NAVs, so that the individual would
able to make informed choices about which scheme to choose. PFMs would share this
common CRA infrastructure. The PFMs would invest the savings people put into their PRAs,
investing them in three asset classes, equity (E), government securities (G) and debt
instruments that entail credit risk (C), including corporate bonds and fixed deposits.
Contribution guidelines
The following contribution guidelines have been set by the PFRDA:
Minimum amount per contribution: Rs. 500 per month

Minimum number of contributions: 1 in a year
Minimum annual contribution: Rs 6,000 in each subscriber account.
If the subscriber is unable to contribute the minimum annual contribution, a default
penalty of Rs.100 per year of default would be levied and the account would become
dormant. In order to re-activate the account, subscriber will have to pay the minimum
contributions, along with penalty due. A dormant account will be closed when the
account value falls
Investment options
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Under the investment guidelines finalized for the NPS, pension fund managers will manage
three separate schemes, each investing in different asset class. The three asset classes are
equity, government securities and credit risk-bearing fixed income instruments. The
subscriber will have the option to actively decide as to how the NPS pension wealth is to be
invested in three asset classes:
E Class: Investment would primarily be in Equity market instruments. It would invest in Index
funds that replicate the portfolio of either BSE Sensitive index or NSE Nifty 50 index.
G Class: Investment would be in Government securities like GOI bonds and State Govt.
bonds
C Class: Investment would be in fixed income securities other than Government Securities
* Liquid Funds of AMCs regulated by SEBI with filters suggested by the Expert Group
*
Fixed
Deposits
of
scheduled
commercial
banks
with
filters
* Debt securities with maturity of not less than three years tenure issued by bodies Corporate
including scheduled commercial banks and public financial institutions
Credit
Rated
Public
Financial
Credit Rated Municipal Bonds/Infrastructure Bonds
Institutions/PSU
Bonds
In case the subscriber does not exercise any choice as regards asset allocation, the
contribution will be invested in accordance with the Auto choice option. In this option the
investment will be determined by a predefined portfolio. At the lowest age of entry (18 years)
the auto choice will entail investment of 50% of pension wealth in E Class, 30% in C Class
and 20% in G Class. These ratios of investment will remain fixed for all contributions until
the participant reaches the age of 36. From age 36 onwards, the weight in E and C asset
class will decrease annually and the weight in G class will increase annually till it reaches
10% in E, 10% in C and 80% in G class at age 55. The following table will illustrates
this auto choice more clearlyInvestment charges
NPS levies extremely low Investment management charge of 0.00010% on net AUM (Asset
Under Management). This is extremely low as compared to charges levied by Mutual Funds
or other investment products. Initial charge of opening the account would be Rs. 470. From
second year onwards the minimum charge would be Rs. 350 a year. As per the offer
document of NPS, annual and transaction charges would be reduced once the number of
accounts in CRA reaches 10 lakh.
Withdrawal norms
If subscriber exits before 60 years of age, he/she has to invest 80% of accumulated saving to
purchase a life annuity from IRDA regulate life insurer. The remaining 20% may be withdrawn
as lump sum. On exit after age 60 years from the pension system, the subscriber would be
required to invest at least 40% of pension wealth to purchase an annuity. In case of
Government employees, the annuity should provide for pension for the lifetime of the
employee and his dependent parents and his spouse at the time of retirement. If subscriber
does not exit the system at or before 70 years, account would be closed with the benefits
transferred to subscriber in lump sum. If a subscriber dies, the nominee has the option to
receive the entire pension wealth as a lump sum. Recent changes permit subscriber to
continue to remain invested after 60 and up to 70 but subscriber can no longer add further
investments. Subscriber to intimate the period of deferment and can not withdraw during the
deferment period. If the subscriber does not exit by 70, the lumpsum will be monetised and
192 | P a g e
transferred to subscribers bank account.

Tax treatment
The offer document of NPS does not specify the tax benefits in elaborate manner. It specifies
Tax benefits would be applicable as per Income Tax Act, 1961 as amended from time to
time. As per current provisions, withdrawals under the NPS attract tax under the EET
(exempt-exempt-taxable) system, which means that while contributions and returns to the
NPS are exempt up to a limit, withdrawals would be taxed as normal income (EET).
ncessions for contributions made in National Pension System in the budget 2011.
While the NPS subscribers are directly benefited from one of these Income tax concessions,
the second one is beneficial to the employers who contribute for NPS each month equivalent
to employees contribution in Tier I.
Income tax concession to Employees under NPS:
So far, the contribution made by a National Pension System subscriber in Tier I scheme is
deductible from the total income under Section 80CCD of the Income Tax Act. Like wise, the
contribution made by the employer for the employee in Tier I of National Pension System is
also deductible under Section 80CCD. However, the aggregate deduction under Section 80C,
80CCC and 80CCD is fixed at Rs.1 lakh.
So, if the NPS subscriber is already having other eligible deductions such as LIC premium,
PPF, bank or NSC deposits, ELSS etc., under Section 80C, 80CCC and Section 80CCD.,
deduction allowed under Section 80CCD in respect of National Pension System may not be
of much useful as the overall limit of savings eligible for deduction is pegged at Rs. 1 lakh.
Further, contribution made by the National Pension System should also be included in the
Total income of NPS subscriber as far as calculation of income tax is concerned, while full
deduction of the same from income under Section 80CCD may not be possible as other
savings made by the subscriber covers the overall limit of Rs.1 lakh under Section 80CCD.
Hence, for a NPS subscriber contribution for NPS by the Government is taxable in most of
the cases.
For example, if an employee receives a salary of Rs.40,000 (pay+da), 10% of the same
(Rs.4000) is paid by him as contribution towards NPS. The Government will also be paying
Rs.4000 in this case in NPS fund of the said employee. Until now, an amount of Rs.96,000
(Rs.48,000+Rs.48000) could be deductible from the total income as far as this employee is
concerned under Section 80CCD.
However, if the said employee has been paying LIC premium of Rs.20,000 per year, he will
be allowed to deduct only Rs.4000 in respect of the same under Section 80CC as total ceiling
of Rs.1,00,000 under Section 80CCE will apply in this case. So, an eligible deduction of
Rs.16,000 could not be availed under Section 80CCD. In other words, employer contribution
to NPS to an extent of Rs.16,000, which is already included in the income is taxable in this
case.
However, the Finance Act, 2011 amended section 80CCE so as to provide that the
contribution made by the Central Government or any other employer to the pension scheme
under section 80CCD shall be excluded from the limit of one lakh rupees provided under
section 80CCE. This proposal is effective from the assessment year 2012-13 (financial year
2011-12) and would totally exempt employers contribution in NPS from levying income tax
193 | P a g e
on the employee.
Income tax concession to Employers under NPS:
The Finance Act, 2011 amended section 36 so as to provide that any sum paid by the
assessee as an employer by way of contribution towards a pension National Pension
System(NPS) to the extent it does not exceed ten per cent of the salary of the employee,
shall be allowed as deduction in computing the income under the head Profits and gains of
business or profession.
This amendment will be effective from 1 April 2012 and will be applicable to the assessment
year 2012-13 (for the income earned in the financial year 2011-12) and subsequent years.
Past investment returns
The NPS architecture has been managing money since April 2008. Rs.2100 crore is invested
as corpus of Central Government employees. In 2008-09, as per unaudited results of the
Pension Funds, the average weighted return on the corpus have been over 14.5% with the
individual returns of three Pension Funds varying from 12% to 16% on the NPS corpus during
the year 2008-09, weighted average return being over 14.5 per cent. According to the latest
data released by the government in Parliament on Aug 23, 2011, return on investment is as
low as 1.8% in case of those private sector employees, who opted for investments in
government securities, the safest of the categories. The performance of the three pension
fund managers for the central government employees indicate that the returns on
subscribers contributions under NPS ranged between 8% and 16% during 2008-09 and
2010-11.
Swavalamban Yojana As mentioned in the operating guidelines issued by MoF, Government
will contribute Rs. 1000 per year to each NPS account opened in the year 2010-11 and for
the next three years, that is, 2011-12, 2012-13 and 2013-14. As a special case and in
recognition of their faith in the NPS, all NPS accounts opened in 2009-10 will be entitled to
the benefit of Government contribution under this scheme as if they were opened as new
accounts in 2010-11 subject to the condition that they fulfill all the eligibility criteria prescribed
under these guidelines.
Accordingly, the basic eligibility criteria for joining the Swavalamban Yojana for a subscriber
is given below: Permanent Retirement Account should be opened in the year 2009-10 or
2010-11 and Minimum contribution should be Rs. 1,000 per annum (Financial year) in Tier I
account and maximum contribution should be Rs. 12,000 per annum (Financial year) in both
Tier I as well as Tier II account together.
NPS allows lump sum withdrawal on exit

Subscribers of the New Pension Scheme can now time the withdrawal of their money when
leaving the income security plan, the pension fund regulator has said, moving away from the
earlier facility of phased withdrawal.
The decision, announced by the Pension Fund Regulatory and Development Authority
(PFRDA) on Thursday, comes into effect immediately.
It follows a feedback from stakeholders that subscribers should be given the option to defer
194 | P a g e
or time the entire lump sum withdrawal (a maximum of 60%) at the time of exit from the
scheme.
The matter has been examined by the Authority and it has been decided to replace the
phased withdrawal option currently available with a deferred withdrawal option, whereby
the subscriber can time the lump sum withdrawal allowed under NPS (New Pension Scheme)
at the time of exit, with immediate effect, the regulator said.
Sub: Circular on replacing the existing facility of Phased Withdrawal with Deferred
Withdrawal
Feedback is being received from various stakeholders that the subscribers be given a
specific option to defer or time the entire lump sum withdrawal (max 60%) at the time of exit
from National Pension System (NPS) rather than forcing them to choose a certain percentage
(%) each and every year while choosing the existing Phased withdrawal option, including the
year in which they are exiting the system.
The matter has been examined by the Authority and it has been decided to replace the
Phased Withdrawal option currently available with a Deferred withdrawal option
whereby the subscriber can time the lump sum withdrawal allowed under NPS at the time of
exit, with immediate effect.
Under the Deferred withdrawal facility, the subscribers at the time of exit from National
Pension System (NPS) can exercise an option to defer the withdrawal of eligible lump sum
withdrawal and stay invested in the NPS.
However, it may be noted that no fresh contributions are accepted and also no partial
withdrawals are allowed during such a period of deferment. The subscriber can withdraw the
deferred lump sum amount at any time before attaining the age of 70 years by giving a
withdrawal application or notice.
If no such notice is given, the accumulated pension wealth would be automatically monetized
and
credited
to
195 | P a g e
his
bank
account
upon
attaining
the
age
of
70
years.
National Pension System Status - March 2013

A. Sector wise NPS status as on March 2, 2013
Status of Implementation of NPS by various States
Number
of
States
Total Number of States
28
Number of States joined NPS
22
States notified joining NPS but have not taken any further
steps
(Maharashtra, Tamilnadu, Arunachal Pradesh)
States not joined NPS (West Bengal, Kerala*, Tripura)
Till date 9506 Tier II accounts have been activated.

B. Status of Implementation of NPS by various States
Sl. No.
Employer/Sector
Number
of
subscribers
Corpus
under
NPS
(In crore)
Central Government
1,125,871
17,047
State Government
1,585,349
9,780
Private Sector
202,679
1,254
NPS-Lite
1,579,690
412
Total
4,493,589
28,493
LIC is appointed as the default Annuity sevice provider

The Pension Fund Regulatory and Development Authority (PFRDA) on 3 March 2013 has
chosen LIC (Life Insurance Corporation of India) as the default annuity service provider for
subscribers exiting from National Pension System (NPS) and seeking withdrawal of
accumulated pension wealth
PFRDA has appointed seven annuity service providers (ASPs) for providing annuity services
to NPS subscribers. These include LIC, SBI Life, ICICI Prudential Life, Bajaj Allianz Life, Star
196 | P a g e
Union Dai-Ichi Life and Reliance Life Insurance.
While subscribers are required to select any appointed ASP along with an annuity scheme
from those offered by the chosen ASP at the time of exiting from NPS, PFRDA has now
decided
to
assist
subscribers
by
providing
default option.
LIC has been chosen as the default ASP and is applicable for all variants of NPS. The default
option is being purely provided in the subscribers interest and to avoid any delay in claim
processing, according to PFRDA.
The default scheme offers annuity a policy by an insurer designed to provide payments to
the holder at specified intervals for life with a provision of 100% of the annuity payable
to spouse during his/her life on death of annuitant.
Under the provisions of NPS, a maximum of 60% of corpus accumulated at the time of exit,
which is normally on the attainment of 60 years of age, can be withdrawn but a minimum 40%
of corpus has to be utilised for purchasing an annuity from one of the empanelled ASPs
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CHAPTER 22
PERMENANAT ACCOUNT NUMBER (PAN)
1) NRIs and PAN (Permanent Account Number)
Though PAN number these days are mandatory for lot of financial and investment
related transactions, but it does not mean that you have to pay tax If you have a PAN or you need to file
Income Tax Return for the simple reason that, you have been allotted a Permanent Account Number
(PAN) by the Income Tax Authorities. Basically, you need to pay tax or file Income Tax Return only if you
earn or accrue taxable income in India or to get a tax refund if any tax amount is deducted from your
income, but your total income is below the income limit prescribed as per the relevant rules and
regulations of Income Tax Act, 1961.
Permanent Account Number (PAN) refers to a ten-digit alphanumeric number, issued in the form of a
laminated card, by the Income Tax Department in India. It is a must to have a PAN number for all those
who file their income tax returns, now it is mandatory to quote the PAN on Income Tax Returns plus so
many other financial transactions.
Also, it is now compulsory to quote PAN in all documents pertaining to financial transactions notified from
time to time by the Central Board of Direct Taxes, such as sale and purchase of immovable property or
motor vehicle or payments in cash, of amounts exceeding a certain limit to hotels and restaurants, or in
connection with travel to any foreign country. Likewise, PAN has to be mentioned for making a time
deposit exceeding Rs. 50,000/- with a Bank or Post Office or for depositing cash of Rs. 50,000/- or more
in a Bank.
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2)
Advantages of Having a PAN
The following are some of the benefits of having a PAN card:
PAN number acts as an Identity proof, showing your relation to India.

Even if you don't file taxes returns in India, you should still have a pan card.
Sale or purchase of immovable property valued at Rs 500,000 or more. If there are co-owners
(buyer or seller), the PAN of both the owners will have to be mentioned. If a nominee holds the
property, the PAN of the legal owner must be mentioned. The PAN should be disclosed in the
document pertaining to purchase or sale of the property
Sale or purchase of a motor vehicle requiring registration other than two-wheelers. This does not
include vehicles running on fixed rails or special vehicles for use only in factories or in other
enclosed premises or vehicles of less than four wheels with engine capacity of not more than 25
cc.
A time deposit of more than Rs.50,000 with any banking company and deposit of more than
Rs.50,000 with post-office savings bank. This requirement is not mandatory when investing in
post-office National Savings Certificate or Kisan Vikas Patra, and the PAN will be required only if
the time deposit exceeds Rs.50,000.
Sale or purchase of securities including shares, bonds, debentures, derivatives, units of Mutual
Funds and government securities.
Cash payment of Rs.50,000 or more for purchase of bank drafts, pay orders or bankers cheques
during any one day.
Cash payment exceeding Rs.25,000 in connection with travel to any foreign country (fare or
purchase of foreign currency).
Payment to hotels and restaurants against bills exceeding Rs.25,000 at any one time.
Opening a bank account.
A cash deposit of Rs.50,000 or more with any bank during any one day.
Payment of Rs.50,000 or more to a mutual fund for purchase of units or to a company for
acquiring its shares or to a company/institution for acquiring its debentures/bonds or to RBI for
acquiring bonds.
As per the amendments in the income tax rules, , quoting PAN (Permanent Account Number) will
be mandatory for any payment of Rs 5 lakh or more for purchase of bullion or jewellery.
Tax will be deducted at 20% from your fixed deposit interest income for non-disclosure of your
PAN. Whereas till now tax was deducted at 10% only from your fixed deposit interest income
when interest earned on your deposit was more than Rs 10,000 in a year in case of Resident
Indians
Minor intending to open time deposit or bank account should quote the PAN of either father or
mother or guardian in whose hands income is likely to be clubbed
PAN should be quoted on all:

1.
2.
3.
4.
Income-tax / TDS / TCS Returns

Correspondence with tax department ,
Tax challans,
Correspondence, bills, vouchers and other documents which are send by deductee of tax to
deductor,
5. Documents pertaining to prescribed transactions
a.
b.
c.
d.
e.
Sale & purchase of immovable property valued Rs 500,000 or more

Sale & purchase of motor vehicle other than two wheelers
Time deposits with bank or banking institution exceeding Rs 50,000
Any deposits exceeding Rs 50,000 with post office
Purchase or sale of securities contract exceeding Rs 100,000
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f.
Opening account with bank or banking institution

PAN of father or mother or guardian can be quoted, in case minors account.
g. Application for installation of landline/mobile telephone connection.

h. Payment of bill exceeding Rs 25,000 to hotel and restaurants.
i. Payment in cash for purchase of bank draft, pay order to bank or banking institution aggregating
of Rs 50,000 or more, during any one day,
j. Deposit of cash with bank or banking institution exceeding aggregate of Rs 50,000 or more during
any one day,
k. Payment in cash in connection with travel (including fare, purchase of foreign currency from
authorised person) to any foreign country of an exceeding Rs 25,000 at any one time.
However foreign travel does not includes travel to neighbouring countries viz. Bangladesh,
Bhutan, Maldives, Nepal, Pakistan, and Sri Lanka, places of pilgrimages viz. Saudi Arabia, on Haj
Pilgrimage organised by the Central HAJ Committee and China on pilgrimage to Kailash
Mansarovar organised by the Ministry of external Affairs, GOI.
l.
m.
n.
o.
Application to bank or other company/institution for issue of credit/debit card.

Payment of Rs 50,000 or more to a mutual fund for purchase of units
Payment of Rs 50,000 or more to a company for acquiring shares issued by it,
Payment of Rs 50,000 or more to a company or institution for acquiring bonds, debentures issued
by them
p. Payment of Rs 50,000 or more to a RBI for acquiring bonds issued by it.
q. Payment of an life insurance premium amount aggregating Rs 50,000 or more in a year to an
insurer
r. Payment to the dealer, of an amount of Rs 500,000 or more, or against bill of an amount of Rs
500,000 or more, against purchase of bullion or jewellery
Permanent Account Number is basically a method of identifying a taxpayer on the computer system
through a unique All-India number so that all information relating to that taxpayer, e.g. taxes paid, refunds
issued, outstanding arrears, income disclosed, transactions entered etc. can be linked to him through the
computer system. Processing of return of an assessee or other actions on AST software is not possible
unless PAN has been allotted to him and is linked to the AO code of the Assessing Officer who is trying to
process that return.
A typical PAN look like ALTPM8952K.
First three characters i.e. ALT in the above PAN are alphabetic series AAA to ZZZ
Fourth character of PAN i.e. P in the above PAN represents the status holder. P stands for
Individual, F stands for Firm, C stands for HUF, A stands for AOP, T stands for TRUST etc.
Fifth character i.e. M in the above PAN represents first character holders last name/surname.
Next four characters i.e. 7190 in the above PAN are sequential from 0001 to 9999.
Last character i.e. K in the above PAN is an alphabetic check digit.
3) How to apply for a PAN ?

The Income Tax Department has ensured that applying for a PAN is a simple and convenient procedure.
All you need to do is submit the requisite Application Form No. 49A . The PAN application can also be
200 | P a g e
downloaded from the website of UTI Investor Services Ltd (the authorised agency to manage IT PAN
service Centres in various cities) or from the website of National Securities Depository Ltd (NSDL) or
printed by local printers or photocopied (on A4 size 70 GSM paper) or obtained from any other source.
The form is also available at IT PAN Service Centres and TIN Facilitation Centres.
You will need a recent colour photograph (stamp size: 3.5 cm x 2.5 cm) to attach on the form. You must
mention the designation and code of the concerned Assessing Officer of the Income Tax department in
Form 49A. You can get this from the IT PAN Service Centres. Also, the application shall have to be
accompanied by a proof of identity as well as a proof of residence.
a) Individual and HUF (Hindu Undivided Family) Applicants who are citizens of India and located
within India at the time of application for PAN:
a) Copy of any one of the following will serve as a proof of identity:
School leaving certificate

Matriculation certificate
Degree of recognized educational institution
Depository account statement
Valid Credit card
Bank account statement
Water bill
Ration card
Property tax assessment order
Passport
Voter's identity card
Driving license
Certificate of identity signed by a Member of Parliament or Member of Legislative Assembly or
Municipal Councilor or a Gazetted Officer.
Note:
Document being submitted should be in the full name of the applicant as mentioned in the PAN
application.
In case the PAN applicant is a minor, any of above documents of any of the parents or guardian
of such minor shall serve as proof of identity.
In case PAN application is made on behalf of a HUF, any of above documents in respect of karta
of the HUF will serve as proof of identity.
b) Citizen of India located outside India at the time of application for PAN - Copy of passport will serve as
a proof of identity
c) Foreign Citizen located in India at the time of application for PAN - Copy of passport and Copy of
Person of Indian Origin (PIO) card issued by Government of India will serve as a proof of identity
d) Foreign Citizen located outside India at the time of application for PAN - Copy of any one of the
following will serve as a proof of identity:
Passport
Other National ID attested by Indian Embassy/Consulate/High Commission/Apostille
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Person of Indian Origin (PIO) card issued by Government of India
b) One of the followong documents should be submitted as proof of address for individual
applicants and HUF applicants
a)
Individual and HUF Applicants who are citizens of India and located within India at the time of
application for PAN - Copy of any one of the following will serve as a proof of address:
Electricity bill*
Telephone bill*
Depository account statement*
Credit card statement*
Bank account statement*
Rent receipt*
Employer certificate*
Ration card
Passport
Voter's identity card
Property tax assessment order
Driving license
Certificate of address signed by a Member of Parliament or Member of Legislative Assembly or
Municipal Councilor or a Gazetted Officer.
Note:
*For serial numbers 1 to 7, proof of address should not be more than six months old from the date
of application.
Document being submitted should be in the full name of the applicant as mentioned in the PAN
change request application.
In case the PAN applicant is a minor, any of above documents of any of the parents or guardian
of such minor shall serve as proof of address.
In case PAN change request application is made on behalf of a HUF, any of above documents in
respect of Karta of the HUF will serve as proof of address.
It is mandatory for individuals and HUF to mention their address for communication on the PAN
change request application and to submit valid proof of the same.
b)
Citizen of India located outside India at the time of application for PAN - Copy of any one of the
following will serve as a proof of address:
Passport
Bank account statement in country of residence
NRE bank account statement**
c) Foreign Citizen located in India at the time of application for PAN . Copy of any one of the following
will serve as a proof of address:
Passport
Bank account statement in India
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Residential permit issued by the State Police Authorities

Registration certificate issued by the Foreigner's Registration Officer
Visa application to Indian authorities & Visa granted & appointment letter/contract from Indian
Company & Certificate (in original) of address in India of applicant issued by authorized signatory
of employer on employers letter head mentioning the PAN of the employer & copy of PAN card
for the PAN mentioned in the employers certificate***
Foreign Citizen located outside India at the time of application for PAN. Copy of any one of the
following will serve as a proof of address:
Passport
Other National ID attested by Indian Embassy/Consulate/High Commission/Apostille

Bank account statement in country of residence, duly attested by Indian Embassy/High
Commission / Consulate / Apostille in the country where applicant is located
The filled application form has to be submitted at your nearest IT PAN Service Centre orTIN Facilitation
Centre along with the requisite fee.
Also, there is a facillity to apply PAN online. Further, requests for changes or correction in PAN data or a
request for a new PAN card (for an existing PAN) may also be made through the Internet. If an
application for allotment of PAN is submitted through the Internet and payment made through a
'nominated' credit/dbit card, the PAN is allotted on priority and communicated through email.
4) New PAN Application From 49A and 49AA w.e.f 08/04/2012
With effect from April 8, 2012, PAN Card Applications are required to be furnished in the new format. New
PAN Card Application Forms 49A / 49AA have been prescribed by the Income Tax Department, as
under
Indian citizens who wish to apply for a new PAN Card can apply for one by submitting a duly filled
and signed PAN Card Application Form 49A. Also this form is applicable for Allotment of
Permanent Account Number in the case of Indian Companies, Entities incorporated in India,
Unincorporated entities formed in India.
Foreign citizens who wish to apply for a new PAN Card can apply for one by submitting a duly
filled and signed PAN Card Application Form 49AA. However, a Qualified Foreign Investor PAN
applicant should submit PAN Card Application Form 49AA after filling up the KYC details. Also
this form is applicable for Allotment of Permanent Account Number in the case of entities
incorporated outside India, unincorporated entities formed outside India,
Income Tax department has notified new PAN application form. New form is applicable from 08/04/2012.
Now there will two set of Form.
Click the following link to download the form
http://www.incometaxindia.gov.in
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1. First is Form 49A to be used by Indian ,HUF,Companies ,firm, AOP, BOI, LLP ,Trusts registered
in India
2. Second
49AA
is
to
be
used
by
person
not
a
Indian
Citizen
and
Companies,Firms,LLP,BOI,AOP,trust not registered in India
Further a New reason to obtain the Pan form has been added ie in the case of a person who is entitled
to receive any sum or income or amount , on which tax is deductible under Chapter XVII-B in any
financial year, before the end of such financial year."
There is no more significant changes in new forms except few minor changes.
5) INSTRUCTIONS FOR FILLING FORM 49A

1. Form to be filled legibly in BLOCK LETTERS and preferably in BLACK INK.
2. Each box, wherever provided, should contain only one character (alphabet /number /punctuation
sign) leaving a blank box after each word.
3. Individual' applicants should affix two recent colour photographs (size 3.5 cm x 2.5 cm) in the
space provided on the form. The photographs should not be stapled or clipped to the form.The
clarity of image on PAN card will depend on the quality and clarity of photograph affixed on the
form.
4. Signature / Left hand thumb impression should be provided across the photo affixed on the left
side of the form.
5. Signature /Left hand thumb impression should be within the box provided on the right side of the
form. The signature should not be on the photograph affixed on right side of the form. If there is
any mark on this photograph such that it hinders the clear visibility of the face of the applicant, the
application will not be accepted.
6. Thumb impression, if used, should be attested by a Magistrate or a Notary Public or a Gazetted
Officer under official seal and stamp.
7. AO code (Area Code, AO Type, Range Code and AO Number) must be filled up by the applicant.
These details can be obtained from the Income Tax Office or TIN Facilitation Centre (TINFC)
may assist in doing so.
8. Applicant can also search for AO details on www.tinnsdl.com
6) GENERAL INFORMATION FOR PAN APPLICANTS

1. Applicants may obtain the application form for PAN (Form 49A) from TINFacilitation Centres
(TINFCs) / PAN Centres, any other stationery vendor providing such forms or download from the
TIN website (www.tinnsdl.com).
2. The fee for processing PAN application is Rs. 85/ (plus service tax, as applicable).
3. Those already allotted a ten digit alphanumeric PAN shall not apply again as having or using
more than one PAN is illegal. However, request for a new PAN card with the same PAN or/and
Changes or Correction in PAN data can be made by filling up 'Request for New PAN Card or/and
Changes or Correction in PAN Data' form available from any source mentioned in (a) above. The
cost of application and processing fee is same as in the case of Form 49A.
4. Applicant will receive an acknowledgment containing a 15digit unique number on acceptance of
this form. This acknowledgment number can be used for tracking the status of the application.
5. For more information / Application status enquiry Visit us at www.tinnsdl.com Call TIN Call
Centre at 02027218080 email us at tininfo@nsdl.co.in
6. SMS NSDLPANAcknowledgement No. & send to 57575 to obtain application status.
7. Write to: INCOME TAX PAN SERVICES UNIT (Managed by National Securities Depository
Limited), 3rd Floor, Sapphire Chambers, Near Baner Telephone Exchange,Baner, Pune 411
045.
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INSTRUCTIONS FOR FILLING FORM 49AA (To be used by QFIs only)

(a) Form to be filled legibly in BLOCK LETTERS and preferably in BLACK INK.
(b) Each box, wherever provided, should contain only one character (alphabet /number /punctuation sign)
leaving a blank box after each word.
(c) 'Individual' applicants should affix two recent colour photographs (size 3.5 cm x 2.5 cm) in the space
provided on the form. The photographs should not be stapled or clipped to the form.The clarity of image
on PAN card will depend on the quality and clarity of photograph affixed on the form.
(d) Signature /Left hand thumb impression should be provided across the photo affixed on the left side of
the form.
(e) Signature /Left hand thumb impression should be within the box provided on the right side of the form.
The signature should not be on the photograph affixed on right side of the form. If there is any mark on
this Photograph such that it hinders the clear visibility of the face of the
applicant, the application will not be accepted.
(f) Thumb impression, if used, should be attested by a Magistrate or a Notary Public or a
Gazetted Officer under official seal and stamp.
(g) AO code (Area Code, AO Type, Range Code and AO Number) must be filled up by the
applicant. These details can be obtained from the Income Tax Office or TIN Facilitation Centre
(TINFC) may assist in doing so.
Please note that, an individual can have only one PAN. If an individual has applied and been allotted a
second PAN, he must surrender the same. If a person fails to comply, then, the tax authorities can
impose a penalty.
The fee for processing PAN application is
771.00) + 12.36% service tax].
962.00[ (Application fee
85.00 + Dispatch Charges
How to Get a Duplicate PAN Card, Name change and corrections

Those who want to make any change or correction in their existing PAN Card can do so by filling the
application form for the change in PAN card and also in case those who have lost their Pan Card can get
their Duplicate PAN Card by filling the application form with Fees of Rs.96/- only
Changes and List of Documents required for those Changes
Name Change After marriage for Ladies Copy of Marriage Certificate or Marriage Invitation card or
Copy of Passport Showing Husband Name or Certificate issued by gazetted officer
Format of Certificate by Gazetted officer For PAN Card Changes like Name, Date of Birth or
Spelling Correction in PAN card Name, Name Change after Marriage
Change in PAN Card Name
For Minor Change in PAN Card Name Relevant Proof from below list of identity proof
For Major Correction in Card Name: Publication of Name in Official gazette or Certificate
issued by gazetted officer
Change in PAN Card Father Name
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For Major Correction: Publication of Name in Official gazette or Certificate issued by

gazetted officer and
For Minor Change: Relevant Proof from below list of identity proof
Change in PAN Card Date of Birth: Relevant Proof from below list of identity proof
But Before filling application for change or correction in the PAN, person should be ready with the
following details
Existing PAN Card Number
PAN Card Photocopy or PAN Card Allotment Letter
Two Photograph of Person
List of Document used as Identity Proof for PAN Card Issue or reissue
1. School leaving Certificate
2. Matriculation Certificate (10th Class Passing Certificate (Not 10th Mark sheet),
3. Degree from Recognized educational institute
4. Depository Account Statement
5. Bank Account Statement
6. Passport
7. Water Bill
8. Ration Card
9. Voters ID card
10. Driving License
11. Credit Card
12. Property Assessment Tax
13. Certificate issued by gazetted officer, MP, MLA or Muncipal Councilor
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CHAPTER 23
Know-Your-Customer (KYC) requirements
Change in KYC process with effect from 1st January, 2012
1.
Background
To simplify KYC norms and make it more investor friendly and uniform across all intermediaries
SEBI has recently laid down certain changes in the existing KYC process vide circulars
MIRSD/SE/Cir-21/2011 dated October 5, 2011 and MIRSD/Cir- 26 /2011 dated December 23,
2011.
Primary objective of this circular is to implement uniform KYC norms and eliminate duplication of
KYC across intermediaries in the securities market. Intermediaries include stock brokers through
stock exchanges, Depository Participants (DPs) through depositories, Mutual Funds (MFs),
Portfolio Managers (PMs), Venture Capital Funds (VCFs) and Collective Investment Schemes
(CIS).
For this purpose, KYC registration is being centralised through KYC Registration Agencies (KRA)
registered with SEBI. Thus each investor has to undergo a uniform KYC process only once in the
securities market and the details would be shared with other intermediaries by the KRA. CVL
(CDSL Ventures Ltd.), who was retained by the mutual funds for centralised registration and
record keeping of KYC records, has recently obtained SEBI registration as a KRA.
2.
Key changes in the KYC norms
a. In-Person Verification (IPV) Information provided in the KYC form has to be verified in person
by the AMC or distributors who are AMFI / NISM certified and compliant with Know Your
Distributor (KYD) guidelines.
b. KYC application form Some changes have been made in the KYC application form and listed
below for ready reference. Kindly refer to the uniform KYC forms posted on the AMFI website.
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To streamline the process of Know Your Client procedures, market regulator SEBI has done away with
the submission of physical documents by investors to the KYC Registration Agencies (KRAs) in favour of
the electronic format only. The intermediaries, including mutual funds, would need to submit scanned
copies of investor documents to the KRAs and retain the physical documents with themselves. However,
the physical documents would need to be submitted, whenever KRAs demand them.
Finance Minister P Chidambaram in the Budget speech for 2013 said the Know Your Customer
(KYC) norms of banks will be sufficient to acquire insurance policies. This will be applicable for
both life and general insurance policies. In other words, a person already holding a bank
account will not be required to give any more documents while buying an insurance cover.
Reason: If the customer holds a bank account, it means the person has already submitted his
identity and address proof, the key elements to satisfy the rules of KYC norm. The person will
not be asked for any more documents, irrespective of the bank he holds the account in. A
customer who wants to buy an insurance policy has to merely submit a certificate from the
bank (in which he holds an account), stating he is an existing customer and has satisfied the
KYC
rules.
KYC Transfer of Bank Accounts Rent agreement
Registered Rent agreement can be accepted as KYC documents & Relaxation for transfer of
existing accounts at the transferor branch to the transferee branch
RBI/2012-13/399
DBOD.AML.BC. No. 78 /14.01.001/2012-13
January 29, 2013
The
Chairmen
/
CEOs
of
all
ScheduledCommercial
(Excluding RRBs)/Local Area Banks / All India Financial Institutions
Banks
Dear Sir,
Know Your Customer (KYC) Norms /Anti-Money Laundering (AML) Standards/Combating of Financing of
Terrorism (CFT)/Obligation of banks under Prevention of Money Laundering Act (PMLA), 2002
Please refer to our circular DBOD.AML.BC. No. 65/14.01.001/ 2012-13 dated December 10, 2012 on
simplification of Know Your Customer (KYC) norms / Anti-Money Laundering (AML) Standards/Combating
of Financing of Terrorism (CFT)/Obligation of banks under PMLA, 2002. With a view to further easing the
KYC process for the general public, especially customers who migrate to a new place on account of new
job, transfer, etc., it has been decided to effect the following modifications to the existing instructions.
2. Shifting of bank accounts to another centre Proof of address: Banks were advised vide circular
DBOD.AML.BC.No. 97/14.01.001/2011-12 dated April 27, 2012, that KYC once done by one branch of
the bank should be valid for transfer of the account within the bank as long as full KYC had been done for
the concerned account. The customer should be allowed to transfer his account from one branch to
another branch without restrictions.In order to comply with KYC requirements of correct address of the
person, fresh address proof has to be obtained from him/her upon such transfer by the transferee branch.
However, a large number of customers with transferable jobs or those who migrate for jobs are unable to
produce a utility bill or other documents in their name as address proof immediately after relocating. In
view of this, it has been decided that:
a. Banks may transfer existing accounts at the transferor branch to the transferee branch without
insisting on fresh proof of address and on the basis of a self-declaration from the account holder
208 | P a g e
about his/her current address, subject to submitting proof of address within a period of six
months.
b.
Banks may also accept rent agreement duly registered with State Government or similar
registration authority indicating the address of the customer, in addition to other documents listed as
proof of address in Annex I of our Master Circular on KYC/AML/CFT dated July 2, 2012.
3. Banks should intimate their customers that in the event of change in address due to relocation or any
other reason, they should intimate the new address to the bank within two weeks of such a change. While
opening new accounts and while periodically updating KYC data as required in terms of para 2.4 (g) of
the Master Circular, an undertaking to this effect should be obtained. In all these cases customers will
have to produce proof of address as mentioned at (a) and (b) above.
4. Banks may revise their KYC policy in the light of the above instructions and ensure strict adherence to
the same.
Yours faithfully,
(Deepak Singhal)
In a communication to banks, RBI asked them not to insist on introduction by an existing customer while
opening a new account, as it is not mandatory under any rule of the central bank. If the identity proof has
an address that is the same as the address on which an account is being opened, then there is no need
for a separate address proof, said the RBI. Currently, banks ask for separate documents for the
identification and address verification process. But, in the case the address on the account opening form
is different from the address stated in the identity proof document, then the banks should obtain a
separate proof of address. The banking regulator has allowed rent agreements registered wi The central
bank has asked banks to accept Aadhaar Cards, as both identity and address proof, if the address on
the account opening form and Aadhaar are the same. RBI said the Unique Identification Authority of India
( UIDAI) had conveyed that banks are accepting the Aadhaar letter issued by it as a proof of identity, but
not of the address.
The regulator had earlier advised banks to satisfy themselves with the current address of the customer
even if he files Aadhaar as proof of identity. It also said job cards given under the rural job scheme should
be accepted as a valid document to open bank accounts. Earlier, accounts opened using job cards were
subject to the limitations applicable to small accounts.th the state government or any other registration
authority as a proof of address.
SEBI has made a few changes to the KYC norms after January 1, 2012. These changes will be effective
from December 1, 2012. So all investors who have complied with their KYC norms prior to January 1,
2012 need to complete the additional KYC formalities.
What you need to do
If you have done your KYC anytime after January 1, 2012, you do not have to do anything. However, if
you have done your KYC before January 1, 2012, you need to fill in an KYC details update form.
This form asks for details like marital status, your gross annual income and net worth. SEBI norms also
prescribe that you do an In Person Verification (IPV). Investors can approach their distributor or asset
management company for this.
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"IPV can be done by any mutual fund distributor who is KYD (Know your distributor) complaint. You can
also get your IPV done with authorized officials of asset management companies.
Now in case you do not remember when you got your KYC done or whether you need to fill the KYC
change detail form, you can do the following. Go to www.cvlkra.com submit your Permanent Account
Number (PAN).
If the result shows MF - VERIFIED BY CVLMF then you need to take the above mentioned steps.
However, if the screen shows MF- VERIFIED BY CVLKRA, you are already new KYC norm compliant,
and need not do anything.
What if you do not update it
If you don't get compliant as per the new norms by December 1, as far as your existing investment and
folios go, you won't be affected. However, you won't be able to make any new investments (invest in a
new AMC).
Individual investors:
Marital status to be provided.
Proof to be submitted for PAN exempt investors has been listed.
Income details the slabs have been modified and an option of providing net worth as on a
recent date in lieu of gross annual income has been provided.
Address proof there are some changes in the list of acceptable proofs.
Non-individual investors:
a.
Place of incorporation, date of commencement of business have been added.
b.
Income details the slabs have been modified, and additional information on the
net worth as on a recent date has been sought.
c.
Following details of Promoters / Partners / Karta / Trustees / Whole time directors
are required: Name, PAN with proof, DIN (for directors) / UID (for others), address
proof and photographs.
d.
Photograph of any one of the authorised signatories.
e.
Copy of the balance sheets for the last 2 financial years and thereafter to be
submitted every year.
f.
Copy of latest share holding pattern
3.
Impact on investors
1. Existing and new investors who have successfully completed the KYC process with CVL for
investments in mutual funds (in the old format) - No action is required and they can continue to
use the KYC acknowledgment issued to them for mutual fund investments. However it will not
be applicable for investments in with other intermediaries in the securities market.
2. Investors who have NOT completed the KYC process with CVL for investments in mutual funds
in the old format New uniform KYC norm as explained above is applicable and the KYC
acknowledgment issued by the KRA can be used for all investments in securities market,
including mutual funds.
3. Investors who have completed KYC process through any of the intermediaries such as DP,
PMS, etc., on or after 1st January, 2012 and hold a valid acknowledgement issued by KRA
210 | P a g e
(currently CVL) for the same may invest with any of the mutual funds with the same
acknowledgement. However, a mutual fund may carry out enhanced due diligence based on its
internal client due diligence policy.
4. New KYC form can be submitted by an investor along with an investment application (purchase
/ additional purchase / switch / SIP mandate form / STP mandate form) and not on a stand
alone basis, as was possible prior to 31/12/2011. However, an investor who has investments in
any mutual fund and is not KYC compliant may submit new uniform KYC form to the mutual
fund by quoting the folios number.
4.
Who can carry out uniform KYC:
The following SEBI registered intermediaries are required to carry out a uniform KYC process at
the time of account opening:
Stock brokers
Depository Participants (DPs)
Mutual Funds (MFs) or Registrar and Transfer agents (RTA) on their behalf.
Portfolio Managers (PMs)
Venture Capital Funds (VCFs)
Collective Investment Schemes (CIS)
5.
Impact on current arrangements with CVL:
Effective January 1, 2012 CVL will discontinue the activity of registering new investors for mutual
funds as per the CVL-AMC agreement. However, CVL will be maintaining the KYC information and
documents for registrations done upto December 31, 2011. The current AMC-CVL agreement will
be modified to reflect this change.
CVL has terminated their agreements with Points-of-Service (PoS) effective January 1, 2012.
PoSs have been given seven days to upload/update KYC information in the CVL system and
forward the documents for KYC forms collected till December 31, 2011. AMCs are requested to
approach CVL / other KRA to get access to their system. With effect from January 1, 2012 all new
KYC registrations, therefore, can be carried out by SEBI registered intermediaries only under the
new uniform KYC guidelines with any of the SEBI registered KRAs.
AMFI committee is in the process of designing a KYC update form covering the additional
information as per the new uniform KYC norms and IPV for specific use by investors, who had
complied with mutual fund KYC with CVL prior to 31st December, 2011. Once this form is
available, you may get this completed for your existing clients
There will be no impact in the CVL-RTA interface as any KYC query from RTAs will be checked
against the erstwhile CVL records and the new KRA records.
6.
Due diligence in the KYC process

i. Please exercise necessary and sufficient care for establishing the identity of the person for
whom you do In-person Verification (IPV).
ii. In case of IPV carried out by ARN holder, please ensure the following while processing the
KYC form:
a.
AMFI / NISM certification of the distributor is valid.
b.
Distributor is KYD compliant.
211 | P a g e
c.
The distributor has furnished necessary mandatory requirements such as self
declaration, etc.
d.
The distributor is empanelled with the AMC (if such requirement exists) where the
investment application is to be submitted.
e.
The ARN on the investment application and related KYC form and IPV need to be
one and the same.
For more details on information / document required to complete the uniform KYC process, please refer
the detailed instructions available in the uniform KYC forms posted on the website of AMFI. You are
requested to carefully read the instructions on the form and guide investors in completing the uniform
KYC procedure.
You are requested to go through the SEBI guidelines carefully and ensure implementation with immediate
effect.
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CHAPTER 24
NRIs guide to deal with inherited property
Buying a property in India is a decision that most NRIs can take after
weighing the pros and cons of various tax and regulatory implications. But getting a property as
inheritance is often not a choice, especially for first generation NRIs or PIOs whose parents bequeath to
them, property situated in India. In such cases, NRIs must know how to deal with such inheritances.
Can an NRI inherit property in India?
Yes, a Non Resident Indian (NRI), Person of Indian origin (PIO) or even a foreign national of non-Indian
origin can inherit and hold property in India. This includes residential and commercial property,
agricultural, plantation and farm land.
From whom can an NRI inherit property?
An NRI, PIO or foreign national as mentioned above can inherit property from:
(a) a person resident in India
(b) a person resident outside India
However, the person from whom the property is inherited should have acquired the same in accordance
with the foreign exchange law in force or FEMA regulations, applicable at the time of acquisition of the
property.
Is there tax payable in India at the time of inheriting the property?
No income tax is payable at the time of inheriting the property.
However, the property may be subject to wealth tax. According to the Wealth Tax Act, tax is payable if the
net value (market value minus any loans taken to finance the assets) of the assets of an individual
exceeds Rs 30 lakh.
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Now, there are certain exceptions to the definition of 'assets'.

i. Only one house
If you own only one residential house, you do not have to pay wealth tax. So after inheritance, if this is the
only property that you own, you do not have to pay wealth tax on it.
The question arises as to whether this includes global properties. For instance, if an NRI owns a property
abroad and inherits one in India, will he be subject to wealth tax on the property in India?
"For an Indian citizen who qualifies as a 'Resident but Not Ordinary Resident (NOR)' or 'Non-Resident
(NR)' of India (as per the Income Tax Act 1961) as well as for a foreign national, wealth tax is applicable
only on the specified assets located in India. Specified assets located outside India are subject to wealth
tax only in the case of Indian citizens who qualify as 'Ordinary Resident (OR)' of India as per the IT Act.
In the instant case, if the NRI qualifies as 'NOR' or 'NR' of India, the US house property will not be
considered as a specified asset for wealth tax. Further, the house property inherited or purchased in India
may be considered as exempt under Section 5 of the Wealth Tax Act
provided that's the only house he owns in India.
The US house property will be considered as specified asset for wealth tax, only if this NRI (assuming
Indian citizen) qualifies as 'Ordinary Resident' of India for the relevant financial year. In such case, as one
residential house property is exempt for wealth-tax, either of the property (US or India) can be considered
as exempt (as per Section 5 of the WT Act) and the balance will be taxable. "
ii. House given on rent for more than 300 days
If you have given the property on rent for more than 300 days during a financial year, you do not have to
pay wealth tax.
If the net value of all your assets, including the inherited property exceeds Rs 30 lakh, wealth tax will be
charged at 1% of the amount exceeding Rs 30 lakh.
Can an NRI rent inherited property? What are the various implications?
Yes, an NRI can rent inherited property. The implications are the same as those applicable for renting out
purchased property.
Can an NRI sell inherited property?
An NRI can sell inherited property to a person resident in India, an NRI or a PIO. A PIO can sell property
in India to a person resident in India or an NRI. In case a PIO wants to sell to another PIO, he will need to
get prior approval from RBI.
An NRI holding agricultural land, plantation land or farm house may sell these properties only to a person
resident in India and who is a citizen of India.
Can an NRI repatriate proceeds of inherited property?
Yes, general permission is available to NRIs and PIOs to repatriate the sale proceeds of property
inherited from a person resident in India subject to the conditions mentioned below. If those conditions
214 | P a g e
are fulfilled, the NRI need not seek permission from the RBI. However, if the property has been inherited
by an NRI from a person resident outside India, then the NRI must seek specific permission from the RBI
Conditions for repatriation in case of property inherited from person resident in India:
(i) The amount of repatriation should not exceed USD 1 million per financial year
(ii) The NRI must produce documentary evidence in support of the inheritance and an undertaking and
certificate by a Chartered Accountant in the formats prescribed by the Central Board of Direct Taxes
2. Inheriting Financial Assets and Investments in India
If an NRI inherit financial assets India, the NRI needs to make a decision of retaining the investments in
India or moving them to the outside the country. Keeping assets in India means managing them and filing
annual income tax returns in India, as well as declaring the income and accounts on the USA tax return,
and filing FBARs
Some investments in India are not permissible for NRIs to hold. These must be sold out. You need the
help of an expert financial adviser to segregate the investments and make a choice to continue with the
investments or cash out. Some investments such as mutual funds and ETFs will create difficulties when
paying USA/other countries taxes, complicating the returns and increasing taxation. It would be wise to
sell these assets as well, replacing them with more appropriate investments or selling them.
US tax law dictates you must declare worldwide income. You may not need to pay taxes on an
inheritance but if the inheritance brings you assets that produce income you will need to pay taxes on that
income. You may also owe taxes on the sale of investments, depending on the cost
basis.
Inheriting mutual funds or ETFs can prove tricky because the US tax implications for holding non USAbased mutual funds/ETFs are complex. These are considered Passive Foreign Investments which
involve special rules: You will pay income tax on any dividends, interest or other income as earned
income, not with the favorable tax treatment of capital gains.
The Authorised Dealers in India have been permitted to allow the facility of repatriation of funds by
NRIs/PIOs in their Non-Resident Ordinary Rupee (NRO) account up to US $1 million per calendar year
representing sale proceeds of both financial and immovable property, acquired by way of
inheritance/legacy.
3. Remittance Exchange Control Regulations
As of Regulation 4 of the Foreign Exchange Management (Remittance of Assets Amendment)
Regulations, 2009, remittance of up to US $ 1 Million per calendar year is allowed without RBI (Reserve
Bank of India) permission.
Documentary evidence in support of acquisition, inheritance or legacy of assets by the remitter is required
as well as a tax clearance/no objection certificate from the Income Tax authority.
Regulation 6 of the Foreign Exchange Management (Remittance of Assets Amendment) Regulations,
2009 states that persons who wish to make remittance of assets over that level may, in the following
cases, apply to RBI. RBI permission is required for remittance exceeding US $ 1 million per calendar
year.
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Application to be made as per instructions in Form LEG on account of legacy/ bequest or inheritance to a
citizen of foreign State permanently resident outside India;
Remittance to a person resident outside India on the ground that hardship will be caused to such a
person if remittance from India is not made;
Application must originate from an NRI / PIO regarding assets in India acquired by him by inheritance /
legacy.
Note: Even if an NRI does not wish to repatriate funds, it is advisable to remit the funds and re-invest the
same into NRE/Foreign Currency Non Resident (B) (FCNR) or Foreign Currency Plan ( FCP ) account
due to the following reasons
Do check with your accountant about taxability and repatriation planning using NRE/FCNR/FCP /NRO
accounts.
Remittance is permitted up to US $1 million per calendar year, out of balances held in NRO account.
4) Inheritance and Gifting rules in India
The Gift Tax was abolished in India in 1998. However, gifts exceeding Rs 50,000 received from any
person who is not a close relative. Close relatives includes immediate family members and close blood
line of parents and spouses parents. of the receiver is to be included in the taxable income of the
receiver as per the provisions of the Indian Income Tax Act, 1961.
The above provision will be applicable to the recipient irrespective of his residential status - resident or
on-resident.
5) Exclusions to taxing of gifts in the hands of recipient Taxing of gifts shall not apply to any money or property received:
i) From any relative; or
ii) On the occasion of the marriage of the individual; or
iii) Under a will/by way of inheritance; or
iv) In contemplation of death of the payer or donor, as the case may be; or From any local authority; or
v) From any Fund, Foundation, University, Educational institution, hospital, other type of medical
institution, or any trust or Institution (referred to in clause (23C) of section10 of the Income Tax Act; or
vi) From any trust or institution registered under section 12AA of the Income Tax Act.
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CHAPTER 25
How its useful for NRIs to use Power of Attorney (POA) in India
A power of attorney is a document in writing empowering a particular person

to act for and in the name of a person executing it. In other words, a power of attorney (POA) is an
authorization to act on someone elses behalf in a legal or business matter specified in the POA
document. The person authorizing the other to act is the grantor/principal of the power and the one
authorized to perform the act is the attorney/agent. It is a unilateral document signed and executed only
by the grantor or principal. A power of attorney may be revoked at the instance of the grantor or due to his
death or incapacity. A power of attorney is usually construed very strictly.
Special Power of Attorney - A power of attorney conferring on the agent the authority to act in a single
transaction in the name of the principal is a Special Power of Attorney. eg authorization given for
sale/registration of a particular property for specific period of time. A single act or transaction is meant to
imply either a single act or acts so related to each other as to form one judicial transaction.
General Power Of Attorney - If the power of attorney authorises the agent to act generally or in more
than one transaction in the name of a principal, it is a General Power of Attorney eg. Authorization given
to deal on behalf all financial and other dealing of the principal without specifying any particular
transaction.
Most of the NRIs (Non-Resident Indians) are facing lot of difficulties to carry out the important financial
and other required transactions in India without his presence. He may have own properties
(commercial/residential) in India which provides rental income, bank accounts which provides interest
income, etc. must be reinvested and used accordingly when he is not in India. It is not easy for an NRI
staying outside the border to invest his income in India, but now as a result of advancement of technology
an NRI act do most of the financial transactions online. But most of the transactions, his presence is very
much required. To avoid this situation, he can appoint a Power of Attorney (POA) to carry out his
activities in India on behalf of him. It has its own merits and demerits.
The following are some of the examples
Real Estate
a) To execute all contracts, deeds, bonds, mortgages, notes, checks, drafts, money orders,
b) To manage, compromise, settle, and adjust all matters pertaining to real estate.
c) To lease, collect rents, grant, bargain, sell, or borrow and mortgage
Signing Agreements, Contracts
a) To enter into contact or sign agreements
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b) Perform any contract, agreement, writing, or thing

c) To make, sign, execute, and deliver, acknowledge any contract, agreement,
Buy/Sell Stocks, Bonds and Securities
a) To sell any and all shares of stocks, bonds, or other securities
b) To make, execute, and deliver any assignment, or assignments, of any such shares of
stock, bonds, or other securities.
Opening/ Operating Bank Accounts, Term Deposits, Mutual Funds etc.
a) To add to or withdraw any amounts from any of my bank accounts, Certificates of
Deposit, Money Market Accounts, etc.
b) To make, execute, endorse, accept and deliver any and all cheques and drafts
c) Execute or release such deeds of trust or other security agreements as may be
necessary
d) Deposit and withdraw funds Acquire and redeem certificates of deposit, in banks, savings
and loan
Filing of Income Tax Returns, Insurance and other
a) To file, sign all tax returns, insurance forms and any other documents
b) To represent in all matters concerning the foregoing.
A power of attorney executed outside India has to be executed before and authenticated by a
Notary Public and also consularised/apostilled by the Indian Consulate present in the country of
execution. In international law, consularisation is the act of authenticating any legal document by
the consul office of the country in which it is to be used, by the consul signing and affixing a red
ribbon to the document for it to be acceptable in the country of use. Foreign countries, who are
party to the Hague Convention, require the bearer of a document to obtain an apostle from
authorities of the country in which the document was issued. An apostille involves the addition of
a certificate, either stamped on the document itself or attached to the document. It certifies the
country of origin of the document, the identity and capacity in which a document has been signed
and the name of any authority which has affixed a seal or stamp to the document. The apostille
enables the presenter to bypass further certification and immediately send or take the documents
to the country of intended use. Only certain countries will accept the apostille. Such a power of
attorney so authenticated is recognized as valid under the Indian Evidence Act, 1872. The same
will also be valid/recognizable under the Registration Act, 1908 for purpose of registration of a
document by an agent of a person, or a representative or an assign (where the person executing
the document cannot be present for registration).
A power of attorney to be used for the specific purpose of registration of a document in respect of
an immoveable property of value more than R. 100 by an agent of a person, or a representative
or an assign (where the person executing the document cannot be present for registration) has to
be executed before or authenticated by the Registrar or Sub-Registrar within whose district or
sub-district the principal resides. This is as per the requirements of the Registration Act, 1908.
This being an exception, no other power of attorney, either special or general requires registration
under the Registration Act, 1908
In normal case the following documents are required for consulate POA attestation
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Power of Attorney (Property Matters)

Requirements for attestation of Power of Attorney (Property Matters):
a) Photocopy of inside cover pages and other relevant pages of the passport.
b) Two recent Passport Size ( 35 mm x 45 mm) photographs.
c) Original and one photocopy of the Power of Attorney to be signed before the Consular Officer of
the Embassy.
Power of Attorney (other than Property Matters)
Requirements for attestation of Power of Attorney (other than Property Matters):a) Photocopy of inside cover pages and other relevant pages of the passport.
b) Original POA document to attest.
Please note that requirements varies from country to country
Power of Attorney can be revoked or would stand revoked if :
Revoked by the principal himself

The principal dies or becomes insane or becomes bankrupt or legally incompetent
The business for which the agent was appointed is over
Mutually agreed upon by the principal and agent
The right under the power of attorney is renounced by the agent
Note : This article is prepared for the general information of the readers. Please contact your
legal adviser or advocate for more information.
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CHAPTER 26
Top 10 Home buying tips for NRIs
1. Dont buy home for short duration stay If you are planning to buy a home for short
duration stay for 2-3 years and if you cant commit to remaining in one place for at least few years,
then owning a home is probably not for you. With the registration fees and other transaction costs of
buying and selling a home, you may end up losing money if you sell within a short period even a rising
real estate market. Suppose, if prices of properties are falling you may end up with huge loss. So
before going to buy a house/apartment first decide how long you are going to reside there, if your
answer is long term say above 5 years, go ahead and buy the house otherwise drop your idea.
2. Explore the possibility of availing a loan at a competitive rate Since you most likely will need to get a
loan to buy a house, you must make sure that you will be able get the loan as much as required for
the full/part payment of the property value. Please note that, the interest rate varies from Bank to
Banks and now after NBFCs started competitive rates, you have more choices. In this context, you
should also check other fees such as processing fee, documentation fee, and any prepayment penalty
associated with the home loan. At the same time do research on the best option that banks offer.
Home loan is a huge amount and hence even a difference of 0.5% can make big difference in payouts. You should also get the maximum tax benefit from your home loan. See if you can make your
spouse as co-applicant and avail the tax benefits. You will simply double the tax benefits if there are
two co-applicants.
3. Aim for a home you can really afford. The rule of thumb is that you can buy housing that runs about
30-40% of your annual salary. But you will do better to use one of many calculators available online to
get a better handle on how your income, debts, and expenses affect what you can afford. This is one
of the most crucial decisions. Know the amount of loan you can afford. The banks may sanction loan
based on your income but you should look at your monthly expenditure and see if you can afford the
maximum that banks offers.
4. If you can't put down the usual 20 percent, you may still qualify for a loan. There are a variety of
public and private lenders who, if you qualify, offer low-interest loans that require a down payment of
10-20% of the value of the property you are planning to buy. In case you are unable to find source to
this basic 10-20%, you may have to pay interest at higher rates.
5. Buy in a good location with all basic facilities The most important part of a real estate piece is
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location. Even if you have to pay little extra, you should do it. The most important aspect of the right
location is future prospect of big construction such as mall, IT Park, company, SEZ, airport, railway
lines, or any other commercial space. Apart from this, the points to consider in any location are the
following: Availability of civic amenities such as power, water, roads, calm environment, and closeness
to main road, markets, shopping malls, schools, and hospitals etc, possibility of renting out your home
if required. Good schools located nearby are an added advantage. In most areas, this advice applies
even if you don\\'t have school-age children; the reason is that, when it comes time to sell, you will
realize that good schools and other basic facilities around are a top priority for many home buyers,
thus helping to boost property values.
6. Do your homework before taking the decision Do your home work before decided to buy a home
and to ensure that the home you are planning to buy is suitable for your living at least for the coming
10-15 years and also have enough space to accommodate the expected increases in the number of
family members. Also, ensue that the prices you are paying is worth to the facility provided.
7. Avail the service of a professional Even though the Internet gives buyers unprecedented access to
home listings, most new buyers (and many more experienced ones) are better off using a professional
agent. Look for an exclusive buyer agent, if possible, who will have your interests at heart and can
help you with strategies during the entire process.
8. Select a builder with good track records Before buying an apartment, please check the credibility of
the builder and also make sure that, the builder has delivered all his past projects within the time limit
with specified quality. In case you observed any delay or failure form the part of the builder to deliver
the project dont buy apartment from that builder. You have to have long term view of your investment.
The property should be stable enough to last 40-50 years so that if you want to sell it and buy another
home, you should be able to do it without much hassle. This is where buying from a reputed builder
becomes more important. At the same time, explore the possibilities of linking your loan disbursal
based on the progress of the construction work instead of pre-determined specified timings.
9. Verification of Legal Documents- Always look for apartments which are pre-approved by the
financial institutions. This will one way ensure that, the property title and other documents are verified
and approved by the financial institutions and they are supposed to be in order in all respects. Also
insist the builder to show you the original title document of the land. For your safety and to ensure
that, all documents are in order, you need to engage a lawyer who can search and verify the title and
associated documents before you buy the home. You should get everything in writing from the builder.
The sale deed should be duly signed by both the buyer and the seller. You should also ensure that lay
out plan, building plan, number of floors, and ownership documents are in order and builder has got
necessary approval from the concerned Government authorities. You should take legal help from a
lawyer if you do not understand any document. Apart from these documents, make sure to get the
encumbrance certificates from the sub-registrar. The encumbrance certificate tells you the details of
property dealings and other ownership transfer of the property for the last 30 years. All taxes
(including land tax and panchayat/municipal/corporation tax) should have been paid on the property.
You should get the proof of paying this tax from the builder; also verify the, the NOC certificate from
water and electricity authorities.
10. Hire the service of an expert civil engineer Sure, your lender will require a home appraisal anyway.
But that's just the bank's way of determining whether the house/apartment is worth the price you've
agreed to pay. Separately, you should hire your own home inspector, preferably an engineer with
experience in doing home surveys in the area where you are buying. His or her job will be to point out
potential problems that could require costly repairs down the road
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In many states in India, the Agreement of Sale between the builder and purchaser is required by law
to be registered. You are advised in your own interest to lodge the agreement for registration within
four months of the date of the Agreement at the office Duration of Investment - Expected duration of
investment is an important factor you need to keep in your mind before buying a property in India. In
case you sell your property within three years from the date of purchase, you are liable to pay short
term capital gain tax on the entire gains you made out of the deal. Short term capital gain will be
added to your income and tax applicable is as per the tax category you belongs for a particular
financial year. If you sell the property after three years, the gain will be considered as long term and
you need to pay only 10% of the gain as tax without indexation benefits and 20% with indexation
benefits. It is better to stay invested at least for 3 years. It is always advisable to take a conservative
approach in both Capital Appreciation and Rental returns. In case you are planning to give your
residential property (apartment/villa) on rent, you will not be able to get 3-4% of your total investment
as annual rent. The other factor to be considered is Investing in property means also an entry load by
paying stamp duty and registration fees and other incidental charges, labor welfare charges etc., to
the Builder. If you are planning to investing it is better to invest as soon as the project is launched as
this gives you enough time for. Also, please keep it in mind that, in addition to the per sqt rate quoted
by the builder, you may required to pay lot additional amounts as a percentages of total cost like
electricity connection charges, water connection charges, resident association deposits, local tax,
registration fees etc.
Pre-Launch offers - Investing in property means also an entry load by paying stamp duty and
registration fees and other incidental charges, labor welfare charges etc., to the Builder. If you are
planning to investing it is better to invest as soon as the project is launched as this gives you enough
time for .
Invest with Deep Thought - The present market is volatile in Mumbai and it is imperative for you to
give a deep thought on various accounts, which begins from the Project, Infrastructure available within
the Project, Outside the project in the neighborhood, Selling prospects, Leasing prospects,
Neighborhood development, Distances to Schools, Markets, Malls, Hospitals, Highways, Airports,
Railway stations etc. These should act as your analysis points.
For NRIs - especially before coming to India, make sure you are carrying most of the relevant papers
with you. You should always have an NRE and an NRO account in India and if you are looking to
invest in Mumbai then one should have an account in Mumbai for easiness. Review your NRI
allowances by the Government of India every budget etc.
Home Loans - You can set off your EMI's if you invest wisely in a property as the rates are presently
around 8% and your rental returns are around 4-6%. You can be a happy man if you do this fool proof
homework as your EMI can be hedged off against the rent receipts to a certain degree.
Re-Sale Properties - In a booming market every property owner wants to cash on in his property at
the best value. A few issues which we face are the commitment level of the seller and we can stumble
on to good transactions at times, but this is more of a time consuming process at times. The repair
value, old building and other property documentation issues can be challenging in certain
transactions.
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NRIs, PIOs not required to report property deals in India: RBI

Returns - It is always advisable to take a conservative approach in both Capital Appreciation and
Rental returns. However one can safely expect appreciations anywhere upwards of 15% Per Year and
Rental Yields of 4 to 6%.
The clarification follows confusion over whether Non- Resident Indians (NRIs) and Persons of
Indian Origin (PIOs), like foreigners, too have to file a declaration with the Reserve Bank within
90 days from the date of acquisition of properties.
RBI (Reserve Bank of India) clarified that NRIs and PIOs are not required to report to the central bank
the details of transactions while purchasing immovable property in India, an announcement which is
likely to encourage Indian diaspora to invest in the country.
"It is clarified that the extant regulations do not prescribe any reporting requirements for transactions
where a person resident outside India who is a citizen of India or a PIO... acquire/s immovable
property in India," the Reserve Bank said.
The clarification follows confusion over whether Non- Resident Indians (NRIs) and Persons of Indian
Origin (PIOs), like foreigners, too have to file a declaration with the Reserve Bank within 90 days from
the date of acquisition of properties.
Foreigners make the declaration in IPI form. "Form IPI has been, accordingly, amended for greater
clarity," RBI said.
NRI property buying tips
Regulations regarding acquisition and transfer of immovable property in India by a person resident
outside India has been notified vide RBI Notification No. FEMA 21/2000-RB dated May 3, 2000 as
amended vide Notification No. FEMA 64/2002-RB dated June 29, 2002 and Notification No. FEMA
65/2002-RB dated June 29, 2002 and relevant directions issued in the form of A.P. (DIR Series)
Circulars. General Permission is available to purchase only a residential/commercial property in India
to a person resident outside India who is a citizen of India (NRI)) and who is a Person of Indian Origin
(PIO).For the purpose of acquisition and transfer of immovable property in India, a PIO means an
individual (not being a citizen of Pakistan or Bangladesh or Sri Lanka or Afghanistan or China or Iran
or Nepal or Bhutan), who (i) at any time, held Indian passport; or (ii) who or either of whose father or
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grandfather was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57
of 1955). NRI/PIO who has purchased residential/commercial property under general permission is not
required to file any documents with the RBI. There is no restriction on number of
residential/commercial property that NRI/PIO can purchase under the general permission available.
No. Under section 2 (ze) of the Foreign Exchange Management Act, 1999 transfer' includes among
others, purchase'. Therefore, a foreign national of non-Indian origin resident outside India cannot
acquire any immovable property in India by way of purchase. A person resident outside India cannot
acquire by way of purchase agricultural land/plantation property/farm house in India. . A Foreign
National of non-Indian origin including a citizen of Pakistan or Bangladesh or Sri Lanka or Afghanistan
or China or Iran or Nepal or Bhutan may acquire only residential accommodation on lease, not
exceeding five years for which he/she does not require prior permission of RBI.
Buying a property is not a difficult task for the NRIs anymore because the easy availability NRI
Housing Loan makes property investment lot more convenient. Any NRI or POI staying abroad are
eligible for NRI loans subject to the certain conditions. Apart from that, government servants posted
abroad on duty with the Indian missions or deputed abroad on assignments with foreign Governments
or regional/international agencies are also entitled to these loans.
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CHAPTER 27
Facilities for Returning NRIs
A returning NRI should know and understand various aspects of Foreign

Exchange Regulations (FEMA), Indian Taxation and Banking Regulations in order to rearrange his
financial affairs in India and outside India. The decision to return to India would have both direct and
indirect tax implications, such as income tax, wealth tax and customs duty. He would also need to take
note of implications from an exchange control regulations perspective. The overseas investments by
Indian residents are regulated by the Foreign Exchange Management Act (FEMA), which is
implemented by the Reserve Bank of India (RBI). The FEMA has a wide network of notifications and
circulars, which lay down permissible avenues for each category of individual. The decision to return
to India may not be just an emotional one, but also needs to be made taking into account the current
regulatory environment and proposed changes being made to them. With a proper understanding,
efficient planning and utilisation of the benefits provided under the tax laws in India, home-coming
would not only feel good on the heart but also relatively easier on the pocket.
If your stay in India during the Financial Year is 182 days or more, your residential status will be as
Resident Indian.
There is a transitional status of RNOR between being an NRI and becoming a full-fledged Resident
after returning to India permanently. An RNOR is not required to pay tax in India on his forex income.
Anyone who returns after 9 or more years of being an NRI will become RNOR for 2 years.
Resident but not Ordinarily Resident (RNOR) is a person who satisfies one of the following conditions
a) he has been a non-resident in India in nine out of the ten previous years preceding that year, or
b) has during the seven previous years preceding that year been in India for a period of, or periods
amounting in all to, seven hundred and twenty-nine days or less.
NRI benefits are available to a person till the time he holds the NRI status in India; a person loses his
NRI status in the same year when he returns to India or within 2 years from the date of arrival to India,
depending on the number of days of stay in India. A returning Indian who has been a Non Resident
for 9 years or more, shall be a Not Ordinarily Resident (NOR) for 2 successive years upon
permanently returning to India.
Immediately on return to India, NRIs should inform their bank to change the status of their accounts as
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domestic Resident accounts or transfer the balance in their NRE/FCNR accounts to Resident Foreign
Currency (RFC) accounts, but FCNR accounts can be continued till the date of maturity and upon
maturity, can be converted to RFC accounts. Resident Foreign Currency (RFC) Accounts Scheme This is a Scheme approved by Reserve Bank of India permitting persons of Indian nationality or origin,
who have returned to India on or after 18th April 1992 for permanent settlement (Returning Indians),
after being resident outside India for a continuous period of not less than 1 year, to open foreign
currency accounts with banks in India for holding funds brought by them to India.
Whether RFC is tax-free or not, withholding tax will be applied @30.6% and if the interest is over Rs.
10 lakhs, the rate will be 33.99%.
The NRE SB and NRO SB accounts will be re-designated as Ordinary SB accounts.
It is also necessary to inform all the companies/Depository Participants (DPs)
investments about the change in your residential status.
where you have
The tax liability of each person in India is basically determined based on his residential status. The
following are the tax liability of different categories of people
Resident liable to pay tax on income earned in India as well as abroad
Non-Resident (NRI) liable to tax on the income earned in India
Not Ordinary Resident (NOR) - liable to tax on the income earned in India
Ordinary Indian Resident (ROR) - is liable to tax on his global income
Overseas Assets
All kind of Foreign exchange / Overseas assets such as properties, bank deposits, stocks and
securities, life insurance policies, loans, company deposits, debentures, bonds etc. acquired, held or
owned by an NRI while he was abroad can be continued to be so held and deal in any manner even
after the NRIs return to India for permanent settlement.
Tax Treatment of overseas Financial Assets.

Foreign exchange and overseas assets (such as bank accounts, stocks/securities, life insurance
policies, loans, company deposits, debentures, bonds etc.) acquired/held/owned by NRI while he was
abroad can be continued to be so held and owned even after the NRI returns to India for permanent
settlement. Such foreign exchange and overseas assets can accumulate or accrue income outside
India and the balances can be utilized for reinvestment or repatriated to India at any time (without
attracting Wealth tax in India) within 1 year immediately preceding the date of his return or later. This
exemption period is limited to 7 successive years which immediately follow the year in which the NRI
permanently returns to India.
Immoveable Properties
NRIs can continue to hold immovable properties outside India. Such properties can be rented out and
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rentals can be credited to overseas bank accounts. The properties can be sold and the sale proceeds
credited to overseas bank accounts. Expenses relating to such properties, such as maintenance,
insurance premium etc. can be paid out of the overseas balances.
k) as per the FEMA, any person resident in India may hold, own, transfer or invest in foreign
currency, foreign security and immovable property situated outside India; if the person had
acquired, held, owned or inherited the same while he was resident outside India. Further,
the FEMA also requires that where any amount of foreign exchange is due or has accrued
to a person resident in India, such person shall take reasonable steps to realise and
repatriate the same within such period and manner as specified by RBI.
l) Even after returning to India, the NRI can continued remitting funds out of India and
investing in overseas markets, these remittances under the Liberalised Remittance Scheme
(LRS) of the RBI. LRS has liberalised and globalised many Indian investors in the true
sense. It has allowed Indian resident individuals to remit funds upto USD 200,000 per
financial year outside India freely, without the prior approval from RBI for permissible
transactions, including acquisition of immovable property, shares, debt instruments and any
other assets subject to certain conditions
m) As per the Indian income-tax laws, NRs are taxable in India only on income which accrues
in India or is received in India. In the case of an NR, once an income is earned and received
outside India and it is brought to India at a later date, it would not be taxable in India.
n) It is beneficial to persons could sell his residential property in aboard, while he is an NR or
a Not Ordinarily Resident (NOR) in India, and he would not be taxable in India on the gain
that he makes from the sale. Similarly, he would not be taxable in India on the income
earned and received by him in abroad from his investments till he qualifies as a NR or NOR
in India. Once he/she loses the status of a NR or NOR and qualifies as an Ordinary
Resident in India, he/she would be taxable in India on his global income.
o) The provisions for determining residency under the wealth tax laws are the same as that of
the Income Tax laws. In the case of NRs and NORs, the current wealth tax provisions
provide that any assets located outside India would be excluded from the ambit of wealth
tax in India. Hence, the returned NRIs will not be required to pay wealth tax in India on the
assets that are located outside India, as long as he qualifies as a NR or NOR in India
p) If the returned NRI intends to reside in India permanently, she/he would not be required to
pay wealth tax on money and the other assets brought by him into India from abroad, within
one year immediately preceding the date of his return or later. This exemption is limited to
seven successive years which immediately follow the year in which she/he returns to India.
Under wealth tax law, wealth tax is payable at the rate of 1% for the net wealth in excess of
Rs 30 lakhs. However, assets located outside India owned by NRI shall not come under
wealth tax bracket. Further, a NRI returning to India for good can claim wealth tax
exemption for the assets brought by him /her to India or assets acquired by such money up
to seven years commencing from the year in which such person returned to India subject to
fulfillment of other conditions
q) As per Baggage Rules, 1998, since, the used car in the abroad for personal purposes for
more than a year and he/she is transferring residence to India now, he/she could bring
his/her car with him but would be required to pay customs duty on the same. However,
considering the quantum of custom duty liability likely to arise due to the import, it may be a
better idea to buy a new car in India subsequent to shift of his residence. In addition to the
car, he/she would be able to get certain specified used personal effects upto a specified
threshold without payment of customs duty.
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r)
With regards to exchange control implications, the returned NRI would be able to open a
Resident Foreign Currency Bank Account (RFC Account). He/she could then transfer,
through appropriate banking channels, the amount that he has in his/her foreign Bank
account into such RFC account without any limit. He/she can continue to hold his other
investments in abroad, since he/she had acquired these when he/she was a resident
outside India. The dividend from the foreign companies and mutual funds and interest
income from his/her foreign bank account which he/she receives from his investment that he
continues to hold in the foreign country can also be credited to the RFC account.
s) There are some special provisions under Indian tax laws wherein NRIs can opt for special
tax rates (instead of progressive slab rates applicable in India) for specific investment
incomes or capital gains from foreign exchange assets (eg: Shares in Indian company
purchased in convertible foreign exchange). Further, the interest earned by NRI on his NRE,
FCNR or RFC account is tax free subject to certain conditions.
t)
Further, an Indian Citizen or Person of Indian origin who is outside India visits India in any
year, would be regarded as Resident, even if he stays in India for less than 182 days, but 60
days or more in the relevant tax year and 365 days or more in preceding four tax years, (the
extended stay benefit of 181 days shall be removed under proposed DTC).
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CHAPTER 28
NRI's guide to selling property in India
A guide to selling property in India by NRIs

An NRI is eligible to hold property or buy property even after become an NRI subject to the rules
contained in the FEMA regulation. NRIs are not eligible to buy plantation and agricultural properties in
India. NRIs need to take special approval from RBI. The following are the rule and regulation related
to the selling of properties by an NRI for those properties acquired before or after he becomes an NRI.
NRIs are allowed to sell residential or commercial properties in India, He/She can sell properties to a
person resident in India (as per FEMA definition, to an Non-Resident Indian to a Person of Indian
Origin (PIO). But there is one exception, an NRI can sell agricultural or plantation land or a farm
house only to a person who is resident in India and a citizen. The sale proceeds would have to be
credited in the Non-Resident Ordinary (NRO) account of the NRI provided the sale of property is
related to the property purchased him/her when he/she was a Resident Indian. But, if the property
was purchased out of rupee resources, that is, income earned in rupees, or the home loan is repaid by
a relative who is a resident of India, the amount must be credited in the NRO account in case the
property was acquired by the NRI when he was residing outside India (NRI).
Repatriation rules related to sale proceeds of properties in India
If the property was purchased while you were a resident of India, then the sale proceeds must be
credited to the NRO account. You can repatriate up to USD 1 million per calendar year from your NRO
Account (including all other capital transactions), provided you have paid all taxes due. In case the
property was purchased while you were a non-resident, you can repatriate the proceeds outside India
provided that you fulfill the following conditions:
1. NRI should have purchased the property in accordance with the foreign exchange laws prevalent at
the time you bought the property
2. The amount to be repatriated will follow these limits:
a. If NRI purchased by remitting foreign exchange to India through normal banking channels, then the
repatriation cannot exceed the amount that you remitted.
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b. If NRI purchased using funds in the Foreign Currency Non Resident (FCNR) Account, then the
repatriation cannot exceed the amount paid through this account.
c. If NRI purchased using funds lying in your Non Resident External (NRE) Account, then the
repatriation cannot exceed the foreign exchange equivalent, as on date of purchase, of the amount
paid through NRE Account.
d. If NRI purchased a property by taking a home loan, then repatriation cannot exceed the amount of
loan repayment that has been done using foreign inward remittances or debit to NRE/FCNR Accounts.
e. If NRI purchased the property using balance in your NRO account, then the sale proceeds must be
credited to your NRO account and you can repatriate to the extent of USD 1 million (including all other
capital account transactions).
In all these cases, the balance sale proceeds can be credited to the NRO account and you will be able
to repatriate up to USD 1 million per calendar year (including all other capital account transactions).
This limit of USD 1 million is the limit upto which you can repatriate without any permission from RBI. If
you have a genuine need to repatriate above this limit, you can make a specific application to RBI for
increasing the repatriation limit In all cases, repatriation is restricted to sale of two residential
properties.
Capital Gains tax applicable on sale of properties in India
Please note that for Income Tax purposes the definition of NRI would be the
one prescribed in the Income Tax Act. For all repatriation purposes, the definition of NRI would be one
under FEMA. While in most cases, a person who qualifies under one would qualify under the other, it
is better to review both definitions.
If you sell the property after three years from the date of purchase, you will be liable for long term
capital gains tax of 20 %. The gains are calculated as the difference between sale value and indexed
cost of purchase. Indexed cost of purchase is nothing by the cost of purchase adjusted to inflation.
The long term capital gain is 10% without indexation benefits and 20% with indexation benefits.
As an NRI, you will be subject to a TDS of 20 per cent on the capital gains.
If you sell the property within three years of purchase, you will be liable for short term capital gains tax
at your respective tax slab. Short term capital gain is calculated as the difference between the sale
value and the cost of purchase (no indexation benefit is available). You will be subject to a TDS of 30
per cent irrespective of your tax slab. The short gain capital gain amount will be added to your total
income and liable to pay tax as per your tax brackets for the particular financial year.
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1% TDS on Transfer of Immovable Propery Exceeding Rs. 50 lakh (Budget 2013 proposal)
Tax deducted at Source (TDS) on transfer of certain immovable properties (other than
agricultural land)
There is a statutory requirement under section 1 39A of the Income-tax Act read with rule 11 4B of the
Income-tax Rules, 1962 to quote Permanent Account Number (PAN) in documents pertaining to
purchase or sale of immovable property for value of Rs.5 lakh or more. However, the information
furnished to the department in Annual Information Returns by the Registrar or Sub-Registrar indicate
that a majority of the purchasers or sellers of immovable properties, valued at Rs.30 lakh or more,
during the financial year 2011-12 did not quote or quoted invalid PAN in the documents relating to
transfer of the property.
Under the existing provisions of the Income-tax Act, tax is required to be deducted at source on
certain specified payments made to residents by way of salary, interest, commission, brokerage,
professional services, etc. On transfer of immovable property by a non-resident, tax is required to be
deducted at source by the transferee. However, there is no such requirement on transfer of
immovable property by a resident except in the case of compulsory acquisition of certain immovable
properties. In order to have a reporting mechanism of transactions in the real estate te sector and also
to collect tax at the earliest point of time, it is proposed to insert a new section 194-IA to provide that
every transferee, at the time of making payment or crediting of any sum as consideration for transfer
of immovable property (other than agricultural land) to a resident transferor, shall deduct tax, at the
rate of 1% of such sum.
In order to reduce the compliance burden on the small taxpayers, it is further proposed that no
deduction of tax under this provision shall be made where the total amount of consideration for the
transfer of an immovable property is less than fifty lakh rupees.
This amendment will take effect from 1st June, 2013.
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CHAPTER 29
CUSTOMS AND BAGGAGE RULES REALTED
TO INTERNATINAL PASSENGERS
Source: Indian Customs Department website as on 21/01/2012
(Please note that rules, provisions and duties related to customs are subject to
change, this is just for information purposes only)
The import duty on gold and platinum has been increased from 4% to 6%
with effect from 21st Jan,2013 to curb imports and check the widening
current account deficit
1) Clearance of arriving passengers:
Every passenger entering or leaving Indian border has to pass through Customs check. Airlines
generally provide the Disembarkation Card to the passengers in the aircraft itself and each passenger
must fill up the same clearly mentioning the quantity and value of goods brought. On landing, the
passenger is first cleared by Immigration authorities, who retain the Immigration portion of the
Disembarkation Card. Thereafter, the passenger takes delivery of baggage, if any, from the conveyer
belt and approaches the Customs where the passenger exercises the option of
seeking clearance through the Green Channel or through the Red Channel.
2) Green Channel or Walk through Channel - applies to passengers who have nothing
to declare and are carrying dutiable goods within the prescribed free allowance. On
the basis of their Oral Declaration/Declaration on their Disembarkation Card such
passengers cross the Green Channel without any question being asked by Customs
and exit the airport after handing over the Customs portion of the Disembarkation
Card to the Customs Officer/Sepoy at the exit.
3) Red Channel - is meant for passengers who have something to declare or are
carrying goods in excess of the duty free allowance. The passenger hands over the
Customs portion of the Disembarkation Card to the officer on duty at this Channel. In
case the card is incomplete the Customs Officer helps record the Oral Declaration
(O.D) of the passenger and thereafter countersigns/stamps the same, after taking the
passengers signature. In order to identify the frequent short visit passengers the
Customs Officer also scrutinizes the passport/other travel
Documents of the passengers. The declaration of goods and their values is generally accepted and
duty assessed. On payment of this duty the passenger is allowed clearance.
4)Passenger crossing Green Channel with Dutiable Goods - Any passenger found walking
through the Green Channel with dutiable/prohibited goods or found misdeclaring the quantity,
description or value of dutiable goods at the "Red Channel" (the baggage is examined where
misdeclaration suspect), is liable to strict penal action including arrest/prosecution apart from
seizure/confiscation of the offending goods depending upon gravity of violation detected. In case the
passenger brings any goods in baggage that are essentially for commerce and not for personal use,
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or imports goods in commercial quantity, these goods become liable to confiscation and the
passenger liable to strict penal action. Only bonafide baggage items for personal use or use by
members of his family are allowed to be imported as baggage. In case of frequent short visit
passengers and repeat offenders, the Customs officers would impose higher levels of fines and
penalties and for deterrent effect even consider prosecution in a Court of law.
5)clearance of arriving passengers:
Airlines generally provide the Disembarkation Card to the passengers in the aircraft itself and each
passenger must fill up the same clearly mentioning the quantity and value of goods brought. On
landing, the passenger is first cleared by Immigration authorities, who retain the Immigration portion of
the Disembarkation Card. Thereafter, the passenger takes delivery of baggage, if any, from the
conveyer belt and approaches the Customs where the passenger exercises the option of
seeking clearance through the Green Channel or through the Red Channel.
6) Duty free allowances and entitlements for Indian Residents and
Foreigners Residing in India:
6.a Duty Free Entitlements - The duty free entitlement of passengers includes used personal effects
(excluding jewellery) required for satisfying the daily necessities of life. In addition, articles valued at
upto Rs.25,000/- are allowed free of duty if carried as accompanied baggage of the passenger. This
amount is proportionately reduced to Rs.12,000/- if stay abroad is of 3 days or less. For children below
10 years, the free allowance is Rs.6,000/- (Rs3,000/- if stay abroad is of 3 days or less). However, for
such passengers coming from Nepal, Bhutan, Myanmar or China, by routes other than by Land route,
and for such passengers coming from Pakistan by land route, the free allowance is Rs.6,000/-.
Budget Proposal 2012- Duty Free baggage allowance has been increased from Rs. 25,000 to
35,000.00. Baggage allowance for Indians travelling abroad was last revised in 2004. This budget it is
proposed to increase the duty-free allowance for eligible passengers of Indian origin from Rs. 25,000
to Rs.35, 000.00 and for children of up to 10 years from Rs. 12,000 to Rs. 15,000.00
6.b Tobacco, Alcoholic liquor - In addition, to the above such passengers are allowed the following
quantities of tobacco products and alcohols within the aforesaid duty free allowances:
(i) 200 cigarettes or 50 cigars or 250 gms tobacco.
(ii) Alcoholic liquor & wines upto 2 litre each.
6.c Not Allowed Items - The items that are not allowed free of duty include firearms, cartridges of
firearms, cigarettes/ cigars/ tobacco or alcoholic liquor and wines that is in excess of what is allowed
within the free allowance, gold or silver, in any state (other than ornaments) unless specified
otherwise.
6.d Applicable Customs Duty - The bonafide baggage items that are in excess of the duty free
allowance can be cleared on payment of a uniform rate of Customs duty that is currently @35%+
Cess, as applicable, except for items like liquor, cigarette etc. that are charged to a higher rate of duty
as applicable to imports other than as baggage.
6.e Duty Allowance applicable for Professionals - Professionals, who are returning to India after
at least 3 months stay abroad are eligible for additional free allowance of Rs.12,000/- for used
household articles such as utensils, linen, kitchen appliances, iron etc. and Rs.20,000/- for
professional equipment. The allowance is proportionately higher if passenger is returning after 6
months stay or 1-year stay abroad.
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7) Import of jewellery/gold/silver:
An Indian passenger who has been residing abroad for over 1 year is allowed to bring jewellery, free
of duty upto an aggregate value of Rs.50,000/- in the case of a male passenger or Rs.100,000/- in the
case of a lady passenger.
Budget 2013 Duty-free limit of import of jewellery like Gold increased to Rs. 50,000 for male
passenger and Rs. 100,000 in case of female passenger subject to conditions
Any passenger of Indian origin (even if a foreign national) or a passenger holding a valid passport
issued under the Passport Act, 1967 if coming to India after a period of not less than 6 months of stay
abroad is allowed to import specified quantities of gold and silver as baggage on payment of duty,
which has to be paid in foreign currency. Such passenger can also obtain the permitted quantity of
gold and silver from authorized Banks - SBI, Bank of Nova Scotia etc. The specified quantities and
rate of duty are as follows:
8)Duty free allowances and entitlements for tourists:
A tourist is a passenger who is not normally resident in India or who enters India for a stay of not
more than 6 months in the course of any 12-month period for legitimate non-immigrant purposes, such
as touring, recreation, sports, health, family reasons, study, religious pilgrimage, or business. The duty
free allowances andentitlements for tourists are as follows:
10) Category of Tourist Duty Free Allowance
Tourists of Indian origin coming to India (other than those coming from Pakistan by land route)
Same as for Indian passengers or foreigners residing in India
Foreign tourists Rs.8,000/Tourist of Pakistani origin Rs.6,000/Tourist of Nepalese and Bhutanese origin Nil
11) Allowances and entitlements on Transfer of Residence (TR):
A person transferring his residence to India after a minimum stay of 2 years abroad, immediately
preceding the date of his arrival on transfer of residence, is entitled to certain benefits in addition to
those available to a passenger, subject to certain conditions. Short visits are permitted during the 2
preceding years but total stay in India on short visits should not exceed 6 months. Further, a shortfall
in period of stay abroad can be relaxed upto 2 months by the Assistant/Deputy Commissioner and
shortfall in period of stay abroad exceeding 6 months by the Commissioner of Customs in deserving
and exceptional cases.
The person transferring his residence to India after 2 years stay abroad as mentioned above is eligible
to clear free of duty, articles such as used personal and household articles of a value of upto Rs.5/lakhs. However, goods such as firearms, cartridges of firearms, cigarettes/ cigars/ tobacco or alcoholic
liquor and wines in excess of what is allowed within the normal free allowance, gold or silver, in any
state (other than ornaments) are not allowed to be imported. Moreover, few specified goods are not
eligible for a complete duty exemption and are charged to a lower concessional duty that is presently
@31%. These goods are: T.V, VCR/VCP/VTR, washing machine, air conditioner, microwave oven,
personal computer, dish washer, music system, electrical/LPG cooking range (other than cooking
range with not more than 2 burners and without any extra attachment), refrigerator, deep freezer,
video camera or a combination of video camera and TV receiver; sound recording or reproducing
apparatus; video reproducing apparatus, word processing machine, fax machine, vessels, aircraft,
cinematographic films of 35 mm and above, gold or silver, in any form, other than ornaments.
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TR concession is available provided the passenger has not availed this facility in the preceding 3
years. In other words there is no bar if the passenger who returns for stay in India on TR goes abroad
but on his return again the TR concession is available for another 3 years.
12) Import of baggage of deceased person:
In terms of Customs/Government Notification No.21/2002-Cus., dated 1-3-2002 used, bonafide
personal and household articles of a deceased person are allowed free of duty subject to the condition
that a Certificate from the concerned Indian Embassy / High Commission is produced regarding the
ownership of the goods by the deceased person.
13) Import of unaccompanied baggage:
The unaccompanied baggage is required to have been in the possession abroad of the passenger
and dispatched within 1 month of his/her arrival in India or within such further period as the Assistant
Commissioner of Customs may allow. The unaccompanied baggage may arrive in India upto 2 months
before the passenger or within such period, not exceeding 1 year, as may be permitted by the
Assistant Commissioner of Customs if he is satisfied that the passenger was prevented from arriving
in India within the period of 2 months due to circumstances beyond his control.
The unaccompanied baggage may land in India upto 2 months before the arrival of the passenger or
within such period, not exceeding one year, as the Assistant Commissioner of Customs or Deputy
Commissioner of Customs may allow, for reasons to be recorded, if he is satisfied that the passenger
was prevented from arriving in India within the period of two months due to circumstances beyond his
control such as sudden illness of the passenger or a member of his family, or natural calamities or
disturbed conditions or disruption of the transport or travel arrangements in the country or countries
concerned or any other reasons, which necessitated a change in the travel schedule of the passenger.
10.(1) Application of these Rules to members of the crew. - The provisions of these Rules shall apply
in respect of members of the crew engaged in a foreign going vessel for importation of their baggage
at the time of final pay off on termination of their engagement.
Provided that except as specified in this sub-rule, a crew member of a vessel shall be allowed to bring
items like chocolates, cheese ,cosmetics and other petty gift items for their personal or family use
which shall not exceed the value of rupees six hundred.
No free allowance is admissible in respect of unaccompanied baggage, which is charged the normal
baggage rate of duty (35% ad valorem + Cess, at present).
14) Aircraft Crew Members - a crew member of an aircraft shall be allowed to bring items gifts
like chocolates, cheese, cosmetics and other petty gift items at the time of the returning of the
aircraft from foreign journey for their personal or family use which shall not exceed the value
of rupees six hundred.
15) Import of foreign exchange/currency:
Any person can bring into India foreign exchange without any limit. However, declaration of foreign
exchange/currency is required to be made in the prescribed Currency Declaration Form in the
following cases: (a) Where the value of foreign currency notes exceeds US$ 5000/- or equivalent; and
(b) Where the aggregate value of foreign exchange (in the form of currency notes, bank notes, traveler
cheques etc.) exceeds US$10,000/- or its equivalent.
16) Import of Indian currency:
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The import of Indian currency is prohibited, however, passengers normally resident in India who are
returning from a visit abroad may import Indian currency not exceeding Rs.7,500/-.
17) Import of fire arms as baggage:
Import of firearms is strictly prohibited. Import of cartridges in excess of 50 is also prohibited. However,
in the case of persons transferring their residence (as per conditions specified in the rules) to India for
a minimum period of 1 year, one firearm of permissible bore can be allowed to be imported subject to
the conditions that: (i) The firearm was in possession and use abroad by the passenger for a minimum
period of 1 year and also subject to the condition that such firearm, after clearance, shall not be sold,
loaned, transferred or otherwise parted with, for consideration or otherwise, during the lifetime of such
person; and
(ii) The firearm is subjected to applicable duty; and
(iii) The passenger has a valid arms licence from the local authorities in India.
18) Import of pet animals as baggage:
Domestic pets like dogs, cats, birds etc. may be imported. Import of animals and birds is governed by
strict health certificate regulations
19) Detained baggage:
There may be occasions when the passenger is not in a position to clear his baggage for any reason
e.g. inability to pay the Customs duty demanded. In such a situation, the passenger may request the
Customs to detain his baggage either for re-export at the time of his departure from India or for
clearance subsequently on payment of duty. The detained baggage would be examined and its full
details inventorised before being taken in the custody of Customs.
20) Mishandled baggage:
There are numerous occasions when passenger baggage gets lost or mishandled by the Airlines. In
all such cases the passenger is required to obtain a certificate to that effect from the airlines and get it
countersigned by Customs indicating specifically the unutilized portion of the free allowance. This
would enable the passenger to avail the unutilised portion of the duty free allowance when his
baggage is delivered by the airlines.
21) Clearance of departing passengers:
On the departure side, the principal task of Customs is enforcement related. These include checks to
prevent narcotic drug trafficking, smuggling of other sensitive items such as Indian including foreign
currency, wild life products, antiques etc. Customs also plays an important role in facilitating the reimport of the high valued articles including jewelry, being carried out of the country by issuing to the
departing passengers a re-export certificate.
22)Export of gold jewellery as baggage:
There is no value limit on the export of gold jewellery by a passenger through the medium of baggage
so long as it constitutes the bonafide baggage of the passenger
23) Export of currency:
Export of Indian currency is strictly prohibited. However, Indian residents going abroad are allowed to
carry Indian currency not exceeding Rs.7,500/-.
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Indians going abroad are permitted to take with them foreign currency without any limit so long as the
same has been purchased from an authorised foreign exchange dealer.
Tourists while leaving India are allowed to take with them foreign currency not
24) International Passenger Facilitation
Introduction:
1.1 Customs is mandated to ensure passengers entering or leaving India by international flights carry
on person/handbag or accompanied baggage, goods in accordance with the permissible
quantity/value and legal provisions and do not attempt to smuggle prohibited or banned or sensitive
goods. Also, all passengers including businessmen, trade delegations, professionals expect speedy
Customs clearance at the airports. Thus, Customs officials at the airports have a challenging role of
ensuring quick clearance and passenger facilitation, as well as enforcing the
Customs Act, 1962 and various allied laws that protect the interests of society/economy/revenue.
Over the time Indian Customs have aligned its procedures in tune with the best international practices
in terms of duty free baggage allowances and other facilities and procedures. Steps have also been
taken to educate general public and incoming and outgoing passengers of the extant Customs rules
and regulations. In this direction Customs prominently display the relevant provisions/baggage
allowances and list of prohibited/restricted items (endangered species or articles made from flora and
fauna such as ivory, musk, reptile skins, furs, shahtoosh, antiques, satellite phones, etc.) at all
international airports, with the dos and donts or benefit of passengers. A booklet on "Customs Guide
to Travellers" is also brought out periodically and circulated at airports as well as to our
Embassies/Consulates abroad. Passenger related Customs information is also made available on
theCBEC's web-site
25) Import and Export through Courier
Imports and exports through courier are becoming increasingly popular. At present, the courier
clearances are allowed both under manual mode as well as electronic mode. The courier clearances
under the manual mode are governed by Courier Imports and Exports (Clearance) Regulations, 1998,
and courier clearance under electronic mode are governed by Courier Imports and Exports (Electronic
Declaration and Processing) Regulations, 2010. The courier goods are cleared through a fast track
basis on observance of simple formalities by courier companies Examination of parcels is kept to the
minimum and clearance is allowed on the basis of selective scrutiny of documents. The duty, where
leviable, is paid by the courier company on behalf of importers/exporters before taking delivery of the
parcels.
The facility of imports and exports through courier mode is allowed to only to those courier companies
which are registered by the Customs. These courier companies are called "Authorized Couriers". The
courier parcels are normally carried by assenger/cargo aircrafts. In the case of clearance through
Land Customs Stations (LCS), other mode of transport is used. Both of them are allowed to file the
Courier Import Manifest.
At present, the facility of courier clearance under the manual mode is available at Customs airports in
Mumbai, Delhi, Chennai, Calcutta, Bangalore, Hyderabad, Ahmedabad, Jaipur, Trivandrum, Cochin,
Coimbatore and Land Customs Stations at Petrapole and Gojadanga. The courier clearances under
the electronic mode of Customs clearance will be soon made operational at Delhi and Mumbai
airports.
The scheme of Customs clearance of imports and exports by courier mode introduces certain
procedural relaxation. Such imports and exports shall, however, continue to be governed by the
applicable provisions of the FTP or any other law, for the time being in force.
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26) Categories of goods allowed import through courier:

Except for certain excluded categories, all goods are allowed to be imported through the courier
mode. The exclusion of certain categories of goods is upon the fact that these broadly require specific
conditions to be fulfilled under any other Act or rule or regulation such as testing of samples etc. on
reference to the relevant authorities or experts before their clearance. In these cases, due to
additional compliance requirements, the assessment and clearance takes time. These goods,
therefore, do not fit into the scheme, which envisages Customs clearance on a fast track basis.
Further, air terminals and LCS are not equipped to handle certain goods. Thus, in general the
following categories of goods are not allowed import through the courier mode:
(a) Precious and semi precious cargo;
(b) Animals and plants;
(c) Perishables;
(d) Publications containing maps depicting incorrect boundaries of India;
(e) Precious and semi precious stones, gold or silver in any form;
(f) Goods under Export Promotion Schemes including EOU scheme;
(g) Goods exceeding weight limit of 70 kgs. (individual packages) imported though courier under
manual mode. However, under the electronic mode, no such restriction regarding weight has been
provided.
Clearance of goods under EOU scheme is permitted under the electronic mode.
27) Categories of goods allowed export through courier:
As in the case of imports, all goods are allowed to be exported though courier except for the following
excluded categories:
(a) Goods attracting any duty on exports;
(b) Goods exported under export promotion schemes, such as Drawback, DEPB, DEEC, EPCG etc.;
(c) Goods where the value of the consignment is above Rs.25,000/- and transaction in foreign
exchange is involved (the limit of Rs.25,000/-does not apply where the G.R. waiver or specific
permission has been obtained from the RBI).
28) Import and export of gems and jewellery:
Import of gems and jewellery including samples thereof by EOUs or SEZ units is allowed through
courier. Likewise, export of cut and polished diamond, gems and jewellery under any scheme of FTP
from EOUs, SEZs or DTA is allowed through courier subject to the condition that the value of each
export consignment under such export does not exceed Rs.20 lakhs.
29) Import and Export through Post

Introduction:
1.1 The facility for import and export of goods by Post Parcels is provided by the Postal Department at
its Foreign Post Offices and sub-Foreign Post Offices. Customs facilities for examination, assessment,
clearance etc. are available at these Post Offices. Limited facility for export clearances is also
available at Export Extension Counters opened by the Postal Department where parcels for export are
accepted and cleared by the customs.
Legal provisions:
Goods imported through post are classified under Chapter Heading 9804 of the Customs Tariff Act,
1975 and rate of duty applicable thereon is charged on all the goods imported by post. Importantly,
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Heading 9804 specifically applies to goods permitted for import through post which are exempted from
prohibition under Foreign Trade (Development and Regulation) Act, 1992. As per Note 6 to Chapter
98, goods against an import licence or Customs Clearance Permit can also not be imported through
post. Further, Note 4 to Chapter 98 states that motor vehicles, alcoholic drinks and goods imported
through courier are not covered under Heading 9804.
Goods imported or exported by post are governed by Sections 82, 83 and 84 of the Customs Act,
1962 whereas the procedure for clearance of goods through post is prescribed in Rules regarding
Postal Parcels and Letter Packets from Foreign Ports In/Out of India of 1953. [Refer Notification No.
53-Cus., dated 17-6-1950] 2.3 In respect of import and exports through post, any label or declaration
accompanying the packet or parcel containing details like description, quantity and value of the goods
is treated as entry for import or export of the goods and no separate manifest for such goods is
required to be filed. 2.4 The relevant date for rate of duty and tariff value, if any, applicable in respect
of imports through post is the date on which the postal authorities present to the Proper Officer of
Customs the list containing details of the goods for assessment. Thus, presentation of said list is
equivalent to filing of Bill of Entry so far as
assessment of goods imported by post is concerned. 2.5 If the post parcels come through a vessel
and the said list presented by the postal authorities is presented before arrival of the vessel, the rate
of duty and tariff value applicable shall be as on the date of arrival of the vessel i.e. Entry Inward of the
vessel. 137
In respect of export goods, the relevant date for rate of duty and tariff value, if any, applicable, is the
date on which the exporter delivers the goods to postal authorities for exportation.
Clearance of Letter Mail Articles:
Letter Mail Articles are generally cleared by the Customs at the time of their arrival and sorting unless
they appear to contain contraband or dutiable articles. In such cases, the Letter Mail is subjected to
further examination at the Foreign Post Offices or sub- oreign Post Offices, as the case may be.
Importability of dutiable items through post:
Import of dutiable goods by letter, packet or parcel posts is prohibited except where such letter or
packet bears a declaration stating the nature, weight and value of the contents on the front side or if
such a declaration is attached alongside indicating that the letter/packet may be opened for Customs
examination. Dutiable goods may also be not imported by post if Customs is not satisfied that the
details of nature, weight and value of the contents in declaration as above are correctly stated. [Refer
Notification No.78-Cus., dated 2-4-1938]
Items intended for personal use, which are exempt from the prohibitions under the FTP or the
Customs Act, 1962, can be imported by postal channel on payment of appropriate duties under Tariff
Heading 9804 of the Customs Tariff Act, 1975. 4.3 In case the ustoms duty payable is not more than
Rs.100/-, the same is exempt. [Refer Notification No. 21/02-Cus., dated 1-3-2002]
Import of gifts through post:
Bonafide gifts up to a value limit of Rs.10,000/-, imported by post, are exempt from Basic and
Additional Customs duties vide Notification No.171/93-Cus., dated 16-9-1993. further, only those
items can be imported as gifts, which are not prohibited for mportation under Foreign Trade
(Development and Regulation) Act,1992.
The sender of the gift may not necessarily be residing in the country from where the goods have been
dispatched and any person abroad can send the gifts to relatives, business associates, friends,
companies and acquaintances. The gifts have to be for bonafide personal use. The purpose of this
stipulation is that the person receives the gift genuinely free and the payment is not made for it
through some other means. The quantity and frequency of the gifts should not give rise to the belief
239 | P a g e
that it is used as a route to transfer money. The gifts can be received by individuals, societies,
institutions, like schools and colleges and even corporate bodies.
For calculating the value limit of Rs.10,000/- in case of imports of gifts, postalcharges or the airfreight
is not taken into consideration. The value of Rs.10,000/- is taken as the value of the goods in the
country from where these were dispatched. 5.4 If the value of the gifts received is more than
Rs.10,000/-, the receiver has to pay Customs duty on the whole consignment, even if the goods were
received free, unsolicited. In addition, at the discretion of the Assistant/ Deputy Commissioner, if the
goods are restricted for import, the receiver has a liability for penalty for such import, even if the goods
have been sent unsolicited. The restricted goods are also liable to confiscation and receiver has to
pay redemption fine in lieu of confiscation in addition to duty and penalty. Certain prohibited goods like
narcotic drugs, arms, ammunition, obscene films/printed material etc. are liable to absolute
confiscation and the receiver is liable to penal action, even if the goods have been sent unsolicited.
Customs duty is chargeable on gifts assessed over Rs.10,000/- by the Customs. In case of post
parcel, the customs department assesses the duty payable and the postal department collects the
assessed duty from the receiver of the gift and subsequently deposits it with the customs.
Import of samples through post:
Bonafide commercial samples and prototypes imported by post are exempted from Customs duty,
subject to the value limit of Rs.10,000/-, provided that the samples are supplied free of cost.
Importers having IEC code number can import commercial samples through post without payment of
duty upto a value of Rs.100,000/- or 15 units in number within a period of 12 months. The goods so
imported shall be clearly marked as Samples. The importer is required to furnish a declaration to the
effect that the samples are solely for the purpose of being shown to the exporters for securing or
executing export orders. The importer is also required to undertake that if declaration is found to be
false, he will pay appropriate duty on the goods imported as commercial samples. [Refer Notification
No.154/94-Cus., dated 13-7-1994]
Import of Indian and Foreign Currencies by post:
Under the provisions of Foreign Exchange Management Act, 1999, no person may bring or send into
India any foreign exchange or Indian currency except with special or general permission of the RBI.
Import of Indian currency notes and coins by post is not permitted.
To reduce pendency and to avoid delay in clearance of mail articles, Customs may allow import of
both Indian and foreign currencies received by residents by post, provided the value does not exceed
Rs.5,000/-, subject to the following conditions Approval is granted by Assistant/ Deputy Commissioner
of Customs;
(b) A detailed record should be maintained of the exemptions granted;
(c) Record of the name and addresses of the remitter and addressee in India should be maintained;
and
(d) Where a spurt is noticed in the number of covers received over a time, the matter may be reported
to the concerned Regional Office of RBI.
Parcels/packets containing foreign/Indian currency, etc., in excess of Rs.5,000/- shall be detained and
adjudicated on merits and released on the basis of No Objection Certificate from the RBI. [Refer
Circular No.16/2002-Cus, dated 5-3-2002]
There is a general permission given to Authorised Dealers to import currency notes from their
overseas branches/correspondents for meeting their normal banking requirements. In view of this, no
specific clearance is required from RBI for such imports.
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[Refer Circular No.60/02-Cus., dated 13-9-2002 read with Annexure V to RBIs AD (MA
Series) Circular No.11, dated 16-5-2000]
Procedure in case of postal imports:
Rules Regarding Postal Parcels and Letter Packets from Foreign Ports in/out of India prescribe
procedure for landing and clearing at notified ports/airports/LCSs of parcels and packets forwarded by
foreign mails or passenger vessels or airliners. The procedure broadly is as under:
(a) The boxes or bags containing the parcels shall be labeled as Postal Parcel,
Parcel Post, Parcel Mail, Letter Mail and will be allowed to pass at specified the Foreign Parcel
Department of the Foreign Post Offices and Sub Foreign Post Offices.
(b) On receipt of the parcel mail, the Postmaster hands over to the Customs the following documents:
(i) A memo showing the total number of parcels received from each country of origin;
(ii) Parcel Bills in sheet form (in triplicate) and the senders declarations (if available) and any other
relevant documents that may be required for the examination, assessment etc. by the Customs
Department;
(iii) The relative Customs Declarations and dispatch notes (if any); and
(iv) Any other information required in connection with the preparation of the Parcel Bills which the Post
Office is able to furnish. On receipt of the documents, the Customs Appraiser shall scrutinize the
particulars given in the Parcel Bill and identify the parcels to be detained for examination either for
want of necessary particulars or defective description or suspected misdeclaration or under-valuation
of contents. The remaining
parcels are to be assessed by showing the rates of duty on the declarations or Parcel Bill, as the case
may be. For this purpose, the Appraisers are generally guided by the particulars given in the Parcel
Bill or Customs declarations and dispatch notes (if any). When any invoice, document or information is
required to ascertain the real value, quantity or description of the contents of a parcel, the addressee
may be called upon by way of a notice to produce or furnish such invoice, document and information.
(d) Whenever necessary, the values from the declarations are entered into the Parcel Bill and after
conversion into Indian Currency at the ruling rates of exchange, the amount of duty is calculated and
entered. The relevant copies of Parcel Bills with the declarations so completed are then returned to
the Postmaster.
(e) Duty is calculated at the rate and valuation in force on the date that the postal authorities present a
list of such goods to the Customs. In case the parcels are brought through a vessel and postal
authorities present list of goods before arrival of the vessel, the rate of duty and tariff value shall be
the date on which Inward Entry is granted to the vessel.
(f) All parcels marked for detention are to be detained by the Postmaster. Rest of
the parcels will go forward for delivery to the addressee on payment of the duty marked on each
parcel.
(g) The detained parcels are submitted together with the Parcel Bill to the Customs. After examining
them and filling in details of contents of value in the Parcel Bills, Customs Appraiser notes down the
rate and amount of duty against each item. The remark Examined is then entered against the entry
in the Parcel Bill relating to each parcel examined by the Customs Appraiser and the Postmasters
copies will be returned by the Customs.
(h) In the case of receipt of letter mail bags, the Postmaster gets the bags opened and scrutinized
under the supervision of the Customs with a view to identify all packets containing dutiable articles.
Such packets are to be detained and presented in due course to the Customs Appraiser with letter
mail bill and assessment memos for assessment. After examining them and filling the details of
contents of value in the bill, the Customs Appraiser will note the rate and amount of duty against each
item. He will likewise fill in these details on the assessment memos to be forwarded along with each
packet.
(i) All parcels or packets required to be opened for Customs examination are opened, and after
examination, closed by the Post Office officials and are then sealed with a distinctive seal. The parcels
or packets shall remain throughout in the custody of the Post Office officials. If on examination the
contents of any parcel or packet are found misdeclared or the value understated or consisting of
prohibited goods, such parcels or
packets must be detained. The Postmaster shall not allow such parcels or packets to go forward
241 | P a g e
without the Customs orders. Adjudication proceedings shall be initiated in such cases by the
competent officer and the parcels released only after payment of fine and penalty, if any, levied by the
adjudicator.
(k) The duties as assessed by the Customs Appraiser and noted in the Parcel Bill or letter mail bill
shall be recovered by the Post Office from the addressees at the time of delivery to them. The credit
for the total amount of duty certified by the Customs Appraiser at the end of each bill is given by the
Post Office to the Customs Department in accordance with the procedure settled between the two
Departments.
(l) The Parcel Bills or letter mail bills and other documents on which assessment is made remain in the
custody of the Post Office, but the duplicates, where prepared, are kept in the Customs Department
for dealing with claims for refunds, etc.
Legal provisions and exemptions in case of postal exports:

Goods which are not prohibited or restricted for export as per FTP can be exported by post through
specified Foreign Post Offices or Sub-Foreign Post Offices or Export Extension Counters. The goods
under claim of Drawback can also be exported through post but not under other export promotion
schemes like DEPB, Advance Licence, DFRC, EPCG etc. Commercial samples, prototypes of goods
and free gifts may also be exported by the post.
The rate of duty and tariff value, if any, applicable to any goods exported by post shall be the rate and
valuation in force on the date on which the exporter delivers such goods to the Postal Authorities for
exportation.
Bonafide commercial samples and prototype of goods supplied free of charge of a value not
exceeding Rs.50,000/- which are not subject to any prohibition or restriction for export under FTP and
which do not involve transfer of foreign exchange, may be exported through post.
Bonafide gifts of articles for personal use of a value not exceeding Rs.25,000/- which are not subject
to any prohibition or restriction on their export under FTP and which do not involve transfer of foreign
exchange, may be exported through post. 9.5 Export by post of Indian and foreign currency, bank
drafts, cheques, National Saving Certificates and such other negotiable instruments is not allowed
unless accompanied by a valid permit issued by the RBI, except in cases where such negotiable
instruments are issued by an authorised dealer in foreign exchange in India.
Indian currency notes of Rs.500/- and Rs.1000/- denominations are prohibited by Government of
Nepal. Therefore, the Indian currency notes of Rs.500/- and Rs.1000/- denominations shall not be
allowed for export to Nepal.
Prohibitions/restrictions under the FTP and the Customs Act, 1962 apply on the export of various
articles by post. Some of these articles are viz. arms and ammunitions, explosives, inflammable
material, intoxicants, obscene literature, certain crude and dangerous drugs, antiquities, narcotic
drugs etc.
Export of purchases made by the foreign tourists is allowed through post subject to proof that the
payment has been made in foreign exchange.
30) Procedure in case of postal exports:
Articles exported by post are required to be covered by a declaration in the
prescribed form.
All exports by post, where the value exceeds Rs.50/- and payment has to be received, must be
242 | P a g e
declared on the exchange control form viz. P.P. form. When the postal article is overed by a certificate
issued by the RBI (with or without limit) or by an authorised dealer in foreign exchange that the export
does not involve any transaction in foreign exchange upto Rs. 500/-, the declaration in a P.P. form is
not necessary.
The letters and parcels are produced by the postal authorities to Customs officer in the Foreign Post
Office. After preliminary scrutiny of the letters and declarations the proper officer shall ensure that
prohibited goods like narcotic drugs, foreign exchange, currency etc. is not being sent through the
parcel. The suspected parcels are detained and other letters/parcels are handed over to the postal
authorities for sending to their destination.
10.4 The detained parcels are opened by Customs officer in presence of the postal
authorities and if same do not contain any prohibited or restricted goods and there is
no mis-declaration of value or drawback, the parcels are re-packed and handed over to postal
authorities for export.
If the detained parcels contain restricted or prohibited goods or mis-declared goods with intention to
avail inadmissible export benefits, the case is investigated and adjudication proceedings are initiated.
31) Procedure for claiming Drawback on exports through post:
The procedure for claiming Drawback through post is prescribed in Rule 11 of Customs and Central
Excise Duties Drawback Rules, 1995. The outer packing of the consignment shall be labeled
Drawback Export and the exporter shall deliver to postal authorities a claim in Annexure I to said
Rules in quadruplicate. The date o receipt of aforesaid claim to proper officer of Customs shall be the
relevant date for filing of claim for the purpose of Section 75A of the Customs Act, 1962.
In case the claim is incomplete, a deficiency memo shall be issued within 15 days and if exporter
complies with the deficiencies within 30 days, an acknowledgement shall be issued. The date of issue
of acknowledgement shall be taken as date of filing the claim for the purpose of Section 75A of the
Customs Act, 1962.
Drawback in respect of exports through post is sanctioned in the Foreign Post Office itself.
32) Drawback in respect of goods re-exported through post:
The goods imported on payment of duty may also be re-exported through post and applicable rate of
Drawback under Section 74 of the Customs Act, 1962 claimed. The Drawback of the duty paid at the
time of import is permissible subject to the fulfillment of the conditions of Section 74 of the Customs
Act, 1962 and Reexport of Imported Goods (Drawback of Customs Duties) Rules, 1995. The Proper
Officer of Customs at Foreign Post Office shall be satisfied about the identity of the goods being reexported and if the same cannot be established, no Drawback would be payable.
The procedure to be followed for claim of Drawback on goods re-exported through post is as follows:
(i) Rule 3 of Re-export of Imported Goods (Drawback of Customs Duties) Rules, 1995 requires the
outer packing of the parcel to carry the words Drawback Export and exporter shall give a claim as
per Annexure I to said Rules in quadruplicate to the Postal authorities. The date of receipt of aforesaid
Annexure I by Customs from Postal authorities shall be the date of receipt of the claim for the
purposes of Section 74 of the Customs Act, 1962 and exporter shall be informed.
(ii) If claim is incomplete, a deficiency memo shall be issued within 15 days and if claim is again filed
by exporter after complying with the deficiencies within 30 days, the receipt shall be acknowledged
and this date shall be treated as date of filing the claim for the purposes of Section 74 of the Customs
Act, 1962.
(iii) Drawback under Section 74 of the Customs Act, 1962 is paid by the Customs Officer in Foreign
Post Office.
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33) Re-export of partial consignment:

If the addressee takes delivery of parcels on payment of duty and then wishes
to return to the sender, they can do so only under claim for Drawback after observing
the prescribed procedure 13.2 Permitting an addressee to open a parcel and take the delivery of part
contents on payment of duty and repack the balance of the contents for re-export without payment of
duty thereon is not authorised and is irregular.
CHAPTER 30
BAGGAGE RULES AT A GLANCE
CLEARANCE OF INCOMING PASSENGERS (GREEN AND
Baggage (Baggage (Amendment) Rules, 2006 (Baggage Rule, 1998)- (Baggage Rules, 1998) [
Notification No. 30/98-Cus. (N.T.), dated 2-6-1998 amended vide Notification No. 76/2006 - Customs
(N.T.) dated 30/06/2006; Notification No. 30/2005 - Customs (N.T.) dated04/04/2005; Notification No.
05/2004 - Customs (N.T.) dated 08/01/2004; Notification No. 13/2004 - Customs (N.T.) dated
03/02/2004; Notification No. 11/2002 - Customs (N.T.) dated 01/03/2002; Notification No. 50/2000 Customs (N.T.) dated 09/08/2000; Notification no. 29/1999-Cus (N.T.) dated 11-05-1999) ]
RED)
CLEARANCE OF INCOMING PASSENGERS (GREEN AND RED CHANNELS)
For the purpose of Customs clearance of arriving passengers, a two channel
system has been adopted
(i) Green Channel for passengers not having any dutiable goods.
(ii) Red Channel for passengers having dutiable goods.
However,
(i)
All the passengers shall ensure to file correct declaration of their baggage.
(ii)
Green channel passengers must deposit the customs portion of the

disembarkation card to the custom official at the gate before leaving the terminal.
(iii)
Declaration of foreign exchange/currency has be made before the custom

officers in the following cases :
(a) where the value of foreign currency notes exceed US $ 5000 or equivalent
(b)
where the aggregate value of foreign exchange including currency exceeds

US $ 10,000 or equivalent
- Passengers walking through the Green Channel with dutiable / prohibited

goods are liable to prosecution/penalty and confiscation of goods.
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- Trafficking of Narcotics and Psychotropic substances is a serious offence

and is punishable with imprisonment.
DUTY FREE ALLOWANCES AND ENTITLEMENTS FOR INDIAN RESIDENTS AND FOREIGNERS RESIDING IN
INDIA
A Resident means a person holding a valid passport issued under the

Passports Act, 1967 and normally residing in India
I.
For passengers coming from countries other than
(a) Nepal, Bhutan, Myanmar, Hongkong or China.
(b) Pakistan by Land Route
Duty Free allowance for bonafide baggage consisting of
For passengers of age
10 years and below 10 years

above
(i)
Used personal effects (excluding jewellery) required for satisfying

daily necessities of life
Free
Free
(ii)
Other articles carried in person or in accompanied baggage

(a) if Stay abroad for more than three days
Valued upto
Rs.25000/-
Valued upto
Rs.6,000/-
(b) if Stay abroad upto three days
Valued upto
Rs.12000/-
Valued upto
Rs.3000/-
Note - Budget proposal 2012 Duty Free baggage allowance has been increased from
Rs. 25,000 to 35,000.00. Baggage allowance for Indians travelling abroad was last
revised in 2004. This budget it is d proposed to increase the duty-free allowance for
eligible passengers of Indian origin from Rs. 25,000 to Rs.35, 000.00 and for children of
up to 10 years from Rs. 12,000 to Rs. 15,000.00
ote:
245 | P a g e
1. The free allowance shall not be pooled with the free allowance of any other
passenger.
2. The free allowance is not applicable to the following goods:
1.
Fire arms.
2.
Cartridges of fire arms exceeding 50.
3.
Cigarettes exceeding 200 or cigars exceeding 50 or tobacco

exceeding 250 gms.
4.
Alcoholic liquor or wines in excess of 2 litres.
5.
Gold or silver, in any form, other than ornaments.
3. One laptop computer (notebook computer) over and above the said free
allowances mentioned above is also allowed duty free if imported by any
passenger of the age of 18 years and above
4. The goods over and above the free allowances shall be chargeable to
customs duty @ 35% + an education cess of 3% i.e. to say the effective rate
is 36.05%.
5. Alcoholic drinks and tobacco products imported in excess of free allowance
are chargeable to custom duty at the rates applicable to their commercial
imports as per the Customs tariff Act.
6. Import of Indian currency is prohibited. However, in the case of passengers
normally resident of India who are returning from a visit abroad Indian
currency upto Rs. 7500 is allowed.
7. Incase the value of one item exceeds the duty free allowance, the duty shall
be calculated only on the excess of such amount.
II. For passengers coming from
(i)
Nepal, Bhutan, Myanmar, Hongkong or China, other than by land route
(ii)
Pakistan by land route
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Duty Free allowance for bonafide baggage consisting of
10 years and above

(i)
Used personal effects (excluding jewellery) required for

satisfying daily necessities of life
(ii)
Other articles carried in person or in accompanied baggage

(a) Stay abroad for more than three days
(b) Stay abroad upto three days
below 10 years
Free
Free
Valued upto
Rs.6000/-
Valued upto
Rs.1500/-
Nil
Nil
Note: 1. The free allowance shall not be allowed to be pooled with the free
allowance of any other passenger.
2. The free allowance is not applicable to the following goods:
a)
Fire arms.
b)
c)
Cigarettes exceeding 200 or cigars exceeding 50 or tobacco exceeding

250 gms.
d)
Alcoholic liquor and wines in excess of 2 litre each.
e)
3. One laptop computer (notebook computer) over and above the said free
allowances mentioned above is also allowed duty free if imported by any
passenger of the age of 18 years and above
4.
The goods over and above the free allowances shall be chargeable to
customs duty @ 35% + an education cess of 3% i.e. to say the effective
rate is 36.05%.
5.
Alcoholic drinks and tobacco products imported in excess of free allowance

are chargeable to custom duty at the rates applicable to their commercial
imports.
6.
Import of Indian currency is prohibited. However, in the case of passengers

normally resident of India who are returning from a visit abroad Indian
247 | P a g e
currency upto Rs. 7500 is allowed.

7.
Incase the value of one item exceeds the duty free allowance, the duty
shall be calculated only on the excess of such amount.
III.
For passengers coming from Nepal, Bhutan, Myanmar or China by Land
Route
Duty Free allowance
consisting of
(i)
for
bonafide
baggage
Used personal effects (excluding jewelry)

required for satisfying daily necessities of
life
(ii)
10 years and
above
below 10 years
Free
Free
Nil
Nil
Other articles carried in person or in

accompanied baggage
SPECIAL ALLOWANCES FOR PROFESSIONALS RETURNING TO INDIA
An Indian passenger who was engaged in his profession abroad shall on his
return to India be allowed clearance free of duty, in addition to the aforesaid
allowances, articles in his bonafide baggage to the extent as mentioned below:(a)
Indian passenger returning after

atleast 3 months
(i) Used household articles (such as linen, utensils,

tableware, kitchen, appliances and an iron) upto an
aggregate value of Rs.12000/(ii) Professional equipment upto a value of
Rs.20,000/-
248 | P a g e
(b)
Indian passenger returning after at

least 6 months
(i) Used household articles (such as linen, utensils,

tableware, kitchen, appliances and an iron) an
aggregate value of Rs.12000/(ii) Professional equipment upto a value of
Rs.40,000/-
(c)
Indian passenger returning after a

stay of a minimum of 365 days
during the preceding two years on
termination of his work and who has
not availed this concession in the
preceding three years.
Used household articles and personal effects

(which have been in the possession and use
abroad of the passenger or his family for at least six
months) and which are not mentioned in Annex.I ,
Annex. II & Annex. III upto an aggregate value of
Rs.75,000/-
Notes: For the purposes of baggage rules Professional Equipment means:
Such portable equipments, instruments, apparatus and appliances as are

ordinarily required in the profession in which the returning passenger was
engaged. This expression includes items used by carpenters, plumbers, welders,
masons and the like. This concession is not available for items of common use
such as Cameras, Cassette Recorders, Dictaphones, Typewriters, Personal
Computers and similar items.
Annexure I
1. Fire arms.
2. Cartridges of fire arms exceeding 50.
3.
Cigarettes exceeding 200 or cigars exceeding 50 or

tobacco exceeding 250 gms.
4. Alcoholic liquor or wines in excess of 2 litres.

5. Gold or silver, in any form, other than ornaments.
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Annexure II
1.
Colour Television or Monochrome Television.
2.
Digital Video Disc Player.
3.
Video Home Theatre System.
4.
Dish Washer.
5.
Music System.
6.
Air Conditioner.
7.
Domestic refrigerators of capacity above 300 litres or its

equivalent.
8.
Deep Freezer.
9.
Microwave Oven.
10. Video camera or the combination of any such video

camera with one or more of the following goods,
namely:(a) Television Receiver;
(b) Sound recording or reproducing apparatus;
(c) Video reproducing apparatus.
11. Word Processing Machine.
12. Fax Machine.
13. Portable Photocopying Machine.
14. Vessel.
15. Aircraft.
16. Cinematographic films of 35 mm and above.
17. Gold or Silver, in any form, other than ornaments.
Annexure III
1.
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VCR or VCP or VTR or VCDP.
2.
Washing Machine
3.
Electrical or LPG Cooking Range
4.
Personal Computer (Desktop Computer)
5.
Lap Top Computer (Notebook Computer)
6.
Domestic Refrigerator upto 300 Ltr. Capacity or its equivalent.
DUTY FREE ALLOWANCES AND ENTITLEMENTS FOR TOURISTS
WHO IS A TOURIST?
A tourist is a passenger
a) who is not normally a resident in India;
b) who enters India for a stay of not more than six months in the course of
any twelve months period for legitimate non-immigrant purposes, such as :
touring, recreation, sports, health, family reasons, study, religious pilgrimage,
or business;
A tourist arriving in India shall be allowed clearance free of duty articles in his
bonafide baggage to the extent as mentioned below:-
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Articles allowed free of duty

I
Tourists of Indian origin other than (i)Used personal effects and travel souvenirs, if those coming from Pakistan by
land route
(a) These goods are for personal use of the tourist,
and
(b) These goods, other than those consumed during
the stay in India, are re-exported when the tourist
leaves India for a foreign destination.
(ii) duty free allowances applicable to Indian
Residents.
II
Tourists of foreign origin other

than those of Nepalese origin
coming from Nepal or of
Bhutanese origin coming from
Bhutan or of Pakistani origin
coming from Pakistan.
(i) Used personal effects and travel souvenirs, if

and
(ii) Articles upto a value of Rs-8000/- for making gifts.
III
Tourists of Nepalese origin

coming from Nepal or of
Bhutanese origin coming from
Bhutan.
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No free allowance.
IV
Tourists of Pakistani origin or

foreign tourists coming from
Pakistan or tourists of Indian
origin coming from Pakistan by
land route
(i) Used personal effects and travel souvenirs, if

and
(ii) Articles upto a value of Rs-6000 for making gifts.
DUTY FREE ALLOWANCES AND ENTITLEMENTS FOR PERSONS TRANSFERRING

RESIDENCE
I.
A person who is transferring his residence to India shall be allowed

clearance free of duty, in addition to allowances applicable to Indian
residents or foreigners residing in India or to passengers returning from
Nepal, Bhutan, Myanmar or China, other than by land route articles in
bonafide baggage to the extent and subject to conditions as mentioned
below :
Articles allowed Free of Duty
Conditions
Relaxation that may be

considered
(a) Used personal and household

articles other than those listed at
Annex I or Annex II, but including (the
articles listed at Annexure-III and)
Jewellery upto Rs. 10000 by a
gentleman passenger or Rs. 20000 for
a lady passenger
(1) Minimum stay of two

years abroad, immediately
preceding the date of his
arrival on transfer of
residence
(a) For condition (1) Shortfall of

upto 2 months in stay abroad can
be condoned by Deputy /
Assistant Commissioner of
Customs if the early return is on
account of (i) terminal leave or vacation
being availed of by the
passenger, or
(ii) any other special
circumstances.
(2) Total stay in India on

short visits during the 2
preceding years should not
exceed 6 months, and
(3) Passenger has not
availed this concession in
the preceding three years.
(b) For condition (2)

Commissioner of Customs may
condone short visits in excess of
6 months in deserving cases.
(c) For condition (3) No
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relaxation.
(b) Jewellery taken out earlier by the

passenger or by a member of his
family from India.
Satisfaction of the Assistant

Commissioner of Customs
regarding the jewellery
having been taken out
earlier from India.
Annexure I
1. Fire arms.
2.
3.
Cigarettes exceeding 200 or cigars exceeding 50 or tobacco exceeding 250 gms.
4.
Alcoholic liquor or wines in excess of 2 litres.
5.
Annexure II
1.
Colour Television or Monochrome Television.
2.
Digital Video Disc Player.
3.
Video Home Theatre System.
4.
Dish Washer.
5.
Music System.
6.
Air Conditioner.
7.
Domestic refrigerators of capacity above 300 litres or its equivalent .
8.
Deep Freezer.
254 | P a g e
9.
Microwave Oven.
10. Video camera or the combination of any such video camera with one or more of
the following goods, namely:(a) Television Receiver;
(b) Sound recording or reproducing apparatus;
(c) Video reproducing apparatus.
11. Word Processing Machine.
12. Fax Machine.
13. Portable Photocopying Machine.
14. Vessel.
15. Aircraft.
16. Cinematographic films of 35 mm and above.
17. Gold or Silver , in any form , other than ornaments.
Annexure III
1.
Video Cassette Recorder or Video Cassette Player or Video Television Receiver

or Video Cassette Disk Player.
2.
Washing Machine.
3.
Electrical or Liquefied Petroleum Gas Cooking Range
4.
Personal Computer( Desktop Computer)
5.
Laptop Computer( Notebook Computer)
6.
Domestic Refrigerators of capacity up to 300 litres or its equivalent.
II.
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Rate of duty applicable on transfer of residence :-
Concessional rate of duty is applicable to the following categories of persons

transferring their residence to India:
(a)
any person holding a valid passport under the passport act 1967 and
returning to India after having stayed abroad for atleast 365 days during the two
years immediately preceding the date of arrival in India.
(b)
any person on bonafide transfer of residence to India
Such persons shall be allowed

(i)
clearance of items listed in Annexure-II, whether old or new, at a

concessional rate of duty of 15% ad valorem + 3% educational cess.
(ii)
clearance of items listed in Annexure-III free of duty
Subject to the conditions that
In case of (a) above:

i)
Such person has been working abroad and is returning to India on

termination of such work after having stayed abroad for at least 365 days
during the two years immediately preceding the date of arrival in India;
ii)
Such person affirms by a declaration that the goods have been in his
possession abroad or, the goods are purchased by such person at the
time of his arrival, but before clearance from customs, from the duty free
shop located in the arrival hall of the International airports;
iii)
The goods (other than those purchased from the duty free shops at the
time of arrival of such passenger) not accompanying such passenger
were shipped or dispatched or arrived within the time limits specified in
the Baggage Rules, 1998; and
iv)
in respect of such goods not more than one unit shall be permissible to
such person and the total aggregate of value of such goods including
other goods imported free of duty by him under Rule 5 of the Baggage
Rules, 1998, shall not exceed rupees seventy five thousand.
In case of (b) above:

i)
Such person has been residing abroad for a minimum period of two years
immediately preceding the transfer of residence and has not availed this
concession in the preceding three years;
ii)
Such persons affirms by a declaration that the goods have been in his
possession abroad or, the goods are purchased by such person at the
256 | P a g e
time of his arrival, but before clearance from customs, from the duty free
shop located in the arrival hall of the International airport;
iii)
The goods (other than those purchased from the duty free shops at the
time of arrival of such passenger) not accompanying such passenger
were shipped or dispatched or arrived within the time limits specified in
the Baggage Rules, 1998;
iv)
Not more than one unit of each item of such goods shall be permissible
per family and the person claiming the benefit shall affirm by a
declaration that no other member of the family had availed of or would
avail of such benefit in respect of that item; and
v)
The total aggregate value of such goods shall not exceed rupees five lakhs.
Note: Transfer of residence entitlements are applicable to returning Indians as

well as Foreigners transferring their residence to India subject to the fulfillment of
prescribed eligibility conditions
IMPORT OF PROFESSIONAL EQUIPMENT AS BAGGAGE
Professional Equipment is permitted to be imported to the following persons to
the extent indicated below:
a. Indian Passengers returning after a stay abroad of atleast 3 months : upto a
value of Rs. 20000
b. Indian Passengers returning after a stay of atleast 6 months : upto a value
of Rs. 40000
For the purposes of baggage rules Professional Equipment means:
Such portable equipment, instruments, apparatus and appliances as are

ordinarily required in the profession in which the returning passenger was
engaged. This expression includes items used by carpenters, plumbers, welders,
masons and the like; This concession is not available for items of common use
such as Cameras, Cassette Recorders, Dictaphones, Typewriters, Personal
Computers and similar items.
IMPORT OF JEWELLERY
As per Budget 2013, an Indian passenger who has been residing abroad for over
257 | P a g e
one year is allowed to bring jewellery, free of duty in his bonafide baggage upto
an aggregate value of Rs. 50,000 (in the case of a male passenger) or
Rs.100,000 (in the case of a lady passenger)
IMPORT OF ALCOHOLIC DRINKS/ CIGARETTES AS BAGGAGE
Following quantities of Alcoholic drinks and Tobacco products may be included

for import within the duty free allowances admissible to various categories of
incoming passengers :
-
Alcoholic liquors or Wines upto 2 litres
200 Cigarettes or 50 Cigars or 250 gms. Tobacco.
The rate of duty applicable on these products over and above the above
mentioned free allowance is as under :
(i)
Cigarettes
BCD @100%+ educational cess @ 3% .
(ii)
Whisky
BCD @150% + ACD @ 4% + education cess @3%
(iii)
Wines and Beer *
BCD @100% + ACD NIL+ 3% education cess
IMPORT OF GOLD AS BAGGAGE
Who can import gold as baggage?

Any passenger of Indian Origin or a passenger holding a valid passport, issued
under the Passport Act, 1967, who is coming to India after a period of not less
than six months of stay abroad; and short visits, if any, made by the passenger
during the aforesaid period of six months shall be ignored if the total duration of
stay on such visits does not exceed thirty days.
258 | P a g e
Other Conditions
(i)
The duty shall be paid in convertible foreign currency.
(ii)
The weight of gold (including ornaments) should not exceed 10 kgs. per
passenger.
(iii)
The passenger should not have brought gold or other ornaments during
any of his visits (short visits) in the last six months i.e. he has not availed
of the exemption under this scheme, at the time of short visits.
(iv)
Ornaments studded with stones and pearls are not allowed to be

imported.
(v)
The passenger can either bring the gold himself at the time of arrival or
import the same within fifteen days of his arrival in India as
unaccompanied baggage.
(vi)
The passenger can also obtain the permitted quantity of gold from
Customs bonded warehouse of State Bank of India and Metals and
Minerals Trading Corporation subject to conditions (i) and (ii)above. He is
required to file a declaration in the prescribed Form before the Customs
Officer at the time of arrival in India stating his intention to obtain the gold
from the Customs bonded warehouse and pay the duty before clearance.
Note:- The Jewellery which is in addition to the jewellery otherwise allowed

without payment of duty, only is liable to payment of duty under the above
mentioned scheme of import of gold
IMPORT OF FOREIGN EXCHANGE/CURRENCY
Any person can bring into India from a place outside India foreign exchange
without any limit. However, declaration of foreign exchange/currency is required
to be made in the prescribed Currency Declaration Form in the following cases:-
(a) Where the value of foreign currency notes exceeds US$ 5000/- or equivalent
(b) Where the aggregate value of foreign exchange (in the form of currency
notes, bank notes, traveler cheques etc.) exceeds US$ 10,000/- orits
equivalent
259 | P a g e
IMPORT OF INDIAN CURRENCY
Import of Indian Currency is prohibited. However, in the case of passengers

normally resident in India who are returning from a visit abroad, import of Indian
Currency upto Rs. 7500 is allowed.
IMPORT OF FIRE ARMS
Import of firearms is strictly prohibited.
Import of Cartridges in excess of 50 is also prohibited.
However, in the case of persons transferring their residence (as per

conditions specified in the rules) to India for a minimum period of one year,
one firearm of permissible bore can be allowed to be imported subject to the
conditions that:
1) the same was in possession and use abroad by the passenger for a
minimum period of one year and also subject to the condition that such
firearm, after clearance, shall not be sold, loaned, transferred or otherwise
parted with, for consideration or otherwise, during the lifetime of such person;
2) the passenger has a valid arms licence from the local (Indian) authorities;
3) the customs and other duties as applicable shall be paid.
IMPORT OF PET ANIMALS

Domestic pets like dogs, cats, birds etc. are permitted to be imported. Import of
pets (dog and cat only) upto two numbers per passenger are allowed at one time
subject to production of required health certificate from country of origin and
260 | P a g e
examination of the said pets by the concerned quarantine officer.

Imports of pets over and above this quantity shall be allowed only against an
Import sanitary permit issued by the department of animal husbandry and
dairying or against an import licence issued by the DGFT.
IMPORT OF BAGGAGE OF DECEASED PERSON
Used, bonafide personal and household effects belonging to a deceased person

are allowed to be imported free of duty subject to the condition that a Certificate
from the concerned Indian mission (Embassy / High Commission) is produced at
the time of clearance regarding the ownership of the goods by the deceased
person.
IMPORT OF UNACCOMPANIED BAGGAGE

The passengers can also send their baggage through cargo which is
treated as unaccompanied baggage. However, no free allowance is admissible in
case of unaccompanied baggage which is chargeable to Customs duty @ 35%
Ad valorem + 3% Education Cess and only used personal effects
can be
imported free of duty.
1. Provisions of Baggage Rules are also extended to unaccompanied baggage
except where they have been specifically excluded.
2. The unaccompanied baggage should be in the possession abroad of the
passenger and shall be dispatched within one month of his arrival in India or
within such further period as the Deputy / Assistant Commissioner of
Customs may allow.
3. The unaccompanied baggage may land in India upto two months before the
arrival of the passenger or within such period, not exceeding one year as
the Deputy / Assistant Commissioner of Customs may allow, for reasons to
be recorded, if he is satisfied that the passenger was prevented from
arriving in India within the period of two months due to circumstances
beyond his control, such as sudden illness of the passenger or a member of
his family, or natural calamities or disturbed conditions or disruption of the
transport or travel arrangements in the country or countries concerned on
any other reasons, which necessitated a change in the travel schedule of
the passenger.
4.
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All the unaccompanied baggage is chargeable to customs duty @ 35%

advalorem + education cess @ 3%.
RATE OF DUTY (subject to changes)
1.
Generally items imported as baggage are subjected to a uniform rate of duty

for ease of assessment
2.
The general rate of duty for items imported in excess of the permissible free
allowance is 35% advalorem + educational cess @ 3% i.e. to say that
effective rate of duty is 36.05%.
3.
The rate of duty applicable to items in Annexure II imported by passengers

transferring their residence or returning to India after a stay of 365 days
abroad in the preceding two years is 15% + educational cess @ 3%
4.
Alcoholic drinks and Tobacco products imported in excess of the free

allowance are charged to duty at the rates applicable to their commercial
imports. These rates for some of the items are as follows:-
5.
(i)
Cigarettes
BCD @100%+ educational cess @

3%
(ii)
Whisky
BCD @150% + ACD @ 4% + 3%

education cess on BCD & ACD
(iii)
Wines and
Beer *
BCD @100% + ACD NIL+ 3%

education cess on BCD
Silver is charged to a duty of Rs. 1500 per Kg.+ 3% Education Cess for
passengers importing silver under the prescribed scheme
6. Gold is charged to following rate of duty for passengers importing gold under
the prescribed scheme
Note: Incase the value of one item exceeds the duty free allowance, the duty
shall be calculated only on the excess of such amount.
262 | P a g e
DETAINED BAGGAGE
A passenger may request the Customs to detain his baggage either for
re-export at the time of his departure from India or for clearance subsequently on
payment of duty.
The detained baggage would be examined and full details will be inventorised.
Such baggage are kept in the custody of the customs.
MISHANDLED BAGGAGE
In case the baggage has been lost or mishandled by the Airlines, a
simplified procedure is in place for clearance of such baggage which allows the
passenger to have delivery of his baggage at his door step by the Airlines.
There is no need to handover the passport or the keys of the baggage.
The passenger is merely required to complete the Custom declaration form
authorizing the Airline to complete the formalities when the baggage arrives. The
passenger is required to obtain a certificate to that effect from the airlines and get
it countersigned by Customs indicating specifically the unutilized portion of the
free allowance. This would enable the passenger to avail the unutilised portion of
the duty free allowance when his baggage is delivered by the airlines.
The passenger is required to submit all these documents with the
concerned airlines for clearance and delivery of goods on his behalf.
AIRLINE CREW
Crewmembers are required to submit the correct declaration before
Custom authorities with respect to the currency gold ornaments and electronic
goods etc. in their possession on arrival as well as departure.
Crew member is allowed to bring items like chocolates, cheese, cosmetics
and other petty gift items for their personal or family use upto a value of Rs. 600
only at the returning of the Aircraft from foreign journey. However, a crew
263 | P a g e
member on final pay off or at the termination of his engagement with the Airline
shall be eligible for allowances as a common passenger.
IMPORT OF PASSENGER CARS (subject to changes)
Import of passenger Cars / Jeep / Multiutility vehicles:
The following rates of Duty are applicable for import of motor cars and other
motor vehicles principally designed for the transport of persons including station
wagons and racing cars. Since motor vehicles are excluded from the definition of
Baggage, duties are to be collected at the Tariff rate taking into consideration
Exemption Notifications if any.
Value of these vehicles for the purpose of levy of customs duty is CIF
value, where C stands for the cost of the goods, I is the insurance and F is the
freight. Cost in the case of new vehicle is the transaction value between the seller
and the buyer. However, in the case of old and used vehicles, cost is arrived at
by taking value of the new vehicle in its year of manufacture and then allowing
depreciation at following rates:
(i)
For every quarter

during 1st year -
4%
(ii)
For every quarter

during 2nd year -
3%
(iii)
For every quarter

during 3rd year -
2.5%
(iv)
For every quarter

during 4th year and thereafter
2%
subject to a maximum
depreciation of 70%
OUT GOING PASSENGERS

All the passengers leaving India by Air are subject to clearance by Custom
Authorities. Only bonafide baggage is allowed to be cleared by passengers.
There is a procedure prescribed whereby the passengers leaving India can take
the export certificate for the various high value items as well as jewellery from the
Customs authorities. Such an export certificate comes handy while bringing back
the things to India so that no duty is charged on such goods exported by the
passenger.
264 | P a g e
OTHER INFORMATION
1. Export of most species of wild life and articles made from wild flora and fauna,
such as ivory, musk, reptile skins, furs, shahtoos etc. is prohibited.
2. Trafficking of narcotic drugs and psychotropic substances is prohibited.
3. Export of goods purchased against foreign exchange brought in by foreign
passengers are allowed except for prohibited goods.
4. Carrying of Indian currency notes in the denomination of Rs. 500 and Rs.
1000 to Nepal is prohibited.
5. Export of Indian Currency is strictly prohibited. However Indian residents when
they go abroad are allowed to take with them Indian currency not exceeding
Rs. 7500.
6. Tourists while leaving India are allowed to take with them foreign currency not
exceeding an amount brought in by them at the time of their arrival in India.
As no declaration is required to be made for bringing in foreign exchange /
currency not exceeding equivalent of U.S. $ 10000, generally tourists can
take out of India with them at the time of their departure foreign
exchange/currency not exceeding the above amount.
EXPORT OF GOLD JEWELLERY
There is no value limit on the export of Gold jewellery by a passenger

through the medium of baggage so long as it constitutes the bonafide baggage of
the passenger. A passenger may request the Customs for issue of an export
certificate at the time of his/her departure from India, in respect of jewelry carried
by him / her, to facilitate its reimport subsequently.
Commercial export of gold jewelry through the courier mode is permitted
subject to observance of prescribed procedures.
EXPORT OF INDIAN CURRENCY
Export of Indian Currency is strictly prohibited. However Indian residents when
they go abroad are allowed to take with them Indian currency not exceeding Rs.
7500 .
EXPORT OF FOREIGN CURRENCY
Tourists while leaving India are allowed to take with them foreign
currency not exceeding an amount brought in by them at the time of their arrival
265 | P a g e
in India. As no declaration is required to be made for bringing in foreign exchange

/ currency not exceeding equivalent of U.S. $ 10000, generally tourists can take
out of India with them at the time of their departure foreign exchange/currency
not exceeding the above amount.
The export of foreign currency is otherwise prohibited.
PROHIBITED AND RESTRICTED GOODS
Certain goods are prohibited (banned) or restricted (subject to certain
conditions) for import and/or export. These are goods of social, health,
environment, wild life and security concerns. While it is not possible to list all the
goods, more common of these are :
PROHIBITED GOODS
-
Narcotic Drugs and Psychotropic substances.
Pornographic material
Counterfeit and pirated goods and good infringing any of the legally
enforceable intellectual property rights.
Antiquities.
RESTRICTED GOODS
-
Firearms and ammunition.
Live birds and animals including pets.
Plants and their produce e.g. fruits, seeds.
Endangered species of plants and animals, whether live or dead.
Any goods for commercial purpose: for profit , gain or commercial usage.
Radio transmitters not approved for normal usage.
Gold and Silver, other than ornaments (For import only)
Indian and foreign currency in excess of prescribed limits:
266 | P a g e
foreign currency in excess of US$ 5000 in the form of currency notes

or equivalent US$ 10000 or equivalent in the form of currency
notes, bank notes or travellers cheque is required to be declared on
arrival.
foreign currency in excess of amount legally obtained or in the case
of tourists in excess of the amount declared on arrival or in excess

of the exempted limit of declaration at the time of departure.
-
Trafficking in Narcotic Drugs like Heroin, Charas, Cocaine or in Psychotropic

substances is a serious offence and is punishable with imprisonment.
Export of most species of wild life and articles made from flora and fauna such
as Ivory, Musk, Reptile skins, Furs, Shahtoosh etc. is prohibited. For any
clarifications passenger should approach the Regional Deputy Director
(Wildlife Preservation) Govt. of India or the Chief Wildlife Wardens of State
Governments posted at Calcutta, Delhi, Mumbai and Chennai.
Export or Import in prohibited and restricted goods commonly leads to arrest.
PENAL PROVISIONS
The Indian Customs Act empowers imposition of heavy penalties for those
passengers who :
-
attempt to walk through the Green Channel with prohibited, restricted or

dutiable goods.
misdeclare their goods at the Red Channel
attempt to export prohibited or restricted goods.
abet the commission of any of the above offences.
The Penal Provision may lead to :

-
absolute confiscation of goods, or
imposition of heavy fine in respect of the concerned goods if these are

released;
imposition of penalty on individual or concerned entities upto five times the

value of goods or the duty involved.
Arrest and prosecution including invocation of preventive detention in

serious cases.
267 | P a g e
CHAPTER 31
All About Indian Passport
The front-end operations of all Regional Passport office have been outsourced
as part of the Passport Seva Kendra (PSK) project and Tata Consultancy Services (TCS) is all set to
handle the front-end operations of all RPO very shortly. Union Ministry of External Affairs has already
implemented the PSK project some of the passport offices in India. These centres have been set up on
a public-private partnership (PPP) basis with Tata Consultancy Services (TCS) as its service provider.
The project has been designed as a citizen-centric and paperless service. All one needs to do is upload a
passport application on www.passportindia.gov.in and confirm an appointment online. After which the
support staff from TCS will guide the applicant through the biometric process. Walk-in applicants will be
greeted by a floor manager who will help the applicants upload applications through a kiosk at the PSK.
"The amenities and services at the PSK are in keeping with any modern bank or airport.
The implementation of the project has reached its halfway mark and will likely to completed by March
2012, The existing passport office will be responsible for liaison with the MEA, dispatching, printing,
answering RTIs, and management of the PSKs. First time applicants no longer need to go the existing
passport office.
According to the available information, TCS would receive applicants, guide them and handle the process
for submission of applications, conduct the verification of the completeness of the application form and
the documents attached therein. TCS would be in charge of receiving applications and guiding
applicants, technical support and maintenance of the premises, while sensitive areas would continue to
be handled by the passport office staff. The PSK initiative would bring in the much-required concept of
one-day visit to the passport office, as the officials would tell the applicants the same evening as to
whether their passport application forms and the supporting documents were in order and whether the
passport would be issued or not. This would eliminate the anxious wait by the applicants.
Under the new system, photographs need not be affixed, image of the applicant's face will be captured at
the time of applying online as is done in the driving licence process. In addition, the new system will
involve taking the finger print (bio-metric) of the applicant and incorporating it in the database. Only if the
finger print tallies, the applicant will be able to apply for other services such as spouse entry, address
change or renewal of passport.
The added feature is that every police district will have access to the passport server for downloading the
personal particular form online and to send the police verification reports online. This will obviate postal
delay and laborious paper work. This will also ensure speedy completion of procedures which are timeconsuming at present. Even passport issuance will be modernized with digital signature.
The place for these front-end operations has been already finalized for most of locations and started
functioning. The new system will put in place a first-in and first-out concept, eliminating the practice of
issuing passports out-of-turn. Under the new system getting passport will not take more than 72 hours.
This turnaround time is from the moment of police verification to the issuance of the passport.
268 | P a g e
Procedures for applying Passports under new system (where ever the new PSK system is implemented)
For filling and submitting your application online, you need to be a registered user on the Passport Seva
website. To create your user account for online form submission, Register now.
Once you register,follow the steps mentioned hereStep 1: Log into your Passport Seva user account.
Step 2:Select the Apply Passport Online menu option in the left navigation menu.
Step 3: Fill in the required details in the form and submit the form online.
Step 4 (Optional): Upload the required documents using the Upload Document link on the Applicant
Home Page. The documents to be uploaded must be self-attested (signed by the applicant) and must be
in pdf format.
Step 5: You are required to be present at the Passport Seva Kendra (PSK)/Mini Passport Seva Kendra
(Mini PSK) along with original documents for completion of the application submission process. Schedule
an appointment with the Passport Seva Kendra (PSK)/ Mini Passport Seva Kendra (Mini PSK) that comes
under the jurisdiction of applicant residence.Online appointment is mandatory to walk into PSK for further
processing.Only emergency/medical cases may go to PSK without appointment - service will be provided
at the discretion of PSK in -charge. You will need to re-submit the application in case the form submission
process at PSK is not completed within 3 month of submitting the application online.
Procedure for online applicant at Passport Seva Kendra (PSK)/Mini Passport Seva Kendra (Mini PSK)
Step 1: Collect a token for application from theToken Issuance Counter ; submit the token,
acknowledgement receipt for application and prior appointment print out to the Citizen Service Executive
(CSE)
at
the
service
counter
when
your
token
number
is
displayed.
Step 2: Complete activities at this counter, such as signing the paper copy of the application form,
getting your photograph and fingerprints captured, and making fee payment.
Note: Minor applicants below 4 years of age should carry a passport size photograph (on a white
background) while visiting Passport Seva Kendra (PSK).
In case you are paying the fee through Credit/ Debit card, only card of self or family member whose
details have been mentioned in the passport application form are acceptable. Only Master and Visa
Credit/ Debit cards are accepted (This service will be available soon).
Step 3: Collect the fee acknowledgement receipt from the CSE (after successful data entry) and go to
the Verification counter, along with original documents , when token number is called, for verification of
your application and documents.
Step 4: Go to the Granting counter, when called for further processing of your application.
Step 5: Collect the print-out of the final status ( acknowledgement letter ) of your application at the exit
gate.
After successful application form submission, with final status as "Granted", you can expect your
passport to be dispatched as follows:
269 | P a g e
Type
of
Application
Tatkaal
Normal
Type
of
Verification
Police
Expected Time of Passport Dispatch
Police Verification is
not required
Within one working day excluding the date of submission

of application.
required on a PostPassport
Issuance
basis
On third working day excluding the date of submission of

application - without waiting for the Police Verification
Report.
not required

application.
Issuance
basis

Report.
required
on
PrePassport
Issuance
basis
Within three working days of receipt of a

"Recommendatory" Police Verification Report (PVR) from
the Police Department. This does not include date of
receipt of "Recommendatory" PVR.
Note: (i) In complex cases, such as adoption, application on behalf of a minor from single parent, major
change in name, duplicate passport, doubtful documentation, the processing time will be approximately
30 days excluding the date of submission of application. Mandatory Pre Police Verification cases such
as J&K and Nagaland subjects would also need additional processing time.
(ii) Issue of passport is subject to data check in the system and finding no adverse entry/ report.
(iii) In case you have been charged with a penalty, you need to make the penalty payment by cash only.
270 | P a g e
http://www.passportindia.gov.in/AppOnlineProject/online/processFlow
Passport Services Overview
Q: What are the various passport

A: The various passport services are:
services
and
which
form
has
to
be
filled
in?
1. Issue of Fresh Passport: You can apply for fresh passport if you have never had a passport.
2. Re-issue of Passport: You can apply for re-issue of passport if you want another passport in lieu
of an existing passport for any of the following reasons:
o Your passport has either expired or is about to expire. You can apply for a re-issue of
passport up to 1 year before the expiry or within 3 years after the expiry of the existing
passport without fresh police verification, provided there is clear police report with respect
to your previous passport and there is no adverse entry in the system.
o Your last passport has expired more than three years ago
o You want to change the personal particulars or other details specified in the passport
o Q: The pages in my passport booklet have exhausted, but it has a validity of 5 years.
What
is
the
procedure
to
apply
for
new
booklet?
A:
271 | P a g e
o
o
Passport booklet is lost

Passport booklet is damaged. The booklet may be damaged beyond recognition or
damaged but recognizable (i.e. Passport number is readable, name is legible and
photograph is intact)
3. Miscellaneous Service: Issue of Police Clearance Certificate (PCC)

For issue of fresh passport and re-issue of passport, you need to fill the application form which consists of
two forms - Passport Application Form and Supplementary Form. References for columns to be filled in
the Supplementary Form have been given in the Passport Application Form, which has to be filled only if
they are applicable to you, else you must leave them blank. For Police Clearance Certificate (PCC), you
need to fill the Police Clearance Certificate (PCC) Application Form.
Q: What types of passports are issued in India?
A: Following three types of passports are issued in India:
1. Ordinary Passport: An ordinary passport appears with a blue cover, and consists of 36 or 60
pages. It is valid for 10 years from the date of issue and can be renewed for another 10 years. An
Indian citizen can use this passport for ordinary vacation or business travel.
2. Diplomatic Passport: Members of the national government, including diplomats, administrative
officials, and official public couriers, use a maroon-covered diplomatic passport.
3. Official Passport: Ordinary citizens travelling on official government business carry an official
passport, with a white cover.
Q: How do I apply for a passport in the new system?
A: You need to fill the application form which consists of two forms - Passport Application Form and
Supplementary Form. References for columns to be filled in the Supplementary Form have been given in
the Passport Application Form, which has to be filled only if they are applicable to you, else leave them
blank.
You can submit the filled in form at the following locations:
Any Passport Seva Kendra (PSK)/Mini Passport Seva Kendra (Mini PSK) within the jurisdiction of
your Passport Office (PO)
District Passport Cell (DPC) of your district
Speed Post Centre (SPC) in your district
Citizen Service Centre (CSC) if any, in your area
While Passport Seva Kendras (PSKs) offer all kinds of passport services, only fresh passport applications
are accepted at District Passport Cells (DPCs)/Speed Post Centres (SPCs)/Citizen Service Centres
(CSCs). You can also locate an application submission centre on our website www.passportindia.gov.in
You need to attach the self-attested photocopies of documents along with the application form. To check
the complete list of documents to be submitted along with the application form, please Click Here.
Original documents must also be produced at the counter, which will be returned after verification.
You need to pay fee when you submit the application form. To know about fee details, please Click Here.
272 | P a g e
Under the new system it is mandatory for all applicants, including infants, to be physically present while
submitting the passport application form whether it is at the Passport Seva Kendra (PSK) or at the District
Passport Cell (DPC)/Speed Post Centre (SPC)/Citizen Service Centre (CSC). No. You need not apply in
the new system again. Your application will be processed in the old system.
Issue of Fresh Passport (Ordinary)
Q: When should I apply for a fresh passport?

A: For complete list of documents to be submitted please Click Here. And to know about fee details,
please Click Here.
Minor
Q: What is the definition of minor for issue of passport?

A: Applicants less than 18 years of age are considered as minor for issuance of passport.
Q: I have a one-month old baby? Does the baby require a separate passport or his/her name can be
endorsed in one of the parents passport?
A: Endorsement of child's name in parent's passports is not allowed anymore. As per the amended law, a
minor should have a separate passport.
Q: In case of minor's passport, whose father is abroad, is it mandatory to obtain father's consent to apply
for the child's passport? If so, what is the procedure?
A: If parent(s) of the minor holds a valid passport, then attested photocopy of passport needs to be
submitted along with the application form. Spouse name should be endorsed on the parent's passport. If
parent(s) hold a valid passport, but spouse name is not endorsed, then they must get the spouse name
added in their passport. For this, they have to apply for reissue of passport and get the specified change
done in personal particulars.Click Here
Q: We are planning to apply for passports for our kids (minors). Is it necessary that my name should be
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included in my wife's passport?

A: If either parent of a minor holds a valid passport with spouse name endorsed, passport will be issued
to the minor without any police verification. Original passport of parent(s) should be presented for the
verification of particulars. If parent(s) hold a valid passport, but spouse name is not endorsed, then they
must get the spouse name added in their passport. For this, they have to apply for reissue of passport
and get the specified change done in personal particulars. Thus, it is necessary that spouse name should
be endorsed on the parent's passport.
Q: Is it necessary that both parents should have passport before applying for their child's passport?
A: It is not necessary that both parents should have a passport before applying for their child's passport.
The advantage of either parent holding a valid passport with spouse name endorsed is that it exempts
their child from the Police Verification process.
Q: I wish to apply for a passport for my child who is 12 months old. In the signature column of the form,
who needs to sign? Should it be the child's thumb impression, or father's signature?
OR
Q: On my child's passport application, it asks for my child's signature in the box below the box for
photograph; my child is a new born, so do I sign in the box?
A: In case of minors, the signature/thumb impression box below the box for photograph should contain
the minor's signature or thumb impression as the case may be. Minor's parents should not put their
signature or thumb impression in this box.
The signature/thumb impression box given at the end of the application form (Column-11, Page-6, self
declaration) should contain signature or thumb impression of either parent/guardian as the case may be.
In the given case if the minor cannot sign, the minor should put his/her thumb impression in the box.
Q: I am a minor who is 16 years old. Is it possible for me to obtain a full validity passport of 10 years?
A: Minors between 15 to 18 years of age can apply either for a 10-year validity passport or they can apply
for a passport, which is valid till they attain the age of 18 years. Fee for a 10-year validity passport is
higher than fee for a passport, which is valid till they attain the age of 18 years.
A 10-year validity passport cannot be issued to applicants without police verification on submission of
parent's passport. If passport is required on an urgent basis, they can apply under Tatkaal scheme.
Q: What would be the validity of a minor's passport?

A: The validity of a minor's passport is restricted to five years or till they attain the age of 18, whichever is
earlier. But the minors with age between 15 to 18 years can apply either for a 10-year validity passport or
for a passport which is valid till they attain the age of 18 years. Different fees are applicable depending
upon which category they are applying for.
To know about the fee details, please Click Here.
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Q: Who can apply for my minor daughter's passport in India as I am on ship at Singapore as second
engineer?
A: Either parent/guardian can apply for minor's passport. You would however need to get Annexure-H
duly attested by the Consular section of the nearest Indian Mission.
To check the complete list of documents to be submitted along with the application form, please Click
Here.
Q: I have turned 18 and have a minor's passport (valid till the age of 18). Can I still travel on it or do I
need an adult passport?
A: The validity of your passport has expired. You need to apply for "Re-issue" of passport and submit the
filled in application form at your nearest Passport Seva Kendra (PSK)/Mini Passport Seva Kendra (Mini
PSK).
Q: Is it true that passport applications for minors under 18 require consent of either both parents or legal
guardian?
A: It is necessary that either parent/legal guardian should give their consent while applying for minor's
passport. Following documents have to be submitted in the given cases:
S.No.
Case
Documents to be submitted
1.
Passport application of a minor with consent

of both parents
Annexure "H"
Applied by Legal Guardian
Annexure "H"
3.
Minors with single parent (One parent

deceased)
Annexure "H"
4.
Applied by one parent/guardian when

consent of one or both parents is not possible
Annexure "G"
5.
Parents are separated but not divorced
Annexure "C"
6.
Single parent of the child born out of wedlock
Annexure "C"
2.
Q: Does my child really have to come in to see you?

A: Under the new system it is mandatory for all applicants, including infants, to be physically present while
submitting the passport application form whether it is at the Passport Seva Kendra (PSK) or at the District
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Passport Cell (DPC)/Speed Post Centre (SPC)/Citizen Service Centre (CSC).
Q: Do my newborn's passport photos have to show his/her eyes open?

A: There can be some relaxation in case of babies, with regard to the position of the face, eyes and the
facial expression. However, a frontal view of full face with clarity is required. The child must look at the
camera with a neutral expression with the mouth closed. Toys or other people must not be visible in the
background of the photograph.
For example:
Q: My spouse is living in another country. How do I get his/her signature for consent while applying for my
child's passport?
A: Consent of the spouse, who is abroad, is required for submitting the application of their child. It should
be in the form of a Sworn Affidavit duly attested by the Indian Embassy/Consulate abroad (as per
Annexure "H").
To check the complete list of documents to be submitted along with the application form, please Click
Here
Q: I want to apply for my child's passport. Are signatures of both parents mandatory on Annexure-H to be
submitted along with the application? What if my spouse is refusing to sign the form?
A: Yes, the signature of both the parents is mandatory on Annexure-H to be submitted along with the
application as it signifies that both parents are giving consent for the issuance of passport to the child.
Annexure H is the declaration of applicant's parents or guardian for the issuance of passport to the minor.
If either of the parents is not giving consent, then the parent applying for the minor's passport needs to
submit Annexure G.
To see the format of Annexure H and G, please Click Here
Q: I wish to apply for a passport for my child who is 12 months old. Can I apply for a 60 pages booklet?
A: No, you cannot apply for a 60 pages passport booklet for your 12-months old child. Only 36 pages
passport booklet are issued to minors.
Q: I have applied for my passport and my child's passport. Can passport be issued to my child without
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police verification?
A: If either parent of a minor holds a valid passport with spouse name endorsed, passport will be issued
to the minor without any police verification. Original passport of parent(s) should be presented for the
verification of particulars. If parent(s) hold a valid passport, but spouse name is not endorsed, then they
must get the spouse name added in their passport. For this they have to apply for reissue of passport and
get the specified change done in personal particulars.
If either parent does not hold a valid passport, passport will be issued to the minor only after police
verification or you can apply under Tatkaal scheme to get the passport on post police verification basis
subject to the approval of the Government official at the Passport Seva Kendra (PSK).
Q: If parents have passport with adverse Police Verification Report or they have a criminal background,
can passport be issued to minor on an urgent basis?
A: In such cases, minors can be issued passport under Tatkaal scheme subject to the approval of the
government official at a Passport Seva Kendra (PSK).
Q: Are minor citizens required to apply for Police Clearance Certificate?

A: Police Clearance Certificate (PCC) can be issued to minors.
Q: I want to apply for my minor child's passport. I hold a valid passport but spouse name is not endorsed.
Can I apply for my child's passport without submitting my passport copy?
A: If parent(s) of the minor holds a valid passport, then attested photocopy of passport needs to be
submitted along with the application form. Spouse name should be endorsed on the parent's passport. If
parent(s) hold a valid passport, but spouse name is not endorsed, then they must get the spouse name
added in their passport. For this, they have to apply for reissue of passport and get the specified change
done in personal particulars.
Senior Citizen
Q: I am a pensioner or have a senior's card; can I have a senior's passport?

A: Separate senior's passport is not issued to a senior citizen. They can apply for an ordinary passport
with a validity of 10 years. Senior Citizens can be issued a passport on post police verification basis if
they submit copy of child's (Age>18) passport, who is staying abroad (with page having parent's name) as
an additional document along with their application form.
To check the complete list of documents to be submitted, please Click Here
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Q: What benefits do senior citizens get for issuance of passport?

A: Senior Citizens can be issued a passport on post police verification basis if they submit copy of child's
(Age>18) passport, who is staying abroad (with page having parent's name) as an additional document
along with their application form.
Students
Q: I am a student staying away from my parents. Where do I apply for a passport and what proof of
residence do I have to furnish?
A: You can apply at any Passport Seva Kendra (PSK) under a Passport Office (PO) in the state of your
current or permanent address.
For instance, if you are a student staying in Rohtak (which falls under the jurisdiction of Regional
Passport Office (RPO), Chandigarh) and your parents are staying in Hissar, which also falls under the
jurisdiction of Regional Passport Office (RPO), Chandigarh, you may apply at any Passport Seva Kendra
(PSK) under Regional Passport Office (RPO) Chandigarh. Please indicate your hostel address/the place
where you are staying in Rohtak as present address and your parent's address as permanent address.
And in case you are studying and staying in Bangalore you may either apply at any of the Passport Seva
Kendra (PSK) under Regional Passport Office (RPO) Bangalore or under Regional Passport Office (RPO)
Chandigarh. For proof of residence of your hostel/place of stay, you should provide a Bonafide Letter
from authorized signatory of college (On official letter head of UGC recognized College).
Employees of Government/PSU/Statutory Body
Q: Is Identity Certificate mandatory for Government/Public Sector/Statutory body employees?

OR
Can a government employee apply as an ordinary citizen without submitting the additional documents?
A: For issuance of a fresh passport, Government/Public Sector/Statutory body employees need to submit
either Identity Certificate in original as per Annexure "B" or No Objection Certificate (NOC) as per
Annexure "M" as an additional document along with the application form. If he/she submits Annexure "B",
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passport will be issued without police verification and if he/she submits Annexure "M", passport will be
issued on post police verification basis.
For reissue of passport, Government/Public Sector/Statutory body employees need to submit No
Objection Certificate (NOC) as per Annexure "M" as an additional document along with the application
form.
Q: What benefits do government employees and retired government employees get for issuance of
passport?
A: Government Employees:
Government/Public Sector/Statutory body employees can be issued passport without police verification, if
they submit Identity Certificate in original as per Annexure "B" as an additional document along with the
application form. They can be issued a passport on post police verification basis, if they submit No
Objection Certificate (NOC) (as per Annexure "M") as an additional document along with the application
form.
Retired Government Employees:
Retired Government employees can be issued a passport on post police verification basis if they submit
Pension Payment Order as an additional document along with the application form.
Q: If a Government employee wants to apply for major change in name in passport, is he/she required to
submit a leading newspaper cutting?
A: If a Government/Public Sector/Statutory body employee wants to make a major change in name, then
he/she has to submit the following additional documents:
1. Gazette Notification changing name in applicant's department
2. Fresh ID Certificate in changed name
3. Deed poll/sworn affidavit as per Annexure "E"
Hence, a leading newspaper cutting is not required to be submitted.
Owner, Partners and Directors of Companies which are members of CII, FICCI & ASSOCHAM
Q: I am a Director of a company which is a member of CII, FICCI & ASSOCHAM? What additional
documents do I have to submit?
A: Click Here to view Document Advisor
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Retired Government Officials
Q: What benefits do government employees and retired government employees get for issuance of
passport?
A: Government Employees:
Government/Public Sector/Statutory body employees can be issued passport without police verification, if
they submit Identity Certificate in original as per Annexure "B" as an additional document along with the
application form. They can be issued a passport on post police verification basis, if they submit No
Objection Certificate (NOC) (as per Annexure "M") as an additional document along with the application
form.
Residents of J&K
Q: I was born in Delhi and my present address is in Delhi. My permanent address is in Jammu and
Kashmir. I have not visited my permanent address since last 20 years. Can I apply for passport under the
Tatkaal scheme?
A: To get the passport on Tatkaal basis, you need to visit Assistant Passport Officer (APO) at your
nearest Passport Seva Kendra (PSK).
Residents of Nagaland
Q: I am a resident of Nagaland and want to get a passport on an urgent basis. What should I do?
A: To get the passport on urgent basis, you need to visit Assistant Passport Officer (APO) at your nearest
Passport Seva Kendra (PSK).
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Citizenship of India (Other than by Birth)
Q: Explain citizenship of India by birth, descent, registration, naturalization.

A: Citizen of India by birth: You are Citizen of India by birth if you are born in India.
Citizen of India by descent: You are Citizen of India by descent if you are born outside India and either of
your parents is a citizen of India at the time of your birth.
Citizen of India by registration/naturalization:You are Citizen of India by Registration/Naturalization if you
have been granted Indian Citizenship by Ministry of Home Affairs (MHA).
Q: What are the additional documents required in case the applicant is a citizen of India by descent or
registration/naturalization?
Q: Can an Indian passport be issued to applicants born outside India?

A: Indian passport can be issued to the "Citizen of India by Descent" i.e. person born to Indian parent(s)
outside India.
Applicants having Diplomatic/Official passport and applying for ordinary passport while in service
Q: Are there any additional documents required if a person applying for Ordinary passport is a
Diplomatic/Official passport holder or a dependent family member of Diplomatic/Official passport holder?
Dependent Family Members of Government/PSU/Statutory body employees
Q: Can dependents of Government/Public Sector/Statutory body employees apply for a passport in the
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normal process without submitting any affidavits?

A: Dependent family members of Government/Public Sector/Statutory body employees can be issued
passport without police verification, if they submit the following additional documents along with their
application form:
1. "Identity Certificate" in original as per Annexure "B" (of dependent)
2. Standard Affidavit as per Annexure "I"
Otherwise, passport would be issued to them on pre police verification basis, or post police verification
basis - if they apply under Tatkaal scheme.
Dependent Family Members of Diplomatic/Official passport holders who are not government servants
Q: Are there any additional documents required if a person applying for an ordinary passport is a
Diplomatic/Official passport holder or a dependent family member of Diplomatic/Official passport holder?
Applicants who have changed their names in past
Q: I recently got married/divorced. How do I change my name on my passport?

A: To change the name in the passport, you have to apply for a "Re-issue" of passport and get the
specified change done in the personal particulars. To check the complete list of documents to be
submitted along with the application form, please Click Here to view Document Advisor
Q: I am a married lady and want to apply for a fresh passport. I am unable to provide the prescribed
marriage certificate or joint affidavit due to marital discord or separation. What should I do?
A: Such applicants have to submit an Affidavit sworn before First Class Judicial Magistrate on NonJudicial stamp paper as per specimen provided in Annexure 'K': Section G of the passport instruction
booklet.
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Applicants who are convicted or court case is pending against them
Q: What do I do if I have a Court Case against me?

A: If a criminal case is pending against you in any court, you can be issued a passport subject to the
condition that you enclose a written permission granted by the court allowing you to travel abroad.
Normally a short validity passport valid for one year is issued, subject to conditions if any, mentioned in
the Court order as per GSR 570 (E) dated 25 August, 1993.
Applicants who have been repatriated/deported
Q: Are there any additional documents required for applicants repatriated from abroad or deported to
India?
Q: The applicant has repatriated from abroad at Government cost and wants to apply for a fresh passport.
However he/she does not have a proof of refund of repatriation cost to Ministry of External Affairs. What
should he/she do?
A: He/she should Please meet the Assistant Passport Officer (APO) at your nearest Passport Seva
Kendra (PSK).
Re-issue of Fresh Passport(Ordinary)
Q: When can I apply for reissue of passport?

A: Passports are issued for 10 year validity (Only for Children, passports are issued with five year validity
or upto the age of 18, exception being minors between 15 and 18 years of age who can also apply for 10
year validity passport).
You can apply for reissue of passport in following cases:
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Your passport has either expired or is about to expire. You can apply for reissue of passport up to
one year before the expiry or within three years after the expiry of the existing passport without
fresh police verification, provided there is clear police report with respect to your previous
passport and there is no adverse entry in the system.
Your last passport expired more than three years ago.
You want to change the personal particulars or other details specified in your current passport
and get a booklet with changed details.
Pages in the existing passport booklet are exhausted.
Passport is lost.
Passport is lost.
Further, most of the embassies who issue visas insist on the passport validity being at least of six months
to one year before they consider issuing visas. Accordingly, apply for reissue well before time and save
the last minute rush.
Q: Will I get back my old passport with my new one?

A: Yes. The old passport will be returned to you at the Verification Counter with a cancellation stamp on it.
Q: What would be the validity of the reissued passport?

A: In case of adults, 10-year validity passport would be issued. In case of minors, the validity of passport
is restricted to 5 years or till they attain the age of 18, whichever is earlier. But minors between 15 to 18
years of age can apply either for a 10 year validity passport or for a passport which is valid till they attain
the age of 18 years. Different fees are applicable depending upon which category they are applying for.
To know the fee details, please Click Here
Q: What are your responsibilities when applying for a passport, if your old passport is lost or damaged?
A: Loss of passport should be immediately reported to the nearest Police Station and to the Passport
Office (PO) or Indian Mission, if abroad. You can apply for "Re-issue" of passport at your nearest
Passport Seva Kendra (PSK) and submit the required documents along with your passport application
form. To check the list of documents, pleaseClick Here
Q: What would be the validity of a passport if a minor applicant applies for reissue of passport?
A: In case of "Re-issue" of passport, the validity of the minor's passport is restricted to five years or till
he/she attain the age of 18, whichever is earlier. But the minors between 15 to 18 years of age can apply
either for a 10-year validity passport or for re-issue of passport which is valid till they attain the age of 18
years. Different fees are applicable depending upon the category they are applying for.
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Validity Expired
Q: My passport expired 4 years ago. Can it be reissued? What is the procedure to reissue it?
A: You have to fill up the Passport Application Form and apply for "Re-issue of Passport". You can submit
the filled in application form at a Passport Seva Kendra (PSK)/Mini Passport Seva Kendra (Mini PSK),
within the jurisdiction of your Passport Office (PO). You must carry original and self attested photocopy of
your expired passport and proof of your address. Fresh police verification is initiated if the passport has
expired more than three years ago. Hence, fresh police verification will be required in your case.
Q: The validity of my passport has expired, but the pages in the booklet have not exhausted. What is the
procedure to extend the validity?
A: You need to apply for "Re-issue" of passport and submit the filled in application form at your nearest
Passport Seva Kendra (PSK)/Mini Passport Seva Kendra (Mini PSK). A new passport booklet would be
issued to you.
Q: What are the additional requirements if passport has expired more than three years ago?
A: Fresh police verification would take place if you apply for reissue of passport after expiry of old
passport more than three years ago.
Q: I'm 25 now, but my last passport was issued when I was 15. What should I do?
A: You need to apply for "Re-issue" of passport and submit the filled in application form at your nearest
Passport Seva Kendra (PSK)/Mini Passport Seva Kendra (Mini PSK).
Damaged Passport
Q: What is the definition of damaged passport?

A: Damaged passport is classified further based on the extent of damage, i.e.:
1. Damaged Passport - Passport number is readable, name is legible and Photo is intact
2. Damaged beyond recognition
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Q: What is the procedure to apply for duplicate passport in case of lost or damaged passport?
A: To apply for duplicate passport in case of lost or damaged passport, you have to fill the Passport
Application form and apply for "Re-issue" of passport. For complete list of documents to be submitted
please Click Here
Q: My passport booklet is damaged. I want to go abroad on urgent basis. What should I do?
A: If your passport is damaged but recognizable, i.e. passport number is readable, name is legible and
photo is intact, then you can apply for "re-issue" of passport under the Tatkaal scheme. But, if passport is
damaged beyond recognition, then you cannot apply under the Tatkaal scheme. In that case, you need to
visit Assistant Passport Officer (APO) at your nearest Passport Seva Kendra (PSK) to get the passport on
urgent basis.
Q: My passport has been destroyed by fire. What is the further process to get another passport?
A: You have to fill the Passport Application form and apply for "Re-issue" of passport. For complete list of
documents to be submitted please Click Here
Lost/Stolen Passport
Q: What do I do if I lose my passport?

A: Loss of passport should be immediately reported to the nearest Police Station and to the Passport
Office (PO) or Indian Mission, if abroad. You can apply for "Re-issue" of passport at your nearest
Passport Seva Kendra (PSK) and submit the required documents along with your passport application
form. For complete list of documents to be submitted, please Click Here
Q: I lost my passport recently. I've applied for a duplicate passport. I want to know if the new passport will
have the same number as my old passport, or a new number?
A: The new passport will have a new passport number, with a fresh validity of 10 years.
Q: I recently lost my valid passport, but do not have the details. Will it be possible for the Passport Office
(PO) to trace the details from your system and give them to me for filling my application form for a
duplicate/new passport?
A: You need to visit Assistant Passport Officer (APO) at your nearest Passport Seva Kendra (PSK).
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Q: What can I do if I have lost my passport and have to travel to India urgently due to an emergency like
serious illness or death in the family?
A: If you have lost your passport during travelling, then you can come to India on the basis of "Emergency
Certificate". For the issuance of "Emergency Certificate", you need to contact the respective mission/post
of that country.
Q: What is the procedure to apply for duplicate passport in case of lost or damaged passport?
A: To apply for a duplicate passport in case of lost or damaged passport, you have to apply for a "Reissue" of passport. To check the complete list of documents to be submitted along with the application
form, please Click Here
Q: I am an Indian living in Germany. I lost my Indian passport but I don't have photocopy of the same.
What should I do?
A: Photocopy of the old passport is not a mandatory document to be submitted in case of
lost/damaged/stolen passport. It should be produced, if it is available. But you will have to produce, the
previous passport details like Passport number, Date of issue, Date of expiry and Place of issue, while
filling the passport application form. If you do not have that information, then contact the respective
mission/post of that country.
Q: In case of lost/damaged passport we cannot apply under the Tatkaal scheme, but according to the fee
list, in the Tatkaal scheme for such cases, additional Tatkaal fee of Rs.1500 is being charged Please
clarify.
A: Tatkaal can be granted only after Assistant Passport Officers (APOs)/Regional Passport Officer
(RPOs) approval.
Q: I have lost my passport and want to apply for re-issue of passport. I don't remember my passport
number. What should I do?
A: Please meet the Assistant Passport Officer (APO) at your nearest Passport Seva Kendra (PSK).
Exhaustion of Pages
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Q: The pages in my passport booklet have exhausted, but it has a validity of 5 years. What is the
procedure to apply for new booklet?
A: You need to (Mini PSK). A new passport booklet would be issued to you with a fresh validity of 10
years.
apply for "Re-issue" of passport and submit the filled in application form at your nearest Passport Seva
Kendra (PSK)/Mini Passport Seva Kendra
Q: When is an additional booklet/additional pages issued?
OR
Q: My passport is nearly full but is valid for another 4 years, is it possible to add extra pages?
A: Additional pages are not added to a passport booklet. If the pages in the passport booklet have
exhausted, you need to apply for "Re-issue" of passport and submit the filled in application form at your
nearest Passport Seva Kendra (PSK)/Mini Passport Seva Kendra (Mini PSK). A new passport booklet
would be issued to you. To check the complete list of documents to be submitted along with the
application form, please Click Here
Validity Due to Expire
Q: My passport will expire in 2 years. What should I do?

A: You can apply for a re-issue of passport up to 1 year before the expiry or within three years after the
expiry of the existing passport without fresh police verification, provided there is clear police report with
respect to your previous passport and there is no adverse entry in the system. You can also apply for
reissue of passport if your last passport has expired more than three years ago, but fresh police
verification would take place
Q: How long is a passport valid?

A: In case of adults, 10-year validity passport would be issued. In case of minors, the validity of passport
is restricted to 5 years or till they attain the age of 18, whichever is earlier. But the minors between 15 to
18 years of age can apply either for a 10-year validity passport or for a passport which is valid till they
attain the age of 18 years. Different fees are applicable depending upon the category they are applying
for. To know the fee details, please Click Here.
Further, most of the embassies who issue visas insist on the passport validity being at least of six months
to one year before they consider issuing visas. Accordingly, apply for reissue well before time and save
the last minute rush.
Q: My passport is about to expire, but I have lost my birth certificate. What are my options?
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A: If your passport is due to expire, you need to apply for "Re-issue" of passport. In case of "Re-issue" of
passport, you need to submit a date of birth proof, if either your old passport has been lost/damaged or
you want to change date of birth details in the passport.
To check the complete list of documents which can be submitted as date of birth proof, please Click Here
Renewal of Short Validity Passport (SVP)
: When is a Short Validity Passport (SVP) issued?

A: Short Validity passport (SVP) is issued in following cases:
1. In case of urgency, students can be issued a SVP on production of admission letters if they are to
appear in examinations, such as TOEFL, SAT etc. Such applications can also be processed under the
Tatkaal Scheme, if they are accompanied by verification certificates as prescribed, and proof of urgency
is furnished to the Passport Office (PO).
2. There are instances of non-delivery of passports to the applicants due to loss in transit in the post
offices. In case of urgency, a short validity passport may be issued to the applicant, the validity to be
extended to full term on completion of the formalities.
3. Indians residing abroad and visiting India for a short period: A SVP can be issued immediately, valid for
one year, on production of return ticket to the country from which the applicant came and/or a document
of identity such as driving license, Green Card, employment permit, social security card, health card,
labour card etc. indicating the applicant's identity and nationality. If the application is for issue of duplicate
passport in lieu of damaged passport, the damaged passport itself may be accepted as proof of identity
provided the personal particulars are clear and legible.
4. If a criminal case is pending against you in any court, passport can be issued subject to the condition
that a written permission granted by the court allowing the applicant to travel abroad is enclosed.
Normally a SVP valid for one year is issued, subject to conditions if any, mentioned in the Court Order as
per GSR 570 (E) dated 25 August, 1993.
For complete list of documents to be submitted please Click Here.
Q: What will be the validity of passport if I apply for renewal of a Short Validity Passport (SVP)?
A: If you apply for renewal of a Short Validity Passport (SVP), then the validity of passport would be
decided by Assistant Passport Officer (APO).
Change of Appearance
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Q:
My
appearance
has
changed.
What
should
I
do?
OR
What
is
the
procedure
to
change
photograph
of
a
child
in
the
passport?
A: To change the photograph in the passport, you have to apply for a "Re-issue" of passport and get the
submitted along with the application form, please Click Here
Change of Signature
Q: What documents have to be submitted in case of change of address and signature in the passport?
A: To check the complete list of documents to be submitted along with the application form, please Click
Here
Change of Name
Q: My name has changed. Can I travel in my previous name? Otherwise how do I change the name on
my
passport?
A: You can travel in your previous name, but it is recommended in this case that your tickets are issued in
the
same
name.
To change your name in the passport, you have to apply for a "Re-issue" of passport and get the
specified change done in personal particulars. To check the list of documents to be submitted, please
Click Here
Q: What documents are required when there is a change in name on account of divorce?
A:
Following
additional
documents
have
to
be
submitted:(i) Court certified copy of Divorce Decree or self attested copy of Divorce certificate.
(ii) Deed Poll or Sworn Affidavit as per Annexure "E" given in the Passport Instruction booklet.
For complete list of documents to be submitted along with the application form, please Click Here
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Q: I recently got married/divorced. How do I change my name on my passport?

OR
What
is
the
procedure
to
change
the
name
in
the
passport?
OR
What are the requirements/documents to be submitted if change of name is NOT consequent upon
marriage
(new
passport
issued
with
new
name)?
A: To change the name in the passport, you have to apply for a "Re-issue" of passport and get the
Q: There is a mistake in the spelling of my name in the passport. What can I do?
A: If you find any mistake/error in the particulars printed in the passport booklet as per the application
form submitted, please return the passport for necessary rectification. Any additional fees required to be
paid would depend solely on Assistant Passport Officer (APO)/Passport Issuing Authority (PIA) decision.
If there is a misrepresentation of facts, then penalty could also be imposed.
However, applicants are requested to apply online which will ensure that the passports are delivered
without any typographical errors since applicants have themselves fed the data.
Q: The Surname field is blank on my passport. And my full name is written in the Given Name field. Could
anybody
tell
the
process
to
add
the
surname
to
my
passport?
form submitted, please return the passport for necessary rectification. Any additional fees required to be
paid would depend solely on Assistant Passport Officers (APOs)/Regional Passport Officers (RPOs)
decision. If there is a misrepresentation of facts, then penalty could also be imposed.
If you have done a mistake while filling your passport application form i.e. you have filled your full name in
the "Given Name" field, then you will have to apply for re-issue of passport for change in personal
particulars.
Q:
Explain
major
and
minor
change
in
name?
A: Minor change in name - change in name because of spelling discrepancy between passport and
documents
which
phonetically
do
not
result
in
total
change
in
name.
Major change in name - Cases other than minor change in name.
Q: If the applicant changes his/her name from:

1. Sandeep Sharma to Sandeep Kumar Sharma
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2. Sandeep Kumar to Sandeep Sharma

3. Ritu to Ritu Thakur
The above change would be considered a major change or a minor change in name?
A: Minor change in name - change in name because of spelling discrepancy between passport and
documents
which
phonetically
do
not
result
in
total
change
in
name.
Major
change
in
name
Cases
other
than
minor
change
in
name.
In Case 1 and Case 2, it is a major change in name. In Case 3, if change in name is due to marriage then
it falls in the category "Change in name due to marriage". If change in name is not due to marriage, it is a
major change in name.
Q: Is No Police Verification (PV) possible in case of change in name of Govt./PSU/Statutory Body

employees?
If
yes,
what
documents
are
required?
A: The documents required are:
Issue of fresh passport: In case of change in name of Govt./PSU/statutory body employees, pre
Police Verification (PV) will be done. Post Police Verification (PV) will be done on submission of
Tatkaal documents.
Reissue of passport: In case of change in name of Govt./PSU/statutory body employees, if the
old passport has clear or exempted PV Report and required documents are submitted No Police
Verification (PV) will be done.
For complete list of documents to be submitted pleaseClick Here.
Change of Date of Birth
Q: What is the process to change the date/place of birth in the passport?

A: To change the date/place of birth in the passport, you have to apply for a "Re-issue" of passport and
get the specified change done in the personal particulars. To check the complete list of documents to be
Q: What are the requirements/documents needed for getting the date of birth changed in the passport?
A: To change the date of birth in the passport, you have to apply for a "Re-issue" of passport and get the
Q: I want to get the DOB changed in the passport since there is a typing error. What should I do?
form you submitted, please return the passport for necessary rectification. Any additional fees required to
be paid would depend solely on Assistant Passport Officers (APOs)/Regional Passport Officers (RPOs)
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decision. If there is a misrepresentation of facts, then penalty could also be imposed.

However, applicants are requested to apply online as that will ensure that the passports are delivered
Change of Spouse's Name
Q:
What
is
the
process
to
endorse
spouse's
name
on
my
passport?
A: To endorse the spouse's name on your passport, you have to apply for a "Re-issue" of passport and
get the specified change done in personal particulars. To check the list of documents to be submitted
along with the application form, please Click Here
Q: I got my passport 2 years ago. I got married recently. Should I include my spouse's name in my
passport?
If
so,
what
is
the
procedure?
A: It is better to include your spouse's name in your passport. For this purpose, you need to fill a Passport
Application form for "Re-issue of Passport" and submit it at the Passport Seva Kendra (PSK)/Mini
Passport Seva Kendra (PSK), within the jurisdiction of your Passport Office (PO).To check the list of
documents to be submitted along with the application form, please Click Here
Q: What documents are required for deletion of spouse's name on account of divorce?
A:
Following
additional
documents
have
to
be
submitted:(i) Court certified copy of Divorce decree or self attested copy of Divorce certificate.
(ii) Deed Poll or Sworn Affidavit as per Annexure "E" given in the Passport Instruction booklet.
Change of Address
Q:
How
do
I
change
the
address
on
my
passport?
A: To change the address in the passport, you have to apply for a "Re-issue" of passport and get the
Q: While applying for a fresh passport, the applicant mentions his paying guest address as present
address in the application form. If the applicant shifts to another address before police verification, what
should he/she do?
A: He/She should intimate the Department Incharge of Police Station.
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Deletion of ECR
Q: My passport was issued at Passport Office, Hyderabad. Presently, I am working at Chandigarh for the
last one year. Can I apply for Non-ECR status at Chandigarh and what are the documents required?
A: You can apply for deletion of ECR at your nearest PSK/Mini PSK within the jurisdiction of Passport
Office (PO), Chandigarh. For this purpose, you need to submit Passport Application form along with the
following documents:
1. Original and self attested photocopy of your passport.
2. Documentary proof for any one of the Non-ECR (previously ECNR) categories - if you are eligible for
Non-ECR.
3. Proof of present address.
To know the list of documents which can be submitted as Address Proof, please Click Here
Q: My child has ECR status printed on his passport? What should I do?
A: To change the ECR status printed on your child's passport, you have to apply for a "Re-issue" of
passport and get the specified change done in personal particulars.
Change of Place of Birth
Q: What is the process to change the date/place of birth in the passport? What are the
requirements/documents needed for getting the date of birth changed in the passport?
A: If you want to change the date/place of birth in the passport, you need to apply for "Re-issue" of
passport and submit the filled in application form at your nearest Passport Seva Kendra (PSK)/Mini
Passport Seva Kendra (Mini PSK). A new passport booklet would be issued to you.
To check the list of documents to be attached with the application form, please Click Here
Change of Gender
Q: Can I apply for change in my gender or change in father's/mother's name in the passport? What
additional documents do I have to submit?
A: To change your gender or your father's/mother's name, you have to apply for a "Re-issue" of passport
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and get the specified change done in personal particulars.

To check the list of documents to be submitted, please Click Here
Change of Father's/Mother's Name
Q: Can I apply for change in my gender or change in father's/mother's name in the passport? What
additional documents do I have to submit?
A: To change your gender or your father's/mother's name, you have to apply for a "Re-issue" of passport
and get the specified change done in personal particulars.
To check the list of documents to be submitted, please Click Here
Issue of Police Clearance Certificate (PCC)
Q: How do I apply for a Police clearance Certificate (PCC)?

A: You can submit the filled in Police Clearance Certificate (PCC) Application Form at Passport Seva
Kendra (PSK)/Mini Passport Seva Kendra (Mini PSK), within the jurisdiction of your Passport Office (PO).
You need to attach the self-attested photocopies of following documents along with the Police Clearance
Certificate (PCC) Application Form:
1. Passport in original with self-attested photocopy of its first two and last two pages, including ECR/NonECR page (previously ECNR) and the page of observation (if any), made by Passport Issuing Authority
and validity extension page, if any, in respect of short validity passport.
2. Proof of Present Address (if address is different from the one mentioned on passport).
Q: In how much time will Police Clearance Certificate (PCC) be issued?

A: Please refer the table below to determine the time required for issuing Police Clearance Certificate
(PCC) in various cases:
S.No.
1.
2.
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Police
Verification
Observation in System
Report
(PVR)/
Police Verification Report in respect of the

existing passport is clear and there is no
subsequent adverse entry in the system
Service Levels
Police Clearance Certificate (PCC)

will be issued on the same day at
PSK/ Mini PSK.
a) Police Verification was not required when

the passport was issued as the applicant

was then a minor and has now become an
adult
b) Police Verification was not required when
the passport was issued as the applicant
was a dependent of a Government
employee
c) Police Verification process could not be
completed at the time of issuance of
passport due to various reasons
d) Applicant's present address is different
from that mentioned in the passport
e) Any other such cases where passport
was issued without police verification
Police Clearance Certificate (PCC)

will be issued only after completion
of police verification process. After
PVR is received, Passport Office
(PO) will inform the applicant through
e-mail/ letter. Applicant needs to
come to the Passport Office (PO)
with his/her passport to collect Police
Clearance Certificate (PCC). Country
for which Police Clearance
Certificate (PCC) is being issued will
be stamped on the passport.
Q: What is the procedure to apply for Police Clearance Certificate (PCC) if passport was issued from
another Passport office/Indian Mission?
A: If you are in India, you can submit the filled in Police Clearance Certificate (PCC) Application Form at
Passport Seva Kendra (PSK)/Mini Passport Seva Kendra (Mini PSK), within the jurisdiction of your
Passport Office. If you are abroad, you need to contact the respective Indian mission/post of that country.
You need to attach the self-attested photocopies of the following documents along with the Police
Clearance Certificate (PCC) Application Form:
1. Passport in original with self-attested photocopy of its first two and last two pages, including ECR/NonECR page (previously ECNR), the page of observation (if any) made by Passport Issuing Authority, and
validity extension page, if any, in respect of short validity passport
2. Proof of Present Address (if address is different from the one mentioned on passport).
Q: What is the validity of Police Clearance Certificate (PCC)?

A: There is no validity specified for Police Clearance Certificate (PCC). However, if the particular country
asks for a specific validity, then you need to meet Assistant Passport Officer (APO) at your nearest
Passport Seva Kendra (PSK) for the same.
Q: Can Police Clearance Certificate (PCC) be issued for more than one country through one application
form?
A:Police Clearance Certificate (PCC) can only be issued for one country through one application form.
Q: What is the age limit for getting the Police Clearance Certificate (PCC)?
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A: There is no age limit specified for getting the Police Clearance Certificate.
Q: Are minor citizens required to apply for Police Clearance Certificate?

A: Police Clearance Certificate (PCC) can be issued to minors, if a country asks for the same.
Issue/ Re-issue of Diplomatic/Official Passport
Q: I am preparing for official travel. How do I obtain my diplomatic, official or regular no-fee passport?
A: You need to fill the Diplomatic/Official Passport Application form. Normally applications for diplomatic
and official passports are entertained only at the Consular, Passport and Visa (CPV) Division, Patiala
House, New Delhi. However you can also choose to apply at any Passport Office if you reside outside the
National Capital Region. Please submit the following documents along with the application form:
1. Original safe custody certificate of valid ordinary passport (if held) from your office.
2. If Diplomatic/Official passport previously held by the applicant were kept in the safe custody of the
Ministry of External Affairs, the original certificate should be enclosed.
3. Diplomatic/Official/Ordinary passport which is around 10 years old or more (from the date of issue)
must be submitted with the application for cancellation.
4. Official retiring in less than six months from the date of application, is required to give an undertaking
from his/her
Tatkaal Related
Q: I am travelling very soon. How can I get a passport urgently?

OR
I have to travel to the UK next week on a company assignment. I don't have a passport. Can I get a new
passport under the Tatkaal Scheme?
A: You can apply under the Tatkaal scheme, if you are eligible and have to pay the additional Tatkaal fee
of Rs.1, 500. You must submit a Verification Certificate (as per Annexure "F") or three out of 15
documents along with Standard Affidavit (as per Annexure "I").
To check the eligibility under the Tatkaal scheme, please refer Section D: Table 2 "List of Applicant
Categories and Documents to be submitted" of the instruction booklet. To check the complete list of
documents to be submitted along with the application form, please Click Here
Q: Can I apply for a passport under the Tatkaal scheme?

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A: The final authority of the issuance of passport under the Tatkaal scheme lies with the Passport Office.
But, there are list of applicants who cannot apply for passport under the Tatkaal scheme.
To check the list of applicants who cannot apply under the Tatkaal scheme, please refer instruction
booklet.
Click Here to download Instruction Booklet.
Q: Can I apply for a passport under the Tatkaal scheme at District Passport Cell (DPC)/Speed Post
Centre (SPC)/Citizen Service Centre (CSC)?
A: Tatkaal applications are accepted only at Passport Seva Kendra (PSK)/Mini Passport Seva Kendra
(Mini PSK). They are not accepted at District Passport Cell (DPC)/Speed Post Centre (SPC)/Citizen
Service Centre (CSC).
Q: I have submitted my passport under the normal procedure, but now I need my passport urgently. Can I
convert my application to a Tatkaal application?
A: You need to visit Assistant Passport Officer (APO) at your nearest Passport Seva Kendra (PSK).
Q: Is Tatkaal Passport Process is same as Normal Passport Process?

A: Under the Tatkaal scheme, an applicant needs to submit additional documents and additional fees
along with his/her application form. Also, police verification will be done after the issuance of passport.
To check the list of additional documents, please Click Here and to check the fee structure, please Click
Here
Q: I am a resident of Nagaland and want to get a passport on urgent basis. What should I do?
A: To get the passport on urgent basis, you need to visit Assistant Passport Officer (APO) at your nearest
Kashmir. I have not visited my permanent address for last 20 years. Can I apply for a passport under the
Tatkaal scheme?
A: To get a passport under the Tatkaal scheme, you need to visit Assistant Passport Officer (APO) at your
A: In case your passport is damaged but recognizable, i.e. Passport Number is readable, name is legible
and photo is intact, then you can apply for "re-issue" of passport under Tatkaal scheme. But, if your
passport has been damaged beyond recognition, then you cannot apply under the Tatkaal scheme. In
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that case, you need to visit Assistant Passport Officer (APO) at your nearest Passport Seva Kendra
(PSK) to get the passport on urgent basis.
can passport be issued to a minor on urgent basis?
A: In such cases, minors can be issued passport under the Tatkaal scheme subject to Assistant Passport
Officer (APOs) approval.
Q: I am a Nagaland senior citizen and want to obtain a passport under the Tatkaal scheme. Can I do so?
A: To get a passport under the Tatkaal scheme, you need to visit Assistant Passport Officer (APO) at your
Emigration Check Required (ECR) Related
Q: I have a passport with ECR status printed on it. What does this mean?
A: Emigration clearance is required for employment in the following countries (18 in total):
United Arab Emirates (UAE), Kingdom of Saudi Arabia (KSA), Qatar, Oman, Kuwait, Bahrain, Malaysia,
Libya, Jordan, Yemen, Sudan, Brunei, Afghanistan, Indonesia, Syria, Lebanon, Thailand, and Iraq.
ECR passport holders taking up employment in the above mentioned list of 18 countries require
emigration clearance from the office of the Protector of Emigrants (POE) before leaving India; otherwise,
they will be stopped from travelling at the port of exit. Please Click Here to download the instruction
booklet.
ECR passport holders travelling abroad for a purpose other than employment, to any of the list of 18
countries, will be allowed to leave the country on production of valid passport, valid visa and return ticket
at the immigration counters of an international airport in India.
Q: What are the categories eligible for Non-ECR status and what documents do they have to submit?
A: To view the complete list of Non-ECR categories and the documents to be submitted, please Click
Here
Q: My passport was issued at Passport Office, Hyderabad. Presently I am working in Chandigarh for the
last one year. Can I apply for Non-ECR status at Chandigarh and what are the documents required?
A: You can apply for deletion of ECR at your nearest Passport Seva Kendra (PSK)/Mini Passport Seva
Kendra (Mini PSK) within the jurisdiction of Passport Office, Chandigarh. For this purpose, you need to
submit
Passport
Application
form
along
with
the
following
documents:
1.
Original
and
self
attested
photocopy
of
your
passport.
2. Documentary proof of any one of the Non-ECR (previously ECNR) categories - if you are eligible for
Non-ECR.Proof
of
present
address.
To view the list of documents that can be submitted as address proof, please Click Here
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Q: I don't have Non-ECR status in my passport. Can I get it on the basis of my provisional matriculation or
above
certificate
issued
by
the
University/Board
concerned?
A: You need to apply for Re-issue of passport for deletion of ECR. A new passport booklet (without
having the "ECR" status printed on its last page) will be dispatched to you.
You are entitled to Non-ECR status if you possess qualification of Matriculation or above. You can get
Non-ECR status on the basis of provisional matriculation certificate if the mark sheets of all semesters of
your
course
are
available
with
you.
To check the complete list of Non-ECR categories, please Click Here
Q: I am a salaried person and income tax is deducted from salary. What are the documents I need to
submit
for
Non-ECR
status?
A: Following documents have to be submitted for Non-ECR (previously ECNR) status:
Proof of assessment of income tax and actual payment of income tax for last one year; or
Income Tax return statement (with income tax being paid by the applicant) for last one year that is
stamped by income tax authorities and a copy of the PAN card.
Q: I have a passport with ECR status. Is emigration clearance required if I want to visit a country other
than
the
list
of
18
countries
mentioned
in
the
instruction
booklet?
A: No, emigration clearance is not required, if you want to visit a country other than the list of 18 countries
mentioned in the instruction booklet. ECR passport holders travelling abroad for purpose other than
employment, to any of the list of 18 countries, will be allowed to leave the country on production of valid
passport, valid visa and return ticket at the immigration counters of an international airport in India.
ECR passport holders taking up employment in the list of 18 countries require emigration clearance from
the office of the Protector of Emigrants (POE) before leaving India; otherwise, they will be stopped from
travelling at the port of exit.
Q: I have a passport with ECR status and have an employment visa on it. Do I require emigration
clearance?
A: ECR passport holders taking up employment in the list of 18 countries mentioned in the instructions of
passport application form require emigration clearance from the office of the Protector of Emigrants (POE)
before leaving India; otherwise, they will be stopped from travelling at the port of exit.
A passport holder having employment visa in passport does not require clearance from POE when they
go back after a short visit to India, else emigration clearance is required.
Q: My child has ECR status printed on his passport? What should I do?
A: To change the ECR status printed on your child's passport, you have to apply for a "Re-issue" of
passport and get the specified change done in personal particulars.
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Q: I have ECR status printed on my passport. I want to go to Malaysia urgently. What is the procedure I
need to follow?
A: At present Emigration control is exercised by the Ministry of Overseas Indian Affairs, through Protector
of Emigrants (POE) under the Emigration Act, 1982. Emigration clearance is required for employment in
the following countries (18 in total):
United Arab Emirates (UAE), Kingdom of Saudi Arabia (KSA), Qatar, Oman, Kuwait, Bahrain, Malaysia,
Libya, Jordan, Yemen, Sudan, Brunei, Afghanistan, Indonesia, Syria, Lebanon, Thailand, and Iraq.
If you are going to Malaysia for purpose other than employment, you will be allowed to leave the country
on production of valid passport, valid visa and return ticket at the immigration counters of an international
airport in India.
If you are taking up employment in Malaysia, you require emigration clearance from the office of the
Protector of Emigrants (POE) before leaving India; otherwise, they will be stopped from travelling at the
port of exit. For further clarification refer website www.moia.gov.in
Other Service Related Queries
Q: Can I apply for services at a Passport Office other than the Passport Office where my previous
passport was issued?
A: You can apply at any Passport Seva Kendra (PSK)/Mini Passport Seva Kendra (Mini PSK), within the
jurisdiction of your Passport Office. If you are a student studying elsewhere, you can also apply at a
Passport Seva Kendra (PSK) of the state of your permanent address.
Q: I shifted to Delhi 7 months back from Bangalore. I want to apply for a passport. Can I apply for a
passport at Passport Office, Delhi? If so, please let me know the procedure.
A: Yes, you can apply at any Passport Seva Kendra (PSK)/Mini Passport Seva Kendra (Mini PSK) within
the jurisdiction of Passport Office (PO), Delhi. For this purpose, you have to fill Passport Application form
and submit the required documents. Since, you have stayed at your present address for less than one
year, please mention your previous address in Column 3 of the Supplementary form.
Q: Can I obtain a new passport if I am in USA on a visitor's visa?

A: Visitors from India on B1 /B2 visa who are not normally resident in USA are advised to hold passports
which are valid for the period of their visit. In such cases, where it becomes necessary due to unavoidable
reasons, passport would be reissued after clearance from the original Passport Issuing Authority.
Q: Can I get a passport on Post police verification under the Normal scheme?
A: The issuance of passport on Post police verification under the Normal scheme depends on case to
301 | P a g e
case basis. The applicant needs to submit additional documents for the same. Please refer the Document
Advisor for such cases and list of documents to be submitted.
Q: I had applied for a passport last year but the same was not issued. I want to again apply for a
passport. Should I put a cross against "Fresh Passport" or "Reissue of Passport" in Column 1.1 of the
Passport Application form?
A: You have to apply for "Fresh Passport", if you were not issued passport last time. You need to provide
the previous application details like file number, month & year of applying and name of the Passport
Office (PO) where applied, in Column 7.2 of the Passport Application form.
Q: Can an Indian passport be issued to applicants born outside India?

A: Indian passport can be issued to the "Citizen of India by Descent" i.e. person born to Indian parent(s)
outside India.
Q: An applicant is staying in Bangalore for last two years and his/her permanent address is in Kerala. Can
he/she endorse his/her permanent address instead of present address in the passport?
A: Only the present address will be endorsed on the passport, not the permanent address.
Application Channels Overview
Q: I applied last week for a passport at the Passport Office (PO) or I applied last week through a travel
agent at the Passport Office (PO). Should I now apply in the new system again?
A:No. You need not apply in the new system again. Your application will be processed in the old system.
Q: What are the various locations where I can submit my application for obtaining a passport?
A:You can submit the filled in Passport Application Form at the following locations:
Any Passport Seva Kendra (PSK)/Mini Passport Seva Kendra (Mini PSK) within the jurisdiction of
You can also fill the form online before coming to Passport Seva Kendra (PSK) . While Passport Seva
Kendras (PSKs) offer all kinds of passport services, only fresh passport applications are accepted at
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District Passport Cells (DPCs), Speed Post Centres (SPCs) and Citizen Service Centres (CSCs). You can
also locate the application submission centre on our website www.passportindia.gov.in
Q: What are the various channels through which I can apply for reissue of my passport?
OR
Q: My passport booklet is exhausted. Where can I apply for reissue of my passport?
A:No. You can submit the filled in Passport Application Form at any Passport Seva Kendra (PSK)/Mini
Passport Seva Kendra (Mini PSK) within the jurisdiction of your Passport Office (PO). You can also fill the
form online before coming to Passport Seva Kendra (PSK). For submitting your application online, you
need to register yourself as a user on our website www.passportindia.gov.in .
To create your user account for online form submission, Register now.
Q: What are the various channels through which I can apply for Police Clearance Certificate (PCC)?
A:You can apply for PCC at Passport Seva Kendra (PSK)/Mini Passport Seva Kendra (Mini PSK), within
the jurisdiction of your Passport Office. You can also fill the form online before coming toPassport Seva
Kendra (PSK). For submitting yourPolice Clearance Certificate (PCC) application online, you need to
register yourself as a user on our website www.passportindia.gov.in .
To create your user account for online form submission, Register now.
Q: Where can I submit the diplomatic /official passport application form?<

A:Normally applications for diplomatic and official passports are entertained only at the Consular,
Passport and Visa (CPV) Division, Patiala House, New Delhi. However, you can also choose to apply at
any Passport Office if you reside outside the National Capital Region.
Q: Can anyone else submit my passport application on my behalf?

A:Under the new system, it is mandatory for all applicants to be physically present while submitting the
passport application form whether it is at the Passport Seva Kendra (PSK) or at the District Passport Cell
(DPC)/Speed Post Centre (SPC)/Citizen Service Centre (CSC).
Q: I want to add my spouse name on my passport. Where can I apply for the same?
OR
Q: I want to change my existing personal particulars in the passport. Where can I apply for the same?A:If
you want to add spouse name in your passport, you need to apply for reissue of passport. You can
submit the filled in Passport Application Form at any Passport Seva Kendra (PSK)/Mini Passport Seva
Kendra (Mini PSK) within the jurisdiction of your Passport Office. You can also fill the form online before
coming to Passport Seva Kendra (PSK). For filling the application online, you need to register yourself as
a user on our website www.passportindia.gov.in
To create your user account for online form submission, Register now
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Q: I am an Indian Citizen by origin and have been repatriated from Sri Lanka. I want to apply for a
passport. Where can I apply for the same?
A:You can submit the filled in Passport Application Form at any Passport Seva Kendra (PSK)/Mini
Passport Seva Kendra (Mini PSK) within the jurisdiction of your Passport Office.
Q: What are the various DOs and DON'Ts for applicants applying at District Passport Cell (DPC)/Speed
Post Centre (SPC)/Citizen Service Centre (CSC)?
A:The various DOs and DON'Ts for applicants applying at District Passport Cell (DPC)/Speed Post
Centre (SPC)/Citizen Service Centre (CSC) are:
Photograph
Paste colour photograph having white/light background, No signature/

stamp on the pasted photograph, Size- 4.5 cm x 3.5 cm, photograph on
the application form should be of the applicant only.
Demand Draft
Should be issued by a Scheduled bank, Validity 60 days or more from

date of submission, Draft should be of exact amount of fee, as
applicable and not be torn/soiled.
Documents
Self-attested photocopies of the supporting documents that need to be

submitted along with the form (In case of submission at Citizen Service
Centre (CSC), particularly at Bangalore-1, applicants are requested to
attach attested photocopies (either gazetted official or notary) of all
documents with the application form.)CLEARphotocopies, One
documentary proof is sufficient for each document category, Documents
should be correctly mentioned in the "ENCLOSURES" section and
properly attached, Personal Details mentioned in the application form
should match the details in the enclosed documents e.g. address,
employment type, gender, Parent's/Spouse name, citizenship, Date of
Birth.
Application form
Only passport application forms in NEW FORMAT will be accepted,

form should not be torn/soiled, form should be complete/correct in all
respects e.g. valid 10 digit mobile number, Education Qualifications &
Emergency Contact Details should be mentioned clearly,
Present/Permanent Address with correct Pin code is filled, 'Residing
since' and both references should be provided, ECNR category to be
appropriately mentioned. In "Place of Birth" column, only "Village",
"District" and "State" needs to be mentioned; "Post" and "Taluk" not
required.
Signature
Applicant should sign/ provide thumb impression STRICTLY within the

designated box below the photograph and also at the self declaration in
the last page.
Q: What are the key changes with respect to passport application submission at District Passport
Cells/Speed Post Centres (SPCs)/Citizen Service Centres (CSCs)?
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A:Only fresh passport applications will now be accepted at District Passport Cells/Speed Post Centres
(SPCs)/Citizen Service Centres (CSCs). Therefore, following cases will NOT be handled at District
Passport Cells/Speed Post Centres (SPCs)/Citizen Service Centres (CSCs):
Reissue Case
Tatkaal Case
Complex CaseClick here to view list of complex cases
Miscellaneous services (e.g. Police Clearance Certificate (PCC))
Applicants requiring the above passport services should visit nearest Passport Seva Kendra (PSK)/ Mini
Passport Seva Kendra (Mini-PSK). To know the location of the Kendra nearest to you, visit the
Website (www.passportindia.gov.in) or call Toll Free (1800-258-1800) .
Online
Q: Who can apply online?

A:Only Indian citizen living in India can avail the online service. This service is not available to Indian
citizens living outside India. Applicants can apply online for ordinary passport - issue of fresh passport, reissue of passport and issue of police clearance certificate (PCC).
Q: Can online registered application be submitted at District Passport Cell (DPC)/Speed Post Centre
(SPC)/Citizen Service Centre (CSC)?
A:Online registered applications have to be submitted at Passport Seva Kendra (PSK)/Mini Passport
Seva Kendra (Mini PSK). They are not accepted at District Passport Cell (DPC)/Speed Post Centre
(SPC)/Citizen Service Centre (CSC).
Q: I have downloaded the passport application form from your website. Can I fill and submit it?
A:Yes, downloaded form which is duly filled in is acceptable. But make sure that the form is printed in
good quality paper (90 GSM or above), using a good quality printer. The form should not be folded or
soiled when it is presented at a Passport Seva Kendra (PSK). Passport Seva Kendra (PSK) staff can
reject your form in case it is not being properly scanned at the Passport Seva Kendra (PSK) due to
reasons mentioned above.
Q: I have printed my online form and have found a mistake. How can I correct it?
A:At the Passport Seva Kendra (PSK)/Mini Passport Seva Kendra (Mini PSK), please ask the Citizen
Service Executive (CSE) to make the required changes in the application form.
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Q: Can I apply online for reissue of passport?

A:Yes, if you are an Indian citizen living in India, you can apply online for re-issue of passport. For
submitting your passport application online, you need to register yourself as a user on our
website www.passportindia.gov.in To create your user account for online form submission, Register now.
Q: I am an Indian citizen but currently I am residing in France. My passport has expired. Can I apply
online for reissue of passport?
A:
Q: Can I apply for Police Clearance Certificate (PCC) application online?

A:Yes, you can apply for Police Clearance Certificate (PCC) application online. For submitting your Police
Clearance Certificate (PCC) application online, you need to register yourself as a user on our
website www.passportindia.gov.in .
To apply for Police Clearance Certificate (PCC) application online, please Click Here .
Q:How can I apply for a passport online?

OR
Q: What are the things I need to take care of while applying for a passport online? (Checklist)
A:To apply online, you need to be a registered user. When you apply online, you also have an option to
download an e-Form that you can fill offline and upload later on. For downloading the form you need not
be a registered user, but for uploading the form you need to register yourself. To apply for a passport
online, please Click Here .
You can also upload the documents required for applying the passport. You should have the scanned
copy of the documents.
Passport Seva Kendra (PSK)/Mini Passport Seva Kendra (Mini-PSK)
Q: What is a Passport Seva Kendra (PSK)?

A:Passport Seva Kendra (PSK) will facilitate front-end activities of passport issuance. Hence, it will
facilitate the issuing of passport to applicants. These centres will cover functionalities from token issuance
to final granting of application for passport issue/re-issue and other services.
Q: What all necessary documents, I need to carry while applying for a passport at a Passport Seva
Kendra (PSK)/Passport Seva Kendra (Mini PSK) ? (Checklist)
A:To view the list of documents to be submitted along with the application form, please Click Here .
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Passport Office (PO)
Q: What is a Passport Office (PO)?

A:Passport Office (PO) would handle all back-end activities required for processing all passport
applications. The POs would be responsible for (i) printing (ii) lamination (iii) dispatch of Passports, and
(iv) granting of applications received through District Passport Cell (DPC), Speed Post Centre (SPC) and
Citizen Service Centres (CSCs) besides attending to (I) establishment matters, (ii) legal cases and (iii)
financial matters.
Q: What kinds of applications are handled at a Passport Office?
A:Following types of applications are processed at a Passport Office (PO):
1. Special purpose passports for visiting countries like Israel/Taiwan
2. Diplomatic Official Passports
3. Further processing of District Passport Cell (DPC)/Speed Post Centre (SPC)/Citizen Service
Centre (CSC) cases be sent by respective Passport Seva Kendra (PSK).
4. Further processing of Complex Cases escalated by Assistant Passport Officer (APO) at Passport
Seva Kendra (PSK) to Regional Passport Officer (RPO) at Passport Office (PO)
Q: I want to apply for a fresh passport. Can I apply for the passport at a Passport Back Office as it is near
to my place?
A:No, you cannot apply for a passport at a Passport Back Office. You need to visit Passport Seva Kendra
(PSK)/Passport Seva Kendra (Mini PSK)/District Passport Cell (DPC)/Speed Post Centre (SPC)/Citizen
Service Centre (CSC) in your area to submit your passport application.
Q: What is a District Passport Cell (DPC)?

A:District Passport Cell (DPC) is a collection centre where application forms pertaining to issue of fresh
passports can be submitted. All the forms that are collected are then sent to the designated Passport
Seva Kendra (PSK) for further processing
Service Centre (CSC)
A: Online registered applications have to be submitted at Passport Seva Kendra (PSK)/Mini Passport
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Q: The validity of my passport is expiring in six months. Can I apply for reissue of passport through
District Passport Cell (DPC) available in my district?
A: No, you cannot apply for reissue of passport through District Passport Cell (DPC)/Speed Post Centre
(SPC)/Citizen Service Centre (CSC) available in your district. Only application form pertaining to issue of
fresh passport can be submitted at District Passport Cell (DPC)/Speed Post Centre (SPC)/Citizen Service
Centre (CSC).
Q: What documents I need to carry while applying for a passport in District Passport Cell (DPC)/Speed
Post Centre (SPC)/Citizen Service Centre (CSC)? (Checklist)
A: When you go to a District Passport Cell (DPC)/Speed Post Centre (SPC) or Citizen Service Centre
(CSC) for submitting your application form, please carry:
Self-attested photocopies of the supporting documents that need to be submitted along with the
form (In case of submission at Citizen Service Centre (CSC), particularly at Bangalore-1,
applicants are requested to attach attested photocopies (either gazetted official or notary) of all
documents with the application form.)
Originals of the supporting documents
Your recent passport size photograph (4.5 cm length x 3.5 cm width) in colour
Filled application form
Demand Draft (DD) drawn in favor of "PAO-MEA" payable at the city where the Regional
Passport Office (RPO) is located, if you are paying fee by DD.
If you are not carrying passport form, you may buy the same from District Passport Cell (DPC)/Speed
Post Centre (SPC)/Citizen Service Centre (CSC) and fill it there itself. For the list of documents to be
submitted along with the application form, please Click Here .
Q: I submitted my application at District Passport Cell (DPC)/Speed Post Centre (SPC)/Citizen Service
Centre (CSC) and forgot to attach one document. Where should I submit the same?
A: You need to visit the Passport Office for submitting the missing documents.
Q: What is a Speed Post Centre (SPC)?

A:Speed Post Centre (SPC) is a collection centre where application forms pertaining to issue of fresh
Seva Kendra (PSK) for further processing.
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(CSC) for submitting your application form, please carry
Post Centre (SPC)/Citizen Service Centre (CSC) and fill it there itself. For the list of documents to be
Q: I submitted my application at District Passport Cell (DPC)/Speed Post Centre (SPC)/Citizen Service
Q: What is a Citizen Service Centre (CSC)?

A: Citizen Service Centre (CSC) is a collection centre where application forms pertaining to issue of fresh
Seva Kendra (PSK) for further processing.
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Q:Can online registered application be submitted at District Passport Cell (DPC)/Speed Post Centre
(CSC) for submitting your application form, please carry:
Post Centre (SPC)/Citizen Service Centre (CSC) and fill it there itself. For list of documents to be
Q:I submitted my application at District Passport Cell (DPC)/Speed Post Centre (SPC)/Citizen Service
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Bangalore One
Q: What is Bangalore One/E seva/E-sampark?

A: Bangalore One/E-seva/E-sampark are Citizen Service Centres (CSC) where an applicant can submit
the filled in Passport Application Form pertaining to issue of fresh passport.
e-Seva
What is Bangalore One/E seva/E-sampark?

e-Sampark
Q: What is Bangalore One/E seva/E-sampark?

Locate your nearest application channel
Q: How can I locate my nearest application channel?

A: You can locate your nearest Passport Seva Kendra (PSK) by calling the call centre at 1800-258-1800
or on our website www.passportindia.gov.in .
To locate your nearest application submission centre, please Click Here
Other Application Channel Related Queries
Q: I have downloaded the passport application form from your website. Can I fill it up & submit the
application by post? If yes, what are the various ways through which I can find the address of my nearest
Passport Seva Kendra (PSK)?
A:
A: No, you cannot submit the application by post. You can submit the filled in Passport Application Form
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at the following locations:

1. Any Passport Seva Kendra (PSK)/Mini Passport Seva Kendra (Mini PSK) within the jurisdiction of
2. District Passport Cell (DPC) of your district
3. Speed Post Centre (SPC) in your district
4. Citizen Service Centre (CSC) if any, in your area
WhilePassport Seva Kendras (PSKs) offer all kinds of passport services, only fresh passport applications
are accepted at District Passport Cells/Speed Post Centres (SPCs) and Citizen Service Centres (CSCs).
You can also locate the application submission centre on our website www.passportindia.gov.in .
Passports
Q: What is the fee for issue of Tatkaal Passport?
A:To know the fee details, please Click Here
Q: How long will it take to get a Tatkaal passport?
A:After successful application form submission, with final status as "Granted", you can expect your
passport to be dispatched as follows:
Type
of
Application
Type
of
Verification
Police
Police Verification
not required
Tatkaal
Expected Time To Dispatch Passport
is
Within one working day excluding the date of submission of

application.
Issuance
basis

Report.
Note:
1. In complex cases, such as adoption, application on behalf of a minor from single parent, major
change in name, duplicate passport, doubtful documentation, the processing time will be
approximately 30 days excluding the date of submission of application. Mandatory Pre Police
Verification cases such as J&K and Nagaland subjects would also need additional processing
time.
2. Issue of passport is subject to data check in the system and finding no adverse entry/report.
Q: Can I apply for passport under the Tatkaal scheme?
A:The final authority for the issuance of passport under the Tatkaal scheme lies with the passport office.
But there are list of applicants who cannot apply for passport under the Tatkaal scheme.
To check the list of applicants who cannot apply under the Tatkaal scheme, please refer instruction
booklet. Click Here to download Instruction Booklet. You can also refer Click Here for the same.
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Q: I am a resident of Nagaland and want to get a passport on urgent basis. What should I do?
A:To get the passport on urgent basis, you need to visit Assistant Passport Officer (APO) at your nearest
Kashmir. I have not visited my permanent address since last 20 years. Can I apply for passport under the
Tatkaal scheme?
A:To get the passport on TATKAAL basis, you need to visit Assistant Passport Officer (APO) at your
A:In case your passport has been damaged but recognizable, i.e. passport number is readable, name is
legible and photo is intact, then you can apply for reissue of passport under the Tatkaal scheme. But, if
passport has been damaged beyond recognition, then you cannot apply under the Tatkaal scheme. In
that case, you need to visit Assistant Passport Officer (APO) at your nearest Passport Seva Kendra
(PSK) to get the passport on urgent basis.
can passport be issued to minor on an urgent basis?
A:In such cases, minors can be issued passport under the Tatkaal scheme subject to Assistant Passport
Officer's (APOs) approval.
Q: Can Nagaland senior citizen apply for the passport under the Tatkaal scheme?
A:To get the passport on urgent basis, you need to visit Assistant Passport Officer (APO) at your nearest
Miscellaneous
Q : The applicant is staying at Bangalore from last two years and permanent address is in Kerala. Can
he/she endorse his/her permanent address instead of present address in the passport?
A: Only the present address will be endorsed on the passport not the permanent address.
Q : I have stayed at three different addresses during last one year. Will the police verification be done at
all the places?
A: Yes, the police verification will be done at all the three addresses where the applicant has resided in
the last one year. The previous addresses will be the places where the applicant has resided for the
longest period during last one year.
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Q : While applying for fresh passport, the applicant mentions his paying guest address as present
address in the application form. If the applicant shifts to another address before police verification, what
should he/she do?
A: He/She should intimate the Department In charge of Police Station
Q : I am a self employed person and have recently shifted to Bangalore from Delhi. I want to apply for
passport on Tatkaal basis, but I don't have any address proof. What should I do?
A: It is mandatory to submit proof of address to apply for passport.
For Proof of Address attach one of the following documents:
Water/Telephone (landline or post paid mobile bill)/Electricity bill/Statement of running bank

account (Scheduled Commercial bank excluding Regional Rural banks and local area
banks)/Income Tax Assessment Order/Election Commission Photo ID card/Gas connection
bill/Certificate from Employer of reputed and widely known companies on letter head
Spouse's passport copy (First and last page including family details), (provided the applicant's
present address matches the address mentioned in the spouse's passport)
Parent's passport copy, in case of minors (First and last page)
Applicant's current and valid ration card
Note: If any applicant submits only ration card as proof of address, it should be accompanied by
one more proof of address out of the given categories.
Q : A mentally retarded person wants to go to abroad for treatment. He does not have any address proof.
Will he be able to get passport? If yes, then what is the procedure?
A: The applicant has to apply for passport and submit parent's/legal guardian's address proof along with
his/her date of birth proof. Passport would be granted to the applicant subject to Assistant Passport
Officer's (APOs) approval.
Passport Seva Kendra (PSK) Working Hours
Q : What are the timings of Passport Seva Kendra (PSK)? Also, what are the lunch timings?
A: The timings of Passport Seva Kendra (PSK) are as follows:
Working Days
Monday-Friday
Working Hours
9:00 AM - 5:30 PM
Token Issuance
9:00 AM - 4:00 PM
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Lunch Hours
1:30 PM - 2:00 PM
Short Validity Passports
Q : In what cases Short validity passport (SVP) is issued? What documents are required to be submitted?
A: Short Validity passport (SVP) is issued in following cases:
1. In case of urgency, students can be issued a SVP on production of admission letters if they are to
appear in examinations, such as TOEFL, SAT etc. Such applications can also be processed
under the Tatkaal Scheme, if they are accompanied by verification certificate as prescribed, and
proof of urgency is furnished to the Passport Office(PO).
2. There are instances of non-delivery of passports to the applicants due to loss in transit in the post
offices. In case of urgency, a SVP may be issued to the applicant, the validity to be extended to
full term on completion of the formalities.
3. Indians residing abroad and visiting India for a short period: SVP can be issued immediately, valid
for one year, on production of return ticket to the country from which the applicant came and/or a
document of identity such as driving license, Green Card, employment permit, social security
card, health card, labour card etc. indicating the applicant's identity and nationality. If the
application is for issue of duplicate passport in lieu of damaged passport, the damaged passport
itself may be accepted as proof of identity provided the personal particulars are clear and legible.
4. If a criminal case is pending against the applicant in any Court, he/she can be issued a passport
subject to the condition that a written permission granted by the court allowing the applicant to
travel abroad is enclosed. Normally a SVP valid for one year is issued, subject to conditions if
any, mentioned in the Court order as per GSR 570 (E) dated 25 August, 1993.
Q : What will be the validity of passport if I apply for renewal of Short Validity Passport (SVP)?
A: The validity of passport would be decided by Assistant Passport Officer (APO), if you apply for renewal
of Short Validity Passport (SVP).
Passport with incorrect details printed
Q : Incorrect details have been printed on my passport. What should I do?

A: If you find any mistake/error in the particulars printed in the passport booklet and the application form
you submitted, please return the passport for necessary rectification. Any additional fees required to be
paid would depend solely on Assistant Passport Officer (APO)/PIA's decision. If there is a
misrepresentation of facts, then penalty could also be imposed.
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Others
Q :What should be the value of the Stamp paper on which the various affidavits are to be executed?
A: An affidavit needs to be prepared on non-judicial stamp paper of minimum value.
Q : My mother is old and infirm. She cannot come to the Passport Seva Kendra (PSK). Can I apply for her
through an agent?
OR
I am a very busy executive. Can my office boy submit the application on my behalf?
A: Under the new system it is mandatory for all applicants to be physically present while submitting the
passport application form whether it is at the Passport Seva Kendra or at the District Passport Cell
(DPC)/Speed Post Centre (SPC)/Citizen Service Centre (CSC).
Q : What is an E-Passport?
A: In 2009 India was issuing e-passports to those eligible for diplomatic passports. These carry a
microchip with a photograph of the bearer and relevant personal information. The e-passport program will
eventually extend to ordinary passports.
Q : What are Special Passports?

A: India also issues special passports to citizens of India who intend to travel to Bangladesh or Sri Lanka.
These passports are only good for travel to the specified destination country. The government ceased
issuing Indo-Bangladesh passports in 2006, although those already issued are usable until their
expiration dates. These passports allow travel to Bangladesh without requiring a visa, which ordinary
passport-holders need to obtain.
Q : What are Special Passports?

A: India also issues special passports to citizens of India who intend to travel to Bangladesh or Sri Lanka.
These passports are only good for travel to the specified destination country. The government ceased
issuing Indo-Bangladesh passports in 2006, although those already issued are usable until their
expiration dates. These passports allow travel to Bangladesh without requiring a visa, which ordinary
passport-holders need to obtain.
1. Type
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2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
Passport Number
Surname
Given Names
Sex
Date of Birth
Place of Birth
Place of issue
Date of Issue
Date of Expiry
Photo
Signature
And Last page of passport booklet displays the following details:

1.
2.
3.
4.
5.
6.
Name of Father/Legal guardian

Name of Mother
Name of Spouse
Address
Old passport no. with date and Place of Issue
File Number
* ECR will be applicable only for a few cases
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CHAPTER 32
Home Loans for NRIs
Home loans for non-resident indians are similar to those offered to resident Indians, but the time limit is
for a shorter period. Compared to resident Indians, in most of the cases the loan amount will not exceed
70-85% percent of the entire cost of the property including cost of land or your repayment capacity
whichever is lower. As the loans are offered to NRIs, the eligibility requirement for loans is also very
stringent. As an NRI, you will be entitled to a loan of a maximum 36 times of your gross monthly earnings.
Loans are available with both adjustable and fixed rate options. Repayment terms various up to a
maximum of seven years, for professionals, the term can be extended up to 20 years. The method of
repayment Equated Monthly Installments (EMIs) directly debited from your NRO/NRE account.
Required documents for NRIs to apply for a housing loan
For Salaried Individuals
Photocopies of: Employment contract (if the contract is in a language other than English, an English
translation of the same attested by the Embassy/Employer should be given)/Appointment letter/Offer
letter.
Past occupational history.
Latest salary slip/certificate
Latest Labour card. Identity card issued by current employers
Visa stamped on the passport
One passport-sized photograph
Profile of the Company
Overseas Bank Account and NRE/NRO statement for the last six months
For Self-employed Individuals
Latest 3 years' audited P&L and B/S of the Company

Photocopy of Memorandum of Understanding
Photocopy of the trade/commercial licence
Profile of the Company
Overseas Bank Account and NRE/NRO statement for the last six months
Banks usually take more care when they are offering loans to NRIs for constructing or buying a home as
they do not stay in India. More documents are wanted compared to those required of resident Indians. As
an NRI, you will be asked for a copy of your passport and visa, a copy of the contract letter of the
employer, the salary statement and bank details for the last 6 months. The salary statement should also
include the date of joining, your name, details of the pay and your designation.
Third party guarantee for under construction property
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Banks would obviously want more security for their loans when they are offering to the NRIs as they do
not stay in India. The first mortgage should be in the name of the NRI and if the property is being
constructed when the loan is sought for, then an additional security in the form of third party guarantee is
required. The third party guarantee can be provided by either a resident of India or a fellow NRI. Even
though these are the normal requirements, some finer details are bank specific.
If you want to take a loan abroad, you have to take it from a loan provider who has offices in the city
where you plan to acquire property. Some banks also require that loan providers have offices in your city
of residence as well as the city where you want to buy the property. Even if every bank has a specific
policy for offering home loans to NRIs, they usually require them to have an account with the lending
bank and show deposits that are kept apart from the property mortgage.
You can also provide your driving license, and the property documents including the latest sale deed with
previous chain links, payment plan, allotment letter as well as receipts for all properties undergoing
construction. Many banks insist NRIs should have a close blood relative in India to take them on as coapplicants for the loan. Things have been made easy and many banks are willing to bend the rules if the
NRI has a good track record and has proven financial capabilities in India or abroad which can be
supported with valid documents
Note : the above guidelines is just for general information only. Home loan terms and conditions, rate of
interest etc varies from bans to bank
Non-resident guarantee for non-fund based facilities entered between two resident entities
A. P. (DIR Series) Circular No. 20, August 29, 2012
Attention of Authorised Dealer Category I (AD Category I) banks is invited to Notification No. FEMA
29 / 2000-RB dated September 26, 2000 viz. Payment to person resident outside India on invocation of
guarantee, A.P. (DIR Series) Circular No. 28 dated March 30, 2001 and A.P. (DIR Series) Circular No. 5
dated August 1, 2005 relating to External Commercial Borrowings (ECB).
2. Borrowing and lending of Indian Rupees between two persons resident in India does not attract the
provisions of the Foreign Exchange Management Act, 1999. In case where a Rupee loan is granted
against the guarantee provided by a person resident outside India, there is no transaction involving
foreign exchange until the guarantee is invoked and the non-resident guarantor is required to meet the
liability under the guarantee. The Reserve Bank vide Notification No. FEMA 29/2000-RB dated
September 26, 2000 has granted general permission to a person resident in India, being a principal
debtor, to make payment to a person resident outside India, who has met the liability under a guarantee.
3. On a review, it has been decided to extend the facility of non-resident guarantee under the general
permission for non-fund based facilities (such as Letters of Credit/guarantees/Letter of Undertaking (LoU)
/Letter of Comfort (LoC) ) entered into between two persons resident in India. The method of discharge of
liability by the non-resident guarantor under the guarantee and the subsequent repayment of the liability
by the principal debtor would continue, as hitherto, as detailed in A.P. (DIR Series) Circular No. 28 dated
March 30, 2001.
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4. It has also been decided to introduce a reporting format to capture such guarantees issued and
invoked. Authorized Dealer Category-I banks are required to furnish such details by all its branches, in a
consolidated statement, during the quarter, as per the format in Annex to the Chief General Manager,
Foreign Exchange Department, ECB Division, Reserve Bank of India, Central Office Building, 11th floor,
Fort, Mumbai 400 001 (and in MS-Excel file through email) so as to reach the Department not later than
10th day of the following month.
5. The policy would be reviewed at an appropriate time based on the experience gained in this regard.
6. The modifications to the policy will come into force from the date of this circular. AD Category I banks
may bring the contents of this circular to the notice of their constituents and customers.
Yours faithfully,
(Rashmi Fauzdar)
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CHAPTER 33
Overseas Citizenship of India (OCI)
OCI Scheme is operational from 02.12.2005
The Overseas Citizenship of India (OCI) Scheme was introduced by amending the Citizenship Act, 1955
in August 2005, in response to persistent demands for dual citizenship particularly from the Diaspora in
North America and other developed countries and keeping in view the Governments deep commitment
towards fulfilling the aspirations and expectations of Overseas Indians. The Scheme was launched during
the Pravasi Bharatiya Divas convention 2006 at Hyderabad. The Scheme provides for registration as
Overseas Citizen of India (OCI) of all Persons of Indian Origin (PIOs) who were citizens of India on 26th
January, 1950 or thereafter or were eligible to become citizens of India on 26th January, 1950 except who
is or had been a citizen of Pakistan, Bangladesh or such other country as the Central Government may,
by notification in the Official Gazette, specify.
OCI is not dual citizenship
OCI is not to be misconstrued as dual citizenship. OCI does not confer political rights. The registered
Overseas Citizens of India shall not be entitled to the rights conferred on a citizen of India under article 16
of the Constitution with regard to equality of opportunity in matters of public employment.
The OCI documents consist of OCI Registration Booklet and a Universal visa sticker. It is mandatory for
registered OCIs to carry their passports which carry the Universal visa sticker for entry into / exit from
India.
A registered Overseas Citizen of India is granted multiple entry, multipurpose, life-long visa for visiting
India, he/she is exempted from registration with Foreign Regional Registration Officer or Foreign
Registration Officer for any length of stay in India, and is entitled to general parity with Non-Resident
Indians in respect of all facilities available to them in economic, financial and educational fields except in
matters relating to the acquisition of agricultural or plantation properties. Specific benefits/parity is notified
by the Ministry from time to time.
A foreign national, who was eligible to become a citizen of India on 26.01.1950 or was a citizen of India
on or at any time after 26.01.1950 or belonged to a territory that became part of India after 15.08.1947
and his/her children and grand children, provided his/her country of citizenship allows dual citizenship in
some form or other under the local laws, is eligible for registration as an Overseas Citizen of India (OCI).
Minor children of such person are also eligible for OCI. However, if the applicant had ever been a citizen
of Pakistan or Bangladesh, he/she will not be eligible for OCI.
The Constitution of India does not allow holding Indian citizenship and citizenship of a foreign country
simultaneously. Based on the recommendation of the High Level committee on Indian Diaspora, the
Government of India decided to grant Overseas Citizenship of India (OCI) commonly known as dual
citizenship. Persons of Indian Origin (PIOs) of certain category as has been specified in the Brochure
who migrated from India and acquired citizenship of a foreign country other than Pakistan and
Bangladesh, are eligible for grant of OCI as long as their home countries allow dual citizenship in some
form or the other under their local laws.
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2. Application for registration as OCI can be made Online. Before filling the application, Instructions may
be perused so that there is no mistake in submission of application. Further, the details regarding Fee
and Offices where applications have to be filed may also be perused. 3. Persons registered as OCI have
not been given any voting rights, election to Lok Sabha/Rajya Sabha/Legislative Assembly/Council,
holding Constitutional posts such as President, Vice President, Judge of Supreme Court/High Court etc.
Registered OCIs shall be entitled to following
benefits:
(i) Multiple entry, multi-purpose life long visa to visit India;
(ii) Exemption from reporting to Police authorities for any length of stay in India; and
(iii) Parity with NRIs in financial, economic and educational fields except in the acquisition of agricultural
or plantation properties.
4. Any further benefits to OCIs will be notified by the Ministry of Overseas Indian Affairs (MOIA) under
section 7B(1) of the Citizenship Act, 1955.
5. A person registered as OCI is eligible to apply for grant of Indian citizenship under section 5(1)(g) of
the Citizenship Act, 1955 if he/she is registered as OCI for five years and has been residing
In response to persistent demands for "dual citizenship" particularly from the Diaspora in North America
and other developed countries and keeping in view the Governments deep commitment towards fulfilling
the aspirations and expectations of Overseas Indians, the Overseas Citizenship of India (OCI) Scheme
was introduced by amending the Citizenship Act, 1955 in August 2005. The Scheme was launched during
the Pravasi Bharatiya Divas convention 2006 at Hyderabad. The Scheme provides for registration as
Overseas Citizen of India (OCI) of all Persons of Indian Origin (PIOs) who were citizens of India on 26th
January, 1950 or there after or were eligible to become citizens of India on 26th January, 1950 except
who is or had been a citizen of Pakistan, Bangladesh or such other country as the Central Government
may, by notification in the Official Gazette, specify.
OCI is not to be misconstrued as dual citizenship. OCI does not confer political rights. The registered
Overseas Citizens of India shall not be entitled to the rights conferred on a citizen of India under article 16
of the Constitution with regard to equality of opportunity in matters of public employment. Detailed
instructions and procedures on the OCI Scheme are available on the MHAs website: www.mha.nic.in .
The OCI documents consist of OCI Registration Booklet and a Universal visa sticker. It is mandatory for
registered OCIs to carry their passports which carry the Universal visa sticker for entry into / exit from
India.
A registered Overseas Citizen of India is granted multiple entry, multi purpose, life-long visa for visiting
India, he/she is exempted from registration with Foreign Regional Registration Officer or Foreign
Registration Officer for any length of stay in India, and is entitled to general parity with Non-Resident
Indians in respect of all facilities available to them in economic, financial and educational fields except in
matters relating to the acquisition of agricultural or plantation properties. Specific benefits/parity is notified
by the Ministry from time to time.
The Ministry has issued notifications granting registered OCIs further benefits as under:
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a. Parity with Non-Resident Indians in the matter of inter-country adoption of Indian children ;
b. Parity with resident Indian nationals in matters of tariffs in domestic air fares ;
c.
Parity with domestic Indian visitors in respect of entry fee for visiting national parks and
wildlife sanctuaries in India ;
d. Parity with non-resident Indians in respect of:

i.
Entry fees for visiting the national monuments, historical sites and museums in India;
ii.
Practicing the following professions in India, in pursuance of the provisions contained in

the relevant Acts, namely:
Doctors, dentists, nurses and pharmacists;
Advocates;
Architects; and
Chartered Accountants; and
e. Entitlement to appear for the All India Pre-Medical Test or such other tests to make them
eligible for admission in pursuance of the provisions contained in the relevant Acts.
An on-line OCI miscellaneous service is now available for re-issuance /issuance of duplicate OCI
documents, in case of issuance of new passport, change of personal particulars, viz, nationality, name,
change of address/occupation, etc. and loss/damage of OCI registration certificate/visa.
As on 20th April, 2011, 7.99 lakh OCI registration booklets and visa stickers have been issued.
1. Eligibility criteria:
A foreign national, who was eligible to become citizen of India on 26.01.1950 or was a citizen of
India on or at anytime after 26.01.1950 or belonged to a territory that became part of India after
15.08.1947 and his/her children and grand children, provided his/her country of citizenship allows dual
citizenship in some form or other under the local laws, is eligible for registration as an Overseas Citizen
of India (OCI). Minor children of such persons are also eligible for OCI. However, if the applicant had
ever been a citizen of Pakistan or Bangladesh, he/she will not be eligible for OCI.
2. Application Form and Procedure:
A family consisting of spouses and upto two minor children can apply
in the same Form i.e. Form XIX. This form can be filed online only and
downloaded from our website www.mha.nic.in. Part B can be downloaded and filled by hand in block
letters.
The following documents must be enclosed in each application:
1. Proof of present citizenship. In case application is filled in India, a copy of valid visa/Residential
permit for a minimum valid period of three months should also be enclosed.
2. Evidence of self or parents or grand parents,
(a) Being eligible to become a citizen of India at the time of
commencement of the Constitution; or
(b) Belonging to a territory that became part of India after
15 th August, 1947; or
(c) Being citizen of India on or after 26 th January, 1950
These could be:
(i) Copy of the Indian passport :or
(ii) Copy of the domicile certificate issued by the Competent authority ;or
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(iii) Any other proof .

3. Evidence of relationship as parent/grand parent, if their Indian origin is claimed as basis for grant of
OCI.
4. Application fee by way of a Demand Draft (US $ 275 for each applicant or equivalent in local currency;
US $ 25 or equivalent in local currency for each PIO card holder). In case of minor PIO card holder a fee
of US $145 or equivalent in local currency to be paid. In case application is filled in India, fee of
Rs.12,400/- to be paid by Demand Draft and PIO card holders Rs.1,150/- in same manner. In case of
minor PIO card holder an amount Rs.6550/- to be paid instead Rs.1150/-.
5. PIO card holder should submit a copy of his/her PIO card. The application form, completed in all
respects, along with enclosures should be submitted in duplicate to the Indian Mission/Post of the
country of applicants citizenship or where he/she is not in the country of citizenship, to
the Indian Mission/Post of the country in which he/she is ordinarily a resident. If the applicant is in India,
he/she can apply to the Foreigners Regional Registration Officer (FRRO) at Delhi, Mumbai, Kolkota or
Amritsar & FRRO Chennai or to the Under Secretary, OCI Cell, Citizenship Section, Foreigners Division,
Ministry of Home Affairs (MHA), Jaisalmer House, 26 Mansingh Road, New Delhi-110011.
3. Procedure for Granting Registration:
After preliminary scrutiny, if there is no adverse information available against the applicant, the
Indian Mission/Post shall register a person as an OCI within 30 days of application and the case shall be
referred to MHA for post verification of the antecedents of the applicant. If during the post verification,
any adverse information comes to the knowledge of the MHA, the registration as an OCI already granted
by the Indian Mission/Post shall be cancelled by an order under section 7 D of the Citizenship Act, 1955.
After preliminary scrutiny, if there is any adverse information against the applicant, prior approval of the
MHA shall be required before grant of registration. The MHA may approve or reject the grant of
registration within 120 days from the date of the receipt of the application. If the grant of registration as
an OCI is approved by the MHA, the Indian Mission/Post shall register the person as an OCI. If the
application is filed in India, registration shall be granted by
MHA by following the above procedure.
After grant of registration, a registration certificate in the form of a booklet will be issued and a
multiple entry, multi-purpose life long OCI U visa sticker will be pasted on the foreign passport of the
applicant.
Collection of OCI documents :
On preparation of OCI document, applicant is required to present in person or he/she can send a duly
authorized person, along with his/her foreign passport & PIO card (if any ) for collection of the OCI
documents. No passport and OCI documents will be received/sent by Dak/Post or Mail.
4. OCI for PIO Card Holders:
PIO card holders who are otherwise eligible for registration as an OCI may apply in the same
Form i.e. Form XIX and they will be considered for grant of registration in the same manner as other
applicants. PIO card holders have to pay a fee of US $ 25 and US $ 145 in case of minor PIO card
holder or equivalent in local currency instead of US $ 275 as for a normal applicant. In case of application
submitted in India, fee worth Rs.12,400/- for general category and Rs.1,150/- for PIO card holders and
Rs.6550/- in case of minor PIO card holder to be paid by way of DD in favour of Pay & Accounts
Officer(Secretariat) MHA. PIO card holder will have to surrender his/her PIO card after acceptance of the
application for grant of OCI.
5. OCI for persons who have applied on the earlier prescribed
application form:
All such applications will be considered for grant of an OCI on the same line as above, without
seeking fresh application and fees.
6. Cancellation of OCI Registration:
If it has been found that the registration as an OCI was obtained by means of fraud, false
representation or concealment of any material fact or the registered OCI has shown disaffection towards
the Constitution of India or comes under any of the provisions of section 7D of the Citizenship Act, the
registration of such person will not only be cancelled forthwith but
he/she will also be blacklisted from visiting India.
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7. Benefits to an OCI:
Following benefits will accrue to an OCI:
(i) A multiple entry, multi-purpose life long visa for visiting India.
(ii) Exemption from registration with local police authorities for
any length of stay in India.
(iii) Parity with Non-resident Indians (NRIs) in respect of economic, financial and educational
fields except in relation to acquisition of agricultural or plantation properties.
Any other benefits to an OCI will be notified by the Ministry of Overseas Indian Affairs (MOIA)
under Section 7B(1) of the Citizenship Act, 1955.
8. Benefits to which OCI is not entitled to:
The OCI is not entitled to vote, be a member of Legislative Assembly or Legislative Council or
Parliament, cannot hold constitutional posts such as President, Vice President, Judge of Supreme Court
or High Court etc. and he/she cannot normally hold employment in the Government.
9. Help Desk:
For any clarification/query on the scheme, please visit our website www.mha.nic.in or visit the
website of the local Indian Mission/Post or contact the Indian Mission/Post or OCI Cell, Citizenship
Section, Foreigners Division, Ministry of Home Affairs, Jaisalmer House, 26, Mansingh Road, New
Delhi-110011.
Frequently Asked Questions (FAQs)

1. Who is eligible to apply?
A foreign national, who was eligible to become a citizen of India on 26.01.1950 or was a citizen of
India on or at anytime after 26.01.1950 or belonged to a territory that became part of India after
15.08.1947 and his/her children and grand children, provided his/her country of citizenship allows dual
citizenship in some form or other under the local laws, is eligible for registration as an Overseas Citizen of
India (OCI). Minor children of such person are also eligible for OCI. However, if the applicant had ever
been a citizen of Pakistan or Bangladesh, he/she will not be eligible for OCI.
2. Who was eligible to become Citizen of India on 26.01.1950?
Any person who, or whose parents or grand-parents were born in India as defined in the
Government of India Act, 1935 (as originally enacted), and who was ordinarily residing in any country
outside India was eligible to become citizen of India on 26.01.1950.
3. Which territories became part of India after 15.08.1947 and from what date?
The territories which became part of India after 15.08.1947 are:
(i) Sikkim 26.04.1975
(ii) Pondicherry 16.08.1962
(iii) Dadra & Nagar Haveli 11.08.1961
(iv) Goa, Daman and Diu 20.12.1961
4. Can the spouse of the eligible person apply for OCI?
Yes, if he/she is eligible in his/her own capacity.
5. Can Minor children apply for OCI?
Yes, if either of the parents is eligible for OCI.
6. In what form should a person apply for an OCI and where are the
forms available?
A family consisting of spouses and upto two minor children can apply
in the same form i.e. Form XIX, which can be filed online or downloaded
from our website www.mha.nic.in.
7. Can application form be filled and submitted on line?
Yes. Part A of the application form can be filed online. Part B can be
downloaded and printed on computer or by hand in Block letters. Printed
Part A and Part B of the application form has to be submitted to the Indian
Mission/Post/Office.
8. What documents have to be submitted with the application?
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The following documents shall be enclosed for each applicant:

1. Proof of present citizenship
2. Evidence of self or parents or grand parents,
(a) being eligible to become a citizen of India at the time of
commencement of the Constitution; or
(b) belonging to a territory that became a part of India after
15 th August, 1947; or
(c) being a citizen of India on or after 26 th January, 1950
These could be:
(i) Copy of the passport :or
(ii) Copy of the domicile certificate issued by the Competent
authority ;or
(iii) Any other proof.
3. Evidence of relationship as parent/grand parent, if their Indian
origin is claimed as basis for grant of OCI.
4. Application fee by way of Demand Draft (US $ 275 for each
applicant or equivalent in local currency; US $ 25 or equivalent in local currency for each
PIO card holder). In case of application filled in India, fee Rs.12,400/- for general category and for
PIO card holders Rs.1,150/- to be paid by way of Demand Draft.
5. PIO card holders should submit a copy of his/her PIO card.
9. What documents would qualify for Any other proof for
evidence of self or parents or grand parents being eligible for
grant of an OCI?
Any documentary evidence like a school certificate, land ownership certificate, birth certificate etc.
by which eligibility may be reasonably ascertained.
10. How many copies of application have to be submitted?
Application has to be submitted in duplicate for each applicant.
11. Whether applicant(s) have to go in person to submit the application (s)?
No. Application(s) can be sent by post either by Speed post or Registered post only and not
through Courier.
12. Whether the applicant (s) have to take oath before the Counsel of the Indian Mission/Post?
No. Earlier provision in this regard has been done away with.
13. Where to submit the application?
To the Indian Mission/ Post of the country of citizenship of the applicant. If the applicant is not in
the country of citizenship, to the Indian Mission/Post of the country where he is ordinarily residing. If the
applicant is in India, to the FRRO Delhi, Mumbai, Kolkota or Amritsar or to FRRO, Chennai or to the
Under Secretary, OCI Cell, Citizenship section, Foreigners
Division, Ministry of Home Affairs (MHA), Jaisalmer House, 26, Mansingh Road, New Delhi-110011.
14. Can a person apply in the country where he is ordinarily residing?
Yes.
15. What are the consequences of furnishing wrong information or suppressing material information?
All the applications will be subject to pre or post enquiry depending on whether any adverse
information is voluntarily reported in the application or not. If the Government comes to the know that any
false information was furnished or material information was suppressed, the registration as OCI already
granted shall be cancelled by an order under section 7D of the Citizenship Act, 1955. The persons will
also be blacklisted thereby banning
his/her entry into India.
16. What is the fee for application for registration as an OCI?
US $ 275 or equivalent in local currency for each applicant. In case
of PIO card holder, US $ 25 or equivalent in local currency for each applicant. In case of application filled
in India, fee Rs.12,400/- for general category and for PIO card holders Rs.1,150/- to be paid by way of
Demand Draft.
17. What is the time taken for registration as OCI?
Within 30 days of the application, if there is no adverse information
available against the applicant. If any adverse information is available against the applicant, the decision
326 | P a g e
to grant or otherwise is taken within 120 days.

18. If the registration as an OCI is not granted, what amount will be refunded?
An amount of US $ 250 or equivalent in local currency shall be refunded, if registration is
refused. US $ 25 is the processing fees, which is non-refundable. In case application filled in India,
Rs.1,150/- will be non-refundable being processing fees.
19. Can a PIO Cardholder apply?
Yes, provided he/she is otherwise eligible for grant of OCI like any other applicant.
20. Will the PIO Cardholder be granted an OCI registration gratis?
No. He/she has to make a payment of US $ 25 or equivalent in local currency along with the
application & Rs.1,150/- in case of application is filled in India.
21. Will the PIO card be honored till the time it is valid even after acquisition of an OCI?
No. PIO card will have to be surrendered to the Indian Mission/Post/MHA for grant of OCI
registration certificate and an OCI U visa sticker.
22. What will be issued after registration as an OCI?
A registration certificate in the form of a booklet will be issued and a multiple entry, multi-purpose
OCI U visa sticker will be pasted on the foreign passport of the applicant. For this purpose, the applicant
has to send the original passport to the Indian Mission/Post after receipt of the acceptance letter/ verifying
the status of the application online.
23. Will a separate OCI passport be issued?
No.
24. Will a duplicate certificate of registration as an OCI will be issued?
Yes. For this purpose, an application has to be made to the Indian
Mission/Post with evidence for loss of certificate. In the case of mutilated/damaged certificate an
application has to be made enclosing the
same. The applications in both the cases have to be made to the same Indian Mission/ Post which issued
the certificate along with payment of a fee of US $ 25 or equivalent in local currency & Rs.1,150/- in case
of application is filled in India.
25. Will a new OCI visa sticker be pasted on the new foreign passport after the expiry of the old
passport?
Yes. On payment of requisite fee, a new OCI U visa sticker will be
issued. However, the applicant can continue to carry the old passport wherein the OCI U visa sticker was
pasted along with new passport for visiting India without seeking a new visa, as the visa is lifelong.
26. Will the applicant lose his citizenship after registering as an OCI?
No. As only citizen of the country which allows dual citizenship under the local laws in some form
or the other are eligible for applying for registration as an OCI, losing foreign citizenship does not arise.
27. Can a person registered as an OCI travel to protected area/restricted area without permission?
No. He/she will be required to seek PAP/RAP for such visits.
28. Would the Indian civil/criminal laws be applicable to persons registered as OCI?
Yes, for the period OCI is living in India.
29. Can a person registered as an OCI be granted Indian citizenship?
Yes. As per the provisions of section 5(1) (g) of the Citizenship Act, 1955, a person who is
registered as an OCI for 5 years and is residing in India for 1 year out of the above 5 years, is eligible to
apply for Indian Citizenship.
30. Will an OCI be granted gratis to certain categories of people?
No.
31. Can OCI be granted to foreign nationals who are not eligible for
OCI, but married to persons who are eligible for OCI?
No.
32. Will foreign-born children of PIOs be eligible to become an OCI?
Yes, provided one of the parents is eligible to become an OCI.
33. What are the benefits of an OCI?
Following benefits will be allowed to an OCI:
(a) Multi-purpose, multiple entry, lifelong visa for visiting India.
(b) Exemption from registration with local police authority for any
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length of stay in India.

(c) Parity with NRIs in respect of economic, financial and education fields except in matters
relating to the acquisition of agricultural/plantation properties.
34. Will any other benefit be granted to an OCI?
Any other benefits to an OCI will be notified by the Ministry of Overseas Indian Affairs (MOIA)
under Section 7B(1) of the Citizenship Act, 1955.
35. Is the OCI entitled to voting rights?
No.
36. Is the OCI entitled to hold constitutional post in India?
No.
37. Is the OCI entitled to hold Government posts in India?
No, except for the posts specified by an order by the Central Government.
38. If a person is already holding more than one nationality, can he/she apply for OCI?
Yes, as long as the local laws of at least one of the countries allow
dual citizenship in some form or the other.
39. What are the advantages of the OCI when compared to PIO cardholders ?
(i) An OCI is entitled to life long visa with free travel to India whereas for a PIO card holder, it is
only valid for 15 years.
(ii) A PIO cardholder is required to register with local Police authority for any stay exceeding 180
days in India on any single visit whereas an OCI is exempted from registration with Police authority for
any length of stay in India.
(iii) An OCI gets a specific right to become an Indian Citizen as in 29 ,whereas the PIO card
holder does not have this.
40. Whether an OCI be entitled to apply for and obtain a normal Indian passport which is given to a
citizen of India?
No. Indian Passports are given only to Indian citizen.
41. Whether nationals of Commonwealth countries are eligible for the OCI?
Yes, if they fulfill the eligibility criteria.
42. Can a person renounce OCI?
Yes. He/she has to declare intention of renunciation in Form XXII to the Indian Mission/Post
where OCI registration was granted. After receipt of the declaration, the Indian Mission/Post shall issue
an acknowledgement in Form XXII A.
43. Do the applicants who have applied on the earlier prescribed application form have to apply again in
the new form?
No. All such applications will be considered for registration as an OCI without seeking fresh
applications and fees.
India to merge OCI and PIO cards to make it single facility
The announcement of Prime Minister Manmohan Singh on January 8, 2011 pertaining to the merging of
the Overseas Citizen of India (OCI) and the People of Indian Origin (PIO) cards is likely to facilitate visafree travel to India, rights of residency and participation in business and educational activities in the
country. The announcement was made on the occasion of the ninth Pravasi Bharatiya Divas (PBD)
Convention held in New Delhi, from 7-9 January 2011.
The government has recently reviewed the functioning of these schemes and has decided to merge the
OCI and PIO cards into a single facility. It hopes to iron out some of the problems that have arisen in the
implementation of these schemes.
Existing advantages of OCI when compared to PIO Cardholders
(i) An OCI is entitled to lifelong visa with free travel to India whereas for a PIO card holder, it is only valid
for 15 years.
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(ii) A PIO cardholder is required to register with local Police authority for any stay exceeding 180 days in
India on any single visit whereas an OCI is exempted from registration with Police authority for any length
of stay in India.
(iii) An OCI gets a specific right to become an Indian Citizen whereas the PIO card holder does not have
this. As per the provisions of section 5(1) (g) of the Citizenship Act, 1955, a person who is registered as
an OCI for 5 years and is residing in India for one year out of the above 5 years, is eligible to apply for
Indian Citizenship.
The ninth Pravasi Bharatiya Divas was organised by the Ministry of Overseas Indian Affairs (MOIA), in
partnership with the Ministry of Development of North Eastern Region along with eight North Eastern
States and the Confederation of Indian Industry (CII). This flagship event of MOIA has been held in New
Delhi, for the sixth time.
The special feature of PBD-2011 is the participation of Ministry of Development of North Eastern Region
and eight North Eastern States as partner. This provided the Diaspora with an opportunity to understand
the tremendous potential of this beautiful part of India.
The focus of PBD 2011 was on the young overseas Indian. In an endeavour to connect with and engage
the younger generation of the overseas Indians with emerging India, a plenary session on Engaging with
the young overseas Indian was organized.
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CHAPTER 34
Person of India Origin (PIO) Scheme
The Government of India revised the PIO Card Scheme, which was launched in 1999, aimed at making
the journey back to the persons roots, simpler, easier, flexible and absolutely hassle free. The PIO Card
will entitle the person to a set of privileges. No visa required for visiting India.
No separate Student Visa or Employment Visa required for admissions in colleges/Institutions

or for taking up employment respectively.
A PIO Card holder will be exempt from the requirement of registration if his stay on any single
visit in India does not exceed 180 days.
A person who at any time held an Indian Passport is eligible
Other initiatives
The Prime Minister also announced the extension of the Indian Community Welfare Fund to all Indian
Missions from the present 42.
The government would soon give effect to a law that allowed Non-Resident Indians (NRIs) to register
themselves as voters. On the welfare of workers emigrating from India, besides the signing of Social
Security Agreements with 12 countries and finalisation of Labour Mobility Partnerships with two others,
the government was negotiating a generic arrangement with the European Union.
New cultural centres are likely to be opened in the U.S., Canada, Saudi Arabia, France and Australia.
New opportunities to the Diaspora to participate in health and education sectors have been identified in
India.
PBD Conventions provide a platform for exchange of views and networking to overseas Indians on
matters of common interest and concern to them. They also help the Government of India to better
understand and appreciate the expectations of the overseas Indian community from the land of their
ancestors and more importantly, acknowledge the important role played by them in Indias efforts to
acquire its rightful place in the comity of nations.
Consultations at earlier PBDs have led to the formulation of the Overseas Citizenship of India scheme,
establishment of Overseas Indian Facilitation Centre, conceptualisation of Pravasi Bharatiya Kendra,
formation of Prime Ministers Global Advisory Council of people of Indian Origin, setting up of the India
Development Foundation, and the launching of the Global Indian Network of Knowledge (Global-INK).
Person of Indian Origin Card (PIO Card)

The Person of Indian Origin Card (PIO CARD) was launched by the Government of India in 1999. The
PIO card was intended to make it easier for foreign nationals of Indian origin to enter India with ease
and avoid the process of applying for visas every time they wanted to visit.
With effect from 15th September 2002, the Government of India has announced a new PIO Card
Scheme.
PIO Card holders are entitled to a number of benefits.
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PIO Card Benefits
No visa required for visiting India as long as a person has a valid PIO Card.
No separate Student Visa or Employment Visa required for admissions in Colleges/Institutions
or for taking up employment respectively.
A PIO Card holder will be exempt from the requirement of registration if his stay on any single
visit
in
India
does
not
exceed
180
days.
In the event of continuous stay in India of the PIO Card holder exceeding 180 days, PIO card
holders will have to get themselves registered within 30 days of the expiry of 180 days with the
concerned Foreigners Regional Registration Officer / Foreigners Registration Officer.
Parity with non-resident Indians in respect of facilities available to the latter in economic, financial
and educational field.
Acquisition, holding, transfer and disposal of immovable properties in India except agricultural
immovable properties in India accept agricultural/plantation properties.
Facilities available to children of NRIs for getting admission to educational institutions in India
including medical colleges, engineering colleges, Institute of Technology, Institute of
Management, etc. under the general categories.
Facilities available under the various housing scheme of LIC, State Government and other
Government Agencies.
Special counters at the immigration check posts for speedy clearance.
All future benefits that would be extended to NRIs would also be available to the PIO Card
holders
Eligibility for PIO Card

Persons of Indian origin who hold foreign passports of a country other than Pakistan, Bangladesh,
Afghanistan, Nepal, Bhutan, China, Sri Lanka are eligible for PIO Card if:
1. They had at any time before acquiring foreign citizenship held an Indian passport.
2. She/he or either of his/her parents or grandparents or great grandparents was born in India or
permanent resident in India provided neither was at any time a citizen of Pakistan, Bangladesh,
Afghanistan, Nepal, Bhutan, China, Sri Lanka.
3. She/he is a spouse of a citizen of India or a person of Indian origin covered under 1 & 2 above.
You may be ineligible to apply for a PIO card if you, your spouse, parents, grandparents or great
grandparents have ever held citizenship of Afghanistan, Bangladesh, Bhutan, China, Iran, Nepal,
Pakistan or Sri Lanka.
PIO or OCI
The PIO card was introduced long before OCI was announced. As it stands today get a PIO card does
not make sense when OCI is a lifetime visa compared to 15 years for PIO card holders
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CHAPTER 35
The General Rules the NRIs should Know
Non-Resident Indian (NRI) Pensioners:
The NRI Pensioners should open an ordinary non-resident bank account in any scheduled bank in India
and execute a power of attorney in favour of the bank as required. They should also submit life
certificate and nationality certificate as prescribed to enable the credit of pension amount due to them in
to their accounts.
Savings Bank account maintained by residents in India non-resident close

relative allowed as jointholder A.P. (DIR Series) Circular No.12 dated September
15, 2011
RBI has permitted individuals resident in India to include non-resident close relative(s) (relative as
defined in section 6 of the Companies Act, 1956) as a joint holder(s) in their resident bank accounts on
former or survivor basis. However, non-resident Indian close relatives shall not be eligible to operate the
account during the life time of the resident account holder.
o
Account Scheme (NRE)/ Foreign Currency (Non-Resident) Account (Banks)

Scheme (FCNR(B))
accounts jointly with Indian resident close relative liberalization A.P. (DIR Series) Circular No.13
dated September 15, 2011
RBI has permitted NRI as defined in Foreign Exchange Management (Deposit) Regulations, 2000
to open NRE / FCNR(B) account with their resident close relative (relative as defined in section 6 of the
Companies Act, 1956) on former or survivor basis. The resident close relative shall be eligible to operate
the account as a Power of Attorney holder in accordance with extant instructions during the life time of the
NRI/ PIO account holder.
4) Foreign Investments in India increase in limit for transfer of security by way of gift
In terms of the Foreign Exchange Management (Transfer or issue of Security by a Person Resident
outside India) Regulations, 2000, as amended a person resident in India is permitted to transfer any
security, by way of gift, to a person resident outside India, with prior approval of the RBI subject to
specified conditions. One of the conditions specified is that the value of security to be transferred
by the donor/ transferor, together with any security transferred to any person residing outside India as gift
in the calendar year should not exceed the rupee equivalent of USD 25,000. This limit has now been
enhanced to USD 50,000 per financial year.
5) Gift in Rupees by Resident Individuals to NRI close relatives

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RBI has permitted a resident individual to make a rupee gift to a NRI/PIO who is a close relative of the
resident individual (relative as defined in Section 6 of the Companies Act, 1956) by way of crossed
cheque / electronic transfer. The amount should be credited to the Non-Resident (Ordinary) Rupee
Account (NRO) account of the NRI / PIO and credit of such gift amount may be treated as an eligible
credit to NRO a/c. The gift amount would be within the overall limit of USD 200,000 per financial year as
permitted under the Liberalised Remittance Scheme (LRS) for a resident individual. It would be the
responsibility of the resident donor to ensure that the gift amount being remitted is under the LRS and all
the remittances under the LRS during the financial year including the gift amount have not exceeded the
limit prescribed under the LRS.
6) Meeting of Medical expenses of NRIs close relatives by Resident Individuals

RBI has clarified that where the medical expenses in respect of NRI close relative (relative as defined in
Section 6 of the Companies Act, 1956) are paid by a resident individual, such a payment being in the
nature of a resident to resident transaction may be covered under the term services related thereto
under Regulation 2(i)of Notification No. FEMA 16 /2000- RB dated May 3, 2000issued in pursuance of the
provisions of section 3 of theForeign Exchange Management Act, 1999.
7) FEMA Repayment of loans of Non-resident close relatives by residents

IT has been decided that where an authorised dealer in India has granted loan to a non-resident Indian in
accordance with Regulation 7 of the Notification No. FEMA 4/2000-RB, ibid, such loans may also be
repaid by resident close relative (relative as defined in Section 6 of the Companies Act, 1956), of the NonResident Indian by crediting the borrowers loan account through the bank account of such relative.
RBI/2011-12/183
A.P. (DIR Series) Circular No. 19, Dated- September 16, 2011
Repayment of loans of Non-resident close relatives by residents
Attention of the AD banks is invited to Regulation 8 (d) of the FEMA Notification No.4/2000- RB dated
May 3, 2000 viz. Foreign Exchange Management (Borrowing and Lending in Rupees) Regulations,
2000, as amended from time to time, in terms of which the housing loan provided to a non-resident Indian
or a person of Indian origin resident outside India by an authorised dealer or a housing finance institution
in India approved by the National Housing Bank for acquisition of a residential accommodation in India,
may be repaid by any relative of the borrower in India by crediting the borrowers loan account through
the bank account of such relative (relative as defined in section 6 of the Companies Act, 1956). Thus,
repayment of loan by close relative in respect of loan in rupees availed by NRI is restricted to housing
loan only.
2.
The Committee to review the facilities for individuals under the Foreign Exchange Management
Act (FEMA), 1999 has in its Report recommended that resident individuals may be granted general
permission to repay loans availed of from banks in Rupees in India by their NRI close relatives as
defined under Section 6 of the Companies Act.
3.
The extant provision has now been reviewed and it has been decided that where an authorised
dealer in India has granted loan to a non-resident Indian in accordance with Regulation 7 of the
Notification No. FEMA 4/2000-RB, ibid, such loans may also be repaid by resident close relative (relative
334 | P a g e
as defined in Section 6 of the Companies Act, 1956), of the Non-Resident Indian by crediting the
borrowers loan account through the bank account of such relative.
4.
The necessary amendments to the Foreign Exchange Management (Borrowing and Lending in
Rupees) Regulations, 2000 are being issued separately.
5.
The directions contained in this circular have been issued under Sections 10(4) and 11(1) of the
Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to
permissions/approvals, if any, required under any other law.
Yours faithfully,
(Meena Hemchandra)
Chief General Manager In-Charge
1. Non-Resident Indian (NRI) is a citizen of India resident outside India.

2. A Person of Indian Origin means an individual (not being a citizen of Pakistan or Bangladesh or Sir
Lanka or Afghanistan or China or Iran or Nepal or Bhutan) who
(i) at any time, held an Indian Passport or
(ii) who or either of whose father or mother or whose grandfather or grandmother was a citizen of India
by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955).
3. A person resident outside India may hold, own transfer or invest in Indian currency, security or
immovable property situated in India if such currency, security or property was acquired, held or
owned by such person when he was resident in India or inherited from a person who was resident
in India
4. NRIs, PIOs not required to report property deals in India: RBI
5. Returns - It is always advisable to take a conservative approach in both Capital Appreciation and
Rental returns. However one can safely expect appreciations anywhere upwards of 15% Per
Year and Rental Yields of 4 to 6%.
6. The clarification follows confusion over whether Non- Resident Indians (NRIs) and
Persons of Indian Origin (PIOs), like foreigners, too have to file a declaration with the
Reserve Bank within 90 days from the date of acquisition of properties.
RBI (Reserve Bank of India) clarified that NRIs and PIOs are not required to report to the central
bank the details of transactions while purchasing immovable property in India, an announcement
which is likely to encourage Indian diaspora to invest in the country.
"It is clarified that the extant regulations do not prescribe any reporting requirements for
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transactions where a person resident outside India who is a citizen of India or a PIO... acquire/s
immovable property in India," the Reserve Bank said.
The clarification follows confusion over whether Non- Resident Indians (NRIs) and Persons of
Indian Origin (PIOs), like foreigners, too have to file a declaration with the Reserve Bank within 90
days from the date of acquisition of properties.
Foreigners make the declaration in IPI form. "Form IPI has been, accordingly, amended for
greater clarity," RBI said.
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CHAPTER 36
Emigration Clearance Indian and foreign persons
Details collected from Bureau of Immigration, India Ministry of Home Affairs (Government of India),
Ministry of Overseas Affairs 0n 21-12-2012
1) What is Emigration ?
Emigration means the departure of any person from India for employment (whether or not under an
agreement, with or without the assistance of a registered Recruiting Agent or employer) in any country or
place outside India.
2) Statutory Framework
To regulate, assist and guide the workers proceeding abroad for employment on contractual basis, the
Government of India enacted the Emigration Act, 1983. The Act had its genesis in a judgement of the
Honble Supreme Court Judgement (Kanga and Others vs. Union of India, dated 20.3.1979), wherein the
Apex Court ruled that emigration should be regulated on the basis of guidelines enumerated in its
aforesaid order. Since the Act was enacted, the protection of emigrants and their interest has become the
duty of the Office of the Protector General of Emigrants (PGE), now in the Ministry of Overseas Indian
Affairs, Government of India. The Emigration Act, 1983 In order to safeguard the interests of Indian
nationals working abroad, the Emigration Act, 1983 requires all workers seeking contractual employment
abroad to obtain emigration clearance from any of the eight Offices of the Protectors of Emigrants
(POEs). The Act also mandates that no agency/establishment can undertake recruitment of Indians for
employment abroad without obtaining registration from the Protector General of Emigrants, Ministry of
Overseas Indian Affairs, and Government of India.
3) Salient Features of the Act
Any Indian national can be recruited for a job abroad either through a Recruiting Agent registered under
the Act or by an employer with a valid Permit issued by the Protector General of Emigrants.
No Indian citizen (unless exempted) can emigrate without obtaining emigration clearance from the
concerned Protector of Emigrants. Organizational Structure Ministry of Overseas Indian Affairs
administers the Emigration Act, 1983. The Act is enforced by the Protector General of Emigrants(PGE).
The eight offices of Protector of Emigrants function under the supervision and control of the PGE. The 8
offices of the Protectors of Emigrants have been established at Delhi, Mumbai, Kolkata, Chennai,
Hyderabad, Chandigarh, Cochin and Thiruvananthapuram. Any applicant seeking employment abroad
and possessing a passport with Emigration Check Required, endorsement can obtain emigration
clearance from any of these eight offices on submission of other documents as prescribed. Persons
holding ECNR passport or unstamped passports are not required to obtain emigration clearance.
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General Instructions
LIST OF PERSONS/CATEGORIES OF WORKERS
IN WHOSE CASE EMIGRATION CHECK IS NOT REQUIRED / ELIGIBLE FOR UNSTAMPED
PASSPORT
1. All holders of Diplomatic/Official Passports.
2. All Gazetted Government Servants.
3. All income-tax payers (including Agricultural Income Tax payees) in their individual capacity.
4. All professional degree holders, such as Doctors holding MBBS degrees or Degrees in Ayurved or
Homoeopathy; Accredited Journalists; Engineers; Chartered Accountants; Lecturers; Teachers;
Scientists; Advocates etc.
5. Spouses and dependent children of category of persons listed from (2) to (4).
6. Persons holding class 10 or higher qualification.
7. Seamen who are in possession of CDC or Sea Cadets, Desk Cadets (i) who have passed final
examination of three year B.SC Nautical Science Courses at T.S. Chanakya, Mumbai; and (ii) who have
undergone three months Pre-sea training at any of the Government approved Training Institutes such as
T.S. Chanakya, T.S. Rehman, T.S. Jawahar, MTI (SCI) and NIPM, Chennai after production of identity
cards issued by the Shipping Master, Mumbai/Calcutta/Chennai.
8. Persons holding permanent immigration Visas, such as the visas of UK, USA and Australia.
9. Persons possessing two years diploma from any institute recognized by the National Council for
Vocational Training (NCVT) or State Council of Vocational Training (SCVT) or persons holding three
years diploma/equivalent degree from institutions like Polytechnics recognized by Central/State
Governments.
10. Nurses possessing qualification recognized under the Indian Nursing Council Act, 1947.
11. All persons above the age of 50 years.
12. All persons who have been staying abroad for more than three years (the period of three years could
be either in one stretch or broken) and their spouses.
13. Children below 18 years of
Immigration check is conducted for all passengers, Indians or foreigners, both at the time of arrival and
departure. The passports are duly stamped at arrival as well as departure. Passengers should be careful
to see that their passports are duly stamped before leaving the immigration counter.
All passengers, Foreigners as well as Indians, coming to India or departing from India are required to fillup Arrival Card and Departure Cards at arrival and departure respectively. The following information is
required to be provided by the passengers in these cards: -
1.
Name and Sex
2.
Date of Birth, Nationality
3.
Passport Details viz. Number, Date of Issue
4.
Address in India
5.
Occupation
6.
Flight Number, Date of Arrival / Date of Boarding & port of Final Destination
7.
Countries visited during last six days for arriving Indians
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8.
Purpose to Visit abroad
If inadvertently, an immigration stamp is not affixed by the counter officer at the check post, the
passenger may immediately contact the concerned FRRO/FRO/SSP and get the same affixed on his/her
passport to avoid inconvenience at the time of next travel abroad.
4) Instructions for Indian Passengers

Indian nationals travelling abroad require a valid Indian passport and travel authority for the destination
country. The travel authority is normally in the form of Visa, which is obtained prior to the journey, except
in case of countries where "Visa on Arrival" is available.
Indians travelling abroad may also note that some countries insist for certain minimum period of passport
validity for allowing entry & for this confirmation should be obtained from the Embassy/travel agent.
Indians having the ECR category of passports require POE clearance from Ministry of Overseas Indians
Affairs for certain destinations.
Even for re-entry into the country, an Indian national is required to be in possession of a valid Indian
passport or travel document issued by Govt. of India.
PCC: Indian nationals may obtain police clearance certificate from the concerned police station of their
place of residence in India OR the Concerned Regional Passport office (RPO).
5) Instruction For Foreigners Coming To India

TRAVEL DOCUMENTS REQUIRED:
Foreign Nationals coming to India are required to possess a genuine and valid national passport or any
other internationally recognized travel document establishing his/her nationality and identity and bearing
photograph of the foreigner. Nepal and Bhutan nationals if entering India by land or air from the Nepal or
Bhutan border respectively do not require a passport for entering into India. However, they are required to
possess, authorized identity proof. Further if they are entering India from a place other than their own
country then possession of passport is a must.
1.Visa Requirements:
Different categories of visas with specific endorsement of numbers of entries allowed and duration of stay
in India are mentioned on the visa depending upon request and subsequent decision of the visa issuing
authority. Foreigners may also look for specific endorsement if any, on the visa for their guidance. In case
of any doubt, they may seek clarification from any of the Indian Missions abroad.
Nationals of Nepal and Bhutan do not require visa to enter India. However, citizens of Nepal require a
visa when entering India from China.
Nationals of Maldives do not require a visa for entry into India for tourism purpose and stay up to 90 days.
"A separate Visa regime exists for diplomatic/official passport holders".
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Immigration officer may grant TLP (Temporary Landing Permit) up to a maximum period of 72 hours by
retention of passport, if the foreigner is not having a valid visa, and if he is satisfied of the purpose and
that the transiting foreigners must have a confirmed onward journey tickets within 72 hours for grant of
TLP. Nationals of Sri Lanka, Bangladesh, Pakistan, Iran, Afghanistan, Somalia, Nigeria, and Ethiopia are
not granted TLP facility.
On production of bonafide proof and on satisfaction of FRRO/FRO cum District Superintendent of Police,
Temporary Landing Facility (TLF) can be granted to the foreigners arriving in India without valid VISA, in
emergent situation, like death/illness in the family up to a period of 15 days. For further extension of stay
in such cases, the foreigner concerned should report to Ministry of Home Affairs, Foreigners Division,
Jaisalmer House, 26, Man Singh Road, New Delhi before the expiry of the TLF period.
Indian currency equivalent to US$40 is charged for TLP/TLF .
A foreigner may be refused entry in one of the following cases
i).If he/she is entering India from the designated port and is not in possession of valid passport and visa.
ii).is insane or
iii).is suffering from infectious or loathsome disease which is prejudicial to public health, or
iv). is involved in an extraditable offence or
v). his/her entry is prohibited under the specific order of the Central government.
2.Immigration Check Requirements on Reaching India:
Immigration check is carried out for all passengers at the port of arrival in India.
The passengers are required to furnish true particulars in the disembarkation card( Arrival Card) as to his
name and nationality, his age, sex, place of birth and address or intended address in India, the purpose of
his visit and the proposed length of stay in India.
Immigration check includes checking of Passport, Visa, Disembarkation Card, entering foreigners
particulars in computer, retention of Arrival Card and stamping of passport of the foreigner.
Pakistan nationals other than those on Diplomatic visa are required to carry a Visa application form
(duplicate copies) which will be issued in addition to regular visa on their passport by the Indian Mission
concerned. On presentation at immigration check post, they are issued Regular Residential Permit and
are required to report at the designated office or concerned Police Station in their places of stay within 24
Hrs unless and until they are officially exempted from police reporting.
Afghanistan Nationals are issued Temporary Residential Permit at the immigration Check post, with a
direction to get themselves registered within 14 days with the concerned FRRO/FRO of their place of
stay.
"Foreigners may ensure that they enter India ONLY AFTER an immigration stamp with the correct date is
affixed on their passport by the Immigration Officer."
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Foreigners carrying a valid PIO (Person of Indian Origin) Card or OCI (Overseas Citizen of India) Card
along with their valid national passport are authorized to enter India without obtaining Indian visa
separately.
6) Requirements concerning stay of Foreigners in India
"Foreigners are required to comply with the purpose for which a visa was initially applied, and also to
abide by conditions, endorsed on the visa". If the visa is valid for more than 180 days, then every
foreigner entering India or resident in India shall present in person or through an authorized
representative to the satisfaction of the appropriate Registration Officer at the place of his stay within the
specified period mentioned on visa except certain visa categories requiring registration within the
specified time. Such registration shall not be necessary in the case of a foreigner entering India on a visa
valid for a period of not more than 180 days and who does not remain in India beyond the said period,
unless, specific endorsement/observation is made on the visa by the Indian Mission.
For further information on registration requirement & visa, enter for specific category of visa concerned
page on this website.
In addition, specific endorsement or guideline on registration formalities made on the Indian visa, if any,
needs to be adhered.
At the time of Registration every foreigner shall furnish accurate information, to the satisfaction of the
Registration Officer and shall, sign the Registration Report, in the presence of the said officer. The
foreigner shall also be provided a copy of Certificate of Registration (Part III of Form A).
Foreigners may go through the instructions given on Registration Certificates for their guidance
concerning stay and future reporting.
Every foreigner shall within twenty-four hours of demand being made a Registration Officer, magistrate or
police officer, not below the rank of a head constable, produce, at such place as may be specified in his
passport or such other proof of his identity and/or Registration Certificate as may be required for any
purpose connected with the enforcement of Foreigners Act/Registration of Foreigners Rules.
Minor (upto age of 18 years) possessing Indian passport with passport of another country may travel to
either of the countires without visa of respective countries. They may use Indian passport at the time of
arrival in India and Foreign passport at the time of departure to the country of which he is possessing the
passport.
7) Guidelines for Emigration Clearance System
1. Emigration Clearance sticker shall be pasted by the POE office only if the individual having
an Emigration Check Required (ECR) Passport, approaches POE office himself or through a
Recruiting Agent. ECR Endorsements on the passports are stamped by the Regional
Passport Officers.
2. In case of unskilled worker, farm worker and women emigrant, Employment agreement
attested by Indian Embassy is mandatory.
3. The Recruiting Agent seeking Emigration Clearance would have to Give an affidavit
confirming the following:-
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1. That employment visa(s) attached/endorsed on the passports of the workers, issued by

respective Foreign Mission/Competent Authority in respect of foreign employer as per
the details given against each name is/are genuine and valid for the period mentioned.
2. Details of workers.
3. That the workers have been recruited by the RA on receipt of Demand Letter, Power of
Attorney from the foreign employer and the same is being submitted.
4. That the worker will be deployed to the same foreign employer for whom he is recruited
and that he will be received by the foreign employer on reaching the country of
employment.
5. That the worker has been trade tested and found fit for the job for which he is being
employed.
6. That the worker will be paid minimum salary and shall be governed by minimum standard
of condition of employment as specified in the Specimen employment contract whose
copy is enclosed.
7. That the worker will be deployed on the same job for which he has been recruited.
8. That the female worker will not be deployed as maidservant/domestic worker.
9. That the RA shall be responsible if persons sent by him are found to be unfit on reaching
the country of employment. The cost of repatriation in such case(s) will be borne by
him.
10. That the RA is maintaining a register for the above mentioned details of the workers.
11. That all the workers mentioned in point (ii) above are actually skilled and semi skilled
and none of them is unskilled worker, agricultural labor, farm worker or housemaid, etc.
It is further certified that the cook(s) included in the above list are not going for domestic
employment.
12. That the RA has gone through the provisions of sub Section (1) and (2) of Section 37 of
the Emigration Act, 1983 and provisions of Section 193 of the Indian Penal Code, 1860
(45 of 1860) relating to punishment for false evidence and have understood the
contents thereof and undertake that in event of any of the documents filed along with or
referred to in this affidavit being found to be false, incorrect, fabricated ,tampered with
or changed, he shall be liable under section 37 of the Emigration Act and Section 193
of the Indian Penal Code.
13. That the intending emigrants have been apprised of the ground realities of the country
of emigration including Maldives. The problems they are likely to face, the lifestyle,
customs, religion, practices, dos and donts in the country of emigration have been
communicated to the intending emigrants.
14. That the RA undertakes to arrange thorough medical check up of all workers being
deployed abroad before their travel from India.
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15. That the worker has signed the employment contract, which contains the seal and
signature of the foreign employer in his presence and that the same employment
contract has been countersigned by him with the seal of the RA and same has been
handed to him and receipt obtained.
4. No female below the age of 30 years shall be granted Emigration Clearance for any type of
work in any ECR country
5. No clearance may be given for Anguilla.
Note: Emigration Clearance for a particular country shall be granted in accordance with the
policy/orders of Government of India, as in force from time to time.
The Protector of Emigrants may reject an application for emigration on the following grounds:
1. That the terms and conditions of employment which the applicant proposed to take up
are discriminatory or exploitative
2. That the employment which the applicant proposes to take up involves work of nature
which is unlawful according to the laws of India or offends the public policy of India or
violates the norms of human dignity and decency.
3. That the applicant will have to work or live in sub-standard working or living conditions.
4. Keeping in mind the prevailing circumstances in the country where the applicant
proposes to take up employment, would not be in the interest of the applicant to
emigrate.
5. That no provision has been made for meeting the expenses which may occur in case it
becomes necessary to arrange for the repatriation to Indian of the applicant, or that the
arrangements made in this regard are not sufficient for the purpose.
6. Orders rejecting any application for emigration clearance shall set out clearly the grounds
on which the order has been made and the fact or circumstances on which such
grounds are based.
8) Who Needs Emigration Clearance
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All persons, having ECR endorsed passports and going to any of the 17 ECR countries for taking up
employment require emigration clearance.
A person could take up employment in a foreign country either through a registered recruiting agent
or directly through a foreign employer or a project exporter. The Protector of Emigrants, after
satisfying himself about the accuracy of the particulars mentioned in the application and other
documents submitted along with the application, grant emigration clearance in the prescribed manner
and form. In case there is any deficiency, the POE intimates the same by an order in writing to the
applicant or, as the case may be, the Recruiting Agent or employer, through whom the applications
have been made.
Information about the registered as well as active Recruiting Agents (RA) is available at the Ministrys
website: www.poeonline.gov.in
Required Documents
Documents
Required
for
Skilled/Semi-Skilled
Workers
(Individuals)
Semi-skilled individuals who seek emigration clearance directly from the Protectors of Emigrants (and not
through Recruiting Agents) are required to produce the following documents in original for scrutiny and
return:
1. Passport valid for a minimum period of six months with valid visa.
2. Employment Contract from foreign employer.
3. Challan towards deposit of prescribed fee.
9) Insurance policy- Pravasi Bhartiya Bima Yojana.
Documents
Required
for
Unskilled/Women
Workers
(Individuals)
Unskilled workers and women (not below 30 years of age) seeking employment abroad shall continue to
furnish (in original) the following documents at the time of obtaining emigration clearance:
1. Passport valid for a minimum period of six months with valid Visa.
2. Employment contract from the foreign employer duly attested by the Indian Mission or
Permission letter from the concerned Indian Mission/Post.
3. Challan towards deposits of prescribed fee.
4. Insurance policy Under Pravasi Bharatiya Bima Yojana (PBBY).
Documents
required
for
skilled/semi-skilled
workers
(Through
Recruiting
Agents)
Recruiting agents who seek emigration clearance for skilled/semiskilled workers are required to produce:
1. Passport of the worker valid for a minimum period of 6 months with valid visa.
2. Original Employment contract, demand letter and power of attorney from the foreign
employer.
3. Challan towards deposit of prescribed fee.
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4. Insurance Policy- Pravasi Bharatiya Bima Yojana.

Documents
required
for
Unskilled/Women
Workers
(Through
Recruiting
Agents)
In addition to the requirements for skilled/semiskilled workers, all employment documents mentioned in (ii)
above have to be duly attested by the Indian Mission.
The specimen employment contract lays down the basic terms and conditions of employment
including salary, accommodation, medical cover, transport, etc.
In the case of vulnerable categories of workers i.e. unskilled Labor and housemaids/domestic
workers, in respect of six countries viz. Yemen, Lebanon, Libya, Jordan, Sudan, and Kuwait,
these employment documents are required to be attested by the concerned Indian
Mission(s).
Emigration clearance to women to work abroad as housemaids/domestic servants etc.

On the recommendations of the National Commission for Women, a ban was imposed on grant of
emigration clearance to women below the age of thirty (30) years for all kind of employment in any ECR
country.
Such women who have come on leave to India and wish to go back to the same foreign
employer are not subject to the said ban and the POEs have been empowered to grant a no
objection certificate to such women applicants to facilitate clearance by Immigration
Authorities at the International Airports in India.
The said ban is not applicable to (i) women holding passports without ECR (Emigration
Check Required) endorsement; and (ii) women going to any of the ECNR countries.
For details on Online Emigration Clearance System please visit http://poeonline.gov.in/index.html
10) ECNR/ECR/POE
As per the Emigration Act, 1983, Emigration Check Required (ECR) categories of Indian passport
holders, require to obtain "Emigration Clearance" from the office of Protector of Emigrants (POE), Ministry
of Overseas Indian Affairs for going to following 18 countries.
United Arab Emirates (UAE), The Kingdom of Saudi Arabia (KSA), Qatar, Oman, Kuwait, Bahrain,
Malaysia, Libya, Jordan, Yemen, Sudan, Brunei, Afghanistan, Indonesia, Syria, Lebanon, Thailand, Iraq
(emigration banned).
However , the Ministry of Overseas Indian Affairs (Emigration Policy Division) have allowed ECR
passport holders traveling abroad for purposes others than employment to leave the country on
production of valid passport, valid visa and return ticket at the immigration counters at international
airports in India w.e.f. 1st October 2007.
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If the RPO has issued Indian passport either with endorsement of Emigration Check Required or no
endorsement of Emigration Check Required in the passport, POE clearance is required only when
there is Emigration Check Required endorsement in the passport.
The POE offices in India are situated at the following places:
1 Jaisalmar
House, 5 8th
Floor,
Chandra
Vihar
Canteen Block, Man Singh Road, Opp.
Exhibition
Ground,
M.J.
New
Delhi. Hyderabad.
Tel No. 011-2338 2472
2 Building
"E"
Khira
S.V. Road,
Santacruz
Mumbai-400
Tel No. 022-2614 7393
Nagar, 6 Suganth,
(West) Thycaud,
054 Trivandrum-695
Tel No. 0471-2324835
3 Room
No.
116
A
Wing, 7 Kendriya
3rd MSO Building, DF Block, 5th
Block,
Salt
Lake,
Kolkata-700
064 Sector-9-A,
Tel No. 033-2334 3407
Chandigarh
Tel No. 0172-2741790
Complex,
Road,
24/846
(I),
014
Ground
Sadan,
Floor,
4 Tamil Nadu Housing Board Complex, 8 Mercy Estate,4th Floor, Ravi Puram,
Ashok
Nagar,
Chennai-600
083 MG Road, Cochin-682015, Tel Phone. No. 0484-2360187
Tel No. 044-2489 1337
11) Employment Guidelines for Emigrants

For the benefit of the prospective emigrants, there are certain guidelines issued by the Ministry of
Overseas Indian Affairs. Follow these guidelines for your own safety and security.
General Guidelines
Deal only with those recruiting agents who have registration certificate and authorised license issued by
the Protectors of Emigrants (POEs)
Do not deal with sub-agents as they are not permitted under the Emigration Act, 1983
Carefully go through the Employment contract and review the salary details and other terms and
conditions of the service
Ask the recruiting agent for the Demand Letter and Power of Attorney from the foreign employer
Do not pay the recruiting agent other than the service charges amounting Rs. 2000 for un-skilled workers,
Rs.3,000 for Semi-skilled, Rs. 5,000 for Skilled workers and Rs. 10,000 for other than the above
Ask for the receipt of the payment and prefer paying through Demand Draft or cheque rather than in cash
12) List of Registered Agents
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The Ministry of Overseas Indian Affairs has published a list of Registered Agents for the benefit of Indian
Nationals aspiring to go abroad for the purpose of employment. Do not deal with any other recruiting
agent than the ones having a valid registration certificate issued by the Protectors of Emigrants (POEs).
Black Listed Foreign Employers
There are certain employers who have been blacklisted by the Ministry of Overseas Affairs. Prospective
emigrants need to avoid any kind of dealing with them. For a detailed list of these black listed foreign
employers .
Dos and Donts for Indian Emigrants
Dos:
Do ensure that you have a valid passport. The passport should preferably be valid at least for the next
six months so that no immediate inconvenience is caused to you on your reaching the country of
employment.
Do ensure that you are recruited through an authorized Recruiting Agent. Insist on seeing his
registration certificate issued by the Protector- General of Emigrants at Delhi. In case of doubt,
contact the nearest Protector of Emigrants Office.
Do ensure that your recruiting agent has the original of the following document:
(i) The Power of Attorney duly executed by the Foreign Employer authorizing the agent to
recruit workers on his behalf;
(ii) The Demand letter indicating the type of workers required by him and
salaries/perquisites offered by him to the workers;
(iii) The specimen copy of the employment agreement proposed to be executed; and
(iv) Visa issued in your name/favour by the foreign Government.
Do ensure that the employment documents are attested by the Indian Mission in the country of
employment, if you are going as an unskilled worker/Household Service Worker.
Do ensure that you have with you a copy of the employment agreement signed between you and your
foreign employer or his agent.
Do ensure that the employment agreement clearly specifies the name and complete postal address of
your employer, salaries per month in foreign currency, duration of contract/agreement, facility for
free/subsidized housing, messing or allowances in lieu thereof, to and fro passage, medical facility, etc.
Do ensure that in case of employment in the Gulf countries, the employment agreement is both in
English and Arabic.
Do ensure that you have opened required Bank Account in one of the banks in India before departure in
order to ensure smooth inflow of remittances for your dependents in India.
Do ensure that you have a proper ticket and a valid visa stamped on your passport before you emplane.
Do ensure that you are familiar with the provisions of the local labour laws. You may either request your
agent or contact the nearest Protector of Emigrants for this purpose.
Do ensure that you have been briefed by your Recruiting Agent about the working/living conditions in
the country of employment.
Do ensure that after your arrival in the country of employment you have obtained resident
permit/identity card.
Do ensure that you have obtained a copy of the contract.
In case of any difficulty, do contact the Indian Mission in the country of employment.
Do note that before final departure for India on termination of contract, you contact the Indian
Mission in respective countries for latest customs and baggage regulations etc.
Do ensure that a copy of your passport is available with you and your family back home.
DONTS
Do not pay any money to your agent without obtaining a valid receipt.
Do not sign the employment agreement unless you have read it or it has been read out to you and you
have understood all the clauses in it.
347 | P a g e
Do not sign any blank paper on your arrival in the country of employment or allow the employer to
execute any agreement other than the one signed by you in India and registered with the Protector of
Emigrants.
Do not leave India unless you are satisfied that your employer knows the exact date and time of your
arrival so that you are not stranded there.
Do not indulge in any collective industrial action like strikes, go-slow and mass demonstrations etc. while
in employment abroad as they are illegal and strictly banned. Your involvement in any such activities may
result in your imprisonment or deportation back to India.
Do not change your sponsor/employer in the foreign country during the period of agreement. Otherwise,
you are liable to fine and other action under the local labour laws.
Do not indulge in non-Islamic religious practices during your stay in those countries like eating,
drinking, or smoking in public places during the month of Ramzan.
Do not keep in your possession or consume alcoholic drinks during your stay in the Gulf countries as it
is strictly prohibited by the respective Governments. Do not part with your passport and other
documents during your stay abroad.
Do not move away from the work site without valid identity card issued by your employer.
Do not fall prey to touts/sub-agents who may exploit you.
13) Abolition of ECRS
In order to get rid of the undue inconvenience and harassment to the passengers with ECR passports
going abroad on tourist/visit visa, the ECR Suspension (ECRS) system has been abolished with effect
from 1st October, 2007. Thus, person holding ECR/ECNR passports traveling on any type of visa to any
of the exempt countries are not required to take clearance from the POE offices.
Offices of the Protectors of Emigrants under the Ministry of Overseas Indian Affairs, grant Emigration
Clearance to the persons who are holding ECR passports and are going to any of the designated
countries (ECR countries) on employment visa.
ECR passport holders going to any of the notified countries (ECR countries) on any visa other than
employment visa, are allowed to travel on production of following documents at the Airport:1. Valid Passport
2. Valid visit/residence/study visa etc.
3. Return Ticket
20/01/0212
International migration is an important dimension impacting economic relations between the developed
and developing countries. Keeping this in mind, the Emigration Policy Division of the Ministry was
established in March 2006 to facilitate and empower the emigrants from India. This Division deals with all
policy matters relating to emigration of workers from India. Its key responsibilities include:
Formulation of policies for improving Emigration Management
Proposing legislative changes
Implementing emigration reforms (including institutional changes and e-Governance)
Formulation of welfare schemes for emigrants
Promoting bilateral and multilateral co-operation in international migration
The Indian emigrant (other than the white collar worker) is fairly vulnerable to exploitation and is ignorant
348 | P a g e
of relevant laws and procedures. The high cost of migration as well as the policy of localization by host
countries further reduces the emigrational benefits to the worker. Therefore, the Ministry is pursuing a
proactive policy to transform the emigration system and empower the emigrants through systemic
interventions at the national, bilateral as well as multilateral fronts.
The various steps taken by the Ministry to transform the emigration system and empower the Emigrants
are:
Drafting of new Emigration legislation to replace the Emigration Act, 1983.
Proposals for signing MOUs with the Gulf countries
Schemes for skill up gradation and pre-departure orientation of potential emigrants
Building up a framework for carrying out on-site welfare measures
Setting up Overseas Indian Centers to coordinate on-site welfare
Replicate the best practices of other countries like Philippines in the area of emigrant welfare
Revamping the recruitment system to make it more professional and accountable
Establishment of Council for Overseas Employment to advise the Government on overseas

employment matters and to develop strategies and good practices in migration management
through research and studies.
14) How can one seek employment abroad ?

A person can take up employment in a foreign country either through a registered recruiting agent or
directly through a foreign employer or a project exporter.
Where can one get detailed information about rules, regulations and procedures about overseas
employment?
For detailed information click here.
Is there any ban on deployment of Indian women to foreign countries?
For protection and security of women emigrants, no emigration clearance is granted to women below
30 years of age holding ECR pasport. This restriction applies to women emigrants having ECR
endorsed passports and going to any of the 17 ECR countries.
What precaution should be taken regarding advertisements for overseas jobs?
In case of ad by a Registered Recruiting Agent, it must be checked that registration certificate number
is clearly mentioned. Similarly, ads by Foreign Employers and Project Exporters should indicate their
permit number. Full address with Telephone Number, Post Box Number, e-mail address of the
advertiser should be mentioned in addition to the job and salary particulars to enable the respondent
to check the veracity of the job and the employers. Clarifications in this regard could be sought from
the office of any Protector General of Emigrants on the helpline().
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Attestation of employment documents by the Indian Mission concerned is mandatory in the case
of recruitment of "unskilled workers" and "housemaids" for any of 17 ECR countries. Aattestation
is required for all categories of workers in Yemen, Lebanon, Libya, Jordan, Sudan and Kuwait.
What are the documents needed to be submitted by skilled or semi-skilled workers planning to
emigrate?
Semi-skilled workers, who seek emigration clearance directly from the Protectors of Emigrants
(PoEs), and not through recruiting agents, are required to produce the following documents in
original:
Passport valid for a minimum period of six months
Valid employment visa
Employment contract signed by foreign employer
Challan towards deposit of prescribed fee
Insurance policy from any of the listed companies under Pravasi Bharatiya Bima Yojana
(PBBY-2006 revised in 2008)
What are the documents needed to be submitted by unskilled workers planning to emigrate?
Unskilled workers and a household service workers seeking employment abroad should furnish (in
original) the following documents at the time of obtaining emigration clearance:
Passport valid for a minimum period of six months
Valid employment visa.
Employment contract signed by the foreign employer and duly attested by the Indian Mission
or permission letter from the Indian Mission/post concerned.
Challan towards deposit of prescribed fee
Insurance policy (from any of the listed companies under Pravasi Bharatiya Bima Yojana
(PBBY-2006 revised in 2008)
On what grounds can an application for emigration clearance be rejected?

Subject to other provisions of the Emigration Act 1983, the PoE may reject an application for
emigration clearance on any one or more of the following grounds:
That the terms and conditions of employment which the applicant proposes to take up are
discriminatory or exploitative.
That the employment which the applicant proposes to take up involves work of a nature
which is unlawful according to the laws of India or goes against the public policy of India or
violates the norms of human dignity and decency.
That the applicant will have to work or live in sub-standard working or living conditions.
That having regard to the prevailing circumstances in the country or place where the
applicant proposes to take up employment or any other relevant circumstances, it would not
350 | P a g e
be in the interest of the applicant to emigrate.
That no provision or arrangement has been made for meeting the expenses which may be
incurred in case it becomes necessary to arrange for the repatriation to India of the
applicant, or that the provisions or arrangements made in this regard are not adequate for
the purpose
To streamline recruitment for overseas employment and to safeguard the interests of the emigrants,
the Emigration Act 1983 stipulates that only recruiting agents duly registered under the Act can
conduct
the
business
of
recruitment
for
overseas
employment.
How can one know that a recruiting agent (RA) is registered or not?
For a list of recruiting agents registered under the Emigration Act, 1983
What has one to ensure before entering into any transaction with the recruiting agent?
First ensure that the agent has displayed his Registration Certificate (RC) which is valid at that point
of time. Then note down the particulars of job and foreign employer and cross check the same with
the foreign employer as well as on Prior Approval Category (PAC) list on this website. In case of
doubt, verify the genuineness of the job as well as the employer through Indian Mission in that
country on telephone or through e-mail, the details of which are available on www.meaindia.nic.in
and
www.india.gov.in.
DO NOT handover any money, your passport, educational or experience certificates to the agent
unless
the
genuineness
of
the
job
and
employer
has
been
established.
DO NOT pay more than the prescribed fee of equivalent wages for 45 days as per the employment
contract
subject
to
maximum
Rs.20,000/=
How can a person lodge complaint against the agents or get their grievances redressed?
Complaints against recruiting agents could be addressed either through post or by e-mail to
helpline@owrc.in. Complaints can also be filed with any of the eight Protector of Emigrants or
dropped in the box marked Protector General of Emigrants kept at the reception area of Akbar
Bhavan, Chankyapuri, New Delhi. A toll free 24x7 Helpline No.1800-11-3090 can also be reached.
Besides all these, one can utilize the services of walk-in counseling center at OWRC, D-19, Okhla
Industrial
Area,
Phase
I,
New
Delhi
110
019.
How can a person lodge complaints against the foreign employers to get their grievances
redressed?
An aggrieved emigrant can file his complaint with the Indian Mission in that country on telephone or
through e-mail, the details of which are available on www.meaindia.nic.in and www.india.gov.in.
They can also take recourse to the options as mentioned above.
Direct recruitment is permitted in the case of foreign employers who have obtained a permit from the
competent authority in this regard.
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The complaints made by emigrants or intending emigrants against the registered recruiting agents are
examined by the Protector General of Emigrants, if necessary in consultation with the Indian Mission
abroad. Action is taken, as appropriate, in accordance with the provisions of the Emigration Act, 1983,
and
rules
framed
thereunder.
Complaints against unauthorized/illegal recruiting agents are referred to the police authorities for
investigation.
Complaints against foreign employers are taken up with the Indian Missions abroad. A recalcitrant
foreign employer is blacklisted (by placing him in the PAC list) from future recruitment in consultation
with the Indian Mission. A list of foreign employers under the Prior Approval Category (PAC) is
available on the website of the Ministry of Overseas Indian Affairs at www.moia.gov.in.
What is the nature of complaints made by Indian workers going abroad for employment?
As a result of progressive liberalization, the number of Indians going abroad for employment has
increased significantly. However, there have been cases of emigrants facing serious difficulties
including exploitation at the hands of foreign employers. Following are the types of complaints received
by the offices of the Protector General of Emigrants (PGE) and Protectors of Emigrants (POEs):
1. The employment contract unilaterally changed to the disadvantage of the workers by the foreign
employers.
2. The worker put to a job different from the one for which he was recruited in India.
3. The worker not given any employment at all by the employer or made to look for a job himself
and forced to pay a commission out of his salary
4. Registered recruiting agent charging a higher service charge than prescribed
5. Employers not paying wages on time Employer terminating the employment contract prematurely
6. Unsatisfactory living and working conditions or harassment Delay in payment of death or
disability compensation etc.
What measures have been taken by the Government to protect the interests of emigrating workers?
The Government is committed to protect the interests of Indian emigrants. The PGE makes all efforts
to redress the grievances of the emigrants with the help of the recruiting agents, the Indian
Missions/posts abroad, foreign governments and/or foreign employers concerned. The Indian Missions
provide assistance and take up complaints/grievances of Indian emigrant workers with the foreign
authorities
concerned
for
amicable
settlement.
To check fraudulent practices, recruiting agents are required to furnish the demand letter and the
power of attorney issued by the foreign employer as well as a specimen employment contract for
obtaining
emigration
clearance.
All cases of recruitment by illegal recruiting agents are referred to the police for criminal action. All state
and union territories have also been requested to instruct the police stations to keep a strict vigil
352 | P a g e
against illegal recruitment.
Before you leave India to take up a job in a foreign country, you should ensure that:
You have a valid passport (for next 6 months) and employment visa.
You have a copy of the agreement signed by you and your foreign employer or his
agent.
You have an insurance policy from an insurance company under the Pravasi
Bharatiya Bima Yojana.
You have a savings bank account to enable you to send remittances from abroad.
What are the points to keep in mind once one reaches the foreign country offering
employment?
Once you reach the destination country where you have been given a job, you should
always remember that:
You should not lose your passport at any cost
You should not sign any other agreement or any blank piece of paper.
You should not strike work or resort to agitations, because it is illegal and you can be
sent back to India.
You should always keep the address and telephone number of the Indian embassy
with you.
You should report all grievances to the Indian embassy.
15) Guidelines for Departure to a foreign country for employment

GUIDELINES:
Be sure of your Recruiting Agent. Ask him to show his Original Registration Certificate issued by
the Protector General of Emigrants, Govt. of India. Do not deal with him unless he is registered
and the registration is valid and is not suspended / cancelled. In case of doubt, check with any of
the offices of the Protectors of Emigrants (POEs) or the Protector General of Emigrants (PGE).
DO NOT deal with sub-agents as they are not permitted under the Emigration Act, 1983 and
Rules.
Ask the Recruiting Agent to show to you the Demand Letter and Power of Attorney from the
foreign employer.
Also carefully go through the Employment Contract detailing the salary/wage levels and other
service conditions.
353 | P a g e
DO NOT pay more than the equivalent of wages for forty five days as offered under the
employment contract, subject to maximum of Rupees Twenty Thousand in respect of services
provided and take a receipt of this payment.
Pay by Demand Draft or Cheque and obtain a receipt. Complaints of overcharging or cheating
can be lodged with the concerned POE or with the Protector General of Emigrants (PGE) or at
OWRC.
CHECK BEFORE DEPARTURE:
Ensure you have a valid Passport at least for 06 months. A valid Visa must be either stamped on
or accompany your Passport. Also ensure invariably that your VISA is for the same category for
which you have been recruited. Always keep a photocopy of your Passport and Visa.
You must possess a copy of the Employment Contract singed by you and your foreign employer
duly attested by the registered recruiting agent.
Insist on a copy of Employment Contract in English duly authenticated by the recruiting agent.
Open a Saving Bank N.R.E. Account in one of the Banks in India to enable you to send your
remittances from abroad.
Acquaint yourself with local labor laws, working and living conditions of the country of
employment. Keep with you complete address, phone, email of the Indian Embassy of the
country which you are visiting.
IN THE COUNTRY OF YOUR EMPLOYMENT
DO NOT part with your Passport and copy of Employment Contract signed by you in India, at any
cost.
Obtain a Resident Permit or Identity Card, Labor Card or IQUAMA.
DO NOT sign any other Employment Contract or any blank paper.
DO NOT strike work or resort to agitations. These are illegal under local labor laws.You could be
arrested, imprisoned and also deported.
DO NOT carry with you any edible items, this may land you in jail, if any banned substance found
in such edible items.
DO NOT carry any medicines without accompanying the prescriptions from a Doctor lesser
AVOID all contacts that may result in AIDS a dreaded disease.
Keep in touch with the nearest Indian Mission and report any complaints about non-payment or
delayed payment of wages or compensations or any other problem to the Indian Mission.
16) CUSTOMS FORMALITIES:
Personal baggage Customs checking is VERY STRICT. Kindly co-operate with the Customs
staff at the International Airport.
Ensure that you do not carry any narcotics or alcoholic drinks. Alcohol is strictly prohibited. Its
consumption is a serious offence attracting severe punishment.
DO NOT accept any unchecked parcel from any one. If you have to take a parcel for someone,
check thoroughly that it does not contain alcohol or narcotics. Otherwise, it may land you in
serious difficulties on arrival in the country of employment.
RELIGION:
The State religion of the Saudi Arabia is ISLAM. Public practice of any other religion is strictly
prohibited.
PRECAUTIONS:
354 | P a g e
You must make and keep a photocopy of all the pages of your Passport. DO NOT lose your
Passport or its photocopy.
By chance if you misplace your Passport, inform the nearest Indian Mission immediately giving
them details, i.e. Passport number, date and place of issue, your name and date of your entry in
the country of employment. You can give these details only if you keep a photocopy of your
Passport.
DO NOT lose your copy of Employment Contract. Make photocopies and keep them with you
always.
You must have a full name, address, telephone/fax number of your foreign employer, before you
leave India.
If you have difficulty in locating your foreign employer, contact the nearest Indian Mission
immediately.
DO NOT accept temporary or permanent employment with another person or establishment other
than that the sponsoring Company/ establishment/ person. Employment with persons other than
your original sponsor is strictly prohibited and attracts severe punishment.
Before the Visa or Employment Contract expires, get them renewed. If you are returning to India
for a short while during the tenure of your Employment Contract abroad, ensure that the validity
period of Visa does not expire before you return to the country of employment.
Also ensure that your Passport is valid. At least two months before it is about to expire, get it
revalidated from the concerned Indian Mission abroad or from the Regional Passport Office
(RPO) in India.
More details on dos/dont may be seen under the heading Country Manual on Saudi Arabia
355 | P a g e
CHAPTER 37
Inheritance Certificate
When someone dies with no will, an Inheritance Certificate (can also be called a Succession Certificate)
must be granted by the court to recognize the debts and securities of the deceased and to give valid
discharge. A Succession Certificate empowers the person holding it to receive interest or dividends,
and/or negotiate the transfer of these with respect to the assets of a deceased person.
Step-1: The person requiring the Succession Certificate may file an application in the court where the
properties of the deceased relative are situated or where he/she normally resided.
Step-2: Depending on the value of the estate of the deceased, the matter shall go to the type of court
which can conduct cases for that value [This is known as pecuniary jurisdiction of the court]. The case
includes the names of all other heirs of the deceased as the respondents in the matter.
A newspaper notice must be issued apart from mandatory notice to the respondents.
Step-3: Upon the expiry of the time period (normally 1 and a half months) from the date of the newspaper
publication of the notice, and after the respondents have given their No Objection, the court passes the
orders for issuance of the Succession Certificate to the person(s) making such an application.
Step-4: Judicial Stamp papers of sufficient amount (as per the prescribed court fees structure) are to be
submitted in the court. After the Certificate is typed by the court staff and duly signed, it is then sealed
and delivered
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2) International Driving Licence

The IDD (also known as the international driver's license) is based on the United Nations standards
on Road Traffic. On September 19, 1949, the first Road Traffic Agreement was created and the
United Nations established an International document to facilitate the travel of motorists in foreign
countries where language barriers create difficulties for both, motorists and local officers. This
document establishes the right for a person to drive in another country when accompanied by an
original and valid driver's license, translating your driving permit in 9 languages. The UN, or more
specifically, the United Nations Economic Commission for Europe (UNECE), deals with conventions
and treaties on road traffic. In particular, the 1968 Vienna Convention on Road Traffic which most, but
not all, countries signed, dealt with the International Driving Permit model that is currently in use
(Chapter IV, Article 41). The 1968 Convention came into force on 21 May 1977, and superseded the
previous road traffic convention, signed in Geneva in 1949.
Some countries call it an international driving licence while other countries call it an international driving
permit (IDP). But both terms basically refer to the very same thing, a document that allows you to drive a
car or another type of motor vehicle in another country. When you present an IDP, you usually bring out
your drivers license from your home country. This document is usually a prepared in different language
than the language required in the country you wish to drive the car, so sometimes you need to be
translated into different languages.
Where Can I Use an IDP?
With your international driving permit you can drive a car in another country without having to undergo
further testing. You dont need to apply for a local driving license as long as you have a valid driving
license from your home country with your IDP (International Driving Permit). An IDP is a document
sanctioned by the United Nations.
What Countries Recognize IDPs?
An international driving permit is available in nine different languages. It is recognized in more than 150
countries and can also be used as a means of identification in case you forgot to bring your passport with
you on the road. Asian countries like Singapore, Thailand, Philippines, India, and Japan recognize this
international driving license.
Countries in the west like Belgium, Britain, Canada, Italy, Ireland, New Zealand, Spain, Romania, USA,
and Mexico among many others also recognize IDPs. The countries in the Middle East that recognize
IDPs include United Arab Emirates, Saudi Arabia, Oman, Kuwait, and others.
Applying for an International Driving Licence
You dont need to undergo any test in order to secure an IDP. It is fairly easy to obtain and will require a
small fee. A significant confusion comes in the question of where you can get one in particular country.
Each country will have different organizations that are authorized to issue this said permit..
The key is to locate the organization that a countrys government has authorized to issue international
driving licenses. You may want to check an official web site of the country you are visiting in order to get
accurate information and avoid getting scammed. The requirements are simple enough: at least age 18, a
valid and recognized drivers license, passport type photos, and filling out an application form plus the
fee.
Countries where the IDD is currently accepted:
Afghanistan
Ecuador
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Leone
San Marino
Albania
Algeria
Andorra
Angola
Antigua
Argentina
Armenia
Aruba
Australia
Austria
Azerbaijan
Bahamas
Bahrain
Bangladesh
Barbados
Belarus
Belgium
Belize
Benin
Bhutan
Bolivia
Brazil
Botswana
Brunei
Bulgaria
Burkina Faso
C.I.S.
Cameroon
Canada
Cape Verde Island
Cayman Islands
Central African Rep.
Chad
Chile
China
Colombia
Comoros
Congo
Costa Rica
Croatia
Cuba
Curacao
Cyprus
Czech Rep.
Denmark
Djibouti
Dominican Republic
Egypt
El Salvador
Equatorial Guinea
Estonia
Fiji
Finland
France (include French
overseas territories)
French Polynesia
Gabon
Gambia
Germany
Georgia
Ghana
Gibraltar
Greece
Grenada
Guatemala
Guernsey
Guinea
Guinea-Bissau
Guyana
Haiti
Honduras
Hong Kong
Hungary
Iceland
India
Indonesia
Iran
Ireland
Israel
Italy
Ivory Coast
Jamaica
Japan
Jersey
Jordan
Kampuchea
Kazakhstan
Kenya
Korea (Rep.)
Kuwait
Kyrgyzstan
Laos
Latvia
Lebanon
Lesotho
Liberia
Libya
Liechtenstein
Lithuania
Luxembourg
Macao
Madagascar
Malawi
Malaysia
Mali
Malta
Mauritania
Mauritius
Mexico
Monaco
Moldova
Morocco
Montserrat
Mozambique
Myanmar
Namibia
Nepal
Netherlands
New Caledonia
New Guinea
New Zealand
Nicaragua
Niger
Nigeria
Norway
Oman
Pakistan
Panama
Papua New Guinea
Paraguay
Peru
Philippines
Poland
Polynesia
Portugal (includes
Madeira & Azores)
Principe
Qatar
Romania
Rwanda
Russia
Sao Tome
Saudi Arabia
Senegal
Seychelles
Sierra Leone
Singapore
Slovakia
Slovenia
Spain
South Africa
Sri Lanka
St.Christopher, Nevis &
Anguilla
Surinam
Swaziland
Sweden
Switzerland
Sudan
Syria
Taiwan
Tajikistan
Tanzania
Thailand
Togo
Trinidad & Tobago
Tunisia
Turkey
Turkmenistan
Uruguay
Uganda
Ukraine
United Kingdom
United States of America
Uzbekistan
Vatican City
Venezuela
Verde Islands
Vietnam
Western Samoa
Windward Islands
Yemen (Rep.)
Yugoslavia
Zaire
Zambia
Zimbabwe
Saudi Arabia Driving License

You can drive in Saudi on an International Driving License and some national licenses for up to three
months, after this you need a Saudi license. Some licences, including those from the UK and US, are
convertible to a Saudi licence without a driving test. The application procedure for a Saudi driving license
is as follows:
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Obtain a translation of your Driving License. This is not the same as the attestation before, but merely the
Driving License Office (DLO) translation for them to certify it is fine and obtain a letter from your
sponsor duly attested by the Chamber of Commerce. You can remit the license fees online.
Obtain a green hanging file folder (yes, this is essential!). Without this your application will fail Into this,
insert your translation, a further company letter, a copy of you license, a copy of your Iqama and the
ubiquitous application form.
Take this to the DLO and take a blood test this is marked on your license, and an eye test - both these
tests will get you a stamp on the form to say they are completed. If the application is successful, pay your
fee and collect your license.
Women are not allowed to drive cars in Saudi Arabia, and a woman can only travel by car if accompanied
by her husband, male relative or male driver
UAE International Driving Permits
International Driving Permit or License (IDP) in Abu Dhabi, Dubai, UAE information. An IDP can be
obtained in the UAE, and an overseas IDP is recommended and might be necessary for driving a rental
car in Dubai and UAE.
Driving licence rules, especially in the UAE it seems, appear to change frequently and/or be implemented
inconsistently. Please keep in mind that within the UAE, each emirate might implement rules differently
and/or have their own rules. Also, authorities sometimes sound like they contradict each other, and press
reports of updates are only as accurate as information they receive. The IDP topic is especially notorious
for conflicting information
Those information conflicts could mean that you are driving legally in one emirate, but not necessarily in
another. And drivers usually find this out the hard way - by having an accident resulting in no insurance
cover, and/or a fine, and/or the car being impounded by the police. Be even more careful on some roads
or desert areas where you can be driving in another country's territory (Oman, possibly Saudi Arabia)
without having gone through a border crossing.
Driving on a visa in Dubai
If you are not a permanent resident and want to drive on your visit to Dubai you must:
be at least 18 years of age

have either a valid Visit Visa or a valid Residence Visa
hold a valid driver licence
International Driving Licence restrictions

Generally you can drive a hire car using an international driver permit if you are on temporary stay (Visit
Visa) only. However, you will need to check with individual car hire companies to see if they accept
international driver permits, as some companies do not accept them. You will need to check that you
have insurance cover if you are intending to drive outside the UAE. An International Driver Permit carried
in conjunction with your foreign driving licence is required for driving in the UAE. You cannot drive using
an International Drivers Permit if:
you are on a Residence Visa
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you want to drive a privately registered vehicle (temporary Dubai licences must be obtained
from the RTA Licensing Agency or an external RTA Driver Licensing Branch for private
vehicles)
Eligibility to apply for a Dubai Driving Licence

If you hold a licence recognized by the UAE and have:
a Dubai Visit Visa you may apply for a temporary Dubai Driver Licence
a Dubai Residence Visa you may apply for a permanent Dubai Driver Licence
A press release 02 July 2007 from the Dubai Department of Tourism and Commerce Marketing said:
About the International Driving License (IDL) and Temporary License, the industry felt that the local
license was more reliable than the international one. They added that holders of a UAE license could
drive in the US and UK using the license.
The RTA officials explained that other emirates do not accept visitors to drive with their local licenses.
Hence, if a driver makes an accident outside Dubai, he would be taken to court for driving without a
license. Moreover, the insurance would not cover the accident. Hence, the present system offered more
protection to visitors and car rental firms at a license exchange fee for certain nationalities listed on RTA
website www.rta.ae.
Other visitors could use their international license.
It was clarified that the IDL could later be obtained from the UAE Touring Club at the Airport, for outbound
passengers only.
The RTA will contact Ministry of Interior asking that UAE law be amended to allow for reciprocal use of
domestic license with certain countries. The RTA said it would consider empowering reputed car rental
firms to issue temporary license for domestic license holders of approved nationalities.
Driving License Quarter
To obtain a driving license in Qatar, one should pass a driving license test. Note that no citizen or
resident can drive without a license or with an expired permit. A visitor to Qatar can drive his car using an
international driving license. For people coming to the country for work and having a residency permit, if
they have a driving license, they are transferred to schools for a driving test to ascertain their ability to
drive. If they pass the test carried out by the Traffic Department, they are granted a license. If
unsuccessful, they are given another chance, and then transferred to a full education cycle.
Apply for a Driving License
Applying for a driving license can be done through the Traffic Department of the Ministry of Interior.
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To download the application form, please click here .

Required procedures for granting driving license to Qatari citizens:
Reach the legal age, (18) years for light driving license, or motorcycle license and (21) years for a
heavy driving license or construction and agricultural equipment license).
ID card + copy
Fill the driving license application
Provide (3) recent colored photos
Provide a training insurance for (3) months period for those who wish to train on a private car.
Procedures to obtain a driving license of any kind by non-citizens:
Reach the legal age, (18) years for light driving license, or motorcycle license and (21) years for a heavy
public driving license or construction and agricultural equipment license).
Fill the driving license application
Provide a letter from the sponsor
Passport + copy
Sponsor's ID card copy,
Provide (3) recent colored photos
Persons with special needs and disabilities:
These persons are transferred via a letter from the Traffic Department to the Department of medical
services after identifying the type of disability if it was apparent. According to the medical report, they are
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granted the required license with the terms specified in the report, setting a distinct mark at the driving
license, and determining the type of car allowed to drive and put a distinctive mark on the car.. Etc.
The person may not be able to drive because of the disability.
Conditions required for granting a driving license:
Age
Health Fitness
Pass the driving test

For more information about driving license click here.
How to get an International Driving License in Kuwait?
Not: Recentaly there are lot of changes in the procedures for obtaining the dirving license in Kuwiat, the
revised procedures not yet available
International driving license is issued by Kuwait International Automobile Club or KT as its more
commonly known as. KT has authority to issue both international license and international travel permit
for your car, if you are driving out of Kuwait.
To get the license here are the basics:
You need one photograph

A copy of your current Kuwait driving license
An application form, available at KT offices
Fee of either KD10 [one year], KD 18 [two years], or KD 24 [three years] in cash
You visit one of the KT branches and submit the above. You will get your license within 10-15 minutes
KT branches are located in Shuwaikh, Fahaheel, and Jahra. The one in Shuwiakh is on 4th Ring Road,
right opposite Safat Al-Ghanim [automobile showrooms in Rai]. The approach to this branch is through
the road just before Sultan Center wholesale division. They are open Sunday to Thursday, 8am 1pm
and 4:30pm 7pm. Call them on [965] 4832388 / 4832192 for more information
Baharian Driving License
Due to the size and existing intrastructure of Bahrain, public transportation's benefit has been very limited.
Most people in Bahrain prefer to drive their own automobile as opposed to riding the bus. Taxi's have
been received with mixed feelings as the issue of overcharging or meter not being used by some cab
drivers still prevails to this day. As a result, there has been an increase in traffic over the past few years
(and with that congestion and accidents).
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So if you have decided on renting a car and driving it around in Bahrain, here's what you must consider
to stay safe and away from trouble:
Quick Points:
1.
2.
3.
4.
5.
6.
All cars must be legally registered and insured.

All drivers must carry a driver's license (International driving license required for visitors).
Wear your seat belts.
Respect the speed limit.
Do not cross any red lights.
No drinking and driving. (The slightest smell of alcohol on your breath is enough to get you
arrested)
- So please assign a designated driver or call a cab. Don't ruin your vacation!
These are some brief points that could prevent you from being prosecuted (according to the General
Directorate of Traffic website)
3. International Passport
In some countries, the international passport or passport for travel abroad is a second passport, in
addition to the internal passport, required for a citizen to travel abroad within the country of residence. In
most countries, a passport inside the country is not required (although it might be one of several means of
identification) and no separate internal passport exists. In that case, international passport means normal
passport. Passport is a document, issued by a national government, which certifies, for the purpose of
international travel, the identity and nationality of its holder. The elements of identity are name, date of
birth, sex, and place of birth.
A passport does not of itself entitle the passport holder entry into another country, nor to Consular
protection while abroad or any other privileges. It does, however, normally entitle the passport holder to
return to the country that issued the passport. Rights to consular protection arise from international
agreements, and the right to return arises from the laws of the issuing country. A passport does not
represent the right or the place of residence of the passport holder in the country that issued the passport
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CHAPTER 38
Islamic Funds - Sharia Law and Investment Structures

Modern Islamic banking is just 35 years old, increasing from US$10 million in 1975 to now over US$250
billion under management with dedicated Islamic banks, together with another US$200 billion with units of
conventional financial institutions. This rapid expansion in just three decades has not only attracted the
interest of conventional bankers and borrowers, but also increasingly of investment fund structurers and
promoters. Western financial institutions are working closely with their Islamic counterparts to develop this
sector and meet the needs of a huge customer base worldwide.
Islamic banking (or participant banking) is banking or banking activity that is consistent with the
principles of Islamic law (Sharia) and its practical application through the development of Islamic
economics. Sharia prohibits the fixed or floating payment or acceptance of specific interest or fees
(known as Riba or usury) for loans of money. Investing in businesses that provide goods or services
considered contrary to Islamic principles is also Haraam (forbidden). While these principles may have
been applied to historical Islamic economies, it is only in the late 20th century that a number of Islamic
banks were formed to apply these principles to private or semi-private commercial institutions within the
Muslim community.
It is worthwhile noting that Islamic finance is not confined to Muslim countries but is spread over Europe,
the United States and the Far East; nor is it limited to Islamic borrowers, but is also used by many
companies as an alternative source of funds. The principles of Islamic banking are similar in many
respects to conventional banking, asset financing and project financing principles commonly used and
applied under English law worldwide.
Islamic Finance
Fundamentals of Islamic finance
The term Islamic banking refers to a system of banking or banking activity that is consistent with Islamic
law (Shariah) principles and guided by Islamic economics. In particular, Islamic law prohibits usury, the
collection and payment of interest, also commonly called riba in Islamic discourse. In addition, Islamic law
prohibits investing in businesses that are considered unlawful, or haraam (such as businesses that sell
alcohol or pork, or businesses that produce media such as gossip columns or pornography, which are
contrary to Islamic values). Furthermore the Shariah prohibits what is called "Maysir" and "Gharar".
Maysir is involved in contracts where the ownership of a good depends on the occurrence of a
predetermined, uncertain event in the future whereas Gharar describes speculative transactions. Both
concepts involve excessive risk and are supposed to foster uncertainty and fraudlent behaviour.
Therefore the use of all conventional derivate instruments is impossible in Islamic banking. In the late
20th century, a number of Islamic banks were created to cater to this particular banking market.
Islamic finance is the application of the Sharia to the finance sector. Although it is most well known for its
prohibition of interest, Sharia is, in fact, a wholly different philosophy from the conventional western
outlook of finance. The Sharia explains in detail the Islamic concepts of money and capital, the
relationship between risk and profit, and the social responsibilities of financial institutions and individuals.
Based on this philosophy, Sharia-compliant instruments and techniques have been developed and
successfully used by Islamic finance units and customers worldwide in the funding of items such as
property, ships, hotels and power plants.
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The payment or receipt of all forms of usury (Riba) is strictly forbidden by the Quran, as well as gambling
and uncertainty. Therefore, all sorts of interest payments common in conventional banking fall under the
category of Riba, whether disguised as commission, a fixed or variable add-on or a discount.
The purpose of this prohibition is to prevent exploitation from the use of money and to share profit and
loss. Money should be used for a proper economic purpose and not treated as a commodity on which a
return can be made by reference to time. Islamic scholars agree money is simply a means of exchange
and not an asset, and should therefore not grow over time. However, capital can earn the returns derived
from the productive use of capital.
It is also forbidden for any Islamic institution or investment fund to deal in the following goods:
(a) alcoholic drinks;
(b) pork, ham, bacon and related by-products;
(c) dead animals (i.e., those not slaughtered according to the rules of the Sharia);
(d) gambling machines;
(e) anti-social and immoral goods such as tobacco, pornography, drugs, etc.;
(f) gold and silver, except for spotcash; and
(g) armaments and destructive weapons.
Since almost all of todays companies deal with some form of interest or otherwise prohibited activity,
some Sharia advisory boards have determined an upper limit to what percentage of a companys income
can be earned through interest and/or such activities. It would be unacceptable to invest in a firm that
exceeds this limit.
Islamic Investment Funds Structures
As shown above, Islamic instruments can be used in many types of fund structures. Sharia-compliant
property funds, in particular, are increasingly being used in the U.K. and are promoted by many
institutions. Investors from the Middle East have long regarded commercial real estate as a favorite form
of investment, with an emphasis on certain commercial property sectors and geographic regions.
Islamic investment funds operate by investors contributing money that is then invested so that profit can
be earned in a manner compliant with Sharia. The validity of the units, shares or certificates issued in the
fund is subject to two conditions.
First, they must carry a pro rata profit actually earned by the fund, instead of a fixed return being tied up
with their face value. As stated earlier, neither principal nor profit can be guaranteed and profit/loss must
be in proportion to how successful the fund is. If the fund earns large profits, the return on the investors
subscription will increase to that proportion. However, if the fund suffers a loss, the investor will also have
to share in the loss.
Second, the amounts pooled must be invested in Sharia-compliant trading activity companies. If, for
example, the fund invests in the hotel or leisure sector, the Sharia board must be satisfied that the income
that will be used to repay the investors, in the form of rental or return on investment, is not made up of
income from the sale of prohibited items such as alcohol. If it is, then such income must be below certain
thresholds (as agreed by the Sharia board); otherwise, the proportion of income derived from interest or
alcohol that exceeds such thresholds must be given to charity.
In Ijara funds, the amount subscribed is used to purchase real estate (via a special purpose vehicle) for
the purpose of leasing out the real estate and charging rental, which then forms the income of the fund
that is distributed pro rata to subscribers, who hold certificates of proportional entitlement that represent
pro rata ownership of their holdings in the tangible assets of the funds (also known as sukuk). These
funds are normally marketed to high-net-worth individuals or banks. The life of the fund is usually fixed.
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Sukuk (Islamic bonds)

SUKUK, , is the Arabic name for financial certificates that are the Islamic equivalent of bonds. However,
fixed-income, interest-bearing bonds are not permissible in Islam. Hence, Sukuk are securities that
comply with the Islamic law(Shriah) and its investment principles, which prohibit the charging or paying of
interest. Financial assets that comply with the Islamic law can be classified in accordance with their
tradability and non-tradability in the secondary markets.
A sukuk is fully negotiable and can be bought and sold on the secondary market. New purchasers of
sukuk step into the shoes of the original holder, taking the certificate (ownership) and hence, all the
profit, but also the rights, obligations and liabilities that accompany it. Requirements for validity include
that leased assets must have some usufruct, assets must be Sharia compliant in their nature and the
lessor must abide by any ownership responsibilities imposed by Sharia. In addition, rental must be fixed
and known by the parties (or ascertainable by means of a formula) at the beginning of a contract
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CHAPTER 39
MASTER CIRCULAR ON FOREIGN INVESTMENT IN INDIA
MASTER CIRCULAR NO. 15/2011-12, Dated 1-7-2011

Foreign investment in India is governed by sub-section (3) of section 6 of the Foreign Exchange
Management Act, 1999 read with Notification No. FEMA 20/2000-RB dated May 3, 2000, as amended
from time to time. The regulatory framework and instructions issued by the Reserve Bank have been
complied in this Master Circular. The list of underlying circulars/notifications is furnished in Appendix. In
addition to the above, this Master Circular also covers the area of Investment in capital of partnership
firms or proprietary concern which is regulated in terms of section 2(h) and section 47 of Foreign
Exchange Management Act, 1999, read with Notification No. FEMA 24/2000-RB dated May 3, 2000.
1. This Master Circular is being issued with a sunset clause of one year. This circular will
stand withdrawn on July 1, 2012 and be replaced by an updated Master Circular on the
subject.
PART I
FOREIGN INVESTMENTS IN INDIASCHEMATIC REPRESENTATION:
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SECTION I
FOREIGN DIRECT INVESTMENT
1. Foreign Direct Investment in India
Foreign Direct Investment (FDI) in India is :
- undertaken in accordance with the FDI Policy which is formulated and announced by the
Government of India. The Department of Industrial Policy and Promotion, Ministry of Commerce and
Industry, Government of India issues a Consolidated FDI Policy Circular on an half yearly basis on
March 31 and September 30 of each year (since 2010) elaborating the policy and the process in respect
of FDI in India. The latest Consolidated FDI Policy Circular dated March 31,2011 is available in public
domain and can be downloaded from the website of Ministry of Commerce and Industry, Department of
Industrial Policy and Promotion http://dipp.nic.in/Fdi_Circular/FDI_Circular_012011_31March2011.pdf.
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- governed by the provisions of the Foreign Exchange Management Act (FEMA), 1999. FEMA
Regulations which prescribe amongst other things the mode of investments i.e. issue or acquisition of
shares/convertible debentures and preference shares, manner of receipt of funds, pricing guidelines and
reporting of the investments to the Reserve Bank. The Reserve Bank has issued Notification No. FEMA
20/2000-RB dated May 3, 2000 which contains the Regulations in this regard. This Notification has been
amended from time to time.
2. Entry routes for investments in India
Under the Foreign Direct Investments (FDI) Schemes, investments can be made in shares, mandatorily
1
and fully convertible debentures and mandatorily and fully preference shares of an Indian company by
non-residents through two routes:
Automatic Route: Under the Automatic Route, the foreigninvestor or the Indian company does not
require any approval from the Reserve Bank or Government of India for the investment.
Government Route: Under the Government Route, the foreign investor or the Indian company
should obtain prior approval of the Government of India, Ministry of Finance, Foreign Investment
Promotion Board (FIPB) for the investment.
3. Eligibility for Investment in India
(i) A person resident outside India2 (other than a citizen of Pakistan) or an entity incorporated outside
India, (other than an entity incorporated in Pakistan) can invest in India, subject to the FDI Policy of the
Government of India. A person who is a citizen of Bangladesh or an entity incorporated in Bangladesh
can invest in India under the FDI Scheme, with the prior approval of the FIPB.
(ii) NRIs, resident in Nepal and Bhutan as well a scitizens of Nepal and Bhutan are permitted to invest
in shares and convertible debentures of Indian companies under FDI Scheme on repatriation basis,
subject to the condition that the amount of consideration for such investment shall be paid only by way of
inward remittance in free foreign exchange through normal banking channels.
(iii) Overseas Corporate Bodies (OCBs) have been de-recognised as a class of investors in India with
effect from September 16, 2003. Erstwhile OCBs which are incorporated outside India and are not under
adverse notice of the Reserve Bank can make fresh investments under the FDI Scheme as incorporated
non-resident entities, with the prior approval of the Government of India, if the investment is through the
Government Route; and with the prior approval of the Reserve Bank, if the investment is through the
Automatic Route. However, before making any fresh FDI under the FDI scheme an erstwhile OCB should
through their AD bank take a one time certification from RBI that it is not in the adverse list being
maintained with the Reserve Bank of India
ADs should also ensure that OCBs do not maintain any account other than NRO current account in
line with the instructions as per A.P. (DIR Series) Circular No. 14 dated September 16, 2003. Further, this
NRO account should not be used for any fresh investments in India. Any fresh request for opening of
NRO current account for liquidating previous investment held on non-repatriation basis should be
forwarded by the AD bank to Foreign Exchange Department, Reserve Bank of India, Central Office,
Mumbai. However, ADs should not close other category of accounts (NRE/FCNR/NRO) for OCBs which
are in the adverse list of the Reserve Bank of India. These accounts are to be maintained by the
respective AD banks in the frozen status.
4. Type of instruments
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(i) Indian companies can issue equity shares, fully and mandatorily convertible debentures and fully and
mandatorily convertible preference shares subject to the pricing guidelines/valuation norms and reporting
requirements amongst other requirements as prescribed under FEMA Regulations.
(ii) issue of other types of preference shares such as, non-convertible, optionally convertible or partially
convertible, have to be in accordance with the guidelines applicable for External Commercial Borrowings
(ECBs).
(iii) As far as debentures are concerned, only those which are fully and mandatorily convertible into
equity, within a specified time would be reckoned as part of equity under the FDI Policy.
5. Pricing guidelines3
Fresh issue of shares: Price of fresh shares issued to persons resident outside India under the FDI
Scheme, shall be :
on the basis of SEBI guidelines in case of listed companies.
not less than fair value of shares determined by a SEBI registered Merchant Banker or a Chartered
Accountant as per the Discounted Free Cash Flow Method (DCF) in case of unlisted companies.
The above pricing guidelines are also applicable for issue of shares against payment of lump sum
technical know how fee/royalty or conversion of ECB into equity or capitalization of pre-incorporation
expenses/import payables (with prior approval of Government).
Preferential allotment: In case of issue of shares on preferential allotment, the issue price shall not
be less than the price as applicable to transfer of shares from resident to non-resident.
Issue of shares by SEZs against import of capital goods: In this case, the share valuation has to
be done by a Committee consisting of Development Commissioner and the appropriate Customs officials.
Right Shares: The price of shares offered on rights basis by the Indian company to non-resident
shareholders shall be;
(i) In the case of shares of a company listed on a recognised stock exchange in India, at a price as
determined by the company.
(ii) In the case of shares of a company not listed on a recognised stock exchange in India, at a price
which is not less than the price at which the offer on right basis is made to the resident shareholders.
Acquisition 4/transfer of existing shares (private arrangement). The acquisition of existing shares
from Resident to Non-resident (i.e. to incorporated non-resident entity other than erstwhile OCB, foreign
national, NRI, FII) would be at a:
(a) negotiated price for shares of companies listed on a recognized stock exchange in India which shall
not be less than the price at which the preferential allotment of shares can be made under the SEBI
guidelines, as applicable, provided the same is determined for such duration as specified therein,
preceding the relevant date, which shall be the date of purchase or sale of shares. The price per share
arrived at should be certified by a SEBI registered Category I Merchant Banker or a Chartered
Accountant.
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(b) negotiated price for shares of companies which are not listed on a recognized stock exchange in
India which shall not be less than the fair value to be determined by a SEBI registered Merchant Banker
or a Chartered Accountant as per the Discounted Free Cash Flow (DCF) method.
Further, transfer of existing shares by Non-resident (i.e. by incorporated non-resident entity,
erstwhile OCB, foreign national, NRI, FII) to Resident shall not be more than the minimum price at which
the transfer of shares can be made from a resident to a non-resident as given above.
The pricing of shares/convertible debentures/preference shares should be decided/determined
upfront at the time of issue of the instruments. The price for the convertible instruments can also be a
determined based on the conversion formula which has to be determined/fixed upfront, however the price
at the time of conversion should not be less than the fair value worked out, at the time of issuance of
these instruments, in accordance with the extant FEMA regulations.
6. Mode of Payment
An Indian company issuing shares/convertible debentures under FDI Scheme to a person resident
outside India shall receive the amount of consideration required to be paid for such shares/convertible
debentures by:
(i) inward remittance through normal banking channels.
(ii) debit to NRE/FCNR account of a person concerned maintained with an AD category I bank.
(iii) conversion of royalty/lump sum/technical know how fee due for payment or conversion of ECB, shall
be treated as consideration for issue of shares.
(iv) conversion of import payables/pre-incorporation expenses/share swap can be treated as
consideration for issue of shares with the approval of FIPB.
(v) debit to non-interest bearing Escrow account5 in Indian Rupees in India which is opened with the
approval from AD Category I bank and is maintained with the AD Category I bank on behalf of residents
and non-residents towards payment of share purchase consideration.
If the shares or convertible debentures are not issued within 180 days from the date of receipt of the
inward remittance or date of debit to NRE/FCNR(B)/Escrow account the amount of consideration shall be
refunded. Further, the Reserve Bank may on an application made to it and for sufficient reasons permit
an Indian Company to refund/allot shares for the amount of consideration received towards issue of
security if such amount is outstanding beyond the period of 180 days from the date of receipt.
7. Foreign Investment limits, Prohibited Sectors and investment in MSEs
(a) Foreign Investment Limits
The details of the entry route applicable and the maximum permissible foreign investment/sectoral
cap in an Indian Company is determined by the sector in which it is operating. The details of the entry
route applicable along with the sectoral cap for foreign investment in various sectors are given in Annex
1.
(b) Investments in Micro and Small Enterprise (MSE)
A company which is reckoned as Micro and Small Enterprise (MSE) (earlier Small Scale Industrial
Unit) in terms of the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, including
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an Export Oriented Unit or a Unit in Free Trade Zone or in Export Processing Zone or in a Software
Technology Park or in an Electronic Hardware Technology Park, and which is not engaged in any
activity/sector mentioned in Annex 2 may issue shares or convertible debentures to a person resident
outside India (other than a resident of Pakistan and to a resident of Bangladesh under approval route),
subject to the prescribed limits as per FDI Policy, in accordance with the Entry Routes and the provision
of Foreign Direct Investment Policy, as notified by the Ministry of Commerce & Industry, Government of
India, from time to time.
Any Industrial undertaking, with or without FDI, which is not an MSE, having an industrial license
under the provisions of the Industries (Development & Regulation) Act, 1951 for manufacturing items
reserved for the MSE sector may issue shares to persons resident outside India (other than a
resident/entity of Pakistan and to a resident/entity of Bangladesh with prior approval FIPB), to the extent
of 24 per cent of its paid-up capital or sectoral cap whichever is lower. Issue of shares in excess of 24 per
cent of paid-up capital shall require prior approval of the FIPB of the Government of India and shall be in
compliance with the terms and conditions of such approval.
(c) Prohibition on foreign investment in India
(i) Foreign investment in any form is prohibited in a company or a partnership firm or a proprietary
concern or any entity, whether incorporated or not (such as, Trusts) which is engaged or proposes to
engage in the following activities6 :
(a) Business of chit fund, or
(b) Nidhi company, or
(c) Agricultural or plantation activities, or
(d) Real estate business, or construction of farm houses, or
(e) Trading in Transferable Development Rights (TDRs).
(ii) It is clarified that real estate business means dealing in land and immovable property with a view to
earning profit or earning income therefrom and does not include development of townships, construction
of residential/commercial premises, roads or bridges, educational institutions, recreational facilities, city
and regional level infrastructure, townships.
It is further clarified that partnership firms/proprietorship concerns having investments as per FEMA
regulations are not allowed to engage in print media sector.
(iii) In addition to the above, Foreign investment in the form of FDI is also prohibited in certain sectors
such as (Annex-2)7:
(a) Retail Trading (except single brand product retailing),
(b) Atomic Energy,
(c) Lottery Business including Government/private lottery, online lotteries, etc.,
(d) Gambling and Betting including casinos, etc.,
(e) Business of chit fund,
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(f) Nidhi company,

(g) Trading in Transferable Development Rights(TDRs),
(h) Activities/sectors not opened to private sector investment,
(i) Agriculture (excluding Floriculture, Horticulture, Development of seeds, Animal Husbandry,
Pisciculture and cultivation of vegetables, mushrooms, etc. under controlled conditions and services
related to agro and allied sectors) and Plantations (other than Tea Plantations),
(j) Manufacturing of Cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco substitutes.
Note:
1. Besides foreign investment in any form, foreign technology collaboration in any form including
licensing for franchise, trademark, brand name, management contract is also completely prohibited for
Lottery Business and Gambling and Betting activities.
2. Foreign investment in Trusts other than investment by SEBI registered FVCIs in domestic VCF
under Schedule 6 to FEMA Notification No. 20 is not permitted.
8. Modes of Investment under Foreign Direct Investment Scheme.
Foreign Direct Investment in India can be done through following modes:
8.A. Issuance of fresh shares by the company
An Indian company may issue fresh shares/convertible debentures under the FDI Scheme to a person
resident outside India (who is eligible for investment in India) subject to compliance with the extant FDI
policy and the FEMA Regulation.
8.B Acquisition by way of transfer of existing shares by person resident outside India
8 B.I Foreign investors can also 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 acquisition of shares by way of transfer in the following manner:
a. Non Resident to Non-Resident (Sale/Gift): A person resident outside India (other than NRI and
OCB) may transfer by way of sale or gift, the shares or convertible debentures to any person resident
outside India (including NRIs).
b. NRI to NRI (Sale/Gift): NRIs may transfer by way of sale or gift the shares or convertible debentures
held by them to another NRI.
c. Non Resident to Resident :
a. Gift: A person resident outside India can transfer any security to a person resident in India by way
of gift.
b. Sale: General permission is also available for transfer of shares/convertible debentures, by way of
sale under private arrangement by a person resident outside India to a person resident in India, subject to
the pricing, reporting and other guidelines as given in Annex 3.
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d. Resident to Non-resident (Sale): A person resident in India can transfer by way of sale,
shares/convertible debentures (including transfer of subscribers shares), of an Indian company in sectors
other than financial services sector (i.e. Banks, NBFC, Insurance, Asset Reconstruction Companies
(ARCs), Credit Information Companies(CICs), infrastructure companies in the securities market viz. Stock
Exchanges, Clearing Corporations, and Depositories, Commodity Exchanges, etc.) under private
arrangement to a person resident outside India, subject to the pricing, reporting and other guidelines
given in Annex 3. However, this general permission is not available in case of transfer of
shares/debentures by gift from a Resident to a Non-Resident/Non-Resident Indian.
e. Non-resident on the Stock Exchange: A person resident outside India can sell the shares and
convertible debentures of an Indian company on a recognized Stock Exchange in India through a stock
broker registered with stock exchange or a merchant banker registered with SEBI.
f. The above general permission also covers transfer by a resident to a non-resident of
shares/convertible debentures of an Indian company, engaged in an activity earlier covered under the
Government Route but now falling under Automatic Route of the Reserve Bank, as well as transfer of
shares by a non-resident to an Indian company under buyback and/or capital reduction scheme of the
company. However, this general permission is not available for transfer of shares transactions indicated
at Para 8.B.II and for all the transactions as indicated above which are not meeting the pricing guidelines.
g. AD Category I banks have been given general permission to open and maintain non-interest
bearing Escrow account in Indian Rupees in India on behalf of residents and non-residents, towards
payment of share purchase consideration and/or provide Escrow facilities for keeping securities to
facilitate FDI transactions. It has also been decided to permit SEBI authorised Depository Participant, to
open and maintain, without approval of the Reserve Bank, Escrow account for securities as stated in para
9 (b).
h. The reporting guidelines are given in Section V of the Master Circular.
8.B.II Prior permission of the Reserve Bank in certain cases for acquisition/transfer of security
(i) The following instances of transfer of shares or convertible debentures from residents to nonresidents by way of sale requires Reserve Bank approval:
(a) Transfer of shares or convertible debentures of an Indian company engaged in financial services
sector (i.e. Banks, NBFCs, ARCs, CICs, Insurance, Infrastructure companies in the securities market
such as, Stock Exchanges, Clearing Corporations, and Depositories, Commodity Exchanges, etc.).
(b) Transactions which attract the provisions of SEBI (Substantial Acquisition of Shares and Takeovers)
Regulations, 1997.
(c) The activity of the Indian company whose securities are being transferred falls outside the automatic
route and the approval of the FIPB has been obtained for the said transfer.
(d) The transfer is to take place at a price which falls outside the pricing guidelines specified by the
Reserve Bank from time to time.
(e) Transfer of shares or convertible debentures where the non-resident acquirer proposes deferment of
payment of the amount of consideration, prior approval of the Reserve Bank is required. Further, in case
approval is granted for the transaction, the same should be reported in Form FC-TRS to the AD Category
I bank, within 60 days from the date of receipt of the full and final amount of consideration.
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(ii) The following instances of transfer of shares from residents to non-residents by way of sale or
otherwise requires Government approval followed by permission from the Reserve Bank:
(a) Transfer of shares of companies engaged in sectors falling under the Government Route.
(b) Transfer of shares resulting in foreign investments in the Indian company, breaching the sectoral cap
applicable.
(iii) A person resident in India, who intends to transfer any security, by way of gift to a person resident
8
outside India, has to obtain prior approval from the Reserve Bank . While forwarding the application to
the Reserve Bank for approval for transfer of shares by way of gift, the documents mentioned in Annex-4
should be enclosed. The Reserve Bank considers the following factors while processing such
applications:
(a) The proposed transferee is eligible to hold such security under Schedules 1, 4 and 5 of Notification
No. FEMA 20/2000-RB dated May 3, 2000, as amended from time to time.
(b) The gift does not exceed 5 per cent of the paid-up capital of the Indian company/each series of
debentures/each mutual fund scheme.
(c) The applicable sectoral cap limit in the Indian company is not breached.
(d) The transferor (donor) and the proposed transferee (donee) are close relatives as defined in Section
6 of the Companies Act, 1956, as amended from time to time. The current list is reproduced in Annex-5.
(e) The value of security to be transferred together with any security already transferred by the
transferor, as gift, to any person residing outside India does not exceed the rupee equivalent of USD
25,000 during a calendar year.
(f) Such other conditions as stipulated by the Reserve Bank in public interest from time to time.
(iv) Transfer of shares from NRI to NR or NR to NRI requires the prior approval of the Reserve Bank of
India.
8.C. Issue of Rights/Bonus shares
An Indian company may issue Rights/Bonus shares to existing non-resident shareholders, subject to
adherence to sectoral cap, reporting requirements, etc. Further, such issue of bonus/rights shares have to
be in accordance with other laws/statutes like the Companies Act, 1956, SEBI (Issue of Capital and
Disclosure Requirements), Regulations 2009, etc.
Issue of Right shares to OCBs: OCBs have been de-recognised as a class of investors with effect
from September 16, 2003. Therefore, companies desiring to issue rights share to such erstwhile OCBs
9
will have to take specific prior permission from the Reserve Bank . As such, entitlement of rights share is
not automatically available to OCBs. However, bonus shares can be issued to erstwhile OCBs (which are
not in the adverse list of the Reserve Bank of India) without prior approval of the Reserve Bank, provided
that the OCB is not in the adverse list of RBI.
Additional allocation of rights share by residents to non-residents : Existing non-resident
shareholders are allowed to apply for issue of additional shares/convertible debentures/preference shares
over and above their rights share entitlements. The investee company can allot the additional rights
shares out of unsubscribed portion, subject to the condition that the overall issue of shares to nonresidents in the total paid-up capital of the company does not exceed the sectoral cap.
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8.D. Issue of shares under Employees Stock Option Scheme (ESOPs)

An Indian Company may issue shares under ESOPs to its employees or employees of its joint venture or
wholly owned subsidiary abroad who are resident outside India, other than to the citizens of Pakistan.
Citizens of Bangladesh can invest with the prior approval of the FIPB. The face value of the shares to be
allotted under the scheme to the non-resident employees should not exceed 5 per cent of the paid-up
capital of the issuing company. Shares under ESOPs can be issued directly or through a Trust subject to
the condition that the scheme has been drawn in terms of the relevant regulations issued by the SEBI.
8.E Conversion of ECB/Lump sum Fee/Royalty/Import of capital goods by SEZs in to Equity/Import
payables/Pre-incorporation expenses
(i) Indian companies have been granted general permission for conversion of External Commercial
Borrowings (ECB) into shares/convertible debentures, subject to the following conditions and reporting
requirements:
(a) The activity of the company is covered under the Automatic Route for FDI or the company has
obtained Governments approval for foreign equity in the company;
(b) The foreign equity after conversion of ECB into equity is within the sectoral cap, if any;
(c) Pricing of shares is determined as per SEBI regulations for listed company or DCF method for
unlisted company;
(d) Compliance with the requirements prescribed under any other statute and regulation in force;
(e) The conversion facility is available for ECBs availed under the Automatic or Approval Route and is
applicable to ECBs, due for payment or not, as well as secured/unsecured loans availed from nonresident collaborators.
(ii) General permission is also available for issue of shares/preference shares against lump sum
technical know-how fee, royalty, under automatic route or SIA/FIPB route, subject to pricing guidelines of
RBI/SEBI and compliance with applicable tax laws.
(iii) Units in Special Economic Zones (SEZs) are permitted to issue equity shares to non-residents
against import of capital goods subject to the valuation done by a Committee consisting of Development
Commissioner and the appropriate Customs officials.
(iv) Issue of equity shares against Import of capital goods/machinery/equipment (including second hand
machinery), is allowed under the Government route, subject to the compliance with the following
conditions:
(a) The import of capital goods, machineries, etc., made by a resident in India, is in accordance with the
Export/Import Policy issued by the Government of India as notified by the Directorate General of Foreign
Trade (DGFT) and the regulations issued under the Foreign Exchange Management Act (FEMA), 1999
relating to imports issued by the Reserve Bank;
(b) There is an independent valuation of the capital goods/machineries/equipments (including secondhand machineries) by a third party entity, preferably by an independent valuer from the country of import
along with production of copies of documents/certificates issued by the customs authorities towards
assessment of the fair-value of such imports;
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(c) The application should clearly indicate the beneficial ownership and identity of the importer company
as well as the overseas entity; and
(d) All such conversions of import payables for capital goods into FDI should be completed within 180
days from the date of shipment of goods.
(v) Issue of equity shares against Pre-operative/pre-incorporation expenses (including payment of rent
etc.) is allowed under the Government route, subject to compliance with the following conditions :
(a) Submission of FIRC for remittance of funds by the overseas promoters for the expenditure incurred.
(b) Verification and certification of the pre-incorporation/pre-operative expenses by the statutory auditor.
(c) Payments being made directly by the foreign investor to the company. Payments made through third
parties citing the absence of a bank account or similar such reasons will not be allowed.
(d) The capitalization should be completed within the stipulated period of 180 days permitted for
retention of advance against equity under the extant FDI policy.
(vi) Issue of shares to a non-resident against shares swap10 i.e., in lieu for the consideration which has to
be paid for shares acquired in the overseas company, can be done with the approval of FIPB.
(vii) The reporting guidelines are given in Section V of the Master Circular.
8.F. Issue of shares by Indian Companies under ADR/GDR
Depository Receipts (DRs) are negotiable securities issued outside India by a Depository bank, on behalf
of an Indian company, which represent the local Rupee denominated equity shares of the company held
as deposit by a Custodian bank in India. DRs are traded on Stock Exchanges in the US, Singapore,
Luxembourg, London, etc. DRs listed and traded in the US markets are known as American Depository
Receipts (ADRs) and those listed and traded elsewhere are known as Global Depository Receipts
(GDRs). In the Indian context, DRs are treated as FDI.
(i) Indian companies can raise foreign currency resources abroad through the issue of ADRs/GDRs, in
accordance with the Scheme for issue of Foreign Currency Convertible Bonds and Ordinary Shares
(Through Depository Receipt Mechanism) Scheme, 1993 and guidelines issued by the Government of
India thereunder from time to time.
(ii) A company can issue ADRs/GDRs, if it is eligible to issue shares to person resident outside India
under the FDI Scheme. However, an Indian listed company, which is not eligible to raise funds from the
Indian Capital Market including a company which has been restrained from accessing the securities
market by the Securities and Exchange Board of India (SEBI) will not be eligible to issue ADRs/GDRs.
(iii) Unlisted companies, which have not yet accessed the ADR/GDR route for raising capital in the
international market, would require prior or simultaneous listing in the domestic market, while seeking to
issue such overseas instruments. Unlisted companies, which have already issued ADRs/GDRs in the
international market, have to list in the domestic market on making profit or within three years of such
issue of ADRs/GDRs, whichever is earlier.
(iv) ADRs/GDRs are issued on the basis of the ratio worked out by the Indian company in consultation
with the Lead Manager to the issue. The proceeds so raised have to be kept abroad till actually required
in India. Pending repatriation or utilisation of the proceeds, the Indian company can invest the funds in:-
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(a) Deposits with or Certificate of Deposit or other instruments offered by banks who have been rated by
Standard and Poor, Fitch, IBCA or Moodys, etc. and such rating not being less than the rating stipulated
by the Reserve Bank from time to time for the purpose;
(b) Deposits with branch/es of Indian Authorised Dealers outside India; and
(c) Treasury bills and other monetary instruments with a maturity or unexpired maturity of one year or
less.
(v) There are no end-use restrictions except for a ban on deployment/investment of such funds in real
estate or the stock market. There is no monetary limit up to which an Indian company can raise
ADRs/GDRs.
(vi) The ADR/GDR proceeds can be utilised for first stage acquisition of shares in the disinvestment
process of Public Sector Undertakings/Enterprises and also in the mandatory second stage offer to the
public in view of their strategic importance.
(vii) Voting rights on shares issued under the Scheme shall be as per the provisions of Companies Act,
1956 and in a manner in which restrictions on voting rights imposed on ADR/GDR issues shall be
consistent with the Company Law provisions. Voting rights in the case of banking companies will continue
to be in terms of the provisions of the Banking Regulation Act, 1949 and the instructions issued by the
Reserve Bank11 from time to time, as applicable to all shareholders exercising voting rights.
(viii)Erstwhile OCBs which are not eligible to invest in India and entities prohibited to buy/sell or deal in
securities by SEBI will not be eligible to subscribe to ADRs/GDRs issued by Indian companies.
(ix) The pricing of ADR/GDR issues including sponsored ADRs/GDRs should be made at a price
determined under the provisions of the Scheme of issue of Foreign Currency Convertible Bonds and
Ordinary Shares (Through Depository Receipt Mechanism) Scheme, 1993 and guidelines issued by the
Government of India and directions issued by the Reserve Bank, from time to time.
(x) Two-way Fungibility Scheme: A limited two-way Fungibility scheme has been put in place by the
Government of India for ADRs/GDRs. Under this Scheme, a stock broker in India, registered with SEBI,
can purchase shares of an Indian company from the market for conversion into ADRs/GDRs based on
instructions received from overseas investors. Re-issuance of ADRs/GDRs would be permitted to the
extent of ADRs/GDRs which have been redeemed into underlying shares and sold in the Indian market.
(xi) Sponsored ADR/GDR issue : An Indian company can also sponsor an issue of ADR/GDR. Under
this mechanism, the company offers its resident shareholders a choice to submit their shares back to the
company so that on the basis of such shares, ADRs/GDRs can be issued abroad. The proceeds of the
ADR/GDR issue is remitted back to India and distributed among the resident investors who had offered
their Rupee denominated shares for conversion. These proceeds can be kept in Resident Foreign
Currency (Domestic) accounts in India by the resident shareholders who have tendered such shares for
conversion into ADRs/GDRs.
(xii) The reporting guidelines for ADR/GDR are given in Section V of the Master Circular.
9. Foreign Currency Account and Escrow Account
(a) Indian companies which are eligible to issue shares to persons resident outside India under the FDI
Scheme will be allowed to retain the share subscription amount in a Foreign Currency Account for bona
fide business purpose only with the prior approval of the Reserve Bank.
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(b) AD Category I banks have been given general permission to open and maintain non-interest
bearing Escrow account in Indian Rupees in India on behalf of residents and non-residents, towards
payment of share purchase consideration and/or provide Escrow facilities for keeping securities to
facilitate FDI transactions. It has also been decided to permit SEBI authorised Depository Participant, to
open and maintain, without approval of the Reserve Bank, Escrow account for securities. The Escrow
account would also be subject to the terms and conditions as stipulated in A.P. (DIR Series) Circular No.
58 dated May 2, 2011. Further, the Escrow account would be maintained with AD Category I bank or
SEBI Authorised Depository Participant (in case of securities account). These facilities will be applicable
to both, issue of fresh shares to the non-residents as well as transfer of shares to the non-residents as
well as transfer of shares from/to the non-residents.
10. Acquisition of shares under Scheme of Merger/Amalgamation
Mergers and amalgamations of companies in India are usually governed by an order issued by a
competent Court on the basis of the Scheme submitted by the companies undergoing
merger/amalgamation. Once the scheme of merger or amalgamation of two or more Indian companies
has been approved by a Court in India, the transferee company or new company is allowed to issue
shares to the shareholders of the transferor company resident outside India, subject to the conditions that
:
(i) the percentage of shareholding of persons resident outside India in the transferee or new company
does not exceed the sectoral cap, and
(ii) the transferor company or the transferee or the new company is not engaged in activities which are
prohibited under the FDI policy (refer para 7(c)).
11. Remittance of sale proceeds
AD Category I bank can allow the remittance of sale proceeds of a security (net of applicable taxes) to
the seller of shares resident outside India, provided the security has been held on repatriation basis, the
sale of security has been made in accordance with the prescribed guidelines and NOC/tax clearance
certificate from the Income Tax Department has been produced.
12. Remittance on winding up/liquidation of Companies
AD Category I banks have been allowed to remit winding up proceeds of companies in India, which are
under liquidation, subject to payment of applicable taxes. Liquidation may be subject to any order issued
by the court winding up the company or the official liquidator in case of voluntary winding up under the
provisions of the Companies Act, 1956. AD Category I banks shall allow the remittance provided the
applicant submits:
(i) No objection or Tax clearance certificate from Income Tax Department for the remittance.
(ii) Auditors certificate confirming that all liabilities in India have been either fully paid or adequately
provided for.
(iii) Auditors certificate to the effect that the winding up is in accordance with the provisions of the
Companies Act, 1956.
(iv) In case of winding up otherwise than by a court, an auditors certificate to the effect that there is no
legal proceedings pending in any court in India against the applicant or the company under liquidation
and there is no legal impediment in permitting the remittance.
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13. Pledge of Shares

(a) A person being a promoter of a company registered in India (borrowing company), which has raised
external commercial borrowings, may pledge the shares of the borrowing company or that of its associate
resident companies for the purpose of securing the ECB raised by the borrowing company, provided that
a no objection for the same is obtained from a bank which is an authorised dealer. The authorized dealer,
shall issue the no objection for such a pledge after having satisfied itself that the external commercial
borrowing is in line with the extant FEMA regulations for ECBs and that :
(i) the loan agreement has been signed by both the lender and the borrower,
(ii) there exists a security clause in the Loan Agreement requiring the borrower to create charge on
financial securities, and
(iii) the borrower has obtained Loan Registration Number (LRN) from the Reserve Bank:
And the said pledge would be subject to the following conditions :
(i) the period of such pledge shall be co-terminus with the maturity of the underlying ECB;
(ii) in case of invocation of pledge, transfer shall be in accordance with the extant FDI Policy and
directions issued by the Reserve Bank;
(iii) the Statutory Auditor has certified that the borrowing company will utilized/has utilized the proceeds
of the ECB for the permitted end use/s only.
(b) Non-resident holding shares of an Indian company, can pledge these shares in favour of the AD
bank in India to secure credit facilities being extended to the resident investee company for bona fide
business purpose, subject to the following conditions:
(a) in case of invocation of pledge, transfer of shares should be in accordance with the FDI policy in
vogue at the time of creation of pledge;
(b) submission of a declaration/annual certificate from the statutory auditor of the investee company that
the loan proceeds will be/have been utilized for the declared purpose;
(c) the Indian company has to follow the relevant SEBI disclosure norms; and
(d) pledge of shares in favour of the lender (bank) would be subject to Section 19 of the Banking
Regulation Act, 1949.
(c) Non-resident holding shares of an Indian company, can pledge these shares in favour of an
overseas bank to secure the credit facilities being extended to the non-resident investor/non-resident
promoter of the Indian company or its overseas group company, subject to the following :
(a) loan is availed of only from an overseas bank;
(b) loan is utilized for genuine business purposes overseas and not for any investments either directly or
indirectly in India;
(c) overseas investment should not result in any capital inflow into India;
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(d) in case of invocation of pledge, transfer should be in accordance with the FDI policy in vogue at the
time of creation of pledge; and
(e) submission of a declaration/annual certificate from a Chartered Accountant/Certified Public
Accountant of the non-resident borrower that the loan proceeds will be/have been utilized for the declared
purpose.
SECTION II
FOREIGN INVESTMENTS UNDER PORTFOLIO INVESTMENT SCHEME (PIS)
1. Entities
(i) Foreign Institutional Investors (FIIs) registered with SEBI are eligible to purchase shares and
convertible debentures issued by Indian companies under the Portfolio Investment Scheme (PIS).
(iii) NRIs are eligible to purchase shares and convertible debentures issued by Indian companies under
PIS, if they have been permitted by the designated branch of any AD Category I bank (which has been
authorised by the Reserve Bank to administer the PIS).
(iii) SEBI approved sub accounts of FIIs(sub accounts) have general permission to invest under the
PIS.
(iv) OCBs are not permitted to invest under the PIS with effect from November 29, 2001, in India. Further,
the OCBs which have already made investments under the PIS are allowed to continue holding such
shares/convertible debentures till such time these are sold on the stock exchange.
2. Investment in listed Indian companies
A. FIIs
(a) An Individual FII/SEBI approved sub-accounts of FIIs can invest up to a maximum of 10 per cent
of the total paid-up capital or 10 per cent of the paid-up value of each series of convertible debentures
issued by the Indian company. The 10 per cent limit would include shares held by SEBI registered
FII/SEBI approved sub-accounts of FII under the PIS (by way of purchases made through a registered
broker on a recognized stock exchange in India or by way of offer/private placement) as well as shares
acquired by SEBI registered FII under the FDI scheme.
(b) Total holdings of all FIIs/SEBI approved sub-accounts of FIIs put together shall not exceed 24
per cent of the paid-up capital or paid-up value of each series of convertible debentures. This limit of 24
per cent can be increased to the sectoral cap/statutory limit, as applicable to the Indian company
concerned, by passing a resolution of its Board of Directors followed by a special resolution to that effect
by its General Body and subject to prior approval from the Reserve Bank.
B. NRIs
(a) NRIs are allowed to invest in shares of listed Indian companies in recognised Stock Exchanges
under the PIS.
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(b) NRIs can invest through designated ADs, on repatriation and non-repatriation basis under PIS route
up to 5 per cent of the paid- up capital/paid-up value of each series of debentures of listed Indian
companies.
(c) The aggregate paid-up value of shares/convertible debentures purchased by all NRIs cannot exceed
10 per cent of the paid-up capital of the company/paid-up value of each series of debentures of the
company. The aggregate ceiling of 10 per cent can be raised to 24 per cent by passing a resolution of its
Board of Directors followed by a special resolution to that effect by its General Body and subject to prior
approval from the Reserve Bank.
C. Prohibition on investments by FIIs and NRIs
FIIs are not permitted to invest in the capital of an Asset Reconstruction Company.
Both FIIs and NRIs are not allowed to invest in any company which is engaged or proposes to
engage in the following activities:
(i) Business of chit fund, or
(ii) Nidhi company, or
(iii) Agricultural or plantation activities, or
(iv) Real estate business* or construction of farm houses, or
(v) Trading in Transferable Development Rights (TDRs).
3. Accounts with AD Category I banks
A. FIIs
FIIs/sub-accounts can open a non-interest bearing Foreign Currency Account and/or a single noninterest bearing Special Non-Resident Rupee Account(SNRR A/c) with an AD Category I bank, for the
purpose of investment under the PIS. They can transfer sums from the Foreign Currency Account to the
single SNRR A/c for making genuine investments in securities in terms of the SEBI (FII)
Regulations,1995, as amended from time to time. The sums may be transferred from Foreign Currency
Account to SNRR A/c at the prevailing market rate and the AD Category I bank may transfer repatriable
proceeds (after payment of tax) from the SNRR A/c to the Foreign Currency account. The SNRR A/c may
be credited with the sale proceeds of shares/debentures, dated Government securities, Treasury Bills,
etc. Such credits are allowed, subject to the condition that the AD Category I bank should obtain
confirmation from the investee company/FII concerned that tax at source, wherever necessary, has been
deducted from the gross amount of dividend/interest payable/approved income to the
share/debenture/Government securities holder at the applicable rate, in accordance with the Income Tax
Act. The SNRR A/c may be debited for purchase of shares/debentures, dated Government securities,
Treasury Bills, etc., and for payment of fees to applicant FIIs local Chartered Accountant/Tax Consultant
where such fees constitute an integral part of their investment process.
B. NRIs
NRIs can approach the designated branch of any AD Category I bank (which has been authorised by
the Reserve Bank to administer the PIS) for permission to open a single designated account (NRE/NRO
account) under the PIS for routing investments.
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Payment for purchase of shares and/or debentures on repatriation basis has to be made by way of
inward remittance of foreign exchange through normal banking channels or out of funds held in
NRE/FCNR(B) account maintained in India. If the shares are purchased on non-repatriation basis, the
NRIs can also utilise their funds in NRO account in addition to the above.
4. Exchange Traded Derivative Contracts
A. FIIs
12
SEBI registered FIIs are allowed to trade in all exchange traded derivative contracts approved by
RBI/SEBI on recognised Stock Exchanges in India subject to the position limits and margin requirements
as prescribed by RBI/SEBI from time to time as well as the stipulations regarding collateral securities as
directed by the Reserve Bank from time to time.
The SEBI registered FII/sub-account may open a separate account under their SNRR A/c through
which all receipts and payments pertaining to trading/investment in exchange traded derivative contracts
will be made (including initial margin and mark to market settlement, transaction charges, brokerage,
etc.).
Further, transfer of funds between the SNRR A/c and the separate account maintained for the
purpose of trading in exchange traded derivative contracts can be freely made.
However, repatriation of the Rupee amount will be made only through their SNRR A/c subject to
payment of relevant taxes. The AD Category I banks have to keep proper records of the above
mentioned separate account and submit them to the Reserve Bank as and when required.
B. NRIs
NRIs are allowed to invest in Exchange Traded Derivative Contracts approved by SEBI from time to time
out of Rupee funds held in India on non-repatriation basis, subject to the limits prescribed by SEBI. Such
investments will not be eligible for repatriation benefits.
5. Collateral for FIIs
(a) Derivative Segment: FIIs are allowed to offer foreign sovereign securities with AAA rating as
collateral to the recognised Stock Exchanges in India in addition to the cash for their transactions in
derivatives segment of the market. SEBI approved clearing corporations of stock exchanges and their
clearing members are allowed to undertake the following transactions subject to the guidelines issued
from time to time by SEBI in this regard:
a. to open and maintain demat accounts with foreign depositories and to acquire, hold, pledge and
transfer the foreign sovereign securities, offered as collateral by FIIs;
b. to remit the proceeds arising from corporate action, if any, on such foreign sovereign securities; and
c. to liquidate such foreign sovereign securities, if the need arises.
Clearing Corporations have to report, on a monthly basis, the balances of foreign sovereign
13
securities, held by them as non-cash collaterals of their clearing members to the Reserve Bank . The
report should be submitted by the 10th of the following month to which it relates.
(b) Equity Segment:
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The above guidelines are also applicable to the equity segment. Further, Domestic Government
Securities (subject to the overall limits specified by the SEBI from time to time; the current limit being USD
10 billion) also can be kept as collateral to the recognised Stock Exchanges in India in addition to the
cash for their transactions in cash segment of the market. However, cross-margining of Government
Securities (placed as margins by the FIIs for their transactions in the cash segment of the market) shall
not be allowed between the cash and the derivative segments of the market.
Custodian banks are allowed to issue Irrevocable Payment Commitments (IPCs) in favour of Stock
Exchanges/Clearing Corporations of the Stock Exchanges, on behalf of their FII clients for purchase of
shares under the PIS. Issue of IPCs should be in accordance with the Reserve Bank regulations on
banks exposure to the capital market issued by the Reserve Bank from time to time and instructions
issued vide DBOD Circular no. DBOD.Dir.BC. 46/13.03.00/2010-11 dated September 30, 2010.
6. Short Selling by FIIs
A. FIIs
FIIs registered with SEBI and SEBI approved sub-accounts of FIIs are permitted to short sell, lend and
borrow equity shares of Indian companies. Short selling, lending and borrowing of equity shares of Indian
companies shall be subject to such conditions as may be prescribed by the Reserve Bank and the
SEBI/other regulatory agencies from time to time. The permission is subject to the following conditions:
(a) Short selling of equity shares by FIIs shall not be permitted for equity shares of Indian companies
which are in the ban list and/or caution list of the Reserve Bank.
(b) Borrowing of equity shares by FIIs shall only be for the purpose of delivery into short sales.
(c) The margin/collateral shall be maintained by FIIs only in the form of cash. No interest shall be paid to
the FII on such margin/collateral.
B. NRIs
The NRI investor has to take delivery of the shares purchased and give delivery of shares sold. Short
Selling is not permitted.
7. Private placement with FIIs
SEBI registered FIIs have been permitted to purchase shares/convertible debentures of an Indian
company through offer/private placement, subject to total FII investment viz. PIS & FDI (private
placement/offer) being within the individual FII/sub-account investment limit 10 per cent and all FIIs/subaccounts put together 24 per cent of the paid-up capital of the Indian company or to the sectoral limits,
as applicable. Indian company is permitted to issue such shares provided that:
(a) in the case of public offer, the price of shares to be issued is not less than the price at which shares
are issued to residents; and
(b) in the case of issue by private placement, the issue price should be determined as per the pricing
guidelines stipulated under the FDI scheme.
8. Transfer of shares acquired under PIS under private arrangement
Shares purchased by NRIs and FIIs on the stock exchange under PIS cannot be transferred by way of
sale under private arrangement or by way of gift to a person resident in India or outside India without prior
384 | P a g e
approval of the Reserve Bank. However, NRIs can transfer shares acquired under PIS to their relatives
as defined in section 6 of Companies Act, 1956 or to a charitable trust duly registered under the laws in
India.
9. Monitoring of investment position by RBI and AD banks
The Reserve Bank monitors the investment position of FIIs/NRIs in listed Indian companies, reported by
Custodian/designated AD banks, on a daily basis, in Forms LEC (FII) and LEC (NRI). However, the
respective designated bank (NRIs)/Custodian bank (FIIs) should monitor:
the individual limit of NRI/FII to ensure that it does not breach the prescribed limits.
that the trades are not undertaken in the prohibited sectors when the same is reported to them.
that all trades are reported to them by monitoring the transactions in the designated account.
The onus of reporting of FII and NRI transactions lies on the designated custodian/AD bank, depository
participant as well as the FII/NRI making these investments.
10. Caution List
When the total holdings of FIIs/NRIs under the PIS reach the limit of 2 per cent below the sectoral cap,
the Reserve Bank will issue a notice to all designated AD Category I banks cautioning that any further
purchases of shares of the particular Indian company by FIIs/NRIs will require prior approval of the
Reserve Bank. The Reserve Bank gives case-by-case approvals to FIIs/NRIs for purchase of shares of
companies included in the Caution List. This is done on a first-come-first-served basis.
11. Ban List
Once the shareholding by FIIs/NRIs reaches the overall ceiling/sectoral cap/statutory limit, the Reserve
Bank places the company in the Ban List. Once a company is placed in the Ban List, no FII/NRI can
purchase the shares of the company under the PIS.
SECTION III
FOREIGN VENTURE CAPITAL INVESTMENTS
Investments by Foreign Venture Capital Investor
(i) A SEBI registered Foreign Venture Capital Investor (FVCI) with specific approval from the Reserve
Bank can invest in Indian Venture Capital Undertaking (IVCU) or Indian Venture Capital Fund (IVCF) or in
a scheme floated by such IVCFs subject to the condition that the domestic VCF is registered with SEBI.
These investments by SEBI registered FVCI, would be subject to the respective SEBI regulations and
FEMA regulations and sector specific caps of FDI.
An IVCU is defined as a company incorporated in India whose shares are not listed on a recognized
stock exchange in India and which is not engaged in an activity under the negative list specified by SEBI.
A VCF is defined as a fund established in the form of a trust, a company including a body corporate and
385 | P a g e
registered under the Securities and Exchange Board of India (Venture Capital Fund) Regulations, 1996
which has a dedicated pool of capital raised in a manner specified under the said Regulations and which
invests in Venture Capital Undertakings in accordance with the said Regulations.
(ii) FVCIs can purchase equity/equity linked instruments/debt/debt instruments, debentures of an IVCU
or of a VCF through initial public offer or private placement in units of schemes/funds set up by a VCF. At
the time of granting approval, the Reserve Bank permits the FVCI to open a non-interest bearing Foreign
Currency Account and/or a non-interest bearing Special Non-Resident Rupee Account with a designated
branch of an AD Category I bank, subject to certain terms and conditions.
(iii) The purchase/sale of shares, debentures and units can be at a price that is mutually acceptable to
the buyer and the seller. A SEBI registered FVCI can only acquire securities (as given in (ii), above by
way of public offer or private placement by the issuer of such securities and not by way of private
arrangement with a third party.
(iv) AD Category I banks can offer forward cover to FVCIs to the extent of total inward remittance. In
case the FVCI has made any remittance by liquidating some investments, original cost of the investments
has to be deducted from the eligible cover to arrive at the actual cover that can be offered.
(v) The investments made by FVCI under the Schedule I of Notification No. FEMA 20/2000- RB dated
May 3, 2000 as amended from time to time would be governed by the norms as stated therein.
SECTION IV
OTHER FOREIGN INVESTMENTS
1. Purchase of other securities by NRIs
(i) On non-repatriation basis
(a) NRIs can purchase shares/convertible debentures issued by an Indian company on non-repatriation
basis without any limit. Amount of consideration for such purchase shall be paid by way of inward
remittance through normal banking channels from abroad or out of funds held in NRE/FCNR(B)/NRO
account maintained with the AD Category I bank.
(b) NRI can also, without any limit, purchase on non-repatriation basis dated Government securities,
treasury bills, units of domestic mutual funds, units of Money Market Mutual Funds. Government of India
has notified that NRIs are not permitted to make Investments in Small Savings Schemes including PPF.
In case of investment on non-repatriation basis, the sale proceeds shall be credited to NRO account. The
amount invested under the scheme and the capital appreciation thereon will not be allowed to be
repatriated abroad.
NRI can also invest in non-convertible debentures both on repatriation basis and on non-repatriation
basis, which has been issued by an Indian Company subject to the other terms and conditions stated
under Notification No. FEMA 4/2000-RB dated May 3,2000 (as amended from time to time).
(ii) On repatriation basis
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An NRI can purchase on repatriation basis, without limit, Government dated securities (other than
bearer securities) or treasury bills or units of domestic mutual funds; bonds issued by a public sector
undertaking (PSU) in India and shares in Public Sector Enterprises being disinvested by the Government
of India, provided the purchase is in accordance with the terms and conditions stipulated in the notice
inviting bids.
2. Indian Depository Receipts (IDR)
Indian Depository Receipts (IDRs) can be issued by non-resident companies in India subject to and under
the terms and conditions of Companies (Issue of Depository Receipts) Rules, 2004 and subsequent
amendment made thereto and the SEBI (DIP) Guidelines, 2000, as amended from time to time. These
IDRs can be issued in India through Domestic Depository to residents in India as well as SEBI registered
FIIs and NRIs. In case of raising of funds through issuances of IDRs by financial/banking companies
having presence in India, either through a branch or subsidiary, the approval of the sectoral regulator(s)
should be obtained before the issuance of IDRs.
(a) The FEMA Regulations shall not be applicable to persons resident in India as defined under section
2(v) of FEMA,1999, for investing in IDRs and subsequent transfer arising out of transaction on a
recognized stock exchange in India.
(b) Foreign Institutional Investors (FIIs) including SEBI approved sub-accounts of the FIIs, registered
with SEBI and Non-Resident Indians (NRIs) may invest, purchase, hold and transfer IDRs of eligible
companies resident outside India and issued in the Indian capital market, subject to the Foreign
Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations,
2000 notified vide Notification No. FEMA 20/2000-RB dated May 3, 2000, as amended from time to time.
Further, NRIs are allowed to invest in the IDRs out of funds held in their NRE/FCNR(B) account,
maintained with an Authorised Dealer/Authorised bank.
(c) Automatic fungibility of IDRs is not permitted.
(d) IDRs shall not be redeemable into underlying equity shares before the expiry of one year period from
the date of issue of the IDRs.
(e) At the time of redemption/conversion of IDRs into underlying shares, the Indian holders (persons
resident in India) of IDRs shall comply with the provisions of the Foreign Exchange Management
(Transfer or Issue of Any Foreign Security) Regulations, 2004 notified vide Notification No. FEMA
120/RB-2004 dated July 7, 2004, as amended from time to time. Accordingly, the following guidelines
shall be followed, on redemption of IDRs:
i. Listed Indian companies may either sell or continue to hold the underlying shares subject to the
terms and conditions as per Regulations 6B and 7 of Notification No. FEMA 120/RB-2004 dated July 7,
2004, as amended from time to time.
ii. Indian Mutual Funds, registered with SEBI may either sell or continue to hold the underlying shares
subject to the terms and conditions as per Regulation 6C of Notification No. FEMA 120/RB-2004 dated
July 7, 2004, as amended from time to time.
iii. Other persons resident in India including resident individuals are allowed to hold the underlying
shares only for the purpose of sale within a period of 30 days from the date of conversion of the IDRs into
underlying shares.
iv. The FEMA provisions shall not apply to the holding of the underlying shares, on redemption of IDRs
by the FIIs including SEBI approved sub-accounts of the FIIs and NRIs.
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(f) The proceeds of the issue of IDRs shall be immediately repatriated outside India by the eligible
companies issuing such IDRs. The IDRs issued should be denominated in Indian Rupees.
3. Purchase of other securities by FIIs
FIIs can buy on repatriation basis dated Government securities/treasury bills, listed non-convertible
debentures/bonds, commercial papers issued by Indian companies and units of domestic mutual funds,
Security receipts issued by Asset Reconstruction Companies and Perpetual Debt Instruments eligible for
inclusion in as Tier I capital (as defined by DBOD, RBI) and Debt capital instruments as upper Tier II
Capital (as defined by DBOD, RBI) issued by banks in India to augment their capital either directly from
the issuer of such securities or through a registered stock broker on a recognized stock exchange in India
subject to the following terms and conditions:
(a) The total holding by a single FII in each tranche of scheme of Security Receipts shall not exceed
10% of the issue and total holdings of all FIIs put together shall not exceed 49% of the paid up value of
each tranche of scheme/issue of Security Receipts issued by the ARCs. Further, sub-account of FIIs are
not allowed to invest in the Security Receipts issued by ARCs.
(b) The total holding by a single FII/sub-account in each issue of Perpetual Debt Instruments (Tier I)
shall not exceed 10% of the issue and total holdings of all FIIs/sub-account put together shall not exceed
49% of the paid up value of each issue of Perpetual Debt Instruments.
(c) Purchase of debt instruments including Upper Tier II instruments by FIIs are subject to limits notified
by SEBI and the Reserve Bank from time to time. The present limit for investment in Corporate Debt
Instruments like non-convertible debentures/bonds by FIIs is USD 40 billion14, which constitutes of the:
limit of USD 25 billion for investment in such non-convertible debentures/bonds issued by listed and
unlisted companies in the infrastructure sector (as defined in the ECB guidelines), with a residual maturity
of 5 years and a minimum lock in period of 3 years.
limit of USD 15 billion for investment in permissible listed corporate debt instruments without any
locking period and residual maturity restrictions.
(d) The present limit of investment by SEBI registered FIIs in Government Securities is USD 10 billion
which constitutes of :
limit of USD 5 billion for Government Securities with the residual maturity of 5 years.
limit of USD 5 billion for Government securities without any residual maturity restrictions.
4. Investment by Multilateral Development Banks (MDBs)
A Multilateral Development Bank (MDB) which is specifically permitted by the Government of India to float
rupee bonds in India can purchase Government dated securities.
5. Foreign Investment in Tier I and Tier II instruments issued by banks in India
(i) FIIs registered with SEBI and NRIs have been permitted to subscribe to the Perpetual Debt
instruments (eligible for inclusion as Tier I capital) and Debt Capital instruments (eligible for inclusion as
upper Tier II capital), issued by banks in India and denominated in Indian Rupees, subject to the following
conditions:
388 | P a g e
a. Investment by all FIIs in Rupee denominated Perpetual Debt instruments (Tier I) should not exceed
an aggregate ceiling of 49 per cent of each issue, and investment by individual FII should not exceed the
limit of 10 per cent of each issue.
b. Investments by all NRIs in Rupee denominated Perpetual Debt instruments (Tier I) should not
exceed an aggregate ceiling of 24 per cent of each issue and investments by a single NRI should not
exceed 5 per cent of each issue.
c. Investment by FIIs in Rupee denominated Debt Capital instruments (Tier II) shall be within the limits
stipulated by SEBI for FII investment in corporate debt instruments.
d. Investment by NRIs in Rupee denominated Debt Capital instruments (Tier II) shall be in accordance
with the extant policy for investment by NRIs in other debt instruments.
(ii) The issuing banks are required to ensure compliance with the conditions stipulated above at the time
of issue. They are also required to comply with the guidelines issued by the Department of Banking
Operations and Development (DBOD), Reserve Bank of India, from time to time.
(iii) The issue-wise details of the amount raised as Perpetual Debt Instruments qualifying for Tier I capital
by the bank from FIIs/NRIs are required to be reported in the prescribed format within 30 days of the
issue to the Reserve Bank15.
(iv) Investment by FIIs in Rupee denominated Upper Tier II Instruments raised in Indian Rupees will be
within the limit prescribed by SEBI for investment in corporate debt instruments. However, investment by
FIIs in these instruments will be subject to a separate ceiling of USD 500 million.
(v) The details of the secondary market sales/purchases by FIIs and the NRIs in these instruments on
the floor of the stock exchange are to be reported by the custodians and designated banks respectively,
to the Reserve Bank through the soft copy of the Forms LEC (FII) and LEC (NRI).
SECTION V
REPORTING GUIDELINES FOR FOREIGN INVESTMENTS IN INDIA AS PER SECTIONS I AND II
1. Reporting of FDI16 for fresh issuance of shares
(i) Reporting of inflow
(a) The actual inflows on account of such issuance of shares shall be reported by the AD branch in the
R-returns in the normal course.
(b) An Indian company receiving investment from outside India for issuing shares/convertible
debentures/preference shares under the FDI Scheme, should report the details of the amount of
consideration to the Regional Office concerned of the Reserve Bank through its AD Category I bank, not
later than 30 days from the date of receipt in the Advance Reporting Form enclosed in Annex-6. Noncompliance with the above provision would be reckoned as a contravention under FEMA, 1999 and could
attract penal provisions.
The
Form
can
also
be
downloaded
http://www.rbi.org.in/Scripts/BSViewFemaForms.aspx.
from
the
Reserve
Banks
website
(c) Indian companies are required to report the details of the receipt of the amount of consideration for
issue of shares/convertible debentures, through an AD Category I bank, together with a copy/ies of the
389 | P a g e
FIRC/s evidencing the receipt of the remittance along with the KYC report (enclosed as Annex-7) on the
non-resident investor from the overseas bank remitting the amount. The report would be acknowledged
by the Regional Office concerned, which will allot a Unique Identification Number (UIN) for the amount
reported.
(ii) Time frame within which shares have to be issued
The equity instruments should be issued within 180 days from the date of receipt of the inward
remittance or by debit to the NRE/FCNR (B) account of the non-resident investor. In case, the equity
instruments are not issued within 180 days from the date of receipt of the inward remittance or date of
debit to the NRE/FCNR (B) account, the amount of consideration so received should be refunded
immediately to the non-resident investor by outward remittance through normal banking channels or by
credit to the NRE/FCNR (B) account, as the case may be. Non-compliance with the above provision
would be reckoned as a contravention under FEMA and could attract penal provisions. In exceptional
cases, refund/allotment of shares for the amount of consideration outstanding beyond a period of 180
days from the date of receipt may be considered by the Reserve Bank, on the merits of the case.
(iii) Reporting of issue of shares
(a) After issue of shares (including bonus and shares issued on rights basis and shares issued on
conversion of stock option under ESOP scheme)/convertible debentures/convertible preference shares,
the Indian company has to file Form FC-GPR, enclosed in Annex 8, through its AD Category I bank,
not later than 30 days from the date of issue of shares. The Form can also be downloaded from the
Reserve Banks website http://www.rbi.org.in/Scripts/BS_ViewFemaForms.aspx. Non-compliance with the
above provision would be reckoned as a contravention under FEMA and could attract penal provisions.
(b) Part A of Form FC-GPR has to be duly filled up and signed by Managing Director/Director/Secretary
of the Company and submitted to the Authorised Dealer of the company, who will forward it to the
concerned Regional Office of the Reserve Bank. The following documents have to be submitted along
with Part A:
(i) A certificate from the Company Secretary of the company certifying that :
(a) all the requirements of the Companies Act, 1956 have been complied with;
(b) terms and conditions of the Governments approval, if any, have been complied with;
(c) the company is eligible to issue shares under these Regulations; and
(d) the company has all original certificates issued by AD banks in India evidencing receipt of amount of
consideration.
(ii) A certificate from SEBI registered Merchant Banker or Chartered Accountant indicating the manner of
arriving at the price of the shares issued to the persons resident outside India.
(c) The report of receipt of consideration as well as Form FC-GPR have to be submitted by the AD bank
to the Regional Office concerned of the Reserve Bank under whose jurisdiction the registered office of the
company is situated.
(d) Issue of bonus/rights shares or shares on conversion of stock options issued under ESOP to persons
resident outside India directly or on amalgamation/merger with an existing Indian company, as well as
issue of shares on conversion of ECB/royalty/lump sum technical know-how fee/import of capital goods
by units in SEZs has to be reported in Form FC-GPR.
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2. Reporting of FDI for Transfer of shares route

(i) The actual inflows and outflows on account of such transfer of shares shall be reported by the AD
branch in the R-returns in the normal course.
(ii) Reporting of transfer of shares between residents and non-residents and vice-versa is to be made in
Form FC-TRS (enclosed in Annex 9-i). The Form FC-TRS should be submitted to the AD Category I
bank, within 60 days from the date of receipt of the amount of consideration. The onus of submission of
the Form FC-TRS within the given timeframe would be on the transferor/transferee, resident in India.
(iii) The sale consideration in respect of equity instruments purchased by a person resident outside India,
remitted into India through normal banking channels, shall be subjected to a KYC check (Annex 9-ii) by
the remittance receiving AD Category I bank at the time of receipt of funds. In case, the remittance
receiving AD Category I bank is different from the AD Category I bank handling the transfer
transaction, the KYC check should be carried out by the remittance receiving bank and the KYC report
be submitted by the customer to the AD Category I bank carrying out the transaction along with
the Form FC-TRS.
(iv) The AD bank should scrutinise the transactions and on being satisfied about the transactions should
certify the form FC-TRS as being in order.
(v) The AD bank branch should submit two copies of the Form FC-TRS received from their
constituents/customers together with the statement of inflows/outflows on account of remittances
received/made in connection with transfer of shares, by way of sale, to IBD/FED/or the nodal office
designated for the purpose by the bank in the enclosed proforma (which is to be prepared in MS-Excel
format). The IBD/FED or the nodal office of the bank will consolidate reporting in respect of all the
transactions reported by their branches into two statements inflow and outflow statement. These
statements (inflow and outflow) should be forwarded on a monthly basis to Foreign Exchange
Department, Reserve Bank, Foreign Investment Division, Central Office, Mumbai in soft copy (in MSExcel) by e-mail to fdidata@rbi.org.in. The bank should maintain the FC-TRS forms with it and should not
forward the same to the Reserve Bank of India.
(vi) The transferee/his duly appointed agent should approach the investee company to record the
transfer in their books along with the certificate in the Form FC-TRS from the AD branch that the
remittances have been received by the transferor/payment has been made by the transferee. On receipt
of the certificate from the AD, the company may record the transfer in its books.
(vi) On receipt of statements from the AD bank, the Reserve Bank may call for such additional details or
give such directions as required from the transferor/transferee or their agents, if need be.
3. Reporting of conversion of ECB into equity
Details of issue of shares against conversion of ECB has to be reported to the Regional Office concerned
of the Reserve Bank, as indicated below:
a. In case of full conversion of ECB into equity, the company shall report the conversion in Form FCGPR to the Regional Office concerned of the Reserve Bank as well as in Form ECB-2 to the Department
of Statistics and Information Management (DSIM), Reserve Bank of India, Bandra-Kurla Complex,
Mumbai 400 051, within seven working days from the close of month to which it relates. The words
ECB wholly converted to equity shall be clearly indicated on top of the Form ECB-2. Once reported,
filing of Form ECB-2 in the subsequent months is not necessary.
391 | P a g e
b. In case of partial conversion of ECB, the company shall report the converted portion in Form FCGPR to the Regional Office concerned as well as in Form ECB-2 clearly differentiating the converted
portion from the non-converted portion. The words ECB partially converted to equity shall be indicated
on top of the Form ECB-2. In the subsequent months, the outstanding balance of ECB shall be reported
in Form ECB-2 to DSIM.
c. The SEZ unit issuing equity as mentioned in para (iii) above, should report the particulars of the
shares issued in the Form FC-GPR.
4. Reporting of ESOPs for allotment of equity shares
The issuing company is required to report the details of issuance of ESOPs to its employees to the
Regional Office concerned of the Reserve Bank, in plain paper reporting, within 30 days from the date of
issue of ESOPs. Further, at the time of conversion of options into shares the Indian company has to
ensure reporting to the Regional Office concerned of the Reserve Bank in form FC-GPR, within 30 days
of allotment of such shares. However, provision with regard to advance reporting would not be applicable
for such issuances.
5. Reporting of ADR/GDR Issues
The Indian company issuing ADRs/GDRs has to furnish to the Reserve Bank, full details of such issue in
the Form enclosed in Annex -10, within 30 days from the date of closing of the issue. The company
should also furnish a quarterly return in the Form enclosed in Annex 11, to the Reserve Bank within 15
days of the close of the calendar quarter. The quarterly return has to be submitted till the entire amount
raised through ADR/GDR mechanism is either repatriated to India or utilized abroad as per the extant
Reserve Bank guidelines.
6. Reporting of FII investments under PIS scheme
(i) FII reporting: The AD Category I banks have to ensure that the FIIs registered with SEBI who are
purchasing various securities (except derivative and IDRs) by debit to the Special Non-Resident Rupee
Account should report all such transactions details (except derivative and IDRs) in the Form LEC (FII) to
Foreign Exchange Department, Reserve Bank of India, Central Office by uploading the same to the
ORFS web site (https://secweb.rbi.org.in/ORFSMainWeb/Login.jsp). It would be the banks responsibility
to ensure that the data submitted to RBI is reconciled by periodically taking a FII holding report for their
bank.
(iii) The Indian company which has issued shares to FIIs under the FDI Scheme (for which the payment
has been received directly into companys account) and the Portfolio Investment Scheme (for which the
payment has been received from FIIs account maintained with an AD Category I bank in India) should
report these figures separately under item No. 5 of Form FC-GPR (Annex (Post-issue pattern of
shareholding) so that the details could be suitably reconciled for statistical/monitoring purposes.
7. Reporting of NRI investments under PIS scheme
17
The link office of the designated branch of an AD Category I bank shall furnish to the Reserve Bank , a
report on a daily basis on PIS transactions undertaken by it, on behalf of NRIs. This report can be
furnished on a floppy to the Reserve Bank and also uploaded directly on the OFRS web site
(https://secweb.rbi.org.in/ORFSMainWeb/Login.jsp). It would be the banks responsibility to ensure that
the data submitted to RBI is reconciled by periodically taking a NRI holding report for their bank.
PART II
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INVESTMENT IN PARTNERSHIP FIRM/PROPRIETARY CONCERN

1. Investment in Partnership Firm/Proprietary Concern
18
19
A Non-Resident Indian (NRI) or a Person of Indian Origin (PIO) resident outside India can invest by
way of contribution to the capital of a firm or a proprietary concern in India on non-repatriation basis
provided:
i. Amount is invested by inward remittance or out of NRE/FCNR(B)/NRO account maintained with
Authorised Dealers/Authorised banks.
ii. The firm or proprietary concern is not engaged in any agricultural/plantation or real estate business
(i.e. dealing in land and immovable property with a view to earning profit or earning income therefrom) or
print media sector.
iii. Amount invested shall not be eligible for repatriation outside India.
2. Investments with repatriation benefits
NRIs/PIO may seek prior permission of Reserve Bank20 for investment in sole proprietorship
concerns/partnership firms with repatriation benefits. The application will be decided in consultation with
the Government of India.
3. Investment by non-residents other than NRIs/PIO
A person resident outside India other than NRIs/PIO may make an application and seek prior approval of
Reserve Bank21, for making investment by way of contribution to the capital of a firm or a proprietorship
concern or any association of persons in India. The application will be decided in consultation with the
Government of India.
4. Restictions
An NRI or PIO is not allowed to invest in a firm or proprietorship concern engaged in any
agricultural/plantation activity or real estate business (i.e. dealing in land and immovable property with a
view to earning profit or earning income therefrom) or engaged in Print Media.
ANNEX 1
[PART I, Section I, para 7(a)]
SECTOR SPECIFIC POLICY FOR FOREIGN INVESTMENT
In the following sectors/activities, FDI up to the limit indicated below is allowed subject to other
conditions as indicated. In Sectors/Activities not listed below, FDI is permitted up to 100 per cent
on the automatic route subject to sectoral rules/regulations applicable.
Sr. No.
Sector/Activity
I
1.
AGRICULTURE
Floriculture, Horticulture,
Development and
production of Seeds and
393 | P a g e
FDI Cap/
Equity
100%
Entry Route
Other conditions
Automatic
2.
3.
4.
5.
planting material,
Animal Husbandry,
Pisciculture,
Aquaculture, Cultivation
of Vegetables &
Mushrooms under
controlled conditions
and services related to
agro and allied sectors.
NB: Besides the
above, FDI is not
allowed in any other
agricultural
sector/activity
Tea Sector, including
tea plantation
NB: Besides the

above, FDI is not
allowed in any other
plantation
sector/activity
INDUSTRY MINING
Mining covering
exploration and mining
of diamonds& precious
stones; gold, silver and
minerals.
Coal & Lignite mining
for captive consumption
by power projects, and
iron & steel, cement
production and other
eligible activities
permitted under the
Coal Mines
(Nationalisation) Act,
1973.
Mining and mineral
separation of titanium
bearing minerals and
ores, its value addition
and integrated
activities.
100%
Subject to divestment of
26% equity in favour of
Indian partner/Indian
public within 5 years
and prior approval of
State Government
concerned in case of
any change in future
land use.
100%
Automatic Subject to Mines &

Minerals (Development
& Regulation) Act, 1957
(www.mines.nic.in)
100%
Automatic Subject to provisions of

Coal Mines
(Nationalisation) Act,
1973.(www.coal.nic.in)
100%
NB: FDI will not be

allowed in mining of
394 | P a g e
FIPB
FIPB
Subject to sectoral
regulations and the
Mines and Minerals
(Development and
Regulation) Act, 1957
and the following
conditions i. value addition facilities
are set up within India
along with transfer of
technology;
prescribed substances listed in

Government of India
Notification No. S.O.
61(E) dated 18.1.2006
issued by the
Department of Atomic
Energy.
6.
7.
8.
9.
10.
11.
12.
395 | P a g e
MANUFACTURING
Alcohol-Distillation &
Brewing
Coffee & Rubber
processing &
warehousing
Defence production
ii. disposal of tailings

during the mineral
separation shall be
carried out in
accordance with
Regulations framed by
the Atomic Energy
Regulatory Board such
as Atomic Energy
(Radiation Protection)
Rules, 2004 and the
Atomic Energy (Safe
Disposal of Radioactive
Wastes) Rules, 1987.
100%
100%
26%
Hazardous chemicals,
viz., hydrocyanic acid
and its derivatives;
phosgene and its
derivatives; and
isocyanates and
diisocyanates of
hydrocarbon.
Industrial explosives Manufacture
100%
Drugs and
Pharmaceuticals
including those
involving use of
recombinant DNA
technology
POWER
Power including
generation (except
Atomic energy);
transmission,
distribution and Power
trading.
100%
100%
100%
Automatic Subject to license by

appropriate authority.
Automatic
FIPB
Subject to licensing
under Industries
(Development &
Regulation) Act, 1951
and guidelines on FDI in
production of arms and
ammunition.
Automatic Subject to industrial
license under the
Industries (Development
and other sectoral
Regulations.
Automatic Subject to industrial

license under the
Industries (Development
and Regulations under
Explosives Act, 1898
Automatic
Automatic Subject to provisions of

the Electricity Act, 2003
(www.powermin.nic.in)
FDI is not permitted for generation, transmission and distribution of electricity

produced in atomic power plant/atomic energy since private investment in this
sector/activity is prohibited and is reserved for public sector.
SERVICES
CIVIL AVIATION
SECTOR
13. Airportsa. Greenfield projects
100%
Automatic Subject to sectoral
Regulations notified by
Ministry of Civil Aviation
(www.civilaviation.nic.
in)
b. Existing projects
100%
FIPB
Subject to sectoral
beyond 74% Regulations notified by
Ministry of Civil Aviation
in)
14. Air Transport Services including Domestic Scheduled Passenger
Airlines; Non-Schedules Airlines; Chartered Airlines; Cargo Airlines;
Helicopter and Seaplane Services
a. Scheduled Air
49% FDI; Automatic Subject to no direct or
Transport
100% for
indirect participation by
Services/Domestic
NRIs
foreign airlines and
Scheduled Passenger investment
Sectoral Regulations.
Airline
in)
b. Non-Scheduled Air
74%- FDI
Automatic Subject to no direct or
Transport
100%- for
indirect participation by
Service/NonNRIs
foreign airlines in NonScheduled airlines,
investment
Scheduled and
Chartered airlines, and
Chartered airlines.
Cargo airlines
Foreign airlines are
allowed to participate in
the equity of companies
operating Cargo
airlines. Also subject to
sectoral Regulations.
in)
c. Helicopter
100%
Automatic Foreign airlines are
Services/Seaplane
allowed to participate in
services requiring
the equity of companies
DGCA approval
operating Helicopter
and seaplane airlines.
Also subject to sectoral
Regulations.
in)
15. Other services under Civil Aviation Sector
a. Ground Handling
74%- FDI
Services
100%- for
Regulations and
NRIs
security clearance.
investment
b. Maintenance and
100%
Automatic
396 | P a g e
16.
Repair organizations;
flying training
institutes; and
technical training
institutions
Asset Reconstruction
Companies
17.
(a)
Banking Private sector
(b)
Banking Public
sector
49%
(only FDI)
74%
(FDI+FII)
Within this
limit, FII
investment
not to exceed
49%
20%
(FDI + FII)
397 | P a g e
FIPB
Investment by FIIs are

not permitted in the
equity capital of ARC.
However, FII registered
with SEBI can invest in
Security Receipts
issued by ARCs
registered with Reserve
Bank of India. FIIs can
invest upto 49% of each
tranche of scheme of
SRs subject to the
condition that
investment by a single
FII in each tranche of
SRs shall not exceed
10% of the issue.
Where any individual
investment exceeds
10% of the equity,
provisions of Section
3(3)(f) of Securitization
and Reconstruction of
Financial Assets and
Enforcement of Security
Interest Act, 2002
should be complied
with. Sub-accounts of
FIIs are not allowed to
invest in the Security
Receipts of ARCs.
(www.finmin.nic.in)
Automatic Subject to guidelines for
setting up
branches/subsidiaries of
foreign banks issued by
RBI. (www.rbi.org.in)
FDI and PI in
nationalized banks are
subject to the overall
statutory limits of 20%
as provided under
Section 3(2D) of the
Banking Companies
(Acquisition and
Transfer of Undertaking)
Acts, 1970/80. The
same ceiling would also
apply in respect of such

investments in State
Bank of India and its
Associate banks.
398 | P a g e
18.
a.
Broadcasting
FM Radio
b.
Cable network
c.
Direct-To-Home
d.
Setting up hardware
facilities such as uplinking, HUB, etc.
e.
Up-linking a News &

Current Affairs TV
Channel
f.
Up-linking a Non-news
& Current Affairs TV
Channel
19.
Commodity
Exchanges
20.
Development of
townships, Housing,
Built up infrastructure
and Construction
Development Projects
(which would include but
not be restricted to
housing, commercial
premises, hotels,
resorts, hospitals,
educational institutions,
FDI +FII
investment
up to 20%
FIPB
49%
(FDI+FII)
FIPB
49%
(FDI+FII).
Within this
limit, FDI
component
not to exceed
20%
49%
(FDI+FII)
FIPB
26%
(FDI+FII)
100%
49%
(FDI+FII)
FDI 26%
FII 23%
100%
Subject to guidelines
notified by Ministry of
Information &
Broadcasting.
(www.mib.nic.in)
Subject to Cable
Television Network
Rules (1994), notified by
Ministry of Information &
Broadcasting.
(www.mib.nic.in)
issued by Ministry of
Information & Broadcasting.
(www.mib.nic.in)
FIPB
Subject to Up-linking
Policy notified by
Ministry of Information &
Broadcasting.
(www.mib.nic.in)
FIPB
Information &
Broadcasting.
(www.mib.nic.in)
FIPB
Information &
Broadcasting.
(www.mib.nic.in)
FIPB
FII purchases shall be
restricted to secondary
market only. Subject to
regulations specified by
concerned Regulators.
Automatic Subject to conditions
vide para 5.23 of
Consoildated FDI policy
of Government of India
including:
a. Minimum
capitalization of US$ 10
million for wholly owned
subsidiaries and US$ 5
million for joint venture.
The funds would have
recreational facilities,
city and regional level
infrastructure)
NB: FDI is not allowed

in Real Estate
Business
399 | P a g e
to be brought within six

months of
commencement of
business of the
company.
b. Minimum area to be
developed under each
project- 10 hectares in
case of development of
serviced housing plots;
and built-up area of
50,000 sq. mts. in case
of construction
development project;
and any of the above in
case of a combination
project.
c. Original Investment
cannot be repatriated
before a period of three
years from the
completion of the
minimum capitalization.
However, the investor
may be permitted to exit
earlier with prior
approval of Government
through the FIPB.
d. At least 50% of the
project must be
developed within the
period of five years from
the date of obtaining all
statutory clearances.
The investor/investee
company would not be
permitted to sell
undeveloped plots. For
the purpose of these
guidelines,
undeveloped plots
would mean where
roads, water supply,
street lighting, drainage,
sewerage, and other
conveniences, as
applicable under the
pres-cribed regulations,
have not been made
available. It will be
necessary that the
investor provides this
infrastructure and
obtains the completion
certificate from the local
21.
22.
23.
24.
400 | P a g e
Courier services for

carrying packages,
parcels and other items
which do not come
within the ambit of the
Indian Post Office Act,
1898.
Infrastructure
companies in
securities markets
namely, Stock
Exchanges,
Depositories and
Clearing Corporations
Credit Information
Companies(CIC)
100%
FIPB
49%
(FDI+FII)
FDI - 26%
FII - 23%
FIPB
body/service agency
before he would be
allowed to dispose of
services housing plots.
[Note : The above
conditions are not
applicable for
1: For investment by
NRIs,
2: For investment in
SEZs, Hotels &
Hospitals.
Subject to existing laws
and exclusion of activity
relating to distribution of
letters, which is
exclusively reserved for
the State.
(www.indiapost.gov.in)
FII purchases shall be
restricted to secondary
market. Subject to
regulations specified by
concerned Regulators.
49%
FIPB (& FII purchases shall be
(FDI+FII)
regulatory restricted to secondary
Within this
clearance market. Foreign
limit, FII
from RBI) Investment in CIC will
investment
be subject to Credit
not to exceed
Information Companies
24%
(Regulation) Act, 2005.
Subject to regulations
specified by concerned
Regulators.
Industrial Parks both
100%
Automatic Conditions in para 5.23
setting up and in
of Consolidated FDI
established Industrial
policy of Government of
Parks
India applicable for
construction
development projects
would not apply
provided the Industrial
Parks meet with the
under-mentioned
conditionsi. it would comprise of a
minimum of 10 units
and no single unit shall
occupy more than 50%
of the allocable area
and ;
ii. the minimum
25.
Insurance
26%
26.
Investing companies
100%
in infrastructure/
services sector
(except
telecom sector)
27.
(i)
Non-Banking Finance Companies

Merchant banking
100%
(ii)
(iii)
Underwriting
Portfolio Management
Services
Investment Advisory
Services
Financial Consultancy
Stock Broking
(iv)
(v)
(vi)
(vii)
(viii)
(ix)
(x)
(xi)
Asset Management
Venture Capital
Custodial Services
Factoring
Credit Rating
Agencies
(xii) Leasing & Finance
401 | P a g e
percentage of the area

to be allocated for
industrial activity shall
not be less than 66% of
the total allocable area.
Automatic Subject to licensing by
the Insurance
Regulatory &
Development Authority
(www.irda.nic.in)
FIPB
Where there is a
prescribed cap for
foreign investment, only
the direct
investment will be
considered for the
prescribed cap and
foreign investment
in an investing company
will not be set off
against this cap
provided the foreign
direct investment in
such investing company
does not exceed 49%
and the management of
the investing company
is with the Indian
owners.
Automatic Subject to:
a. Minimum
capitalization norms for
fund based NBFCs US$ 0.5 million to be
brought upfront for FDI
up to 51%; US$ 5
million to be brought
upfront for FDI above
51% and up to 75%;
and US$ 50 million out
of which US$ 7.5 million
to be brought upfront
and the balance in 24
months, for FDI beyond
75% and up to 100%.
b. Minimum
capitalization norms for
non-fund based NBFC
activities - US$ 0.5
million, subject to the
condition that such
company would not be
(xiii)
(xiv)
(xv)
(xvi)
Housing Finance
Forex Broking
*Credit card Business
Money changing
business
(xvii) Micro credit
allowed to set up any

subsidiary for any other
activity nor it can
participate in the equity
of NBFC
holding/operating
company. Non-fund
based activities would
include Investment
Advisory Services,
Financial Consultancy,
Forex Broking, Money
Changing Business and
Credit Rating Agencies.
c. Foreign investors can
set up 100% operating
subsidiaries without the
condition to disinvest a
minimum of 25% of its
equity to Indian entities
subject to bringing in
US$ 50 million without
any restriction on
number of operating
subsidiaries without
bringing additional
capital.
(xviii) Rural credit
d. Joint venture
operating NBFCs that
have 75% or less than
75% foreign investment
will also be allowed to
set up subsidiaries for
undertaking other NBFC
activities subject to the
subsidiaries also
complying with the
applicable minimum
capital inflow.
e. Compliance with the
guidelines of the RBI.
*Credit card business includes issuance, sales, marketing and design of various
payment products such as credit cards, debit cards, stored value cards, smart card,
value added cards, etc.
28. Petroleum & Natural Gas sector
a. Refining
49% in case
FIPB (in Subject to Sectoral
of PSUs.
case of policy and no
100% in case
PSUs)
divestment or dilution of
of private
Automatic domestic equity in the
companies (in case of existing PSUs.
private (www.petroleum.nic.in)
companies)
b. Other than refining and
100%
including market study
Regulations issued by
and formulation;
Ministry of Petroleum &
402 | P a g e
29.
a.
Natural Gas.
(www.petroleum.nic.in)
26%
FIPB
100%
FIPB
b.
Publishing of
scientific
magazines/specialty
journals/periodicals
30.
a.
Telecommunications
Basic and cellular,
74%
Unified Access
(Including
Services,
FDI, FII, NRI,
National/International
FCCBs,
Long Distance, V-Sat, ADRs, GDRs,
Public Mobile Radio
convertible
Trunked Services
preference
(PMRTS), Global Mobile shares, and
Personal
proportionate
Communications
foreign equity
Services (GMPCS) and
in Indian
other value added
promoters/
telecom services
Investing
Company)
ISP with gateways,
74%
radio-paging, end-toend bandwidth.
b.
403 | P a g e
investment/financing;
setting up infrastructure
for marketing in
Petroleum & Natural
Gas sector.
Print Media
Publishing of
newspaper and
periodicals dealing with
news and current affairs
c.
(a) ISP without gateway;

(b) Infrastructure
provider providing dark
fibre, right of way, duct
space, tower (Category
I);
(c) electronic mail and
voice mail.
100%
d.
Manufacture of telecom
equipments
100%
31.
a.
Trading
Wholesale/cash & carry
100%
Automatic
up to 49%.
FIPB
beyond
49%.
notified by Ministry of
Information &
Broadcasting.
(www.mib.nic.in)
Information &
Broadcasting.
(www.mib.nic.in)
vide para 5.38 of
Consolidated FDI policy
of Government of India.
Automatic
up to 49%.
FIPB
beyond
49%.
Subject to licensing and

security requirements
notified by the
Department of
Telecommunications.
(www.dotindia.com)
Automatic Subject to the condition
up to 49%. that such companies
FIPB
shall divest 26% of their
beyond equity in favour of
49%.
Indian public in 5 years,
if these companies are
listed in other parts of
the world. Also subject
to licensing and security
requirements, where
required.
(www.dotindia.com)
requirements.
(www.dotindia.com)
Automatic
b.
c.
d.
trading
Trading for Exports
Trading of items
sourced from small
scale sector
Test marketing of such
items for which a
company has approval
for manufacture
100%
100%
Automatic
FIPB
100%
FIPB
e.
Single Brand Product

retailing
51%
32.
Satellites Establishment and

operation
74%
33.
Special Economic
Zones and Free Trade
Warehousing Zones
covering setting up of
these Zones and setting
up units in the Zones
Venture Capital Fund
and Venture Capital
Undertaking
100%
34
Subject to the condition

that the test marketing
approval will be for a
period of two years and
investment in setting up
manufacturing facilities
commences
simultaneously with test
marketing.
FIPB
Subject to para 5.39.3
of Consolidated FDI
policy of Government of
India
FIPB
Subject to sectoral
guidelines issued by
Department of
Space/ISRO.
(www.isro.org)
Automatic Subject to Special
Economic Zones Act,
2005 and the Foreign
Trade Policy.
(www.sezindia.nic.in)
Automatic SEBI registered FVCI

are allowed to invest in
domestic venture capital
undertakings and
domestic venture capital
funds through the
automatic route subject
to the SEBI regulations
and sector specific caps
on FDI.
Note : All the above sector/activities are governed by the respective Press Notes/Releases issued
by the issued by the Government of India from time to time
ANNEX - 2
[PART I, SECTION I, PARA 7(c)(iii)]
(A) All Activities/Sectors would require prior approval of the Government of India for FDI in
accordance with the FDI policy issued by Government of India from time to time.
(B) Sectors prohibited for FDI
I. Retail Trading (except single brand product retailing)
404 | P a g e
II. Atomic Energy

III. Lottery Business including Government/private lottery, online lotteries etc.
IV. Gambling and Betting including casinos etc.
V. Business of chit fund
VI. Nidhi Company
VII. Trading in Transferable Development Rights (TDRs)
VIII.Activities/sector not opened to private sector investment
IX. Agriculture (excluding Floriculture, Horticulture, Development of seeds, Animal Husbandry,
Pisciculture and cultivation of vegetables, mushrooms etc. under controlled conditions and services
related to agro and allied sectors) and Plantations (Other than Tea Plantations)
X. Real estate business, or construction of farm houses.
XI. Manufacturing of Cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco or of tobacco
substitutes.
Note:
1. Besides foreign investment in any form, foreign technology collaboration in any form including
licensing for franchise, trademark, brand name, management contract is also completely prohibited for
Lottery Business and Gambling and Betting activities.
2. Foreign investment in Trusts other than investment by SEBI registered FVCIs in domestic VCF is not
permitted.
ANNEX 3
[PART I, SECTION I, PARA 8(b)]
Terms and conditions for Transfer of Shares/Convertible Debentures, by way of Sale, from a
Person Resident in India to a Person Resident Outside India and from a Person Resident Outside
India to a Person Resident in India
1.1 In order to address the concerns relating to pricing, documentation, payment/receipt and remittance in
respect of the shares/convertible debentures of an Indian company, in all sectors, transferred by way of
sale, the parties involved in the transaction shall comply with the guidelines set out below.
1.2 Parties involved in the transaction are (a) seller (resident/non-resident), (b) buyer (resident/nonresident), (c) duly authorized agent/s of the seller and/or buyer, (d) Authorised Dealer bank (AD) branch
and (e) Indian company, for recording the transfer of ownership in its books.
2. Responsibilities/Obligations of the parties
All the parties involved in the transaction would have the responsibility to ensure that the relevant
regulations under FEMA are complied with and consequent on transfer of shares, the relevant individual
405 | P a g e
limit/sectoral caps/foreign equity participation ceilings as fixed by Government are not breached.
Settlement of transactions will be subject to payment of applicable taxes, if any.
3. Method of payment and remittance/credit of sale proceeds
3.1 The sale consideration in respect of the shares purchased by a person resident outside India shall be
remitted to India through normal banking channels. In case the buyer is a NRI, the payment may be made
by way of debit to his NRE/FCNR (B) accounts. However, if the shares are acquired on non-repatriation
basis by NRI, the consideration shall be remitted to India through normal banking channel or paid out of
funds held in NRE/FCNR (B)/NRO accounts.
3.2. The sale proceeds of shares (net of taxes) sold by a person resident outside India may be remitted
outside India. In case of FII, the sale proceeds may be credited to its special Non-Resident Rupee
Account. In case of NRI, if the shares sold were held on repatriation basis, the sale proceeds (net of
taxes) may be credited to his NRE/FCNR(B) accounts and if the shares sold were held on non
repatriation basis, the sale proceeds may be credited to his NRO account subject to payment of taxes.
3.3 The sale proceeds of shares (net of taxes) sold by an OCB may be remitted outside India directly if
the shares were held on repatriation basis and if the shares sold were held on non-repatriation basis, the
sale proceeds may be credited to its NRO (Current) Account subject to payment of taxes, except in the
case of OCBs whose accounts have been blocked by Reserve Bank.
4. Documentation
Besides obtaining a declaration in the enclosed Form FC-TRS (in quadruplicate), the AD branch should
arrange to obtain and keep on record the following documents:
4.1 For sale of shares by a person resident in India
i. Consent Letter duly signed by the seller and buyer or their duly appointed agent indicating the details
of transfer i.e. number of shares to be transferred, the name of the investee company whose shares are
being transferred and the price at which shares are being transferred. In case there is no formal Sale
Agreement, letters exchanged to this effect may be kept on record.
ii. Where Consent Letter has been signed by their duly appointed agent, the Power of Attorney
Document executed by the seller/buyer authorizing the agent to purchase/sell shares.
iii. The shareholding pattern of the investee company after the acquisition of shares by a person resident
outside India showing equity participation of residents and non-residents category-wise (i.e.
NRIs/OCBs/foreign nationals/incorporated non-resident entities/FIIs) and its percentage of paid up capital
obtained by the seller/buyer or their duly appointed agent from the company, where the sectoral cap/limits
have been prescribed.
iv. Certificate indicating fair value of shares from a Chartered Accountant.
v. Copy of Brokers note if sale is made on Stock Exchange.
vi. Undertaking from the buyer to the effect that he is eligible to acquire shares/convertible debentures
under FDI policy and the existing sectoral limits and Pricing Guidelines have been complied with.
vii. Undertaking from the FII/sub account to the effect that the individual FII/Sub account ceiling as
prescribed by SEBI has not been breached.
406 | P a g e
4.2 For sale of shares by a person resident outside India

i. Consent Letter duly signed by the seller and buyer or their duly appointed agent indicating the details
of transfer i.e. number of shares to be transferred, the name of the investee company whose shares are
being transferred and the price at which shares are being transferred.
ii. Where the Consent Letter has been signed by their duly appointed agent the Power of Attorney
Document authorizing the agent to purchase/sell shares by the seller/buyer. In case there is no formal
Sale Agreement, letters exchanged to this effect may be kept on record.
iii. If the sellers are NRIs/OCBs, the copies of RBI approvals evidencing the shares held by them on
repatriation/non-repatriation basis. The sale proceeds shall be credited to NRE/NRO account, as
applicable.
iv. Certificate indicating fair value of shares from a Chartered Accountant.
v. No Objection/Tax Clearance Certificate from Income Tax authority/Chartered Accountant.
vi. Undertaking from the buyer to the effect that the Pricing Guidelines have been adhered to.
Shares/convertible debentures of Indian companies purchased under Portfolio Investment Scheme
by NRIs, OCBs cannot be transferred, by way of sale under private arrangement.
Compliance is also to be ensured of the pricing and the reporting guidelines as stated under para 5
(Section I) and para 2 (Section V) respectively.
ANNEX- 4
[PART I, SECTION I, PARA 8 (b) II (iii)]
Documents to be submitted by a person resident in India for transfer of shares to a person
resident outside India by way of gift
i. Name and address of the transferor (donor) and the transferee (donee).
ii. Relationship between the transferor and the transferee.
iii. Reasons for making the gift.
iv. In case of Government dated securities and treasury bills and bonds, a certificate issued by a
Chartered Accountant on the market value of such security.
v. In case of units of domestic mutual funds and units of Money Market Mutual Funds, a certificate from
the issuer on the Net Asset Value of such security.
vi. In case of shares and convertible debentures, a certificate from a Chartered Accountant on the value
of such securities according to the guidelines issued by Securities & Exchange Board of India or DCF
method for listed companies and unlisted companies, respectively.
vii. Certificate from the concerned Indian company certifying that the proposed transfer of
shares/convertible debentures by way of gift from resident to the non-resident shall not breach the
applicable sectoral cap/FDI limit in the company and that the proposed number of shares/convertible
407 | P a g e
debentures to be held by the non-resident transferee shall not exceed 5 per cent of the paid up capital of
the company.22
viii. An undertaking from the resident transferor that the value of security to be transferred together with
any security already transferred by the transferor, as gift, to any person residing outside India does not
exceed the rupee equivalent of USD 25,000 during a calendar year.
ANNEX 5
(PART I, SECTION I, PARA 8 (b) II (iii))
Definition of relative as given in Section 6 of Companies Act, 1956.
A person shall be deemed to be a relative of another, if, and only if:
(a) they are members of a Hindu undivided family ; or
(b) they are husband and wife ; or
(c) the one is related to the other in the manner indicated in Schedule IA (as under)
1. Father.
2. Mother (including step-mother).
3. Son (including stepson).
4. Sons wife.
5. Daughter (including step-daughter).
6. Fathers father.
7. Fathers mother.
8. Mothers mother.
9. Mothers father.
10. Sons son.
11. Sons sons wife.
12. Sons daughter.
13. Sons daughters husband.
14. Daughters husband.
15. Daughters son.
408 | P a g e
16. Daughters sons wife.

17. Daughters daughter.
18. Daughters daughters husband.
19. Brother (including step-brother).
20. Brothers wife.
21. Sister (including step-sister).
22. Sisters husband.
409 | P a g e
ANNEX 6
[PART I, SECTION V, PARA 1 (i)]
Report by the Indian company receiving amount of consideration for issue of shares/Convertible
debentures under the FDI Scheme
(To be filed by the company through its Authorised Dealer Category I bank, with the Regional Office of
the Reserve Bank under whose jurisdiction the Registered Office of the company making the declaration
is situated, not later than 30 days from the date of receipt of the amount of consideration, as specified in
para 9 (I) (A) of Schedule I to Notification No. FEMA 20/2000- RB dated May 3, 2000)
Permanent Account
Number (PAN) of the
investee company given
by the IT Department
No. Particulars
1. Name of the Indian company
(In Block Letters)
Address of the Registered Office
3.
Fax
Telephone
e-mail
Details of the foreign investor/collaborator
Name
Address
Country
Date of receipt of funds
4.
Amount
5.
Whether investment is under Automatic Route

Automatic Route/Approval Route
or Approval Route
If Approval Route, give details (ref. No. of
approval and date)
Name of the AD through whom the remittance is
received
Address of the AD
6.
7.
In foreign
In
currency Indian
Rupees
A copy of the FIRC evidencing the receipt of consideration for issue of shares/convertible debentures as
above is enclosed.
(Authorised signatory of the investee company)
(Stamp)
(Authorised signatory of the AD)

(Stamp)
FOR USE OF THE RESERVE BANK ONLY:
Unique Identification
410 | P a g e
Number for the

remittance received:
ANNEX 7
[PART I, SECTION V, PARA 1(I) ]
Know Your Customer (KYC) Form in respect of the non-resident investor
Registered Name of the Remitter/Investor
(Name, if the investor is an Individual)
Registration Number (Unique Identification
Number* in case remitter is an Individual)
Registered Address (Permanent Address if
remitter Individual)
Name of the Remitters Bank
Remitters Bank Account No.
Period of banking relationship with the remitter
* Passport No., Social Security No. or any Unique No. certifying the bona fides of the remitter as
prevalent in the remitters country
We confirm that all the information furnished above is true and accurate as provided by the
overseas remitting bank of the non-resident investor.
(Signature of the Authorised Official

of the AD bank receiving the remittance)
Date :
Place:
Stamp :
ANNEX 8
411 | P a g e
[PART I, SECTION V, PARA 1 (iii)]

FC-GPR
PART A
(To be filed by the company through its Authorised Dealer Category I bank with the Regional Office of
the RBI under whose jurisdiction the Registered Office of the company making the declaration is situated
as and when shares/convertible debentures are issued to the foreign investor, along with the documents
mentioned in item No. 4 of the undertaking enclosed to this Form)
Permanent Account
Number (PAN) of the
investee company given
by the IT Department
Date of issue of
shares/convertible
debentures
No. Particulars
1. Name
(In Block Letters)
Address of the Registered Office
2.
State
Registration No. given by Registrar of
Companies
Whether existing company or new company Existing company/New company
(strike off whichever is not applicable)
If existing company, give registration number
allotted by RBI for FDI, if any
Telephone
Fax
e-mail
Description of the main business activity
NIC Code
Location of the project and NIC code for the
district where the project is located
Percentage of FDI allowed as per FDI policy
State whether FDI is allowed under
Automatic Route or Approval Route
(strike out whichever is not applicable)
Details of the foreign
investor/collaborator*.
Name
Automatic Route/Approval Route
Address
Country
Constitution/Nature of the investing Entity
[Specify whether
412 | P a g e
1. Individual
2. Company
3. FII
4. FVCI
5. Foreign Trust
6. Private Equity Fund
7. Pension/Provident Fund
23
8. Sovereign Wealth Fund (SWF)
9. Partnership/Proprietorship Firm
10. Financial Institution
11. NRIs/PIO
12. Others (please specify)]
Date of incorporation
4 Particulars of Shares/Convertible Debentures Issued
(a) Nature and date of issue
Nature of issue
Date of issue
Number of shares/
convertible
debentures
01 IPO/FPO
02 Preferential allotment/private
placement
03 Rights
04 Bonus
05 Conversion of ECB
06 Conversion of royalty (including
lump sum payments)
07 Conversion against import of
capital goods by units in SEZ
08 ESOPs
09 Share Swap
10 Others (please specify)
Total
(b) Type of security issued
No.
Nature of
Number Maturity Face Premium Issue Amount
security
value
Price of inflow*
per
share
01 Equity
02 Compulsorily
Convertible
Debentures
03 Compulsorily
Convertible
Preference
shares
04 Others (please
specify)
Total
(i) In case the issue price is greater than the face value please give break up of the premium received.
413 | P a g e
(ii) * In case the issue is against conversion of ECB or royalty or against import of capital goods by units
in SEZ, a Chartered Accountants Certificate certifying the amount outstanding on the date of conversion
(c)
@ please specify the nature

(d)
(e)
** before issue of shares
Break up of premium
Control Premium
Non competition fee
Others@
Total
Amount
Total inflow (in Rupees) on account

of issue of shares/convertible
debentures to non-residents (including
premium, if any) vide
(i) Remittance through AD:
(ii) Debit to NRE/FCNR A/c with
Bank_________
(iii) Others (please specify)
Date of reporting of (i) and (ii) above
to RBI under Para 9(1) A of Schedule
I to Notification No. FEMA 20/2000RB dated May 3, 2000, as amended
from time to time.
Disclosure of fair value of shares
issued**
We are a listed company and the
market value of a share as on date of
the issue is*
We are an un-listed company and the
fair value of a share is*
*(Please indicate as applicable)
5. Post issue pattern of shareholding

Equity
Investor category
Compulsorily
convertible
Preference
Shares/Debentures
No. of Amount % No. of Amount %
share (Face
shares
(Face
Value)
Value)
Rs.
Rs.
(a) Non-Resident
01 Individuals
02 Companies
03 FIIs
04 FVCIs
05 Foreign Trusts
06 Private Equity Funds
07 Pension/Provident Funds
08 Sovereign Wealth Funds
09 Partnership/Proprietorship
414 | P a g e
10
11
12
(b)
Firms
Financial Institutions
NRIs/PIO
Others (please specify)
Sub Total
Resident
Total
DECLARATION TO BE FILED BY THE AUTHORISED REPRESENTATIVE OF THE INDIAN

COMPANY:
(Delete whichever is not applicable and authenticate)
We hereby declare that:
1. We comply with the procedure for issue of shares/convertible debentures as laid down under the FDI
scheme as indicated in Notification No. FEMA 20/2000-RB dated 3rd May 2000, as amended from time to
time.
2. The investment is within the sectoral cap/statutory ceiling permissible under the Automatic Route of
RBI and we fulfil all the conditions laid down for investments under the Automatic Route namely (strike off
whichever is not applicable).
(a) Foreign entity/entities(other than individuals), to whom we have issued shares have existing joint
venture or technology transfer or trade mark agreement in India in the same field and Conditions
stipulated at Para 4.2 of Consolidated FDI policy Circular of Government of India have been complied
with.
OR
Foreign entity/entities(other than individuals), to whom we have issued shares do not have any
existing joint venture or technology transfer or trade mark agreement in India in the same field.
For the purpose of the same field, 4 digit NIC 1987 code would be relevant.
(b) We are not an Industrial Undertaking manufacturing items reserved for small sector.
OR
We are an Industrial Undertaking manufacturing items reserved for small sector and the investment
limit of 24 % of paid-up capital has been observed/requisite approvals have been obtained.
(c) Shares issued on rights basis to non-residents are in conformity with Regulation 6 of the RBI
Notification No FEMA 20/2000-RB dated 3rd May 2000, as amended from time to time.
OR
Shares issued are bonus.
OR
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Shares have been issued under a scheme of merger and amalgamation of two or more Indian
companies or reconstruction by way of demerger or otherwise of an Indian company, duly approved by a
court in India.
OR
Shares are issued under ESOP and the conditions regarding this issue have been satisfied
3. Shares have been issued in terms of SIA/FIPB approval No. dated
.
4. We enclose the following documents in compliance with Paragraph 9(1)(B) of Schedule 1 to
Notification No. FEMA 20/2000-RB dated May 3, 2000:
(i) A certificate from our Company Secretary certifying that
(a) all the requirements of the Companies Act, 1956 have been complied with;
(b) terms and conditions of the Government approval, if any, have been complied with;
(c) the company is eligible to issue shares under these Regulations; and
(d) the company has all original certificates issued by authorised dealers in India evidencing receipt of
amount of consideration in accordance with paragraph 8 of Schedule 1 to Notification No. FEMA 20/2000RB dated May 3, 2000.
(ii) A certificate from Statutory Auditors/SEBI registered Category I Merchant Banker/Chartered
Accountant indicating the manner of arriving at the price of the shares issued to the persons resident
outside India.
5. Unique Identification Numbers given for all the remittances received as consideration for issue of
shares/convertible debentures (details as above), by Reserve Bank.
R
R
(Signature :
of the
..
Applicant)*
(Name in
:
Block
..
Letters)
(Designation :
of the
..
signatory)
Place:
Date:
(* To be signed by Managing Director/Director/Secretary of the Company)
416 | P a g e
CERTIFICATE TO BE FILED BY THE COMPANY SECRETARY24 OF THE INDIAN COMPANY

ACCEPTING THE INVESTMENT:
(As per Para 9(1)(B)(i) of Schedule 1 to Notification No. FEMA 20/2000-RB dated May 3, 2000)
In respect of the abovementioned details, we certify the following :
1. All the requirements of the Companies Act, 1956 have been complied with.
2. Terms and conditions of the Government approval, if any, have been complied with.
3. The company is eligible to issue shares/convertible debentures under these Regulations.
4. The company has all original certificates issued by AD Category I banks in India, evidencing receipt
of amount of consideration in accordance with paragraph 8 of Schedule 1 to Notification No. FEMA
20/2000-RB dated May 3, 2000.
Name & Signature of the Company Secretary)
(Seal)
417 | P a g e
FOR USE OF THE RESERVE BANK ONLY:

Registration Number for the FC-GPR:
Unique Identification Number allotted to the
Company
at the time of reporting receipt of remittance R
NNEX 9-I
[PART I, SECTION V, PARA 2 ]
Form FC-TRS
Declaration regarding transfer of shares/compulsorily and mandatorily convertible
preference shares (CMCPS)/debentures by way of sale from resident to nonresident/non-resident to resident
(to be submitted to the designated AD branch in quadruplicate within 60 days from the date
of receipt of funds)
The following documents are enclosed
For sale of shares/compulsorily and mandatorily convertible preference shares/debentures
by a person resident in India
i. Consent Letter duly signed by the seller and buyer or their duly appointed agent and
in the latter case the Power of Attorney Document.
ii. The shareholding pattern of the investee company after the acquisition of shares by a
person resident outside India.
iii. Certificate indicating fair value of shares from a Chartered Accountant.
iv. Copy of Brokers note if sale is made on Stock Exchange.
v. Declaration from the buyer to the effect that he is eligible to acquire
shares/compulsorily and mandatorily convertible preference shares/debentures under FDI
policy and the existing sectoral limits and Pricing Guidelines have been complied with.
vi. Declaration from the FII/sub-account to the effect that the individual FII/Sub-account
ceiling as prescribed has not been breached.
Additional documents in respect of sale of shares/compulsorily and mandatorily
convertible preference shares/debentures by a person resident outside India
vii. If the sellers are NRIs/OCBs, the copies of RBI approvals, if applicable, evidencing the
shares held by them on repatriation/non-repatriation basis.
viii. No Objection/Tax Clearance Certificate from Income Tax Authority/Chartered Account.
1
Name of the company
Address (including e-mail, telephone Number, Fax
No.)
Activity
NIC Code No.
2
Whether FDI is allowed under Automatic route
Sectoral Cap under FDI Policy
3
Nature of transaction
Transfer from resident to
non-resident/
(Strike out whichever is not applicable)
Transfer from non418 | P a g e
6
7
resident to resident
Name of the buyer
Constitution/Nature of the investing Entity
Specify whether
1. Individual
2. Company
3. FII
4. FVCI
5. Foreign Trust
8. Sovereign Wealth Fund (SWF#)
9. Partnership/Proprietorship firm
11. NRIs/PIOs
12. Others
Date and Place of Incorporation
Address of the buyer (including e-mail, telephone
number. Fax No.)
Name of the seller
Constitution/Nature of the disinvesting entity
Specify whether
1. Individual
2. Company
3. FII
4. FVCI
5. Foreign Trust
8. Sovereign Wealth Fund (SWF#)
9. Partnership/Proprietorship firm
11. NRIs/PIOs
12. Others
Date and Place of Incorporation
Address of the seller (including e-mail, telephone
Number Fax No.)
Particulars of earlier Reserve Bank/FIPB approvals
Details regarding shares/compulsorily and mandatorily convertible
preference shares (CMCPS)/debentures to be transferred
Date of the
Number of Face value Negotiated Price Amount of
transaction
shares
in Rs.
for the
consideration
CMCPS/ transfer** in
in Rs.
debentures
Rs.
Foreign Investments in the
company
No. of shares
Percentage
Before the
transfer
After the
transfer
419 | P a g e
Where the
shares/CMCPS/debentures
are listed on Stock Exchange
Name of the Stock exchange
Price Quoted on the Stock
exchange
Where the
shares/CMCPS/debentures
are Unlisted
Price as per Valuation
guidelines*
Price as per Chartered
Accountants
*/** Valuation report (CA
Certificate to be attached)
Declaration by the transferor/transferee
I/We hereby declare that :
i. The particulars given above are true and correct to the best of my/our knowledge and
belief.
ii. I/We, was/were holding the shares compulsorily and mandatorily convertible
preference shares/debentures as per FDI Policy under FERA/FEMA Regulations on
repatriation/non-repatriation basis.
iii. I/We, am/are eligible to acquire the shares compulsorily and mandatorily convertible
preference shares/debentures of the company in terms of the FDI Policy. It is not a transfer
relating to shares compulsorily and mandatorily convertible preference shares/debentures
of a company engaged in financial services sector or a sector where general permission is
not available.
iv. The Sectoral limit under the FDI Policy and the pricing guidelines have been adhered
to.
Signature of the Declarant or his duly authorised agent

Date:
Note:
In respect of the transfer of shares/compulsorily and mandatorily convertible preference
shares/compulsorily and mandatorily convertible debentures from resident to non-resident
the declaration has to be signed by the non-resident buyer, and in respect of the transfer of
shares/compulsorily and mandatorily convertible preference shares/compulsorily and
mandatorily convertible debentures from non-resident to resident the declaration has to be
signed by the non-resident seller.
Certificate by the AD Branch
It is certified that the application is complete in all respects.
The receipt/payment for the transaction are in accordance with FEMA
Regulations/Reserve Bank guidelines.
Signature
Name and Designation of the Officer
Date: Name of the AD Branch
AD Branch Code
420 | P a g e
AD Branch Code
ANNEX 9-II
Know Your Customer (KYC) Form in respect of the

non-resident investor
Registered Name of the

Remitter/Investor
(Name, if the investor is an
Individual)
Registration Number (Unique Identification Number* in case remitter is an Individual)
Registered Address (Permanent Address if remitter Individual)
Name of the Remitters Bank
Remitters Bank Account No.
Period of banking relationship with the remitter
*Passport No., Social Security No. or any Unique No. certifying the bona fides of the remitter as prevalent
in the remitters country.
We confirm that all the information furnished above is true and accurate as provided by the
overseas remitting bank of the non-resident investor.
(Signature of the Authorised Official of the AD bank receiving the remittance)
Date:
Place:
Stamp
ANNEX 10
Form DR
[Refer to paragraph 4(2) of Schedule 1]
Return to be filed by an Indian Company who has arranged issue of GDR/ADR
Instructions : The Form should be completed and submitted to the Reserve Bank of India, Foreign
Investment Division, Central Office, Mumbai.
1. Name of the Company
2. Address of Registered Office
3. Address for Correspondence
421 | P a g e
4. Existing Business (please give the NIC Code of the activity in which the company is predominantly
engaged)
5. Details of the purpose for which GDRs/ADRs have been raised. If funds are deployed for overseas
investment, details thereof
6. Name and address of the Depository abroad
7. Name and address of the Lead Manager/Investment/Merchant Banker
8. Name and address of the Sub-Managers to the issue
9. Name and address of the Indian Custodians
10. Details of FIPB approval (please quote the relevant NIC Code if the GDRs/ADRs are being issued
under the Automatic Route)
11. Whether any overall sectoral cap for foreign investment is applicable. If yes, please give details
12. Details of the Equity
Capital
Before Issue
After Issue
(a) Authorised Capital

(b) Issued and Paid-up Capital
(i) Held by persons Resident in India
(ii) Held by foreign investors other than FIIs/NRIs/PIOs/OCBs (a list of foreign investors holding more
than 10 per cent of the paid-up capital and number of shares held by each of them should be furnished)
(iii) Held by NRIs/PIOs/OCBs
(iv) Held by FIIs
Total Equity held by non-residents
(c) Percentage of equity held by non-residents to total paid-up capital
13. Whether issue was on private placement basis. If yes, please give details of the investors and
GDRs/ADRs issued to each of them
14. Number of GDRs/ADRs issued
15. Ratio of GDRs/ADRs to underlying shares
16. Issue Related Expenses
(a) Fee paid/payable to Merchant Bankers/Lead Manager
(i) Amount (in US$)
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(ii) Amount as percentage to the total issue

(b) Other expenses
17. Whether funds are kept abroad. If yes, name and address of the bank
18. Details of the listing arrangement
Name of Stock Exchange
Date of commencement of trading
19. The date on which GDRs/ADRs issue was launched
20. Amount raised (in US $)
21. Amount repatriated (in US $)
Certified that all the conditions laid down by Government of India and Reserve Bank of India have been
complied with.
Sd/Chartered Accountant
Sd/Authorised Signatory of
the Company
ANNEX 11
[PART I, SECTION I, PARA 29]
Form DR Quarterly
[Refer to paragraph 4(3) of Schedule 1]
Quarterly Return
(To be submitted to the Reserve Bank of India, Foreign Investment Division, Central Office, Mumbai)
1. Name of the Company
2. Address
3. GDR/ADR issue launched on
4. Total No. of GDRs/ADRs issued
5. Total amount raised
423 | P a g e
6. Total interest earned till end of quarter

7. Issue expenses and commission etc.
8. Amount repatriated
9. Balance kept abroad Details
(i) Banks Deposits
(ii) Treasury Bills
(iii) Others (please specify)
10. No. of GDRs/ADRs still outstanding
11. Companys share price at the end of the quarter
12. GDRs/ADRs price quoted on overseas stock exchange as at the end of the quarter
Certified that the funds raised through GDRs/ADRs have not been invested in stock market or real estate.
Sd/Chartered Accountant
Sd/Authorised Signatory of
the Company
ANNEX 12
APPENDIX
List of Important Circulars/Notifications which have been consolidated in the Master Circular on
Foreign Investments/Acquisition of Immovable property in India/Establishment of Branch, Liaison
and Project Offices in India and investments in proprietary/partnership firms
Notifications
Sl.No.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
424 | P a g e
Notification
No. FEMA 32/2000-RB
No. FEMA 35/2001-RB
No. FEMA 41/2001-RB
No. FEMA 45/2001-RB
No. FEMA 46/2001-RB
No. FEMA 50/2002-RB
No. FEMA 55/2002-RB
No. FEMA 76/2002-RB
No. FEMA 85/2003-RB
No. FEMA 94/2003-RB
No. FEMA 100/2003-RB
Date
December 26, 2000
February 16, 2001
March 2, 2001
September 20, 2001
November 29, 2001
February 20, 2002
March 7, 2002
November 12, 2002
January 17, 2003
June 18, 2003
October 3, 2003
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
31

No.FEMA 118/2004-RB
No.FEMA 122/2004-RB
No.FEMA 125/2004-RB
No.FEMA 130/2005-RB
No.FEMA 131/2005-RB
No.FEMA 138/2005-RB
No. FEMA 137/2005- RB
No.FEMA 138/2005-RB
October 3, 2003
October 27, 2003
January 1, 2004
March 6, 2004
June 29, 2004
August 30, 2004
November 27, 2004
March 17, 2005
March 17, 2005
July 22, 2005
July 19, 2005
July 22, 2005
July 22, 2005
June 9, 2006
May 31, 2007
October 23, 2007
November 13, 2007
August 22, 2008
November 10, 2009
April 7, 2010
Circulars
Sl.
No.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
425 | P a g e
Circular No.
Date
A.P.DIR(Series) Circular No.14

September 26, 2000

January 6, 2001
February 22, 2001
April 28, 2001
November 29, 2001
February 13, 2002
March 11, 2002
November 12, 2002
November 23, 2002
January 13, 2003
January 13, 2003
February 3, 2003
March 27, 2003
May 5, 2003
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
31.
32
33.
34.
35.
36.
37.
38.
39.
40.
41.
42.
43.
44.
45.
46.
47.
48.
49.
50.
51.
52.
53.
54.
55.
56.
57.
58.
59.
60.
61.
62.
63.
426 | P a g e

AP DIR (Series) Circular No.53
A.P. DIR(Series) Circular No. 04
A.P. DIR (Series) Circular No. 08
A. P. DIR (Series) Circular No. 10
A.P. DIR (Series) Circular No.16
August 20, 2003

September 1, 2003
September 16, 2003
October 17, 2003
November 14, 2003
December 3, 2003
December 3, 2003
December 8, 2003
December 8, 2003
December 17, 2003
December 20, 2003
February 3, 2004
February 6, 2004
April 24, 2004
September 13, 2004
October 1, 2004
October 1, 2004
October 4, 2004
July 29, 2005
August 11, 2005
August 17, 2005
August 25, 2005
August 30, 2005
September 05, 2005
November 11, 2005
January 25, 2006
July 28, 2006
November 16, 2006
December 22, 2006
February 8, 2007
April 20, 2007
May 24, 2007
May 31, 2007
June 8, 2007
June 8, 2007
July 19, 2007
December 14, 2007
December 19, 2007
December 31, 2007
April 28, 2008
April 28, 2008
May 30, 2008
October 17, 2008
April 22, 2009
July 22, 2009
April 12, 2010
May 4, 2010
September 14, 2010
March 15, 2011
64.
65.
66.
67.
68.

April 29, 2011

April 29, 2011
May 2, 2011
May 2, 2011
June 30, 2011
1. Shares mentioned in this Master Circular means equity shares, preference shares means fully
and mandatorily convertible preference shares and convertible debentures means fully and mandatorily
convertible debentures [cf. A. P. (DIR Series) Circular Nos. 73 & 74 dated June 8, 2007].
2. Person resident in India means[As per FEMA Sec 2(v)]
(i) a person residing in India for more than one hundred and eighty-two days during the course of the
preceding financial year but does not include
(A) a person who has gone out of India or who stays outside India, in either case
(a) for or on taking up employment outside India, or
(b) for carrying on outside India a business or vocation outside India, or
(c) for any other purpose, in such circumstances as would indicate his intention to stay outside India for
an uncertain period;
(B) a person who has come to or stays in India, in either case, otherwise than
(a) for or on taking up employment in India, or
(b) for carrying on in India a business or vocation in India, or
(c) for any other purpose, in such circumstances as would indicate his intention to stay in India for an
uncertain period;
(ii) any person or body corporate registered or incorporated in India,
(iii) an office, branch or agency in India owned or controlled by a person resident outside India,
(iv) an office, branch or agency outside India owned or controlled by a person resident in India;
person resident outside India means a person who is not resident in India; [As per FEMA Sec
2(w)].
3. As per Notification No. FEMA 205/2010- RB dated April 7,2010.
4. A.P.(DIR Series) Circular No. 49 dated May 4, 2010.
427 | P a g e
5. Issued vide AP DIR Series Circular No 58 dated May 2, 2011, wherein Escrow account can also be
used for received for amount of consideration and also for keeping securities to facilitate FDI transactions
subject to the terms and conditions as given in the Circular. The account has to be maintained with the
Authorized Dealer Category I bank or an SEBI authorised Depository Participant. The guidelines in the
circular are applicable for issue of fresh shares as well as for transfer of existing shares.
6. As per Notification no. FEMA 1/2000-RB dated May 3, 2000.
7. As per Notification no. FEMA 20/2000-RB dated May 3, 2000.
8. Addressed to the Chief General Manager-in-Charge, Reserve Bank of India, Foreign Exchange
Department, Foreign Investment Division, Central Office, 11th floor, Fort, Mumbai 400 001 along with the
documents prescribed in Annex-4.
9. Applications to be addressed to the Chief General Manager-in-Charge, Reserve Bank of India,
Foreign Exchange Department, Foreign Investment Division, Central Office, Mumbai.
10. Regulation issued under Notification No. FEMA 120.
11. As per DBOD Circular No. DBOD.No.PSBD.7269/16.13.100/2006-07 dated February 5, 2007 bank
raising fund through ADR/GDR mechanism, should give an undertaking to the Reserve Bank that they
would not take cognizance to voting by the depository, should the depository vote in contravention of its
agreement with the bank.
* Real estate business does not include construction of housing/commercial premises, educational
institutions, recreational facilities, city and regional level infrastructure, townships.
12. As per Notification no FMD.MSRG.No.39/02.04.003/2009-10 dated August 28,2008 FIIs registered
with SEBI may purchase/sell Interest Rate Futures subject to the condition that total gross long position
does not exceed their individual permissible limit for investment in Government securities and the total
gross short position, for the purpose of hedging only, does not exceed their long position in the
Government securities and in the Interest Rate Futures at any point of time.
Department, Foreign Investment Division, Central Office, Mumbai.
14. AP Dir Series Circular No. 55 dated April 29, 2011
15. Addressed to the Chief General Manager-in-Charge, Foreign Exchange Department, Reserve Bank
of India, Foreign Investment Division, Central Office, Central Office Building, Mumbai 400 001.
16. In terms of AP Dir Series Circular No. 45 dated March 15,2011 submission of Part B of form FCGPR has been discontinued. Indian companies are now required to submit an Annual return for Foreign
Assets and Liabilities.
17. Addressed to the Chief General Manager- in-Charge, Foreign Exchange Department, Reserve Bank
of India, Foreign Investment Division, Central Office, Central Office Building, Mumbai 400 001.
18. Non-Resident Indian (NRI) means a person resident outside India who is a citizen of India or is a
person of Indian origin;
19. Person of Indian Origin means a citizen of any country other than Bangladesh or Pakistan or Sri
Lanka, if
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(a) he at any time held Indian passport; or

(b) he or either of his parents or any of his grand-parents was a citizen of India by virtue of the
Constitution of India or the Citizenship Act, 1955 (57 of 1955); or
(c) the person is a spouse of an Indian citizen or a person referred to in sub-clause (a) or (b);
Department, Foreign Investment Division, Central Office, Mumbai
Department, Foreign Investment Division, Central Office, Mumbai
22. AP (DIR Series) Circular No. 08 dated August 25, 2005
* If there is more than one foreign investor/collaborator, separate Annex may be included for items 3
and 4 of the Form.
23. SWF means a Government investment vehicle which is funded by foreign exchange assets, and
which manages those assets separately from the official reserves of the monetary authorities.
24. If the company doesnt have a full time Company Secretary, a certificate from a practicing Company
Secretary may be submitted.
# SWF means a Government investment vehicle which is funded by foreign exchange assets, and
which manages those assets separately from the official reserves of the monetary authorities.
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CHAPTER 40
Forex Facilities for Residents (Individuals)
(updated up to January 20, 2012)
Introduction :
1. The legal framework for administration of foreign exchange transactions in India is provided by the
Foreign Exchange Management Act, 1999. Under the Foreign Exchange Management Act, 1999 (FEMA),
which came into force with effect from June 1, 2000, all transactions involving foreign exchange have
been classified either as capital or current account transactions. All transactions undertaken by a resident
that do not alter his / her assets or liabilities, including contingent liabilities, outside India are current
1
account transactions. In terms of Section 5 of the FEMA, persons resident in India are free to buy or sell
foreign exchange for any current account transaction except for those transactions for which drawal of
foreign exchange has been prohibited by Central Government, such as remittance out of lottery winnings,
remittance of income from racing/riding, etc., or any other hobby, remittance for purchase of lottery
tickets, banned / proscribed magazines, football pools, sweepstakes, etc., payment of commission on
exports made towards equity investment in Joint Ventures/ Wholly Owned Subsidiaries abroad of Indian
companies, remittance of dividend by any company to which the requirement of dividend balancing is
applicable, payment of commission on exports under Rupee State Credit Route, except commission up to
10% of invoice value of exports of tea and tobacco and payment related to call back services of
telephones. Foreign Exchange Management (Current Account Transactions) Rules, 2000 - Notification
[GSR No.381(E)] dated May 3, 2000, as amended from time to time, is available in the Official Gazette as
well as, as an Annex to our Master Circular on Miscellaneous Remittances from IndiaFacilities for
Residents available
I. Guidelines on Travel Related Matters
Q.1. Who are authorized by the Reserve Bank to sell foreign exchange for travel purposes?
Ans. Foreign exchange can be purchased from any authorised person, such as Authorised Dealer (AD)
Category-I bank and AD Category II. Full-Fledged Money Changers (FFMCs) are also permitted to
release exchange for business and private visits.
Q.2. Who is an Authorized Dealer?
Ans. An Authorised Dealer is any person specifically authorized by the Reserve Bank under Section
10(1) of FEMA, 1999, to deal in foreign exchange or foreign securities (the list of ADs is available on
www.rbi.org.in) and normally includes banks.
Q.3. How much foreign exchange can one buy when traveling abroad on private visits to a country
outside India?
Ans. For private visits abroad, other than to Nepal and Bhutan, viz., for tourism purposes, etc., any
resident can obtain foreign exchange up to an aggregate amount of USD 10,000, from an Authorised
Dealer, in any one financial year, on self-declaration basis, irrespective of the number of visits undertaken
during the year. This limit of USD 10,000 or its equivalent per financial year for private visits can also be
availed of by a person who is availing of foreign exchange for travel abroad for any purposes, such as, for
employment or immigration or studies.
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exceeding two coins each.

Explanation : 'Commemorative Coin' includes coin issued by Government of India Mint to commemorate
any specific occasion or event and expressed in Indian currency.
Q. 20. How much Indian currency can be brought in while coming into India?
Ans. A resident of India, who has gone out of India on a temporary visit may bring into India at the time
of his return from any place outside India (other than Nepal and Bhutan), currency notes of Government
of India and Reserve Bank of India notes up to an amount not exceeding Rs.7,500.
A person can take or send out of India to Nepal or Bhutan, currency notes of Government of India and
Reserve Bank notes, in denominations not exceeding Rs.100.
Q. 21. How much foreign exchange can be brought in while visiting India?
Ans. A person coming into India from abroad can bring with him foreign exchange without any limit.
However, if the aggregate value of the foreign exchange in the form of currency notes, bank notes or
travellers cheques brought in exceeds USD 10,000 or its equivalent and/or the value of foreign currency
alone exceeds USD 5,000 or its equivalent, it should be declared to the Customs Authorities at the Airport
in the Currency Declaration Form (CDF), on arrival in India.
Q. 22. Is it required to follow complete export procedure when a gift parcel is sent outside India?
Ans. A person resident in India is free to send (export) any gift article of value not exceeding Rs.5,00,000
provided export of that item is not prohibited under the extant Foreign Trade Policy and the exporter
submits a declaration that goods of gift are not more than Rs.5,00,000 in value.
Export of goods or services up to Rs.5,00,000 may be made without furnishing the declaration in Form
GR/ SDF/ PP/ SOFTEX, as the case may be.
Q.23. How much jewellery can be carried while going abroad?
Ans. Taking personal jewellery out of India is as per the Baggage Rules, governed and administered by
Customs Department, Government of India. While no approval of the Reserve Bank is required in this
case, approvals, if any, required from Customs Authorities may be obtained.
Q.24. Can a resident extend local hospitality to a non-resident?
Ans. A person resident in India is free to make any payment in Indian Rupees towards meeting
expenses, on account of boarding, lodging and services related thereto or travel to and from and within
India, of a person resident outside India, who is on a visit to India.
Q. 25. Can residents purchase air tickets in India for their travel not touching India?
Ans. Residents may book their tickets in India for their visit to any third country. For instance, residents
can book their tickets for travel from London to New York, through domestic/foreign airlines in India itself.
Q. 26. Can a resident open a foreign currency denominated account in India?
Ans. Persons resident in India are permitted to maintain foreign currency accounts in India under the
following three Schemes:
a. Exchange Earners Foreign Currency Accounts:All categories of resident foreign exchange earners can credit up to 100 per cent of their foreign
exchange earnings, as specified in the paragraph 1 (A) of the Schedule to Notification No. FEMA
10/2000-RB dated 3rd May, 2000 and as amended from time to time, to their EEFC Account with an
Authorised Dealer in India. Funds held in EEFC account can be utilised for all permissible current account
transactions
431 | P a gand
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Rules/Regulations/ Notifications/ Directives issued by the Government/RBI from time to time. The account
is maintained in the form of a non-interest bearing current account.
b. Resident Foreign Currency Accounts : -
Ans. The individual will have to designate a branch of an AD through which all the remittances under the
Scheme will be made. The applicants should have maintained the bank account with the bank for a
minimum period of one year prior to the remittance. If the applicant seeking to make the remittance is a
new customer of the bank, Authorised Dealers should carry out due diligence on the opening, operation
and maintenance of the account. Further, the AD should obtain bank statement for the previous year from
the applicant to satisfy themselves regarding the source of funds. If such a bank statement is not
available, copies of the latest Income Tax Assessment Order or Return filed by the applicant may be
obtained. He has to furnish an application-cum-declaration in the specified format regarding the purpose
of the remittance and declare that the funds belong to him and will not be used for purposes prohibited or
regulated under the Scheme.
Q. 46. Can an individual, who has repatriated the amount remitted during the financial year, avail
of the facility once again?
Ans. Once a remittance is made for an amount up to USD 200,000 during the financial year, he would
not be eligible to make any further remittances under this scheme, even if the proceeds of the
investments have been brought back into the country.
Q. 47. Can remittances be made only in US Dollars?
Ans. The remittances can be made in any freely convertible foreign currency equivalent to USD 200,000
in a financial year.
Q. 48. In the past resident individuals could invest in overseas companies listed on a recognised
stock exchange abroad and which has the shareholding of at least 10 per cent in an Indian
company listed on a recognised stock exchange in India. Does this condition still exist?
Ans. Investment by resident individual in overseas companies is subsumed under the Scheme of USD
200,000. The requirement of 10 per cent reciprocal shareholding in the listed Indian companies by such
overseas companies has since been dispensed with.
III. Guidelines for Financial Intermediaries offering special schemes, protection under the Scheme.
Q. 49. Are intermediaries expected to seek specific approval for making overseas investments
available to clients?
Ans. Banks including those not having operational presence in India are required to obtain prior
approval from Reserve Bank for soliciting deposits for their foreign/overseas branches or for acting as
agents for overseas mutual funds or any other foreign financial services company.
Q.50. Are there any restrictions on the kind/quality of debt or equity instruments an individual can
invest in?
Ans. No ratings or guidelines have been prescribed under the Liberalised Remittance Scheme of USD
200,000 on the quality of the investment an individual can make. However, the individual investor is
expected to exercise due diligence while taking a decision regarding the investments which he or she
proposes to make.
Q. 51. Whether credit facilities in Indian Rupees or foreign currency would be permissible against
security of such deposits?
Ans. No. The Scheme does not envisage extension of credit facility against the security of the deposits.
Further, the banks should not extend any kind of credit facilities to resident individuals to facilitate
remittances under the Scheme.
Q. 52. Can bankers open foreign currency accounts in India for residents under the Scheme?
Ans. No. Banks in India cannot open foreign currency accounts in India for residents under the Scheme.
Q. 53. Can an Offshore Banking Unit (OBU) in India be treated on par with a branch of the bank
outside
accounts
432 India
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Scheme?
Ans. No. For the purpose of the Scheme, an OBU in India is not treated as an overseas branch of a
bank in India.
Further, a resident individual can give rupee gifts to his visiting NRI/PIO close relatives [means relative as
defined in Section 6 of the Companies Act, 1956] by way of crossed cheque/electronic transfer within the
overall limit of USD 200,000 per financial year for the resident individual and the gifted amount should be
credited to the beneficiarys NRO account. An individual resident can lend money by way of crossed
cheque /electronic transfer to a Non resident Indian (NRI)/ Person of Indian Origin (PIO) close relative
[means relative as defined in Section 6 of the Companies Act, 1956] within the overall limit of USD
200,000 per financial year under the Liberalised Remittance Scheme, to meet the borrowers personal or
business requirements in India, subject to conditions. The loan should be interest free and have a
maturity of minimum one year and cannot be remitted outside India.
Q. 5. Are resident individuals under this Scheme required to repatriate the accrued
interest/dividend on deposits/investments abroad, over and above the principal amount?
Ans. The resident individual investors can retain and re-invest the income earned on investments made
under the Scheme. The residents are not required to repatriate the funds or income generated out of
investments made under the Scheme.
Q.6. Are remittances under the Scheme on gross basis or net basis (net of repatriation from
abroad)?
Ans. Remittance under this scheme is on a gross basis.
Q. 7. Can remittances under the facility be consolidated in respect of family members?
Ans. Remittances under the facility can be consolidated in respect of family members subject to the
individual family members complying with the terms and conditions of the Scheme.
Q. 8. Can one use the Scheme for purchase of objects of art (paintings, etc.) either directly or
through auction house?
Ans. Remittances under the Scheme can be used for purchasing objects of art subject to compliance with
the extant Foreign Trade Policy of the Government of India and other applicable laws.
Q.9. Is the AD required to check permissibility of remittances based on nature of transaction or
allow the same based on remitters declaration?
Ans. AD will be guided by the nature of transaction as declared by the remitter and will certify that the
remittance is in conformity with the instructions issued by the Reserve Bank, in this regard from time to
time.
Q.10. Can remittance be made under this Scheme for acquisition of ESOPs?
Ans. The Scheme can also be used for remittance of funds for acquisition of ESOPs.
Q.11. Is this scheme in addition to acquisition of ESOPs linked to ADR/GDR (i.e USD 50,000/- for a
block of 5 calendar years)?
Ans. The remittance under the Scheme is in addition to acquisition of ESOPs linked to ADR/GDR.
Q.12. Is this Scheme is in addition to acquisition of qualification shares (i.e. USD 20,000 or 1% of
paid up capital of overseas company, whichever is lower)?
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Ans. The remittance under the Scheme is in addition to acquisition of qualification shares.
Q.13. Can a resident individual invest in units of Mutual Funds, Venture Funds, unrated debt
securities, promissory notes, etc., under this scheme?
Ans. A resident individual can invest in units of Mutual Funds, Venture Funds, unrated debt securities,
promissory notes, etc. under this Scheme. Further, the resident can invest in such securities through the
bank account opened abroad for the purpose under the Scheme.
Q.14. Can an individual, who has availed of a loan abroad while as a non-resident Indian can repay
the same on return to India, under this Scheme as a resident?
Ans. This is permissible.
Q. 15. Is it mandatory for resident individuals to have PAN number for sending outward
remittances under the Scheme?
Ans. It is mandatory to have PAN number to make remittances under the Scheme.
Q. 16. In case a resident individual requests for an outward remittance by way of issuance of a
demand draft (either in his own name or in the name of the beneficiary with whom he intends to
putting through the permissible transactions) at the time of his private visit abroad, whether the
remitter can effect such an outward remittance against self-declaration?
Ans. Such outward remittance in the form of a DD can be effected against the declaration by the resident
individual in the format prescribed under the Scheme.
Q. 17. Are there any restrictions on the frequency of the remittance?
Ans. There is no restriction on the frequency. However, the total amount of foreign exchange purchased
from or remitted through, all sources in India during a financial year should be within the cumulative limit
of USD 200,000.
Q.18. What are the requirements to be complied with by the remitter?
Ans. The individual will have to designate a branch of an AD through which all the remittances under the
Scheme will be made. The applicants should have maintained the bank account with the bank for a
minimum period of one year prior to the remittance. If the applicant seeking to make the remittance is a
new customer of the bank, Authorised Dealers should carry out due diligence on the opening, operation
and maintenance of the account. Further, the AD should obtain bank statement for the previous year from
the applicant to satisfy themselves regarding the source of funds. If such a bank statement is not
available, copies of the latest Income Tax Assessment Order or Return filed by the applicant may be
obtained. He has to furnish an application-cum-declaration in the specified format (Annex) regarding the
purpose of the remittance and declare that the funds belong to him and will not be used for the purposes
prohibited or regulated under the Scheme.
Q. 19. Can an individual, who has repatriated the amount remitted during the financial year, avail
of the facility once again?
Ans. Once a remittance is made for an amount up to USD 200,000 during the financial year, he would
not be eligible to make any further remittances under this scheme, even if the proceeds of the
investments have been brought back into the country.
434 | P a g e
Q.20. Can remittances be made only in US Dollars?

Ans. The remittances can be made in any freely convertible foreign currency equivalent to USD 200,000
in a financial year.
Q. 21. In the past resident individuals could invest in overseas companies listed on a recognised
stock exchange abroad and which has the shareholding of at least 10 per cent in an Indian
company listed on a recognised stock exchange in India. Does this condition still exist?
Ans. Investment by resident individual in overseas companies is subsumed under the Scheme of USD
200,000. The requirement of 10 per cent reciprocal shareholding in the listed Indian companies by such
overseas companies has since been dispensed with.
PART B :
Guidelines for Financial Intermediaries
Q. 22. Are intermediaries expected to seek specific approval for making overseas investments
available to clients?
Ans. Banks including those not having operational presence in India are required to obtain prior approval
from the Department of Banking Operations and Development, Central Office, Reserve Bank of India,
Central Office Building, Shahid Bhagat Singh Marg, Mumbai, for soliciting deposits for their
foreign/overseas branches or for acting as agents for overseas mutual funds or any other foreign financial
services company.
Q.23. Are there any restrictions on the kind/quality of debt or equity instruments an individual can
invest in?
Ans. No ratings or guidelines have been prescribed under the Liberalised Remittance Scheme. However,
the individual investor is expected to exercise due diligence while taking a decision regarding the
investments under the Scheme.
Q. 24. Whether credit facilities in Indian Rupees or foreign currency would be permissible against
security of such deposits?
Ans. No. The Scheme does not envisage extension of credit facility against the security of the deposits.
Further, the banks should not extend any kind of credit facilities to resident individuals to facilitate outward
remittances under the Scheme.
Q. 25. Can bankers open foreign currency accounts in India for residents under the Scheme?
Ans. No. Banks in India cannot open foreign currency accounts in India for residents under the Scheme.
Q. 26. Can an Offshore Banking Unit (OBU) in India be treated on par with a branch of the bank
outside India for the purpose of opening of foreign currency accounts by residents under the
Scheme?
Ans. No. For the purpose of the Scheme, an OBU in India is not treated as an overseas branch of a bank
in India.
General Information
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For further details/guidance, please approach any bank authorised to deal in foreign exchange or contact
Regional Offices of the Foreign Exchange Department of the Reserve Bank.
Clarification Liberalised Remittance Scheme for Resident Individuals
RBI/2011-12/430
March 06, 2012
To,
All Category I Authorised Dealer Banks
Madam / Sir
Clarification Liberalised Remittance Scheme for Resident Individuals
Attention of Authorised Dealer Category I (AD Category I) banks is invited to A. P. (DIR Series)
Circular No. 64 dated February 4, 2004, as amended form time to time, A. P. (DIR Series) Circular No. 24
dated December 20, 2006, A.P. (DIR Series) Circular No. 9 dated September 26, 2007, A.P. (DIR Series)
Circular No. 51 dated May 8, 2007 and A.P. (DIR Series) Circular No. 32 dated October 10, 2011 on the
Liberalised Remittance Scheme for Resident Individuals (the Scheme).
2. In this regard, it is clarified that:
i.
ii.
iii.
The facility is available to all resident individuals including minors. In case of remitter being a
minor, the LRS declaration form should be countersigned by the minors natural guardian.
Accordingly, the modified LRS application cum declaration form is enclosed;
Remittances under the facility can be consolidated in respect of family members subject to
individual family members complying with the terms and conditions of the scheme; and
Remittances under the scheme can be used for purchasing objects of art subject to the provisions
of other applicable laws such as the extant Foreign Trade Policy of the Government of India.
3. All other terms and conditions mentioned in the afore-mentioned Circular shall remain unchanged.
4. AD Category I banks may bring the contents of this circular to the notice of their constituents and
5. The directions contained in this Circular have been issued under sections 10 (4) and 11 (1) of the
Foreign Exchange Management Act, 1999 (42 of 1999) and is without prejudice to permissions /
Yours faithfully,
(Meena Hemchandra)
Chief General Manager In-Charge
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Annex
[Annex to A. P. (DIR Series) Circular No. 90 dated March 06, 2012]
Application cum Declaration for purchase of foreign exchange under the
Liberalised Remittance Scheme of USD 200,000 for Resident individuals
(To be completed by the applicant)
I. Details of the applicant
a. Name ..
b. Address
c. Account No..
d. PAN No.
II. Details of the foreign exchange required
1. Amount (Specify currency)
2. Purpose
III. Source of funds: .
IV. Nature of instrument
Draft..
Direct remittance
V. Details of the remittance made under the Scheme in the financial year
(April- March) 20__ 20__
Date :
Amount :.
VI. Details of the Beneficiary
1. Name ..
2. Address
3. Country
4*. Name and address of the bank.
5*. Account No..
(* Required only when the remittance is to be directly credited to the bank account of the beneficiary)
This is to authorize you to debit my account and effect the foreign exchange remittance/ issue a
draft as detailed above (strike out whichever is not applicable).
Declaration
I, . (Name), hereby declare that the total amount of foreign exchange purchased
from or remitted through, all sources in India during the financial year as per item No. V of the Application,
including utilisation of the said limit on account of loan extended or gift made in rupees credited to NRO
account of non-resident close relative(s), is within the limit of USD 200,000/- (US Dollar Two hundred
thousand only), which is the limit prescribed by the Reserve Bank for the purpose and certify that the
source of funds for making the said remittance belongs to me and will not be used for prohibited
purposes.
Signature of the applicant
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(Name)
Signature of the natural guardian of the applicant @
(Name)
@ Where the applicant is minor, the application should be countersigned by minors natural guardian
Certificate by the Authorised Dealer
This is to certify that the remittance is not being made by/ to ineligible entities and that the remittance is in
conformity with the instructions issued by the Reserve Bank from time to time under the Scheme.
Name and designation of the authorised official:
Place:
Signature:
Date:
Stamp and Seal
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CHAPTER 41
Air Travel Tips for NRIs
Travelling Documents
Make sure you have a valid ticket to your destination

Make sure your passport is valid for at least 6 months from the date of travel until the return date
In the case where children are included in their parents' passports, please make sure that they
are included in the traveling visa. And in the case of their travel without being accompanied by
the primary passport holder, please make sure that the country traveling to will allow them in
without the presence of the primary passport holder
Prior to your travel, and in some cases, you must obtain the necessary and required visa to the
countries you are traveling to. Kindly make sure that you acquire the necessary visa and
documents in a suitable time frame, for the acquiring period differs for each country and it may
depend on the citizenship you hold.
Some countries require an entry and exit visa or a transit visa, therefore, you must review all
traveling requirements associated with the country traveling to beforehand. Kindly double check
the validity period (issue date and expiry date) of the visa. You may not use a previously
acquired visa in some cases. Some visa legislations limit the number of entries permissible by a
single visa.
Make sure to carry necessary approved Identity Cards to be produced in case of any
requirement as additional proof.
Before Travelling Procedures
Your early presence at the airport makes finding seats next to your
family members an easier task. In all cases, you must be present for check-in two hours before
departure time for international flights, and one hour and half before departure time for domestic
flights.
In the case where a special service or assistance is required, for example: unaccompanied
minors, special travel needs, seniors, and families; you must coordinate with the Airline Staff at
the airport to complete the necessary procedures to enable us to provide you with these
services.
Ask our staff about the special counters available for special need passengers to complete the
check-in procedures
Make sure your name and address is place securely on and inside your luggage
Make sure you remove all old stickers and tags from your luggage
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For your safety, keep your baggage in your custody

Do not accept any baggage or parcels from any person you do not trust. By doing so, you may
be placing yourself and others in danger
Make sure that all your luggage is securely fasten
During Travelling Procedures
Present the airlines counter staff with your passport, personal travel
documents, and inform them with the number of carryon and check-in luggage
You will be asked the following questions about your luggage;
Did you personally pack your luggage?
Are you fully aware of the content of your luggage?
Did you leave your luggage unattended?
You will be asked if your luggage contains any hazardous material. You will be presented with
the list of non-permissible hazardous material
You may select your seat on the airplane depending on availability
When traveling on First or Business Class, you will be presented with an invitation card to a
special passenger lounges
Luggage is accepted at the check in counters during the day of travel on the condition that a
valid traveling ticket is presented.
When traveling with your family or in a group, you may take advantage of the cumulative
luggage allowance. The total allowance is calculated with the total number of baggage or the
total weight, even if the travelers were traveling in different classes.
If you have extra luggage that exceeds your baggage allowance, you will have to pay the
additional charges.
Please note that your entire luggage must go through the X-Ray safety scanner.
After Travelling Procedures
Please note that you must complete filling in your exit card in order to
present it to the passports authorities
To ensure the comfort and safety of passengers, and to ensure the timely departure of the flights,
special carryon luggage monitoring systems are implemented by some of the airline companies. If
your carryon luggage does not confirm with hand luggage specifications, you will be redirected to
the check in counter.
You must proceed directly to the departure lounge once your check-in procedures are completed to
ensure your timely boarding.
When boarding is announced, you must be present at your assigned boarding gate.
The Airlines staff available at the boarding gates will check that the name printed on your traveling
440 | P a g e
documents matches the name printed on your ticket and boarding pass
Upon Arrival
Head directly to the luggage pickup area, and make sure your
luggage ticket matches the tag on your luggage.
Make sure you have received all your luggage by matching the ticket number and not by
identifying them by shape and color.
Keep your traveling ticket and your luggage ticket numbers until you have acquired all the
baggage.
If you have a connecting flight, you must proceed to the connecting flight counter to finalize your
traveling arrangements.
Please make sure you confirm your return flight reservations.
In case there was a delay in the arrival of your luggage, kindly follow up with the assigned
luggage service staff member who will assist you with the necessary arrangements to insure
your comfort and the speedy arrival of your luggage.
In case your luggage was lost or was mishandled, kindly proceed with the following:
Follow up with the luggage services staff members who are available at your arrival
area immediately and before you leave the arrival area.
Provide the luggage services staff member with the necessary information such as;
your full name, any other names marked on the luggage, permanent and temporary
address, phone number, the correct color and shape of the baggage based on the
luggage identification card available at the luggage services sections, and the luggage
brand name (such as: Samsonite, Delsey, American tourist, VIP etc.).
Make sure you obtain a tracking number, as well as the phone numbers of the luggage
services divisions at the airport, and the necessary documents required for follow.
Airlines luggage service staff members will proceed with the necessary procedures to locate your lost
luggage. That will include a live on ground search and the use of the World Tracer System
Pregnant Women
In normal cases Airline companies will allow a pregnant woman who is less than (32) weeks and did not
have any complications during a prior pregnancy, such as former drain or the birth of twins, to fly by air
after filling up the necessary declarations. The form must be filled in by a competent doctor and is valid
for a period of seven (7) days from the date of issue. After week (32) of her pregnancy, the pregnant
woman should provide a medical certificate filled in by a competent doctor. The form is valid for a period
of seven (7) days from the date of issue. The pregnant women air travel rules varies from airlines to
airlne.
Useful Travel Tips

To ensure a smooth check in, should be at the airport within sufficient time before departure.
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- Please retain your ticket and baggage tags until you have collected all your baggage upon arrival.
- Air carriers are not liable for fragile, perishable and valuable items such as jeweler, laptops and mobile
phones, placed inside checked in baggage.
- It is forbidden to carry any large electronic items, such as televisions, as part of baggage that you will
check in. if you have any such items please ensure to provide them to cargo before you travel.
- If your baggage does not arrive on the same flight, please inform Baggage Services staff immediately
and before leaving the arrival lounge.
- If you find any damage to your baggage or its contents or if any contents are missing, please inform
Baggage Service staff immediately and before leaving the arrival lounge or at the least within 7 days after
your arrival date.
Baggage Information
Domestic Flights Baggage Information
Guest Class passengers are normally entitled to carry one piece of luggage weighing 25kg
maximum
First Class & Business Class passengers are entitled to carry two pieces of luggage, each weighing
25kg maximum
If any piece of luggage weighs more than 25kg the passenger will be requested to redistribute the
contents of the luggage in order for the total weight to fall within the limits. If the number of pieces of
luggage exceeds the weight limit, the passenger will be requested to pay a fine for each piece over the
limit. Similarly, if the number of pieces is over the limit but their total weight is within the limits, there will
be fine applied to each piece. The amount of fine charged varies from airline to airlines
Excess Baggage
In the case where the passenger needs to carry luggage weighing more than
32 kg, and can not be separated into pieces (such as musical instruments / sports tools / medical
equipment ... etc.), the passenger must notify the concerned Airlines in advance to take the necessary
arrangements for the luggage to be transferred.
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The banned carriage of substances among the luggage

For safety reasons Airlines prohibits carrying hazardous materials on its flights such as:
Firearms, ammunition, swords, and knives.

Explosives, incendiary materials, flammable, toxic substances, and compressed gases.
For flights departing from or to the United States of America and the European Union countries, there are
additional security measures prohibiting the carriage of certain materials within the hand luggage in
accordance with the following:
All liquid materials, gels, toothpaste, liquid cosmetics, and perfumes.
Cigarette lighters in both hand baggage and inspected luggage

Useful Tips
- Carry-on baggage must not exceed 9kg in first and business class and 7kg in
economy class cabins. Please also ensure baggage size does not exceed that of
overhead compartment capacity.
- It is forbidden to carry compressed and liquid materials in either checked-in baggage

or carry-on baggage.
- Ensure labels containing your name and phone numbers are properly fixed using
adhesive on the inside and outside of your baggage.
- Do not place valuables and important documents inside baggage that will be checkedin.
- Ensure that your baggage is secured by lock or key lock before you check it in.
- Identify your baggage using tag numbers and not by type and color.
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CHAPTER 42
Baggage Insurance Policy
Normally Baggage Insurance Policy covers all accompanied baggage during

a journey like suitcases, trunks etc., containing the baggage and additions during the journey. This is
where you will be covered for either the loss or theft of your possessions. The level of cover will depend
on what type of travel/baggage insurance policy you take out. This cover will protect against passports,
money, luggage and personal possessions so it is worth having this. It should be included with many
base premiums of travel insurance; however this will generally be for a lesser amount. You could upgrade
this level of cover but this may lead to an premium increase. Baggage/Travel Insurance covers you for
misplaced, thieved, and damaged luggage Refunds you renewal price as much as plan limitations for
your own stuff as well as your luggage, although they might be misplaced, thieved or damaged following
the airline flight. Travel Insurance covers Air travel crash Offers a one time payment gain (as much as the
insurance policy cap).
o
Loss of Checked Baggage Checked Baggage means the baggage handed by the
Insured Person and accepted by an Airline for an International flight for transportation in
the same aircraft as the Insured Person and for which the airline has provided a baggage
receipt. This insurance will pay up to the limit of cover shown in the insurance policy in
the event of the insured Person suffering a total loss of Baggage that has been checked
by an International Airline for an International flight. The insurers reserve the right to
replace or pay the intrinsic value of any lost article.
Delay of the checked Baggage
This insurance will pay up to the limit of cover shown in the insurance policy for the necessary
emergency. Purchase of replacement items in the event that the Insured Person suffers a delay of more
than 12 hours (varies insurance policy to policy) from the scheduled arrival time at the destination for
delivery of Baggage that has been checked by an International Airline for an International outbound flight.
A non-delivery certificate must be obtained immediately from the airline which must be submitted to
'insurance company in the event of a claim hereunder. Proof of purchase must be provided for all items
reimbursed under this section.
The terms of baggage insurance policy, premium, items covered etc. will vary from insurance companies
to insurance company.
Import of Pets as Baggage allowed only to persons transferring their residence to India
th
Circular No. 15 / 2013-Customs, New Delhi, 8 April, 2013
Subject: Import of Pets under Baggage reg.
Attention is invited to Boards Circular No. 94/2002- Customs dated 23.12.2002 on the
above cited subject wherein it was provided that import of pets upto two numbers per passenger
may be allowed at one time subject to the production of the required healthcertificate from the
country of origin andexamination of the same by the concerned Quarantine officer.
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2.
Board has re-examined the present policy of import of two pets by passengers in view of
representations received in this regard. Accordingly, it has been decided to allow import of two
pet animals as baggage only to persons transferring their residence to India after two years of
continuous stay abroad in terms of Baggage Rules 1998 subject to production of the required
healthcertificate from the country of origin and examination of said pets by the concerned
Quarantine Officer at this end. This new dispensation shall come into force with effect from
th
15 April 2013. Import of animals (pets) in general would continue to be governed by DGFT
policy.
3.
Boards Circular No. 94/2002 Customs dated 23.12.2002 stands modified accordingly to
that extent.
4.
These instructions may be brought to the notice of the trade/airlines/carriers
by issuingsuitable Trade / Public Notices. Suitable Standing orders/instructions may be issued
for the guidance of the field officers.
5.
Difficulties faced, if any, may be brought to the notice of the Board immediately.
Yours faithfully,
(S.C.Ganger)
Under Secretary (Customs)
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CHAPTER 43
Different Modes of Money Remittance NRIs
Non Resident Indians (NRIs) are spread all over the world either employed or doing some business to
earn their livelihood.
Most of the money they earned abroad is remitted to their home country India for
various purposes such as monetary help to their family, parents, childrens education, investments in
shares, bank deposits, real estate etc.
In this chapter I will try to explain the various modes of money
exchange and transfer, savings and repatriating and sending money to their loved ones overseas in the
most convenient and cost efficient manner.
The main motivator for individuals from India to migrate
aboard is the opportunity to earn and a part of which send back as remittance to their families.
As per RBI Survey, electronic wires/SWIFT is a dominant mode of remitting money by overseas Indians.
Almost 63 per cent of inward remittance comes from this mode. Approximately 12 per cent comes from
cheques followed by about 9 per cent through direct transfers to bank account and 10 per cent through
drafts. The share of total remittances through debit / credit card is relatively low (about 1 per cent).
Inward remittances into India have been generally segregated on the basis of the profile of NRIs. While
the white collared category would prefer the online mode or bank account transfers, the blue collared
category would prefer cash remittances. Banks in India have introduced series of product innovations and
technology enhancements to facilitate remittances into India. Various developments have been made on
various platforms viz. online, card based remittances, bank transfers to recipients through NEFT /
RTGSA, etc. The cost attached to remittances are costs like transaction fee, foreign currency conversion
charges, demand draft charges , delivery charges and government service tax which customers need to
study carefully before choosing the bank and mode of transfer.
We first examine the options available for remittance of money from countries across the world to India.
NRIs have various options available to them, but it is important for them to identify the one that is the
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most convenient, easy, safe and low-cost.
1) Traditional mode of money transfer cheques, Demand/Bank Drafts.
Traditional/offline way of money transfer consists of sending
It takes time to reach the cheques/DDs in the destination and also
collection of outstation cheques/DDs needs more time and banks normally charges large amounts as
collection charges. And also there is a chances of cheuque/DD lost in transit. The remitter needs to incur
various types of expenses such as draft charges., postage/courier charges, difference in forx rates in
addition to the delay in crediting the destination account as explained above (in most of the cases 15-30
days delay , exchange rates are not upfront and subject to a higher fluctuation rate; money insured
guarantee not available; no tracking facility available; follow-ups with the bank necessary; you may have
to fork out overseas courier charges
2) Agent Transfer: You need to visit an agent location carrying currency notes and verification details
such as passport or approved Identification Cards among others to make a remittance. But, there are
several disadvantages in this medium: no guarantee if money is lost in transit; depends on agent
availability and working hours; quite expensive; you may need to travel long distances to make a
remittance and most of the countries there are restrictions to transfer money above a pre-fixed
unattractive exchange rates; hidden costs; direct credit to bank not possible; no status tracking
mechanism etc.
3) Wire Transfer : A bank wire transfer is an electronic transfer of funds from one bank account to
another. But, the disadvantages are: very high transfer fees; your amount will get transferred in about 1-2
days but the cost can be quite steep; exchange rate at the discretion of the bank (may not be
attractive); physical visit to the bank to make a transfer a must; no transaction tracking facility available;
only select bank accounts offer this facility; additional fees may be charged.
4) Remittance through ATM
But, our technology is so advanced, the business of international payments have become fast, flexible
and even free at times. The new generation private banks have started internet-based remittance
services, to serve the needs of those who send money back to their home country. But the situations
have changed and our old private banks and nationalized banks also upgraded their system and offering
this facility to all their NRI customers. Even Non-banking companies have also been active in this
business.
2. Exchange Rates
Whenever you remit money to India, please ensure that, you are getting the correct exchange rates.
Most of the time the Foreign Exchange remittance companies offer gifts as well as reduction in the
remittance charges to attract poor NRIs. But whatever they are reduction in commission they will adjust
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that in the exchanges rates. You will be a looser all the times. Dont go for these types of money
exchange companies who are offering gifts and other benefits. Instead of this you can use services of
Money Exchanges companies promoted by reputed banks in your place. Always look for best exchange
rates and good services.
The exchange rate, or rate that one currency will be traded for another, is very important to consider
when transferring funds. These rates are continuously changing and can thus affect the amount of money
which is credited in your bank account in India. For example, when sending money to India, one needs to
consider how many INR you can trade for each USD. If the exchange rate of USD/INR is 45.00 then
sending 1000 USD to someone will be like sending INR 45,000.
3. Cost to Recipient for Accessing Sent Funds
Once the money arrives in a foreign country there are some fees that the recipient will have to pay. these
fees will vary depending on the method in which you send your money. Receiving funds from a bank
transfer requires exchanging the money to the local currency. Banks and exchange shops will charge a
commission fee for this action which is based on supply and demand. This means that you will receive
less than the rate that is being quoted in the global foreign exchange market. Alternatively, if you choose
to send money by cheque, the recipient of the funds will have to pay an international deposit fee. This fee
varies from bank to bank, and can range from 25 to 50 USD.
Knowing the cost of sending your money, the current exchange rate, and the cost of receiving money will
give you a more accurate picture of what happens to the funds you send overseas.
Usually service providers quote a delivery of 2 to 3 working days. That works well for most people. Some
online remittance services "guarantee" that the money will be delivered since all the current players are
of high repute, and have the necessary infrastructure and security systems in place, guaranteed delivery
is implicit anyway. The only limitations are regarding the amount of money that can be transferred at a go
and within a certain period, which is of the order of a few thousand dollars. Some banks allow higher
transfers in special cases. Also, only those based in select countries can make Internet remittances to
India. The money to be remitted to India every month varies countries to country.
Therefore, it is important for each remitter to understand how the different methods work and what their
limitations are.
Before you decide on a service, you need to keep the following important points in mind:
Insurance: Your online remittance is insured too. Which means your money is secured against
technology risks, viruses, hacking, and denial of service attack among others from the time it leaves your
hands till it reaches the recipient.
Tracking the status of your transfer is easy: Tracking your money transfer is easy with the online
mode of remittance. You can track your remittance end-to-end through the online tracking mechanism.
Competitive transaction fees: The exchange rates are attractive; transparency is the key, and no
hidden charges
Good Customer Services 24x7 customer support, 365 days of the year
Turn Around Time : Different money transfer companies provide customized services to send money
based on the urgency. You can select from instant money transfer to regular money transfer services.
Quick and easy: A few clicks is all it takes and your money gets transferred anywhere easily. You are
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saved the hassles of searching for an agent location.

Trustworthy and Reliable Agents
Value added services Instant credit, SMS Alert, etc
Tips for Online Money Transfer
Never share your password with anyone, If you think someone may have your password, change it
immediately, Make sure your password is unique and hard to guess, Use a password that includes both
letters and numbers ,Never use your email address as your password, Change your password regularly,
Dont use the same password that you use for any other online service
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CHAPTER 44
P Notes (Participatory Notes) and NRIs
P-notes are derivative instruments issued in foreign jurisdictions by an FII or its associates, against
underlying Indian securities. Under this mechanism, FIIs buy shares in India and issue P-notes to
overseas investors with the shares as the underlying security. SEBI's principal worry around FII
investments has always been over the proportion of P-notes in their assets under management.
Participatory notes or P Notes are derivative instruments used by foreign investors to invest in the Indian
stock markets. How does this work? Well, Foreign Institutional Investors (FIIs) who are registered with the
Securities and Exchange Board of India (SEBI) issue P Notes to overseas investors who wish to invest
their funds in the Indian stock market without disclosing their identity to SEBI. FIIs inform overseas
investors about the details of the securities, expected rate of return and more. On this basis, if the foreign
investors decide to invest in the particular equities, they are required to deposit funds in the foreign
branches of the FII. The FII, on its part, purchases the selected scrips in the Indian market and takes care
of all the legal formalities.
P Notes are popular with NRIs for three reasons:
Anonymity Investors do not have to disclose their identity to SEBI.
Simplicity All the legal paperwork is handled by FIIs.
Tax benefit Unlike Indians, overseas investors do not have to pay the 33% tax.
After a lull of three years, the volume of participatory notes (P-Notes) in the stock market is again on the
rise. The proportion of P-notes in assets under management by foreign institutional investors (FII) rose to
19 per cent in November 2011. They had averaged around the 15 per cent mark between October 2008
and September 2010. For market regulator SEBI, that could be a cause for worry. At a time when the
markets are struggling, the possibility of foreign investors taking the P-note route to make a quick buck
cannot be ruled out, says the head of a Mumbai-based domestic broking firm.
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CHAPTER 45
'Passive Foreign Investment Company - PFIC'
A foreign-based corporation that has one of the following attributes:

1. At least 75% of the corporation's income is considered "passive", which is based on investments rather
than standard operating business.
2. At least 50% of the company's assets are investments that produce interest, dividends and/or capital
gains
PFICs include foreign-based mutual funds, partnerships and other pooled investment vehicles that have
at least one U.S. shareholder. Most investors in PFICs must pay income tax on all distributions and
appreciated share values, regardless of whether capital gains tax rates would normally apply.
'Passive Foreign Investment Company - PFIC'
PFICs are subject to complicated and strict tax guidelines by the Internal Revenue Service (IRS), which
covers treatment of these investments in Sections 1291 through 1297 of the income tax code. Both the
PFIC and the shareholder must keep accurate records of all transactions, including share basis,
dividends and any undistributed income earned by the company.
The strict guidelines are set up to discourage ownership of PFICs by U.S. investors. PFIC shares won't
even receive a step-up in cost basis as is the case with nearly all other marketable, appreciable assets.
An option that investors have is to seek qualification of a PFIC investment as a qualified electing fund
(QEF). This may reduce the tax rate on certain transactions but also forces the investor to pay taxes even
on income earned by the foreign company that is not distributed to shareholders
PASSIVE FOREIGN INVESTMENT COMPANY SPECIAL RULES FOR TAXES - Form 8621
For purposes of Income tax in the US, , U.S. persons owning shares of a passive foreign investment
company (PFIC) may choose between (i) current taxation on the income of the PFIC or (ii) deferral of
such income subject to a deemed tax and interest regime. The provision was enacted as part of the Tax
Reform Act of 1986 as a way of placing owners of offshore investment funds on a similar footing to
owners of U.S. investment funds (regulated investment companies) The original provisions applied for all
foreign corporations meeting either an income or an asset test. However, 1997 amendments limited the
application in the case of U.S. Shareholders of controlled foreign corporations.
PFIC defined
Any foreign (i.e., non-U.S.) corporation meeting either the income test or the asset test is a PFIC with
respect to each shareholder when the test is met. PFIC status applies separately for each U.S. person
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owning shares, and also separately with respect to shares acquired at different times. PFIC status does
not, itself, have any impact on the foreign corporation or foreign shareholders.
The income test is met if 75% or more of the foreign corporation's gross income is passive income,
defined as foreign personal holding company income with modifications.
The asset test is met if 50% or more of the foreign corporation's average assets (as defined in the IR
Code) produce, or could produce passive income, or are assets (such as cash and bare land) that
produce no income. The test is applied based on the foreign corporation's adjusted basis, for U.S. tax
purposes, of the assets, or at the election of the particular shareholder, fair market values of the assets.
Look-thru of 25% subsidiaries: Interests in 25% or more owned foreign corporations are treated similarly
to
partnership
interests
(i.e.,
looked
through)
for
the
income
test
and
the
asset
test.
Effect of PFIC Status

If a U.S. person receives income from a PFIC or recognizes gain from disposition of shares of a PFIC,
such person is subject to a tax and interest regime. A shareholder may elect out of this regime (see QEF
below). The regime applies only to any distribution or gain in excess of 125% of the average distributions
for the prior three years. This regime is as follows: First, such income or gain (in excess of the 125%) is
allocated pro rata to each day of the person's holding period for the particular shares. Next, the amounts
allocated to prior years after 1986 are excluded from current year taxable income. Then tax is computed
on amounts allocated to each prior year at the maximum rate of tax applicable to the type of taxpayer for
such year (prior year tax). Then interest is computed on such prior year tax as if it were an underpayment
of tax (interest charge). Finally, current year tax is increased by the aggregate of prior year tax amounts
and interest charge amounts.
The interest charges are computed using daily compounding. Thus, the interest charges and prior year
tax amounts may exceed the income recognized, if the holding period of the shares is long enough.
Shareholders of a PFIC (including a QEF) are eligible for foreign tax credit with respect to the current and
deemed prior year taxes, including the deemed paid credit for 10% corporate shareholders of the PFIC.
Shareholders of a PFIC should consider filing IRS Form 8621 to make certain elections which may
reduce their tax burden. Read more about the PFIC rules by
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CHAPTER 46
The Foreign Contribution (Regulation Act, 2010)
As defined in Section 2(1)(h) of FCRA, 2010, "foreign contribution" means

the donation, delivery or transfer made by any foreign source, (i) of any article, not being an article
given to a person* as a gift for his personal use, if the market value, in India, of such article, on the date of
such gift is not more than such sum** as may be specified from time to time by the Central Government
by rules made by it in
this behalf; (ii) of any currency, whether Indian or foreign;
(iii) of any security as defined in clause (h) of section 2 of the securities Contracts(Regulation) Act, 1956
and includes any foreign security as defined in clause (o) of Section 2 of the Foreign Exchange
Management Act, 1999.
Explanation 1 A donation, delivery or transfer or any article, currency or foreign security referred to in
this clause by any person who has received it form any foreign source, either directly or through one or
more persons, shall also be deemed to be foreign contribution with the meaning of this clause.
Explanation 2 _ The interest accrued on the foreign contribution deposed in any bank referred to in subsection (1) of Section 17 or any other income derived from the foreign contribution or interest thereon
shall also be deemed to be foreign contribution within the meaning of this clause.
Explanation 3 _ Any amount received, by an person from any foreign source in India, by way of fee
(including fees charged by an educational institution in India from foreign student) or towards cost in
lieu of goods or services rendered by such person in the ordinary course of his business, trade or
commerce whether within India or outside India or any contribution received from an agent or a foreign
source towards such fee or cost shall be excluded from the definition of foreign contribution within the
meaning of this clause.
* In terms of FCRA, 2010 "person" includes _ (i) an individual; (ii) a Hindu undivided family; (iii) an
association; and (iv) a company registered under section 25 of the Companies Act, 1956.
**The sum, as stated at (i) above, has not been specified in FCRR, 2011.
th
The Foreign Contribution (Regulation) Act, 2010 (42 of 2010) dated the 26 September, 2010 was
notified in the Gazette of India Extraordinary Part II -Section I dated the 27th September, 2010.
However, the Act has come into forcewith effect from the 1st May, 2011 vide Gazette Notification vide
G.S.R. 349(E) dated the 29th April, 2011. Consequently, the earlier Act, viz., the Foreign Contribution
(Regulation) Act, 1976 has been repealed. The Foreign Contribution (Regulation) Rules, 2011 made
under section 48 of FCRA, 2010 have also come into force simultaneously with FCRA, 2010 vide Gazette
Notification vide G.S.R. 349 (E) dated the 29th April, 2011. While the provisions of the repealed FCRA,
1976 have generally been retained, the FCRA, 2010 is an improvement over the repealed Act as more
stringent provisions have been made in order to prevent misutilisation of the foreign contribution received
by the associations. The prime objective of the Act is to regulate the acceptance and utilization of foreign
contribution and foreign hospitality by persons and associations working in the important areas of national
life. The focus of the Act is to ensure that the foreign contribution and foreign hospitality is not utilized to
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affect or influence electoral politics, public servants, judges and other people working the important areas
of national life like journalists, printers and publishers of newspapers, etc. The Act also seeks to regulate
flow of foreign funds to voluntary organizations with the objective of preventing any possible diversion of
such funds towards activities detrimental to the national interest and to ensure that individuals and
organizations may function in a manner consistent with the values of the sovereign democratic republic.
Organizations seeking foreign contributions for definite cultural, social, economic, educational or religious
programmes may either obtain registration or prior permission to receive foreign contribution from Ministry
of Home Affairs by making application in the prescribed format and furnishing details of the activities and
audited accounts. The registration is granted only to such association which has proven track record of
functioning in the chosen field of work during last three years and after registration, such organization is
free to receive foreign contribution from any foreign source for its stated objectives. Registration is
granted only after thorough security vetting of the activities and antecedents of the organization and office
bearers thereof. However, such organizations which are newly established and do not have proven track
record of functioning may also receive foreign contribution for specific activities, for a
specific purpose and from a specific source after seeking project based prior permission (PP) from the
Ministry of Home Affairs. In order to bring in transparency in the administration of the Foreign Contribution
(Regulation) Act, 2010 and the Rules framed thereunder, improve the functioning, disseminate the
information and enhance user friendliness of the various procedures, the web-site is uploaded with all the
related information for guidance of all concerned.
Foreign Contribution (Regulation) Act 2010 RBI Circular

RBI/2011-12/388
DBOD.AML.BC.No.80/ 14.08.001/ 2011-12
February 6, 2012
The Chairmen/Chief Executive Officers of
All Scheduled Commercial Banks (excluding RRBs)
Dear Sir,
Guidelines issued under Section 36(1)(a) of the Banking Regulation Act, 1949 Implementation of the provisions of Foreign Contribution (Regulation) Act, 2010
The Reserve Bank, considering the public interest and on being satisfied that it is necessary so to do, in
exercise of the powers conferred by Clause (a) of sub-section (1) of Section 36 of the Banking Regulation
Act, 1949 (Act 10 of 1949) and of all the powers enabling it in this behalf, hereby issue the guidelines on
Foreign Contribution (Regulation) Act, 2010 and Foreign Contribution (Regulation) Rules, 2011 enclosed
herewith, for compliance of all scheduled commercial banks (excluding Regional Rural Banks). With the
coming into force of the Act, Foreign Contribution (Regulation) Act, 1976 stands repealed.
2. The salient features of the new Act are given in the Annex to this circular. This circular is intended only
to serve as a guide to the banks for carrying out their obligations under the Act and the Rules made
thereunder. In case of doubt, banks should make it a point to refer to the text of the Act and the Rules,
and if found necessary, proper legal advice should be taken.
Yours faithfully,
(Deepak Singhal)
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Chief General Manager- in-Charge

Encl: As above
GUIDELINES
Government of India, Ministry of Home Affairs has published a Notification S.O. 909 (E) dated the 29th
April, 2011, in the Official Gazette bringing into force the Foreign Contribution (Regulation) Act, 2010 (the
Act) with effect from May 1, 2011. A Gazette Notification G.S.R. 349 (E) dated the 29th April, 2011, has
also been issued notifying the Foreign Contribution (Regulation) Rules, 2011 (the Rules) made under
Section 48 of the Act. The Rules have come into force simultaneously with the Act. With the coming into
force of the Act, Foreign Contribution (Regulation) Act, 1976 stands repealed. Therefore, it has now
become necessary for the banks to ensure that the provisions of the new Act and the Rules made there
under are fully complied with.
2. The Act prohibits certain classes of persons from receiving foreign contribution. It also restricts certain
classes of persons from accepting foreign hospitality while visiting any country or territory outside India,
without the prior permission of the Central Government. The Act provides that persons having definite
cultural, economic, educational, religious and social programes should get themselves registered with the
Government of India before accepting any foreign contribution. In case a person falling in the above
category is not registered with the Central Government, it can accept foreign contribution only after
obtaining prior permission of the Central Government. Further, under the Act, the Central Government is
empowered to prohibit any person or organisation not specified in the Act from accepting any foreign
contribution and to require any person or class of persons, not specified in it to obtain prior permission of
the Central Government before accepting any foreign hospitality.
3. The Act casts certain obligations on banks in relation to the receipt of foreign contributions. The Act
stipulates that every person who has been granted a certificate of registration/prior permission as
stipulated in the Act shall receive foreign contribution in a single account and only through such branches
of a bank as may be specified in his application. It strictly prohibits the receipt or deposit of any other
funds (other than foreign contribution) in such accounts. The Act mandates that every bank or authorized
person in foreign excahnge shall report to specified authority, the prescribed amount of foreign
remittance, source and manner in which foreign remittance was received and other particulars in such
form and manner as may be prescribed. Section 18 of the Act requires every person who has been
granted a certificate of registration or prior permission under the Act to intimate the Central Government
on the details provided therein in the manner stipulated therein. This intimation has to be accompanied by
a copy of the statement indicating the particulars of foreign contribution received duly certified by an
officer of the bank or authorized person in foreign exchange.
4. Associations which were granted certificates of registration or prior permission under Section 6 of the
Foreign Contribution (Regulation) Act, 1976, will continue to be eligible to receive foreign contribution
under the Act and such registration shall be valid for a period of five years from the date on which the Act
came into force. Any permission to accept foreign hospitality granted under Section 9 of the repealed Act
would also be deemed to be the permission granted under the Act until such permission is withdrawn by
the Central Government.
5. Reserve Bank had been issuing guidelines from to time under the Foreign Contribution Regulation Act,
1976 advising banks, that while accepting foreign contribution for onward credit to the accounts of
persons, it needs to be ensured that the concerned persons/organisations are registered with the Central
Government or has the prior permission to receive such foreign contribution if required by law, and that
no branch other than the specified branch accepts foreign contribution. Banks were also advised to
forward the report of receipts of such contributions to the Central Government. Some irregularities and
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deviations from the prescribed procedures were noticed in the implementation of the repealed enactment.
Banks and Financial Institutions are required to strictly adhere to the provisions of the new Act while
dealing with the receipt of foreign contributions.
6. The salient features of the new Act are given in the Annex to these guidelines. This circular is intended
only to serve as a guide to the banks and Financial Institutions for carrying out their obligations under the
Act and the Rules made thereunder. In case of doubt, banks and Financial Institutions should make it a
point to refer to the text of the Act and the Rules, and if found necessary, proper legal advice should be
taken.
Annex
1. Introduction
As the Preamble suggests, the Foreign Contribution (Regulation) Act, 2010, is intended to consolidate the
law regulating the acceptance and utilisation of foreign contribution or foreign hospitality by certain
individuals or associations or companies and to prohibit acceptance and utilisation of foreign contribution
or foreign hospitality for any activities detrimental to the national interest and for matters connected
therewith. The Act extends to the whole of India, to its citizens outside India and also to associate
branches or subsidiaries outside India, of companies or body corporate, registered or incorporated in
India.
2. Prohibition on acceptance of foreign contribution
The Act stipulates that certain persons are totally barred from accepting any foreign contribution. The
term foreign contribution is defined in Clause (h) of Section 2 of the Act to mean the donation, delivery or
transfer made by a foreign source of any article (not being an article of gift for personal use, the market
value of which is not more than the specified amount), currency (whether Indian or foreign) or any
security. The following are the persons prohibited from accepting foreign contribution:
a. Candidate for election;
b. Correspondent, columnist, cartoonist, editor, owner, printer or publisher of a registered
newspaper;
c. Judge, government servant or employee of any entity controlled or owned by the Government;
d. Member of any Legislature;
e. Political party or office bearers thereof;
f. Organisations of a political nature as may be specified;
g. Associations or companies engaged in the production or broadcast of audio news or audiovisual
news or current affairs programmes through any electronic mode or form or any other mode of
mass communication;
h. Correspondent or columnist, cartoonist, editor, owner of the association or company referred to in
(g) above.
The Act empowers the Central Government to specify organizations as organizations of political nature by
publication in the Official Gazette. Foreign contribution can however be accepted by the above-mentioned
persons in the following specific cases:
a. by way of salary, wages or other remuneration due to him or to any group of persons working
under him, from any foreign source or by way of payment in the ordinary course of business
transacted in India by such foreign source; or
b. by way of payment, in the course of international trade or commerce, or in the ordinary course of
business transacted by him outside India; or
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c.
as an agent of a foreign source in relation to any transaction made by such foreign source with
the Central Government or State Government; or
d. by way of a gift or presentation made to him as a member of any Indian delegation, provided that
such gift or present was accepted in accordance with the rules made by the Central Government
with regard to the acceptance or retention of such gift or presentation; or
e. from his relative; or
f. by way of remittance received, in the ordinary course of business through any official channel,
post office, or any authorised person in foreign exchange under the Foreign Exchange
Management Act, 1999; or
g. by way of any scholarship, stipend or any payment of like nature.
For appreciating the scope of the term foreign contribution, it is necessary to understand the meaning
assigned by the Act to the term foreign source. This term is given an inclusive definition, with a very wide
coverage. Generally, it covers foreign governments and its agencies, any international agencies (other
than certain specified agencies such as United Nations, World Bank, etc.), foreign citizens, foreign
companies and foreign corporations, entities such as trade unions, trusts, societies, clubs, etc. formed or
registered outside India.
3. Restrictions on acceptance of foreign hospitality
The Act imposes restrictions on acceptance of foreign hospitality by certain specified persons. It
mandates that no member of a Legislature or office-bearer of a political party or Judge or Government
servant or employee of any corporation or any other body owned or controlled by the Government shall,
while visiting any country or territory outside India, accept, except with the prior permission of the Central
Government, any foreign hospitality. However, such permission would not be necessary for an emergent
medical aid needed on account of sudden illness contracted during a visit outside India. The term foreign
hospitality is defined to mean any offer, not being a purely casual one, made in cash or kind by a foreign
source for providing a person with the costs of travel to any foreign country or territory or with free
boarding, lodging, transport or medical treatment.
Apart from this, the Central Government is empowered to prohibit any person or organisation not
specified in the Act from accepting any foreign contribution and to require any person or class of persons,
not specified in the Act to obtain prior permission of the Central Government before accepting any foreign
hospitality.
4. Registration for the acceptance of foreign contribution
Section 11 of the Act mandates that except as otherwise provided in the Act, no person having a definite
cultural, economic, educational, religious or social program shall accept foreign contribution, unless such
person obtains a certificate of registration from the Central Government. In case a person falling in the
above category is not registered with the Central Government, it can accept foreign contribution only after
obtaining prior permission of the Central Government. The Central Government can, by Notification in the
Official Gazette, specify the person or class of persons who shall obtain its prior permission before
accepting the foreign contribution, the areas in which such contribution shall be accepted, the purpose for
which foreign contribution shall be utilised and the sources from which foreign contribution shall be
accepted. The Central Government is also authorised to suspend or cancel the registration so granted.
Every person who has been granted a certificate under Section 12 shall have such certificate renewed
within six months before the expiry of the period of the certificate.
5. Prohibitions and restrictions on receipt, transfer, utilization etc. of foreign contribution
The Act imposes a prohibition, on persons registered and granted certificate or has obtained prior
permission under the Act, from transferring such contribution to any other person, unless such other
person is also registered and had been granted a certificate or obtained the prior permission under the
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Act. Certain restrictions have been imposed on the utilisation of the foreign contribution received and the
Act mandates that the foreign contribution shall be utilised only for the purposes for which contribution
was received. No foreign contribution or any income arising out of it can be used for speculative
purposes. Use of foreign contribution for defraying administrative expenses has been restricted by the
Act.
The Act empowers the Central Government to prohibit any person or organisation not specified in Section
3 from accepting any foreign contribution and also to require any person or class of persons not specified
in Section 6 to obtain prior permission of the Central Government before accepting any foreign hospitality.
Where the Central Government is satisfied, after making such inquiry as it may deem fit, that any person
has in his custody or control any article or currency or security, whether Indian or foreign , which has
been accepted by such person in contravention of any of the provisions of the Act, it may, by order in
writing, prohibit such person from paying, delivering, transferring or otherwise dealing with, in any manner
whatsoever, such article or currency or security except in accordance with the written orders of the
Central Government.
6. Foreign contribution to be received through a scheduled bank
Section of 17 is of special importance to bankers. It states that every person who has been granted a
certificate or given prior permission under Section 12 shall receive foreign contribution in a single account
only through such one of the branches of a bank as he may specify in his application for grant of
certificate. Such person can open one or more accounts in one or more banks for utilising the foreign
contribution received by him. However, no funds other than foreign contribution shall be received or
deposited in such account or accounts. The Act makes it mandatory for every bank or authorised person
in foreign exchange to report to such specified authority (a) the prescribed amount of foreign remittance
(b) the source and manner in which the foreign remittance was received and (c) other particulars, in such
form and manner as may be prescribed.
Every person who has been granted a certificate or given prior approval under the Act has to give, within
such time and in such manner as may be prescribed, an intimation to the Central Government, and such
other authority as may be specified by the Central Government, as to the amount of each foreign
contribution received by it, the source from which and the manner in which such foreign contribution was
received, and the purposes for which, and the manner in which such foreign contribution was utilised by
him. Further, every person receiving foreign contribution has to submit a copy of a statement indicating
therein the particulars of foreign contribution received, duly certified by officer of the bank or authorised
person in foreign exchange, and furnish the same to the Central Government.
7. Maintenance of accounts and disposal of assets
Section 19 of the Act stipulates that every person who has been granted a certificate or given prior
approval as above has to maintain accounts of the foreign contribution received and utilized in the
prescribed manner. Where any person who was permitted to accept foreign contribution under the Act
ceases to exist or has become defunct, all the assets of such person shall be disposed of in
accordance with the provisions contained in any law for the time being in force under which the person
was registered or incorporated.
8. Powers of inspections and seizure
The Act empowers the Central Government to authorize inspection of accounts or records for verifying
contravention of the provisions of the Act. It also provides for seizure of accounts and records and also
articles or currency or security received in contravention of the provisions of the Act.
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9. Miscellaneous Issues
The Act describes certain offences and the punishment/penalties for violation of its provisions. Section 37
of the Act provides that whoever fails to comply with any provision of the Act for which no separate
penalty has been provided, shall be punished with imprisonment for a term which may extend to one
year, or with fine or with both.
The Act provides that any offence punishable under the Act (whether committed by an individual or
association or any officer or employee thereof), not being an offence punishable with imprisonment only,
may, before the institution of any prosecution, be compounded by such officers or authorities and for such
sums as the Central Government may, by Notification in the Official Gazette, specify in this behalf.
The Central Government may give such directions as it may deem necessary to any other authority or
any person or class of persons regarding the carrying into execution of the provisions of the Act.
10. Rules framed under the Act
In exercise of the powers conferred by Section 48 of the Act, the Central Government has framed the
Foreign Contribution (Regulation) Rules, 2011 for carrying out the provisions of the Act. The Rules, inter
alia, provide for Guidelines for the Central Government for declaration of an organisation to be of a
political nature, the nature of activities which would be treated as speculative activities, what constitutes
administrative expenses, procedure for availing of foreign hospitality by specified categories of persons,
procedure relating to application for obtaining registration or prior permission to receive foreign
contribution, whom to make application for compounding, procedure for transferring foreign contribution to
other registered or unregistered persons, the Forms to be used for various purposes etc.
Rule 13 of the said Rules mandates that in case a person who has been granted a certificate of
registration or prior permission receives foreign contribution in excess of one crore rupees, or equivalent
thereto, in a financial year, he/it shall place the summary data on receipts and utilisation of the foreign
contribution pertaining to the year of receipt as well as for one year thereafter, in the public domain.
It is important to note that in terms of Rule 15, the amount of foreign contribution lying, unutilised in the
exclusive foreign contribution bank account of a person whose certificate of registration has been
cancelled shall vest with the banking authority concerned till the Central Government issues further
directions is the matter. In case a person whose certificate of registration has been cancelled
transfers/has transferred the foreign contribution to any other person, the above condition would apply to
the person to whom the fund has been transferred.
Rule 16 of the said Rules provides that every bank has to send a report to the Central Government within
thirty days of any transaction in respect of receipt of foreign contribution by any person who is required to
obtain a certificate of registration or prior permission under the Act, but who was not granted such
certificate or prior permission as on the date of receipt of such remittance. Such report has to contain the
following details:
a.
b.
c.
d.
e.
f.
g.
Name and address of the donor.

Name and address of the recipient.
Account number.
Name of the Bank and Branch.
Amount of foreign contribution (in foreign currency as well as Indian Rupees).
Date of receipt.
Manner of receipt of foreign contribution (cash/cheque/electronic transfer etc.):
It has been made a duty of the bank concerned to send a report to the Central Government within thirty
days from the date of such last transaction in respect of receipt of any foreign contribution in excess of
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one crore rupees or equivalent thereto in a single transaction or in transactions within a duration of thirty
days, by any person, whether registered or not under the Act, and such report also has to include the
aforesaid details.
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CHAPTER 47
WILL
One wants to make sure that the life he has led has been meaningful and
dignified in all aspects. A person, who owns property in any form, is definitely concerned about his
property after his demise. A Will is an important document which enables the individual /any living person
to rightfully leave his assets and wealth to who ever he chooses to, after his death. In a way a person can
ensure that his wishes with respect to his assets and property are followed after his death.
There often arise complexities when a person dies without a Will. It is a little effort that goes a long way,
not leaving our family in any kind of turmoil, after our death. Some people execute writings, prepared by
themselves or with the help and advice of well-meaning friends or relatives. Often, these turn out to be
useless in law during implementation, after the death of the person. The crux is that the absence of a will
or the invalidity of a will or parts of a will often generates problems for the legal heirs and successors.
AFTER THE DEATH OF A PERSON, HIS PROPERTY DEVOLVES IN TWO WAYS:
According to the respective law of succession, when no will is made- i.e.intestate

By way of will i.e. testamentary
LAW OF SUCCESSION
The laws of inheritance are diverse and complicated. The rules of distribution of property in case a
person dies without making a will are defined by every Law of succession. These rules provide for a class
of persons and percentage of property that will be inherited by such persons. It must be remembered that
it is preferable that one should make a will to ensure that one's actual intension is manifested.
It often happens that, due to ignorance of law, people fail to make a proper, enforceable will.
Consequently, confusion ensues and often, the rightful heirs do not receive their fair share.
When a male dies unexpectedly or where there has been a tragic demise and there is no will, it often
creates problems for the legal heirs and successors. This can result in unintended injustice. The property
passes to the minor children, the surviving wife and to the mother of the deceased (although not on good
terms) in equal shares. If there is an office or house, an equal share will go to the mother. Shares of
companies are also divided equally. It is difficult to get all the heirs on a common meeting ground to write
to the companies to transfer the shares to the names of the respective heirs. But all these problems can
be obviated if a will is left behind.
According to the law of inheritance and succession, if a Hindu male passes away,
o Hindu female shares equally with the male i.e. a son and daughter will succeed with
461 | P a g e
equal shares.
The wife as well as the mother also gets an equal share.
ThThere is nothing to prevent a Hindu male from bequeathing his entire property to a
stranger if he so desires.
Muslim male cannot will away more than 1/3 of the estate i.e. 2/3rdof the property must be
divided among the family members in the shares laid down in the Shariat Act, 1937.
o A Muslim wife cannot be dispossessed. li>
o Even though she has to share with other wives if there is more than one wife.
o The widow gets a definite share.
o Mohammedan Law gives the male heirs, the sons, twice the share of the daughters.
o
o
THE LAW APPLICABLE TO WILLS
In India has a well developed system of succession laws that governs a

person's property after his death. The Indian Succession Act 1925 applies expressly to wills and codicils
made by Hindus, Buddhists, Sikhs, Jains, Parsis and Christians but not to Mohammedans as they are
largely covered by Muslim Personal Law.
The Indian Succession Act, 1925

Hindu Personal Laws
Muslim Personal Laws
The Indian Registration Act, 1908
The Indian Succession Act, 1925, a will has been defined as follows:
"A Will is the legal declaration of the intention of the testator, with respect to his property which he desires
to be carried into effect after his death." Important postulates of a will are as follows:
Legal declaration: A Will is a legal declaration. The documents purporting to be a Will or a

testament must be legal, i.e. in conformity with the law and must be executed by a person legally
competent to make it.. It must be signed and attested, as required by law.
Disposition of property: The declaration should relate to disposition of the property of the person
making the Will.
Death of the Testator: A will becomes enforceable only after the death of the testator. It gives
absolutely no rights to the legatee (the person who inherits) until the death of the testator. It has
no effect during the lifetime of the testator. The testator can change his will, at any time prior to
his death, in any manner he deems fit.
Revocability: The essence of every Will is that it is revocable during the lifetime of the testator.
PERSONS COMPETENT TO MAKE A WILL
According to Section 59 of the Indian Succession Act,

o Any person of sound mind
o Who has reached the age of majority
The following persons cannot make a will:
o Lunatics, insane persons.
o Minors i.e. below 18 years of age. In case a guardian is appointed to a minor, ;such
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minor reaches age of maturity only at the age of 21 years.

POINTS TO REMEMBER
Persons who are deaf or dumb or blind are not, thereby, incapacitated in making a will, if they are
able to know what they do by it.
A person, who is ordinarily insane, may make a will during an interval while he is of sound mind.
No person can make a will whilst he is in such a state of mind, whether arising from intoxication
or from illness or from any other cause, so that he does not know what he is doing.
EXECUTOR OF A WILL
An executor is the person appointed ordinarily by the testator's by his will or codicil
ToTo administer testator's property and

To carry into effect the provision of the will
CODICIL
An instrument made in relation to a Will,

Explaining, altering or adding to its dispositions,
It shall be deemed to form part of the Will.
The Testator wants to change the names of the Executors by adding some other names, in that
case this could be done by making a Codicil in addition to the Will, as there may not be other
changes required to be made in the main text of the Will.
It may be that the Testator wants to change certain bequests by adding to the names of the
legatees or subtracting some of them. It may be some Beneficiaries or Executor may be dead
and the names are required to be removed. All these can be done by making a Codicil.
The Codicil must be reduced to writing.
It must be signed by the Testator and attested by two Witnesses.
LETTER OF ADMINISTRATION
A certificate granted by the competent court to an administrator

Where there exists a WILL
o authorizing him to administer the estate of the deceased in accordance with the WILL.
o where a WILL does not name any executor,
o an application can be filed in the court for grant of Letter of Administration for the
property.
And in accordance with law where the deceased has died intestate.
A PROBATE
Probate means
o the copy of the will is given to the executor
o together with a certificate granted under the seal of the court
o and signed, by one of the registrars, certifying that the will has been proved
The application for probate shall be made by petition to the court of competent jurisdiction.
A copy of the last will and testament of the deceased should be annexed to the petition.
The copy of the will and the copy of the grant of administration of the testator's estate together,
form the probate.
It is conclusive evidence of the validity and due execution of the will and of the testamentary
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capacity of the testator.

A probate is obtained to authenticate the validity of the will.
The probate is still the only proper evidence of the executor's appointment.
The grant of probate to the executor does not confer upon him any title to the property which the
testator himself had no right to dispose off which did belong to the testator and over which he had
a disposing power with a grant of administration to the estate of the testator.
Probate proceedings cannot be referred to Arbitration. The probate court (whether it is the District
Court or High Court) has been granted and conferred with exclusive jurisdiction to grant probate
of a Will of the deceased.
A SUCCESSION CERTIFICATE
Succession Certificate can be granted by the court to realize the debts and securities of the
deceased and to give valid discharge.
A succession certificate is a certificate when granted to the person empowers the person
o to receive interest or dividends
o negotiate the transfer or any of them
o with
respect
to
the
securities
of
a
deceased
person
P.S: Securities means any bond, stock, debenture or security
He is required to dispose of the amount so realised in accordance with the rights of the person
entitled thereto.
The person requiring the Succession Certificate may
o File an application in the court, where the properties of your deceased relative are
situated or where he / she normally resided.
o Depending on the value of the estate of the deceased, the matter shall go to the
type of court, which can conduct cases for that value [This is known as
"pecuniary jurisdiction" of the court].
o With the names of all other heirs of your late relative as the respondents in the
matter.
o Who may after notice to all concerned and a newspaper notice is also ;issued apart from
mandatory notice to the respondents.
o Upon the expiry of the time period (normally 1 and a half months) from the date of
publication of the notice after the respondents have given their no objection.
o The court passes the orders for issuance of the Succession Certificate to the person/s
making such an application.
Judicial Stamp papers of sufficient amount (as per the prescribed court fees structure) to be
submitted in the court, where after the Certificate is typed by the court staff, duly signed and
sealed and delivered.
The certificate takes about 3-4 months from date of filing to receive your certificate.
WILL & NOMINATION
A nomination is not a will.

The nominee merely acts as the trustee. In some instances, the nominee and the beneficiary of
the will is the same person.
At all times, the provisions of the will prevail over the nomination.
It is advisable to have the same person as the nominee and the beneficiary of the will, so as to
prevent future disputes.
A nomination, in order to be effective, need not be executed as a will but must be in accordance with the
formalities required by the particular provision applicable.
ATTESTATION OF A WILL
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The testator shall sign or shall affix his mark to the will, or some other person shall sign it in his
presence and by his direction.
The signature or mark of the testator, or the signature of the person signing shall appear clearly
and should be legible. It should appear in the manner that is appropriate and makes the will legal.
The will shall be attested by two or more witnesses, each of whom has seen the testator sign or
affix his mark to the will or has seen other person sign the will, in the presence and by the
direction of the testator, or has received from the testator.
Personal acknowledgement of his signature or mark, or of the signature of such other person.
Each of the witnesses shall sign the will in the presence of the testator.
Each of the witnesses shall sign the will in the presence of the testator, but it should not be
necessary that more than one witness be present at the same time, and no particular form of
attestation shall be necessary.
EXECUTION OF A WILL
On the death of the testator, an executor of the will or an heir of the deceased testator can apply
for probate.
The court will ask the other heirs of the deceased if they have any objections to the will.
If there are no objections, the court will grant probate.
A probate is a copy of a will, certified by the court. A probate is to be treated as conclusive
evidence of the genuineness of a will.
In case any objections are raised by any of the heirs, a citation has to be served, calling upon
them to consent.
This has to be displayed prominently in the court.
Thereafter, if no objection is received, the probate will be granted.
It is only after this that the will comes into effect.
PROCEDURE FOR REGISTRATION :
A Will is to be registered with the registrar/sub-registrar with a nominal registration fee.

The testator must be personally present at the registrar's office along with witnesses.
Signature of registrar : The endorsement of the register is sufficient to prove the execution of the
will, if at all the testators of the will are dead and if the testator affirms the contents of the will and
put his thumb impression on the endorsement in the presence of the sub-registrar, the subregistrar could also be considered to be an attesting witness.
Stamping of will : A will or codicil is not requires to be stamped at all.
FORMS & FORMALITIES TO MAKE A WILL
Form of a Will
o There is no prescribed form of a Will.
o In order for it to be effective,
It needs to be properly signed and attested.
The Will must be initialed by the testator at the end of every page and next to any
correction and alteration.
Language of a Will
o A Will can be written in any language.
o No technical words need to be used in a Will.
o The words used should be clear and unambiguous so that the intention of the testator is
reflected in his Will.
Stamp Duty
o No stamp duty is required to be paid for executing a Will or a codicil.
o A Will need not be made on stamp paper.
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Attestation
o A Will must be attested by two witnesses who must witness the testator executing the
Will.
o The witnesses should sign in the presence of each other and in the presence of the
testator.
o However, according to Hindu Law, a witness can be a legatee. Under Parsi and Christian
law, a witness cannot be an executor or legatee.
o A Muslim is not required to have his Will attested if it is in writing.
Registration:
o Under section 18 of the Registration Act the registration of a will is not compulsory.
o It is a strong legal evidence that the proper parties had appeared before the registering
officers and the latter had attested the same after ascertaining their identity.
o A Will must be proved as duly and validly executed, as required by theIndian
Succession Act.
o Once a Will is registered, it is placed in the safe custody of the Registrar and therefore
cannot be tampered with, destroyed, mutilated or stolen.
o It shall be released only to the testator himself or, after his death, to an authorized person
who produces the Death Certificate.
o The cover should be super scribed with the name of the testator or his agent with a
statement of the nature of the document.
o An amount of Rs. 1,000/- will be charged as fee. The deposited cover may be withdrawn
by the testator or his agent on payment of prescribed fee of Rs. 200/-.
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CHAPTER 48
ADMISSION TO UNDERGRADUATE ENGINEERING PROGRAMME

IN PREMIER TECHNICAL INSTITUTIONS IN INDIA www.dasanit.org
Direct Admission of Students Abroad (DASA) Scheme
2012-13
Coordinating Institute : National Institute of Technology Karnataka (NITK),

Surathkal ,
Mangalore - 575 025, India, www.nitk.ac.in
Admissions for Foreign Nationals / Persons of Indian Origin (PIOs) / Non-Resident Indians (NRIs) under
Direct
Admission of Students Abroad (DASA) Scheme for undergraduate engineering programme for the
Academic Year 2012-13 to National Institutes of Technology (NITs), Indian Institutes of Information
Technology(IIITs) and other Premier Technical Institutions in India.
Admissions Under DASA Scheme 2012-13
In the current global scenario India is emerging as a knowledge super power with a large pool of
technically qualified professionals. Traditionally, the Indian education system has been known for quality
of education, coupled with low cost of education delivery and living, making it an attractive destination for
international students to come and study in India. Students contemplating to study in India can be
assured of experiences rich in traditions, heritage and exposure to diverse culture. This would also entail
being part of the transition to a modern open knowledge economy, making new friends from around the
world and most importantly receiving internationally recognized qualifications. Indian educational system
offers world class education through wide range of general and specialized courses relevant to the needs
of the world.
The admission of Foreign Nationals / Persons of Indian Origin/ Non-Resident Indians to
undergraduate programs in Centrally Funded Institutions (CFIs) is being offered under DASA (Direct
Admission of Students Abroad) scheme from the academic session 2001-02 onwards. The Ministry of
Human Resource Development, Government of India has entrusted the coordination of the admission
process under DASA scheme to NITK, Surathkal from academic year 2010-11 to 2012-13. Till date
students from more than 30 countries have been admitted under DASA. The admission process is
entirely online, and requires a candidate to fill an online application form and make payment of fee
electronically. In addition a signed print copy of the online application form along with necessary
documentary evidences has to be submitted to NITK, Surathkal within the prescribed date.
Academic Eligibility
Candidates must have passed the qualifying examination, i.e. Senior Secondary [10+2] or equivalent
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from any system of education as recognized by the Association of Indian Universities with Physics and
Mathematics as compulsory subjects and any one of these (Chemistry, Bio-technology, Computer
Science, Biology) as optional subjects.
AND
Must have secured a minimum of 60% aggregate marks or 6.75 CGPA on a 10 point scale or equivalent
grades in all the subjects of the qualifying examination. Candidates appearing for the qualifying
examination with the above-mentioned compulsory subjects by 25th May 2012 and expecting their final
results latest by 15th September 2012 may also apply.
AND
Candidates should have a minimum total score of 1440 in SAT Subject Tests (subjects: Maths level
II, Physics and Chemistry). For more details on SAT Subject Tests (also known as SAT II) visit website:
www.collegeboard.com. SAT subject tests score has to be submitted online through CollegeBoard to
NITK Surathkal (designated institute code : 6530). SAT subject scores received till May 29, 2012 only will
be considered for allotment under first merit list.
Fee Structure & Fee Payment
Registration Fee and First Year Tuition Fee: An amount of US$ 7250 [US Dollar Seven thousand Two
hundred Fifty only] towards nonrefundable registration fee of US$ 250 and first year Tuition Fee of US$
7,000 is required to be paid along with the application form. Foreign nationals from SAARC countries
(except India) seeking admission through this scheme shall be allowed 50% Tuition fee waiver. They are
required to submit an amount of US$ 3,750(which includes US$ 3,500 towards first year tuition fee and a
nonrefundable registration fee of US$ 250). The fee can be paid either through Bank Transfer or Demand
Draft or e-payment. Charges for fee payment, if any, should be borne by the candidates.
Submission of Application
The submission of application is a two stage process, both are essential.
(i) Online application (http://www.dasanit.org) and Submission of signed print copy of the application
along with required documents and payment details.
(ii) SAT subject test score to be sent to NITK Surathkal through CollegeBoard (designated institute
code 6530) Seat Allotment Procedure Seat allotment will be based on SAT subject test scores and the
choices given by the candidate, in the order of their merit and priority taken together. Participating
Institutions*
National Institutes of Technology (NITs)
NIT, Agartala, Tripura
MNNIT, Allahabad, Uttar Pradesh
MANIT, Bhopal, Madhya Pradesh
NIT, Calicut, Kerala
NIT, Durgapur, West Bengal
NIT, Hamirpur, Himachal Pradesh
MNIT, Jaipur, Rajasthan
NITJ, Jalandhar, Punjab
NIT, Jamshedpur, Jharkhand
NIT, Kurukshetra, Haryana
VNIT Nagpur, Maharashtra
NIT, Patna , Bihar
NIT, Raipur , Chhattisgarh
NIT, Rourkela, Orissa
NIT, Silchar Assam
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NIT, Srinagar, Kashmir

SVNIT, Surat, Gujarat
NITK, Surathkal, Karnataka
NIT, Tiruchirappalli, Tamilnadu
NIT, Warangal, Andhra Pradesh
NIT, Goa
NIT, Manipur
NIT, Nagaland
NIT, Sikkim
Indian Institutes of Information Technology (IIITs)
IIIT, Allahabad, Uttar Pradesh
ABVIIITM, Gwalior, MP
IIITDM, Jabalpur , MP
IIITD&M, Kancheepuram, TN
Other Institutions
PEC University of Technology, Chandigarh
SLIET, Longowal, Punjab
NIFFT, Ranchi, Jharkhand
* Actual list of participating institutes with seat matrix will be available on www.dasanit.org at the launch of
online application process on April 01, 2012.
Under Graduate Programmes on offer for DASA 2012-13**
1 Aeronautical Engineering 19 Industrial & Production Engineering
2 Agricultural Engineering 20 Information Technology
3 Architecture 21 Integrated PG [IT/Management] 5 Years
4 Bio-Medical Engineering 22 Instrumentation & Control Engineering
5 Bio-Technology 23 Instrumentation & Process Control
6 Ceramic Engineering 24 Maintenance and Plant Engineering
7 Chemical Engineering 25 Material Science & Metallurgical Engineering
8 Civil Engineering 26 Mechanical Engineering
9 Computer Science & Engineering 27 Manufacturing Engineering
10 Computer Science & Applications 28 Mining Engineering
11 Electrical Engineering 29 Production Engineering
12 Electrical & Electronics Engineering 30 Production & Engineering Management
13 Electronics & Communication Engineering 31 Production & Industrial Engineering
14 Electronics & Electrical Communication Engineering 32 Textile Technology
15 Electronics & Instrumentation Engineering 33 Engineering Physics
16 Electronics & Telecommunications 34 Welding Technology
17 Food Technology 35 Foundry Technology
18 Industrial Engineering Management
**The courses listed above are tentative and more than 2000 seats are likely to be available for allotment.
Important Dates
Contact Details
Coordinator DASA
DASA Office
National Institute of Technology Karnataka, Surathkal
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Mangalore 575 025, KARNATAKA, INDIA

Phone : +91 824 2474085
Fax : +91 824 2474085
Email : dasa@nitk.ac.in
DASA Website: http://www.dasanit.org
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CHAPTER 49
Exchange Earner's Foreign Currency (EEFC) Account
Exchange Earners' Foreign Currency Account (EEFC) is an account

maintained in foreign currency with an Authorised Dealer i.e. a bank dealing in foreign exchange. It is a
facility provided to the foreign exchange earners, including exporters, to credit 100 per cent of their
foreign exchange earnings to the account, so that the account holders do not have to convert foreign
exchange into Rupees and vice versa, thereby minimizing the transaction costs. All categories of foreign
exchange earners, such as individuals, companies, etc. who are resident in India, may open EEFC
accounts. An EEFC account can be held only in the form of a current account. No interest is payable on
EEFC accounts. . One can credit up to 100 per cent of his/ her foreign exchange earnings into the EEFC
account, subject to permissible credits and debits.
General facilities
Can Exchange Earners Foreign Currency (EEFC) accounts be held jointly with a -resident Indian?
Yes, EEFC account of a resident individual can be held jointly with a resident close relative on a former
or survivor basis.
However, such resident Indian close relative will not be eligible to operate the account during the life time
of the resident account holder.
Can a resident individual holding a savings bank account include nonresident close relative as a
joint account holder?
Yes, individuals resident in India are permitted to include non-resident close relative(s) as a joint holder(s)
in their resident bank accounts on former or survivor basis. However, such non- resident Indian close
relatives shall not be eligible to operate the account during the life time of the resident account holder.
Can a resident individual gift shares/securities/convertible debentures etc to NRI close relative?
Yes, a resident individual is permitted to gift shares/securities/convertible debentures etc to NRI close
relative up to USD 50,000 per financial year subject to certain conditions.
Can a resident individual give rupee gifts to his visiting NRI/PIO close relatives?
Yes, a resident individual can give rupee gifts to his visiting NRI/PIO close relatives by way of crossed
cheque/electronic transfer within the overall limit of USD 200,000 per financial year for the resident
individual and the gifted amount should be credited to the beneficiarys NRO account.
What types of services can be provided by a resident individual to his / her nonresident close
relatives?
A resident may make payment in rupees towards meeting expenses on account of boarding, lodging and
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services related thereto or travel to and from and within India of a person resident outside India who is on
a visit to India. Further, where the medical expenses in respect of NRI close relative are paid by a
resident individual, such a payment being in the nature of a resident to resident transaction may also be
covered under the term services.
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CHAPTER 50
EXIM Policies
EXIM policies concerning Direct Investment Schemes for Non resident Indians (NRIs) and Overseas
Corporate Bodies (OCBs) are cited below:
Investment under Automatic Route with repatriation benefits: NRIs can invest in shares and
debentures of Indian companies under Automatic Route without obtaining RBIs or Governments
approval.
Investment with Government approval: There are certain sectors that require the permission of
Foreign Investment Promotion Board (FIPB) for investments by NRIs and OCBs. These
investments also enjoy full repatriation benefits.
Other investments with repatriation benefits: These include investment in domestic mutual
funds, bonds and shares issued by public sector undertakings and enterprises, government
securities and shares.
Investments up to 100% equity without repatriation benefits: NRIs can invest by way of
capital contribution in any proprietary or partnership concern in India provided the firm or the
proprietary concern is not engaged in any agricultural/plantation activity or real estate business or
Print Media on non-repatriation basis subject to certain conditions.
Other investments by NRIs/OCBs without repatriation benefits:
o Investment in Non Convertible Debentures
o Money Market Mutual Funds
o Deposits with Companies
o Commercial Papers (OCBs are presently not permitted
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CHAPTER 51
Compounding of Contraventions under FEMA, 1999
Any person who contravenes any provision of the FEMA, 1999 [except section 3(a)]
or contravenes any rule, regulation, notification, direction or order issued in exercise of the powers under
this Act or contravenes any condition subject to which an authorization is issued by the Reserve Bank,
can apply for compounding to the Reserve Bank. Applications seeking compounding of contraventions
under section 3(a) of FEMA, 1999 may be submitted to the Directorate of Enforcement When a person is
made aware of the contravention of the provisions of FEMA, 1999 by the Reserve Bank or the Foreign
Investment Promotion Board (FIPB) or any other statutory authority or the auditors or by any other
means, she/he may apply for compounding. One can also make an application for compounding, suo
moto, on becoming aware of the contravention.
Compounding of Contraventions under FEMA, 1999 Master Circular No. 9/2012-13

COMPOUNDING OF CONTRAVENTIONS UNDER FEMA, 1999
MASTER CIRCULAR NO. 9/2012-13, Dated 2-7-2012
The compounding of contraventions under Foreign Exchange Management Act (FEMA), 1999 is a
voluntary process by which an applicant can seek compounding of an admitted contravention of any
provision of FEMA, 1999 under Section 13(1) of the FEMA, 1999.
2. This Master Circular consolidates the existing instructions on the subject of Compounding of
Contraventions under FEMA, 1999 at one place. The list of underlying circulars /notifications,
consolidated in this Master Circular, is furnished in the Appendix.
on July 1, 2013 and be replaced by an updated Master Circular on the subject.
1. General
1.1 In terms of Section 13(1), Chapter IV of FEMA 1999, if any person contravenes any provision of
FEMA, 1999, or any rule, regulation, notification, direction or order issued in exercise of the powers under
this Act, or contravenes any condition subject to which an authorization is issued by the Reserve Bank,
he shall, upon adjudication, be liable to a penalty up to thrice the sum involved in such contravention
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where the amount is quantifiable or up to Rupees Two lakh, where the amount is not quantifiable and
where the contravention is a continuing one, further penalty which may extend to Rupees Five thousand
for every day after the first day during which the contravention continues. The provisions of Section 15 of
FEMA, 1999 permit compounding of contraventions and empower the Compounding Authority to
compound any contravention as defined under Section 13 of the ACT on an application made by the
person committing such contravention. In terms of rule 4 of the Foreign Exchange (Compounding
Proceedings) Rules, 2000, the powers to compound the contraventions have been prescribed for
compounding authorities with regard to the sum involved in such contravention and no contravention shall
be compounded unless the amount involved in the contravention is quantifiable.
1.2 The Government of India has, in consultation with the Reserve Bank placed the responsibility of
administering compounding of contraventions with the Reserve Bank, except contraventions under
Section 3(a) of FEMA, 1999. Accordingly, Foreign Exchange (Compounding Proceedings) Rules, 2000
have been framed by the Government of India empowering the Reserve Bank to compound
contraventions under FEMA, 1999 with a view to provide comfort to individuals and corporate community
by minimizing transaction costs, while taking severe view of willful, malafide and fraudulent transactions.
2. Compounding Powers
2.1 The compounding powers of the Reserve Bank and the Directorate of Enforcement (DoE),
respectively, are as under:
(a) Reserve Bank has been empowered to compound the contraventions of all the Sections of FEMA,
1999, except clause (a) of Section 3 of the Act, ibid.
(b) Directorate of Enforcement would exercise powers of compounding under clause (a) of Section 3 of
FEMA, 1999 (dealing essentially with Hawala transactions).
2.2 For effective implementation of compounding process under FEMA, 1999, the Government of India
has framed the procedure for compounding of contraventions. Once a contravention has been
compounded by the Compounding Authority, no proceeding or further proceeding will be initiated or
continued, as the case may be, against the contravener.
3. Delegation of Powers
3.1 As a measure of customer service and in order to facilitate the operational convenience,
compounding powers were delegated to the Regional Offices of the Reserve Bank of India mentioned
below to compound the contraventions of FEMA involving (i) delay in reporting of inward remittance, (ii)
delay in filing of form FC-GPR after allotment of shares and (iii) delay in issue of shares beyond 180 days
(viz. paragraphs 9(1)(A), 9(1)(B) and 8, respectively, of the Schedule I to the Foreign Exchange
Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000,
notified vide Notification No. FEMA 20/2000-RB dated 3rd May 2000 and as amended from time to time:
(a) Paragraphs 9 (1) (A) and 9 (1) (B) of Schedule I to FEMA 20/2000-RB dated May 3, 2000 Bhopal, Bhubaneshwar, Chandigarh, Guwahati, Jaipur, Jammu, Kanpur, Kochi, Patna and Panaji for
amount of contravention below Rupees One hundred lakh only (Rs. 1,00,00,000 /-).
(b) Paragraphs 9 (1) (A), 9 (1) (B) and 8 of Schedule I to FEMA 20/2000-RB dated May 3, 2000 Ahmedabad, Bangalore, Chennai, Hyderabad, Kolkata, Mumbai and New Delhi for amount of
contravention without any limit.
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4. Process of Compounding
4.1 An application for compounding of a contravention under FEMA, 1999 may be submitted to the
Compounding Authority (CA) on being advised of a contravention under FEMA, 1999, either through a
memorandum or suo moto on being made or on becoming aware of the contravention. The format of the
application is appended to the Foreign Exchange (Compounding Proceedings) Rules, 2000 (Annex-I).
4.2 Along with the application in the prescribed format, the applicant may also furnish the details as per
the enclosed Annexes (Annex-II) relating to Foreign Direct Investment, External Commercial Borrowings,
Overseas Direct Investment and Branch Office / Liaison Office, as applicable, a copy of the Memorandum
of Association and latest audited balance sheet along with an undertaking that they are not under
investigation of any agency such as DOE, CBI, etc. in order to complete the compounding process within
the time frame.
4.3 All applications for compounding whether on the advice of the Regional Office concerned or suomoto, relating to the contraventions mentioned at paragraph 3.1 (a) and (b) above and up to the amount
of contravention stated therein, may be submitted by the companies/individuals falling under the
jurisdiction of the aforesaid Regional Offices directly to the Regional Office concerned, together with the
prescribed fee of Rs.5000/- by way of a demand draft drawn in favour of Reserve Bank of India and
payable at the concerned Regional Office. Applications for compounding of all other contraventions
together with the prescribed fee of Rs.5000/- by way of a demand draft drawn in favour of Reserve Bank
of India and payable at Mumbai may be submitted to: The Compounding Authority, [Cell for Effective
implementation of FEMA (CEFA)], Foreign Exchange Department, 5th floor, Amar Building, Sir P.M.
Road, Fort, Mumbai-400001.
4.4 On receipt of the application for compounding, the proceedings would be concluded and an order
issued by the CA within 180 days from the date of the receipt of the application for compounding. The
time limit for this purpose would be reckoned from the date of receipt of the completed application for
compounding by the Reserve Bank.
4.5 The CA may call for any additional information, record or any other document relevant to the
compounding proceedings. Such additional information/ documents are required to be submitted within
the period as may be specified by the CA and the application may be rejected if such
information/documents are not submitted within the prescribed time.
4.6 The application will be examined in terms of sub rule (1) of rule (4) of the Foreign Exchange
(Compounding Proceedings) Rules, 2000 to assess whether the contravention is compoundable and the
amount of contravention is accordingly quantified.
4.7 The nature of contravention is ascertained keeping in view, inter alia, the following indicative points :
a. whether the contravention is technical and / or minor in nature and needs only an administrative
cautionary advice;
b. whether the contravention is serious in nature and warrants compounding of the contravention; and
c. whether the contravention, prima facie, involves money-laundering, national and security concerns
involving serious infringement of the regulatory framework.
However, the Reserve Bank reserves the right to classify the contraventions as stated above and neither
the contravener nor others have any right to classify any contravention as technical suo moto.
4.8 The disposal of the compounding application is made by issue of a Compounding Order specifying
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the provisions of FEMA,1999 or any rule, regulation, notification, direction or order issued in exercise of
the powers under FEMA, 1999, in respect of which contravention has taken place.
4.9 Where there is sufficient cause for further investigation, the Reserve Bank may refer the matter to the
Directorate of Enforcement for further investigation and necessary action under FEMA, 1999, or to the
Anti- Money Laundering Authority instituted under the Prevention of Money Laundering Act (PMLA), 2002
or to any other agencies, as deemed fit. Such applications will be disposed of by returning the application
to the applicant.
5. Scope and Manner of Compounding
5.1 The CA will exercise jurisdiction in respect of the contraventions admitted to have been committed in
relation to any of the provisions of the FEMA, 1999, or any rule, regulation, notification, direction or order
issued in exercise of the powers under FEMA, 1999.
5.2 The application for compounding will be disposed of on merits, upon consideration of the records and
submissions and at the absolute discretion of the CA. The following factors, which are only indicative,
may be taken into consideration for the purpose of passing the Compounding Order and for arriving at the
quantum of sum on payment of which contravention shall be compounded:
(i) the amount of gain of unfair advantage, wherever quantifiable, made as a result of the contravention;
(ii) the amount of loss caused to any authority / agency / exchequer as a result of the contravention;
(iii) economic benefits accruing to the contravener from delayed compliance or compliance avoided;
(iv) the repetitive nature of the contravention, the track record and / or history of non-compliance of the
contravener;
(v) contraveners conduct in undertaking the transaction and disclosure of full facts in the application and
submissions made during the personal hearing; and
(vi) any other factor considered relevant and appropriate.
6. Issue of the Compounding Order
6.1 An opportunity for personal hearing is given to the applicant for further submission of documents in
person in support of the application within a specified period. The contravener or its authorized
representative can choose not to appear in person or make any submissions before the CA for personal
hearing The CA will proceed with the processing of the compounding application on the basis of
information and documents available in the application for compounding.
6.2 The Compounding Authority will pass a compounding order on the basis of the averments made in
the application as well as other documents and submissions made in this context by the contravener
during the personal hearings, if any.
6.3 Where the compounding of any contravention is made after making of a complaint under sub-section
(3) of section 16 of FEMA, 1999 as the case may be, one copy of the compounding order made under
sub rule (2) of Rule 8 of Foreign Exchange (Compounding Proceedings) Rules, 2000 will be provided to
the applicant (the contravener) and also to the Adjudicating Authority.
7. Post-compounding procedure
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7.1 The sum for which the contravention is compounded as specified in the order of compounding under
sub-rule (2) of Rule 8 of Foreign Exchange (Compounding Proceedings) Rules, 2000 is payable by way
of a demand draft in favour of the Reserve Bank of India within fifteen days from the date of the order of
compounding of such contravention. The demand draft has to be deposited in the manner as directed in
the compounding order.
7.2 On realization of the demand draft for the sum for which contravention is compounded, a certificate in
this regard shall be issued by the Reserve Bank subject to the specified conditions, if any, in the order.
7.3 The provisions of the Rules do not confer any right on the contravener, after a compounding order is
passed, to seek to withdraw the order or to hold the compounding order as void or request a review of the
order passed by the CA.
7.4 In case of failure to pay the sum compounded within the time specified in the compounding order, it
shall be deemed in terms of Rule 10 of the Foreign Exchange (Compounding Proceedings) Rules, 2000,
that the contravener had never made an application for compounding of any contravention under these
Rules.
7.5 In respect of the contraventions of FEMA, 1999 (as defined in section 13 of the FEMA, 1999), which
are not compounded by the Compounding Authority, other relevant provisions of FEMA, 1999, including
reference to the Directorate of Enforcement shall apply.
8. Pre-requisites for compounding process
8.1 In respect of a contravention committed by any person within a period of three years from the date on
which a similar contravention committed by him was compounded under the Compounding Rules, such
contraventions would not be compounded. Such contravention would be dealt with under relevant
provisions of the FEMA, 1999 for contravention. Any second or subsequent contravention committed after
the expiry of a period of three years from the date on which the contravention was previously
compounded shall be deemed to be a first contravention.
8.2 Contraventions relating to any transaction where proper approvals or permission from the
Government or statutory authority concerned, as the case may be, have not been obtained, such
contraventions would not be compounded unless the required approvals are obtained from the authorities
concerned.
8.3 Cases of contravention, such as, those having a money laundering angle, national security concern
and / or involving serious infringements of the regulatory framework or where the contravener fails to pay
the sum for which contravention was compounded within the specified period in terms of the
compounding order, shall be referred to the Directorate of Enforcement for further investigation and
necessary action under FEMA, 1999 or to the authority instituted for implementation of the Prevention of
Money Laundering Act 2002, (PMLA) or to any other agencies, for necessary action, as deemed fit.
8.4 The Reserve Bank generally advises the persons concerned of their choice and option to make an
application for compounding as and when such contraventions come to its notice. The facts constituting
such contraventions will be brought to the notice of the Directorate of Enforcement in case no application
for compounding is made within the time indicated by the Reserve Bank.
ANNEX-I
FOREIGN EXCHANGE (COMPOUNDING PROCEEDINGS) RULES, 2000
NOTIFICATION NO. G.S.R.383(E) DATED 3RD MAY 2000
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As amended vide
G.S.R.443(E) dated November 2, 2002
G.S.R. 609 (E) dated September 13, 2004 and
G.S.R. 613 (E) dated August 27, 2008
In exercise of the powers conferred by section 46 read with sub-section (1) of section 15 of the Foreign
Exchange Management Act, 1999 (42 of 1999) the Central Government hereby makes the following rules
relating to compounding contraventions under chapter IV of the said Act, namely:1. Short title and commencement (1) These rules may be called the Foreign Exchange (Compounding Proceedings) Rules 2000.
(2) They shall come into force on the 1st day of June, 2000.
2. Definitions - In these rules, unless the context otherwise requires (a) Act means the Foreign Exchange Management Act, 1999 (42 of 1999);
(b) authorised officer means an officer authorised under sub-rule (1) of rule 3;
(c) applicant means a person who makes an application under section 15 (1) of the Act to the
compounding authority;
(d) Compounding Order means an order issued under sub-section (1) of Section 15 of the Act;
(e) Form means a form appended to these rules;
(f) section means a section of the Act;
(g) all other words and expressions used in these rules and not defined but defined in the Act, shall have
the meaning respectively assigned to them in the Act.
3. (1) Compounding Authority means the persons authorised by the Central Government under subsection (1) of section 15 of the Act, namely;
(a) an officer of the Enforcement Directorate not below the rank of Deputy Director or Deputy Legal
Adviser (DLA).
(b) An officer of the Reserve Bank of India not below the rank of the Assistant General Manager.
4. Power of Reserve Bank to compound contravention 1
[(1) If any Person contravenes any provisions of Foreign Exchange Management Act, 1999 (42 of 1999)
except clause (a) of Section 3 of the Act.]
(a) in case where the sum involved in such contravention is ten lakhs rupees or below, by the Assistant
General Manager of the Reserve Bank of India;
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(b) in case where the sum involved in such contravention is more than rupees ten lakhs but less than
rupees forty lakhs, by the Deputy General Manager of Reserve Bank of India;
(c) in case where the sum involved in the contravention is rupees forty lakhs or more but less than
rupees hundred lakhs by the General Manager of Reserve Bank of India;
(d) in case the sum involved in such contravention is rupees one hundred lakhs or more, by the Chief
General Manager of the Reserve Bank of India;
Provided further that no contravention shall be compounded unless the amount involved in such
contravention is quantifiable.
(2) Nothing contained in sub-section (1) shall apply to a contravention committed by any person within a
period of three years from the date on which a similar contravention committed by him was compounded
under these rules.
Explanation: For the purposes of this rule, any second or subsequent contravention committed after the
expiry of a period of three years from the date on which the contravention was previously compounded
shall be deemed to be a first contravention.
(3) Every officer specified under sub-rule (1) of rule 4 of the Reserve Bank of India shall exercise the
powers to compound any contravention subject to the direction, control and supervision of the Governor
of the Reserve Bank of India.
(4) Every application for compounding any contravention under this rule shall be made in Form to the
Reserve Bank of India, Exchange Control Department, Central Office, Mumbai along with a fee of Rs.
5000/- by Demand Draft in favour of compounding authority.
5. The Power of Enforcement Directorate to compound contraventions 2
[(1) If any Person contravenes provisions of Section 3(a) of Foreign Exchange Management Act.]
(a) in case where the sum involved in such contravention is five lakhs rupees or below, by the Deputy
Director of the Directorate of Enforcement;
(b) in case where the sum involved in such contravention is more than rupees five lakhs but less than
rupees ten lakhs, by the Additional Director of the Directorate of Enforcement;
(c) in case where the sum involved in the contravention is rupees ten lakhs or more but less than fifty
lakhs rupees by the Special Director of the Directorate of Enforcement;
(d) in case where the sum involved in the contravention is rupees fifty lakhs or more but less than one
crore rupees by Special Director with Deputy Legal Adviser of the Directorate of Enforcement;
(e) in case the sum involved in such contravention is one crore rupees or more, by the Director of
Enforcement with Special Director of the Enforcement Directorate.
Provided further that no contravention shall be compounded unless the amount involved in such
contravention is quantifiable.
(2) Nothing contained in sub-section (1) shall apply to a contravention committed by any person within a
period of three years from the date on which a similar contravention committed by him was compounded
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under these rules.

Explanation: For the purposes of this rule, any second or subsequent contravention committed after the
expiry of a period of three years from the date on which the contravention was previously compounded
shall be deemed to be a first contravention.
(3) Every officer of the Directorate of Enforcement specified under sub-rule (1) of this rule shall exercise
the powers to compound any contravention subject to the direction, control and supervision of the
Director of Enforcement.
(4) Every application for compounding any contravention under this rule shall be made in Form to the
Director, Directorate of Enforcement, New Delhi, along with a fee of Rs.5000 by DD in favour of the
Compounding Authority.
6. Where any contravention is compounded before the adjudication of any contravention under section
16, no inquiry shall be held for adjudication of such contravention in relation to such contravention against
the person in relation to whom the contravention is so compounded.
7. Where the compounding of any contravention is made after making of a complaint under sub-section
(3) of section 16, such compounding shall be brought by the authority specified in rule 4 or rule 5 in
writing, to the notice of the Adjudicating Authority and on such notice of the compounding of the
contravention being given, the person in relation to whom the contravention is so compounded shall be
discharged.
8. Procedure for Compounding (1) The Compounding Authority may call for any information, record or any other documents relevant to
the compounding proceedings.
(2) The Compounding Authority shall pass an order of compounding after affording an opportunity of
being heard to all the concerned as expeditiously as possible as and not later than 180 days from the
date of application.
9. Payment of amount compounded 3
The sum for which the contravention is compounded as specified in the order of compounding under
sub-rule (2) of rule 8, shall be paid by demand draft in favour of the Compounding Authority within fifteen
days from the date of the order of compounding of such contravention.
10. In case a person fails to pay the sum compounded in accordance with the rule 9 within the time
specified in that rule, he shall be deemed to have never made an application for compounding of any
contravention under these rules and the provisions of the Act for contravention shall apply to him.
11. No contravention shall be compounded if an appeal has been filed under section 17 or section 19 of
the Act.
12. Contents of the order of the Compounding Authority (1) Every order shall specify the provisions of the Act or of the rules, directions, requisitions or orders
made there under in respect of which contravention has taken place along with details of the alleged
contravention.
(2) Every such order shall be dated and signed by the Compounding Authority under his seal.
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13. Copy of the order - One copy of the order made under rule 8(2) shall be supplied to the applicant
and the Adjudicating Authority as the case may be.
Format of Application
FORM
(See Rule 4 or 5)
(To be filled in duplicate and shall be accompanied by certified copy of the Memorandum issued)
1. Name of the applicant (in BLOCK LETTERS)
2. Full address of the applicant (including Phone and Fax Number and email id)
3. Whether the applicant is resident in India or resident outside India [Please refer to Section 2(v) of the
Act]
4. Name of the Adjudicating Authority before whom the case is pending
5. Nature of the contravention [according to sub-section (1) of Section 13]
6. Brief facts of the case
7. Details of fee for application of compounding
8. Any other information relevant to the case
I/We declare that the particulars given above are true and correct to the best of my/our knowledge and
belief and that I/We am/are willing to accept any direction/order of the Compounding Authority in
connection with compounding of my/our case.
Dated : (Signature of the Applicant)
Name
ANNEX-II- FDI
DETAILS TO BE FURNISHED ALONG WITH APPLICATION FOR COMPOUNDING OF
CONTRAVENTION RELATING TO FOREIGN DIRECT INVESTMENT IN INDIA
Name of the applicant
Nature of activities under taken
Brief particulars about the foreign investor
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Details of foreign inward remittances received by Applicant Company from date of incorporation till
date
TABLE A
Sl. No. Name of Remitter Total Amount (INR) Date of Receipt Reported to RBI on* Delay if any
Total
* date of reporting to RBI and not AD
TABLE B
Name of
Investor
Date of allotment
of shares
Number of
shares allotted
Amount for which

shares allotted
Date of reporting Delay if

to RBI*
any
Total
TABLE C
In case there is excess share application money
Sl.
No.
Name of
Remitter
Total
Amount
(INR)
Date of
Receipt
Excess share
application
money
Date of refund of
share application
money
Amount
in forex
RBI approval
letter and
date
Total
TABLE D
Authorised Capital
Sl. No. Date Authorised Capital With effect from Date of Board meeting Date of filing with ROC
A= B+C
Please give supporting documents Table A- Copies of FIRC with date stamp of receipt at RBI Table BCopies of FCGPR with date stamp of receipt at RBI Table C letter seeking refund/ allotment of sharesapproval letter from RBI A2 form
Copies of Balance Sheet during the period of receipt of share application money and allotment of
shares
Nature of contravention and reasons for the contravention
A declaration that they are not under investigation of any agency such as DoE, CBI, etc
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ANNEX II- ECB

CONTRAVENTION RELATING TO EXTERNAL COMMERCIAL BORROWING
Brief particulars about the foreign lender
Is the applicant an eligible borrower?
Is the lender eligible lender?
Is the lender an equity holder?
What is the level of his holding at the time of
loan agreement?
Details of ECB
Date of Loan agreement
Amount in Foreign Currency and Indian
Rupee
Rate of interest
Period of loan
Repayment particulars
Details of draw down
Date of draw
down
Amount in Foreign
Currency
Amount in
INR
Details of LRN Number- application and receipt

Details of ECB 2 returns submitted; Period of return: Date of submission
Details of Utilization of ECB in Foreign Currency and Indian Rupee
All supporting documents may be submitted
ANNEX-II- ODI
CONTRAVENTION RELATING TO OVERSEAS INVESTMENT
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Name of Overseas entity
Date of incorporation of overseas entity
Nature of activities under taken by overseas entity
Nature of entity- WOS/JV
Details of remittance sent- Date of remittance; Amount in FCY and in INR
Details of other financial Commitment
Details of UIN applied and received
Date of receipt of share certificate
Approval of other regulators if required
Details of APRs submitted: For the period ended; date of submission
ANNEX II- BRANCH OFFICE / LIAISON OFFICE
CONTRAVENTION RELATING TO BRANCH/LIAISON OFFICE IN INDIA
Date of approval for opening of Liaison Office/ Branch Office
Validity period of the approval
income and expenditure of the LO/BO
Dates of submission of Annual activity Certificates
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APPENDIX
LIST OF RULES/ A.P. (DIR SERIES) CIRCULARS CONSOLIDATED IN THE MASTER CIRCULAR
COMPOUNDING OF CONTRAVENTIONS OF FEMA, 1999
Rules Sl
No
Rules No.
Date
Foreign Exchange (Compounding Proceedings) Rules, 2000
May 3, 2000

(Amendment)
November 2, 2002

(Amendment)
September 13,
2004

(Amendment)
August 27, 2008
A.P.(DIR Series) Circular No. 56 dated June 28, 2010.

A.P.(DIR Series) Circular No. 57 dated December 13, 2011.
____________
1. GSR 613(E) dated August 27, 2008
2. GSR 609 (E) dated September 13, 2004
3. GSR 443(E) dated November 2, 2002
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CHAPTER 52
What is a Consumer Court
Definition of Consumer under the Act (Consumer Protection Act 1986)
A person who buys any goods or services for a consideration which has been paid or
promised or partly paid and partly promised or under any system of deferred payment is a
Consumer.
Please note that, A person who obtains such goods for resale or for any
commercial purposes will not be a consumer. However, if such goods are bought by a
person exclusively for the purpose of earning his livelihood by means of self-employment
then such a person will be considered as a consumer.
An NRI can also approach Consumer Forum court to get his grievance readdressed, provided the
transactions are in the nature of the definition as per Consumer Protection Act, 1986. Filing of complaint
in consumer court is very simple, you need not pay any court fees or engage any advocate to argue on
your behalf. You yourself or a person authorized by you can go and appear before the court. The
complaint can be prepared in white paper with relevant details and supporting. The various levels of
consumer courts functioning in India and its jurisdictions are given below
District Consumer Disputes Redressal Forum
You can file a complaint with the District Consumer Disputes Redressal
Forum if the compensation you seek is less than 20 lakhs. Created by the State Government, it is headed
by a person who is or has been or is eligible to be appointed as a District Judge, and has the District
Collector, members of parliament (MP), members of legislative assembly (MLA) and officials of all
Government departments having consumer interface of the concerned district as members. The court can
hear cases for companies that either operate an office or a branch within the district's limits, or if the
grievance occurred, either partially or fully, within the district.
Once the District Consumer Forum decides in your favor, it can ask the company to take any of the
following actions:
Rectify any deficiencies in the product to what is claimed

Repair any defect free of cost
Provide a similar or superior product in place of the existing product
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Refund the amount paid in full

Recompense for any damages / costs / inconveniences
Stop the sale of the product in the market altogether
Either discontinue or not repeat any unfair or restrictive trade practices
Issue corrective advertisement in place of any earlier misrepresentation
State Consumer Disputes Redressal Commission

If you are not satisfied with the verdict of the District Forum, then, within a period of 30 days, you can
approachthe State Consumer Disputes Redressal Commission. Presided over by a person who is or has
been a High Court judge, the State Consumer Court also deals with complaints where the compensation
sought is between 20 lakhs and 1 crore. Here again, the court can hear cases for companies that either
operate an office or a branch within the state, or if the grievance occurred, either partially or fully, within
the state. As per law, the State Consumer Court has to function in the state capital, but the government
has the powers to shift it as required.
The State Consumer Forum usually hears cases of three types:
Appeals from District Consumer Forums

Cases against companies that operate an either an office or a branch within the state
Cases where the actual reason for filing the complaint occurred within the state, either partially or
fully.
National Consumer Disputes Redressal Commission

If you are still unhappy with the State Consumer Court's decision, then the National Consumer Disputes
Redressal Commission is the place you need to go to within a period of 30 days. The National
Commission deals with complaints where the compensation sought from the company is more than 1
crore. The National Commission functions in New Delhi, and is lead by a person who is or has been a
judge
of
the
Supreme
Court
of
India.
The National Commission handles five types of cases:
Complaints that have either been sought or that need to be shifted from one State Consumer
Court to another in the interest of justice.
Appeals made from State Consumer Courts
Complaints that occurred anywhere in India except in the State of Jammu and Kashmir
State Consumer Courts cases where there have been allegations or proof of material
irregularities or any other illegal activities
Cases where verdicts have been passed in the absence of either parties (ex-parte)
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CHAPTER 53
Duty Free Shops
Duty free shops located in international airports in India, provides

opportunities to the international travelers to buy most of the international brand products from the
destination airport itself at almost the same price those products are available in the respective countries.
Indians are shopping more at Indian duty-free shops because of the convenience shopping on arrival
offers, such as less baggage to carry and comparable pricing. Liquor, chocolates, perfumes and
cosmetics are the most shopped categories by arriving passengers while departing passengers shop for
souvenirs and destination products. Around 25 per cent of the products (books, DVDs and souvenirs) are
sourced locally. Also, there are certain restrictions in buying products like liquor; each international
passenger can buy only 2 liters of liquor. All international passengers needs to produce their passport
and travelling details to buy products form duty free shops especially liquors.
Duty-free shops (or stores) are that are exempt from the payment of certain local or national and taxes
on the requirement that the goods sold will be sold to travelers who will take them out of the country.
Which products can be sold duty-free vary by jurisdiction, as well as how they can be sold, and the
process of calculating the duty or refund the duty component. However, some countries impose duty on
goods brought into the country, though they had been bought duty-free in another country, or when the
value or quantity of such goods exceed an allowed limit. Duty-free shops are often found in the
international airports and sea ports but goods can be also bought duty-free on board airplanes and
passenger ships. They are not as commonly available for road or train travelers.
Please keep in mind that, duty free shops in Indian airports will not accept Indian Rupees, you need to
pay them in foreign currency like USD, GBP, SAR, AED etc. In case you do not have sufficient foreign
currency to pay the bills, you can use your credits for this purpose.
Custom circular about setting up bonded warehouse for gems and jewellery
Custom department has issued acircular no. 11/2013 dated 7 March 2013 about setting up
public/privatebonded warehouse for gems &jewellery sector. Full circular is as under.
Subject: Setting up of Public/PrivateBonded Warehouses for Gems & JewellerySector
Director General of Foreign Trade vide notification no. 30 (RE-2012)/2009-2014 dated 31.01.2013
amended FTP 2009-2014 and introduced a new para 4A.16A for settingup of Public / Private Bonded
Warehouses for Gems & JewellerySector. The scheme under para 4A.16A of FTP 2009-2014
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provides forsetting up Private / Public Bonded Warehouses in SEZ/DTA for import and re-export of cut
and Polished diamonds, cut and polished coloured gemstones, uncut & unset precious & semi-precious
stones, subject to achievement of minimum Value Addition (VA) of 5%.
2.
To operationalise the above scheme, procedure as follows may be followed:
(i) The scheme shall be applicable to jurisdiction of Commissioners of Customs (a) CSI Airport, Mumbai, (b)
Jodhpur (Hq. at Jaipur), (c) Air Cargo Export, Delhi and (d) Airport & Air Cargo,
Chennai. A Private/Public bonded Warehouse may be set up in SEZ/DTA subject to observance of
Board's existing instructions on setting up such warehouses wherein imported goods would be kept by
the warehouse licence holder. Physical control over thewarehouse in the form of Double Lock System
and posting of Cost Recovery Officer is waived.
(ii) Clearance from the bonded warehouse may be taken by EOU under authorization from the
Deputy/Assistant Commissioner and on filing ex-bond Bill of Entry.
(iii) Clearance from the bonded warehouse may be taken by units in SEZ in accordance with the SEZ Act,
2005 and the rules made thereunder.
(iv) The holders of GEM REP Authorizations can take the goods by following the procedures given under
para 4A.4, 4A.4.1 and 4A.4.2 of Handbook of Procedures Volume I. Details in this regard are to be given
to the Deputy/Assistant Commissioner bywarehouse licence holder instead of licensing authority.
(v) The warehouse licence holders shall be responsible for the safe keeping of the goods, for making
physical delivery thereof to the users, as the case may be, against duty assessed Bills of Entry on which
ex-bond clearance has been allowed by the proper officer, and for rendering to Customs a complete
account of goods received and kept by them in bond. In their capacity as bonders, they will also maintain
the prescribed records, including name, address and other specified details of the users and quantity of
the goods released to the user and exported by him.
(vi) Separate Bond/Stock Account register in the form, Annexure-I and Stock Card in the form, Annexure-II is
to be maintained by the each Licensee. The details are to be filled on the date of transaction and the
signatures of the Licensee/ authorised representative be appended after every transaction.
3.
The above said procedures may be brought into effect immediately, and the trade informed suitably.
Proper steps may be taken for smooth transition from existing scheme to new scheme without dislocating
the trade.
4.
Wide publicity may please be given to this Circular by way of issuance of Trade/Public Notice.
5.
Receipt of this circular may kindly be acknowledged.
.
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CHAPTER 55
Indian citizenship can be acquired by birth, descent, registration and

naturalization. The conditions and procedure for acquisition of Indian citizenship as per the provision of
the Citizenship Act, 1955 are given below:
(1) By Birth (Section 3)
A person born in India on or after 26th January 1950 but before 1st July,
1987 is citizen of India by birth irrespective of the nationality of his parents.
A person born in India on or after 1st July,1987 but before 3rd December, 2004 is
considered citizen of India by birth if either of his parents is a citizen of India at the time of his
birth.
A person born in India on or after 3rd December, 2004 is considered citizen of India by birth if
both the parents are citizens of India or one of the parents is a citizen of India and the other is not
an
illegal
migrant
at
the
time
of
his
birth.
An ?illegal migrant? as defined in section 2(1)(b) of the Act is a foreigner who entered India.
(i)
without
valid
passport
or
other
prescribed
travel
documents
or
(ii) with a valid passport or other prescribed travel documents but remains in India beyond the
permitted period of time.
(2) By Descent (Section 4)
A person born outside India on or after 26th January 1950 but before 10th December 1992
is a citizen of India by descent, if his father was a citizen of India by birth at the time of his birth. In
case the father was a citizen of India by descent only, that person shall not be a citizen of India,
unless his birth is registered at an Indian Consulate within one year from the date of birth or with
the permission of the Central Government, after the expiry of the said period.
A person born outside India on or after 10th December 1992 but before 3rd December, 2004, is
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considered as a citizen of India if either of his parents was a citizen of India by birth at the time of
his birth. In case either of the parents was a citizen of India by descent, that person shall not be a
citizen of India, unless his birth is registered at an Indian Consulate within one year from the date
of birth or with the permission of the Central Government, after the expiry of the said period.
A person born outside India on or after 3rd Decmber, 2004 shall not be a citizen of India, unless
the parents declare that the minor does not hold passport of another country and his birth is
registered at an Indian consulate within one year of the date of birth or with the permission of the
Central Government, after the expiry of the said period.
Procedure
Application for registration of the birth of a minor child to an Indian consulate under Section 4(1) shall be
made in Form-I and shall be accompanied by an undertaking in writing from the parents of such minor
child that he does not hold the passport of another country.
(3) By Registration (Section 5(1))
Indian Citizenship by registration can be acquired (not illegal migrant) by:
Persons of Indian origin who are ordinarily resident in India for SEVEN YEARS before making
application under section 5(1)(a) (throughout the period of twelve months immediately before
making application and for SIX YEARS in the aggregate in the EIGHT YEARS preceding the
twelve months). Application shall be made in Form I.
Persons of Indian origin who are ordinarily resident in any country or place outside undivided
India
under
section
5(1)(b).
Persons who are married to a citizen of India and who are ordinarily resident in India for
SEVEN YEARS (as mentioned at (a) above) before making application under section 5(1)(c).
Application shall be made in Form-II.
Minor children whose both parents are Indian citizens under section 5(1)(d). Application shall be
made by his parents in Form-III.
Persons of full age whose both parents are registered as citizens of India under section 5(1)(a) or
section 6(1) can acquire Indian citizenship under section 5(1)(e). Application shall be made in
Form III-A.
Persons of full age who or either of the parents were earlier citizen of Independent India and
residing in India for ONE YEAR immediately before making application under section 5(1)(f).
Application shall be made in Form III- B.
Persons of full age and capacity who has been registered as an OVERSEAS CITIZEN OF INDIA
(OCI) for five years and residing in India for ONE YEAR before making application under section
5(1)(g).
Application
shall
be
made
in
Form
III-C.
Clarification: A person shall be deemed to be a Person of Indian origin if he, or either of his
parents, was born in undivided India or in such other territory which became part of India after the
15th day of August, 1947.

Any minor child can be registered as a citizen of India under Section 5(4), if the Central Government is
satisfied that there are ?special circumstances? justifying such registration. Each case would be
considered on merits. Application shall be made in Form-IV.
Procedure
Application in relevant Form for grant of Indian citizenship by registration under section 5 has to be
submitted to the Collector/District Magistrate of the area where the applicant is resident. The application
492 | P a g e
has to be accompanied by all the documents and fees payments as mentioned in the relevant Forms. It is
very important that applications are complete in all respects otherwise valuable time of the applicant
would be lost in making good the deficiencies after they were detected. The application along with a
report on the eligibility and suitability of the applicant is to be sent by the Collector/District Magistrate to
the concerned State Government/UT Administration within 60 days. Thereafter, the State Govt./UT
Administration shall forward the application to the Ministry of Home Affairs (MHA), Government of India
within 30 days.
Each application is examined in MHA in terms of the eligibility criteria under the Citizenship Act, 1955 and
the Citizenship Rules, 1956. If the applicant is not fulfilling the eligibility criteria, communication to this
extent would be sent through the State Govts./UT Administration. Any deficiency in the application would
be brought to the notice of the applicant through the State Govt./ UT Administration. The applicant,
thereafter, has to make good the deficiency through the State Govts./UT Administration. No
correspondence would be made directly with the applicant. However, a copy of the correspondence
through the State Govts./UT Administration would be marked to the applicant. Each applicant whose case
is found to be eligible after scrutiny of application is informed about the acceptance of his application
through the State Government. The applicant should not renounce his foreign citizenship till the
citizenship application is accepted and informed of the decision. The applicant is then required to furnish
through the State Government, a certificate of the renunciation of his foreign citizenship issued by the
mission of the concerned country, proof of fee payment as per SCHEDULE IV of the Act, and personal
particulars in Form-V. Thereafter, a certificate of Indian citizenship is issued to the applicant through the
State Government.
(5) By Naturalisation (Section 6)
Citizenship of India by naturalization can be acquired by a foreigner (not illegal migrant) who is ordinarily
resident in India for TWELVE YEARS (throughout the period of twelve months immediately preceding the
date of application and for ELEVEN YEARS in the aggregate in the FOURTEEN YEARS preceding the
twelve months) and other qualifications as specified in Third Schedule to the Act. Application shall be
made in
APPLICATION FOR CITIZENSHIP

3. Application for registration of birth under section 4.- A person may submit an application
for registration of birth of his minor child born outside India in terms of sub-section (1) of section 4 in Form
I to the Indian consulate in the country, where such child was born, together with a declaration that the
child does not hold the passport of any other country.
4. Application for registration under clause (a) of sub-section (1) of section 5.- An
application from a person of Indian origin for registration as a citizen of India under clause (a) of subsection (1) of section 5 shall not be entertained unless
(a) the application is made in Form II;
(b) he gives an undertaking in writing that he shall renounce the citizenship of his country in the
event of his application being sanctioned;
(c) he is ordinarily resident in India for a period of at least seven years on the date of making
application; and
(d) he makes the oath of allegiance as specified in the Second Schedule to the Citizenship Act,
1955.
5. Application for registration under clause (c) of sub-section (1) of section 5.- (1) An
application from a person, who is married to a citizen of India, for registration as a citizen of India under
clause (c) of sub-section (1) of section 5 shall not be entertained unless
(a) the application is made in Form III;
493 | P a g e
(c) on the date of making the application he,(i) has been ordinarily a resident of India; or
(ii) has been in the service of the Government of India;
at least for a period of seven years; and
(d) he makes the oath of allegiance as specified in the Second Schedule to the Citizenship Act, 1955.
Explanation.- In computing the period of seven years, any broken period of residence and service under
sub-clauses (i) and (ii) of clause (c) shall be included in the period specified therein.
(2) The Central Government may, in consideration of the special circumstances, exempt, any foreign
national married to such an Indian citizen who is in the service of the Government in India, from the
operation of clause (c) of sub-rule (1).
(3) The Central Government may, in consideration of the special circumstances, exempt any foreign
national who has been married to an Indian citizen for not less than seven years and who has visited
India at least once in a year during any seven years out of nine years, from the operation of clause (c) of
sub-rule (1).
6. Application for registration under clause (d) of sub-section (1) of section 5.- An
application for registration as a citizen of India under clause (d) of sub-section (1) of section 5, for a minor
child of a person who is a citizen of India, shall not be entertained unless
(a) the application is made in Form IV; and
(b) the parent of such minor child declares that he is the legal guardian of the child.
7. Application for registration under clause (e) of sub-section (1) of section 5.- An
application from a person for registration as citizen of India under clause (e) of sub-section (1) of section
5 shall not be entertained unless
(a) the application is made in Form V;
event of his application being sanctioned ; and
(c) he makes the oath of allegiance as specified in the Second Schedule to the Citizenship Act,
1955.
8. Application for registration under clause (f) of sub-section (1) of section 5.- An
application from a person for registration as a citizen of India under clause (f) of sub-section (1) of section
5 shall not be entertained unless (a) the application is made in Form VI;
(b) he gives an undertaking that he shall renounce the citizenship of his country in the event of
his application being sanctioned;
(c) he is resident in India for a continuous period of at least one year on the date of making
application; and
1955.
9. Application for registration under clause (g) of sub-section (1) of section 5.- An
application from a person registered as an overseas citizen of India, for registration as a citizen of India
under clause (g) of sub-section (1) of section 5, shall not be entertained unless (a) the application is made in Form VII;
(c) he has been an overseas citizen of India for a period of at least five years and resident in India
for a continuous period of one year on the date of making application; and
1955.
10. Application for grant of citizenship by naturalisation under sub- section (1) of section
6.- An application from a person for naturalisation as a citizen of India under sub-section (1) of section 6
shall not be entertained unless
(a) the application is made in Form VIII;
event of his application being sanctioned; and
(c) the application is accompanied with (i) a duly stamped affidavit verifying the correctness of the statements made in the
494 | P a g e
application alongwith two affidavits from Indian citizens testifying the character of the
applicant; and
(ii) a certificate depicting that the applicant has adequate knowledge of one of the languages specified in
the Eighth Schedule to the Constitution of India.
Explanation 1.- The applicant shall be considered to have adequate knowledge of the concerned
language if he can speak or read or write that language.
Explanation 2.- The certificate may either be issued by a recognised educational institution or a
recognised public organization or from two persons of the locality or district of the applicant who are
citizens of India.
11. Authority to which application may be made.- (1) An application for registration under
section 5 or naturalisation under section 6 shall be made to the Collector within whose jurisdiction the
applicant is ordinarily resident.
(2) On the receipt of the application, the Collector shall issue an acknowledgment in Form IX.
(3) On being satisfied about the correctness of the particulars of application and before
forwarding the application to the State Government or the Union territory Administration, as the case may
be, the Collector shall administer to the applicant, who has applied for grant of citizenship by registration,
the oath of allegiance as specified in the Second Schedule to the Citizenship Act, 1955.
Foreigners Division
495 | P a g e

Indian citizenship can be acquired by birth, descent, registration and naturalization. The conditions and
procedure for acquisition of Indian citizenship as per the provision of the Citizenship Act, 1955 are given
below:
(1) By Birth (Section 3)
A person born in India on or after 26th January 1950 but before 1st July, 1987 is citizen of India
by birth irrespective of the nationality of his parents.
A person born in India on or after 1st July,1987 but before 3rd December, 2004 is
considered citizen of India by birth if either of his parents is a citizen of India at the time of his
birth.
A person born in India on or after 3rd December, 2004 is considered citizen of India by birth if
both the parents are citizens of India or one of the parents is a citizen of India and the other is not
an illegal migrant at the time of his birth.
An ?illegal migrant? as defined in section 2(1)(b) of the Act is a foreigner who entered India.
(i) without a valid passport or other prescribed travel documents : or
(ii) with a valid passport or other prescribed travel documents but remains in India beyond the
permitted period of time.
(2) By Descent (Section 4)
A person born outside India on or after 26th January 1950 but before 10th December 1992
is a citizen of India by descent, if his father was a citizen of India by birth at the time of his birth. In
case the father was a citizen of India by descent only, that person shall not be a citizen of India,
unless his birth is registered at an Indian Consulate within one year from the date of birth or with
the permission of the Central Government, after the expiry of the said period.
A person born outside India on or after 10th December 1992 but before 3rd December, 2004, is
considered as a citizen of India if either of his parents was a citizen of India by birth at the time of
his birth. In case either of the parents was a citizen of India by descent, that person shall not be a
citizen of India, unless his birth is registered at an Indian Consulate within one year from the date
of birth or with the permission of the Central Government, after the expiry of the said period.
A person born outside India on or after 3rd Decmber, 2004 shall not be a citizen of India, unless
the parents declare that the minor does not hold passport of another country and his birth is
registered at an Indian consulate within one year of the date of birth or with the permission of the
Central Government, after the expiry of the said period.
Procedure
Application for registration of the birth of a minor child to an Indian consulate under Section 4(1) shall be
made in Form-I and shall be accompanied by an undertaking in writing from the parents of such minor
child that he does not hold the passport of another country.
Indian Citizenship by registration can be acquired (not illegal migrant) by:
Persons of Indian origin who are ordinarily resident in India for SEVEN YEARS before making
application under section 5(1)(a) (throughout the period of twelve months immediately before
making application and for SIX YEARS in the aggregate in the EIGHT YEARS preceding the
496 | P a g e
twelve months). Application shall be made in Form I.

Persons of Indian origin who are ordinarily resident in any country or place outside undivided
India under section 5(1)(b).
Persons who are married to a citizen of India and who are ordinarily resident in India for
SEVEN YEARS (as mentioned at (a) above) before making application under section 5(1)(c).
Application shall be made in Form-II.
Minor children whose both parents are Indian citizens under section 5(1)(d). Application shall be
made by his parents in Form-III.
Persons of full age whose both parents are registered as citizens of India under section 5(1)(a) or
section 6(1) can acquire Indian citizenship under section 5(1)(e). Application shall be made in
Form III-A.
Persons of full age who or either of the parents were earlier citizen of Independent India and
residing in India for ONE YEAR immediately before making application under section 5(1)(f).
Application shall be made in Form III- B.
Persons of full age and capacity who has been registered as an OVERSEAS CITIZEN OF INDIA
(OCI) for five years and residing in India for ONE YEAR before making application under section
5(1)(g). Application shall be made in Form III-C.
Clarification: A person shall be deemed to be a Person of Indian origin if he, or either of his
parents, was born in undivided India or in such other territory which became part of India after the
15th day of August, 1947.

Any minor child can be registered as a citizen of India under Section 5(4), if the Central Government is
satisfied that there are ?special circumstances? justifying such registration. Each case would be
considered on merits. Application shall be made in Form-IV.
Procedure
Application in relevant Form for grant of Indian citizenship by registration under section 5 has to be
submitted to the Collector/District Magistrate of the area where the applicant is resident. The application
has to be accompanied by all the documents and fees payments as mentioned in the relevant Forms. It is
very important that applications are complete in all respects otherwise valuable time of the applicant
would be lost in making good the deficiencies after they were detected. The application along with a
report on the eligibility and suitability of the applicant is to be sent by the Collector/District Magistrate to
the concerned State Government/UT Administration within 60 days. Thereafter, the State Govt./UT
Administration shall forward the application to the Ministry of Home Affairs (MHA), Government of India
within 30 days.
Each application is examined in MHA in terms of the eligibility criteria under the Citizenship Act, 1955 and
the Citizenship Rules, 1956. If the applicant is not fulfilling the eligibility criteria, communication to this
extent would be sent through the State Govts./UT Administration. Any deficiency in the application would
be brought to the notice of the applicant through the State Govt./ UT Administration. The applicant,
thereafter, has to make good the deficiency through the State Govts./UT Administration. No
correspondence would be made directly with the applicant. However, a copy of the correspondence
through the State Govts./UT Administration would be marked to the applicant. Each applicant whose case
is found to be eligible after scrutiny of application is informed about the acceptance of his application
through the State Government. The applicant should not renounce his foreign citizenship till the
citizenship application is accepted and informed of the decision. The applicant is then required to furnish
through the State Government, a certificate of the renunciation of his foreign citizenship issued by the
mission of the concerned country, proof of fee payment as per SCHEDULE IV of the Act, and personal
particulars in Form-V. Thereafter, a certificate of Indian citizenship is issued to the applicant through the
497 | P a g e
State Government.
(5) By Naturalisation (Section 6)
Citizenship of India by naturalization can be acquired by a foreigner (not illegal migrant) who is ordinarily
resident in India for TWELVE YEARS (throughout the period of twelve months immediately preceding the
date of application and for ELEVEN YEARS in the aggregate in the FOURTEEN YEARS preceding the
twelve months) and other qualifications as specified in Third Schedule to the Act. Application shall be
made in
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CHAPTER 56
GENERAL REQUIREMENTS FOR REGISTRATION OF A FOREIGN NATIONAL
Registration is required for
Foreigners visiting India on long term (more than 180 days)

Student visa(S) (including those coming for study of Yoga, Vedic Culture, Indian system of
dance and Music), Research Visa(R), Employment Visa(E),Missionary Visa (M) ,Medical
Visa(M) or Medical Attendant (MX) Visa are required to get themselves registered with
concerned FRRO/FRO within 14 days of his/her first arrival, irrespective of the duration of their
stay.
If the Indian Visa has a stipulation/ observation/ Special endorsement made by Indian mission/
Embassy on the Indian Visa for Registration, the Foreigners are required to be registered..
Foreigners visiting India on other categories of long term visa including Business/Entry(X) visa
would not require registration with the concerned FRROs/FROs if , repeat if duration of his/her
stay does not exceed 180 days on a single visit. In case a foreigner intends to stay for more
than 180 days on a single visit he should get himself registered well before the expiry of 180
days.
Pakistan Nationals are required to register within 24 hours and Afghanistan Nationals are
required to register within 14 days of their arrival in India. Pak nationals may report to Special
Branch, Police Bhawan, Asaf Ali Road, Delhi for registration.
Registration facilities are not provided at the airport and are carried out in the office of FRROs or
District Superintendents of Police (FROs).
Personal presence of the foreigner at the FRRO/FRO office is mandatory for visa related
services.
Children below 16 years of age are exempt from Registration if they have entered on PIO card
or on any type of VISA.
Itis mandatoryfor the foreigner (even children) to personally appear at the FRRO office, Delhi for
obtaining any visa related services.
Penalty for late Registration

No fee is charged for registration, but a penalty in Indian currency equivalent to US$ 30/(Rs.1395/-) in case of late registration is charged.
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Requirements at the time of Registration

Every foreigner at the time of Registration, shall furnish, such information in registration report, as may be
in his possession for the purpose of satisfying the Registration Officer and shall, on being required, shall
sign the registration report in the presence of the said officer and shall thereupon be entitled to receive
from the said officer a certificate of registration in Part III of Form A
:A foreigner is also required to submit:
Four recent passport size photographs;

Photocopy of photo page and valid Indian Visa page of the passport;
Proof of residential address in India;Documents of identification and;
In case of Student Visa, bonafide certificate from School/College;
In case of Employment Visa, request letter, undertaking, contract
agreement from employer.
In case of Business Visa, business related papers on the
authenticity of the business, copy of permission from Reserve
Bank of India and approval of Government of India in case of
joint venture/collaboration;
In case of Journalist Visa, accreditation certificate from Press Information
Bureau and approval of Ministry of External Affairs.
In case of Research Visa, bonafide certificate & letter from the nodal
agency/Ministry sponsoring the Research
( For further details on Documents required please see the concerned
Visa page)
Liability of production of Registration ertificate

Every registered foreigner shall, within twenty-four hours, which can be extended if sufficient cause is
shown, on demand by any Registration Officer, any magistrate or any police officer not below the rank of
a head constable, produce his certificate of registration for inspection by such registration officer,
magistrate or police officer:If the Registration Officer, magistrate or police officer, not being below the
rank of an Inspector is of the opinion that the passport or other documents of identification produced by
the foreigner do not furnish adequate proof of identity and if the registration certificate does not bear the
photograph or finger impressions/signatures, he may be asked to produce, four copies of passport size
photograph, four complete sets of his finger impressions/signatures, one of which shall be made on the
Registration Certificate. The finger impression/signatures shall be made in the presence of the
Registration Officer and each set attested by him.
Report of absence from Registered Address
If at any time a foreigner proposes to be absent from one's registered address for a continuous period of
eight weeks or more or one is changing his registered address then the foreigner is required to inform in
person or through an authorized representative or by registered post to his Registration Officer of his
intention to leave either temporarily or permanently the jurisdiction of the Registration Officer. In case of
return, the foreigner should inform the Registration Officer of the date of return and in the case the
foreigner is moving away, the change of address. Any changes made subsequently should also be
intimated to the Registration Officer.
Every foreigner, who stays for a period of more than eight weeks at any place in any district other than
the district in which registered address is situated, shall inform the Registration Officer of that district of
his presence. This can be made in writing and the requirements deemed to have been fulfilled if, prior to
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arrival the foreigner furnishes to the Registration Officer of the said district intimating the dates of his
proposed arrival and departure from the district.
Change in Registered address

A foreigner shall be deemed to have changed his registered address, if he changes his residence from
one place to another place in India and if having no residence, he leaves his registered address knowing
that he is not likely to return within six months of leaving it.
Reports of other changes except address

Every foreigner is required to furnish to the Registration Officer of the district in which his registered
address is situated, particulars of any circumstances affecting in any manner the accuracy of the
particulars recorded in his certificate of registration within fourteen days after the circumstance has
occurred, and generally shall provide to the Registration Officer all information as may be necessary for
maintaining the accuracy of the certificate.
Surrender of certificates of registration on departure

Every foreigner who is about to depart finally from India shall surrender his certificate of registration either
to the Registration Officer of the place where he is registered or of the place from where he intends to
depart or to the Immigration Officer at the Port/Check post of exit at the time of final departure from India.
If the certificate is surrendered other than to the Immigration Officer of the port or check post of exit, a
receipt indicating such surrender of the document may be obtained and shown to the Immigration Officer
at the time of final departure.
Duplicate certificate of registration

If any certificate of registration, issued under these rules is lost or destroyed, the foreigner to whom it was
issued, shall make or send to the Registration Officer of the district of his registered address a report of
circumstances in which it was so lost or destroyed together with an application in writing a copy of police
report in order to issue a duplicate copy of the certificate of registration.
Production of proof of Identity

Every foreigner shall within twenty-four hours of demand being made of him by any Registration Officer,
magistrate or police officer, not below the rank of a head constable ,which can be extended in case of
sufficient cause shown by the foreigner, shall produce, at such place as may be specified , his passport or
such other proof of his identity.
Every foreigner entering India shall, on demand by the Registration Officer, deliver his passport or other
proof of identity to that officer and shall thereafter attend at such time and place as the Registration
Officer may direct for the purpose of receiving back his passport and shall be entitled to receive a receipt
for it from the Registration Officer.
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Report to be made to and by hotel keepers.

Every keeper of a hotel shall require every visitor to the hotel to furnish the particulars necessary for
recording, and sign, on his arrival at the hotel, his name and nationality in a register maintained for the
purpose in Hotel Register and, if any such visitor is a foreigner shall further require him;
(a) On his arrival at such a hotel to furnish the other particulars specified in Items 4 to 10 of the said
register; and
(b) At the time of his departure from such a hotel to furnish the particulars necessary for recording in the
said register, the date and time of his departure and the address to which he is proceeding.
The prescribed Hotel Register shall at all time be made available for inspection, on the demand of the
Registration Officer, any magistrate or any police officer not below the rank of head constable.
Every particular, other than the signature of the keeper of a hotel or a visitor, which is required to be
recorded in the said register, shall be recorded by the keeper of the hotel in the English language or
otherwise, in an Indian language.
It shall be duty of the keeper of the hotel, if so requested to explain to the visitor the requirements of doing
the same.
The keeper of the hotel shall, as soon as it may be but not more than twenty four hours, after the arrival of
any foreigner, transmit a copy of duty completed Form C to the Registration Officer (Copies of Form C
can be obtained, from any Registration Officer on application).
(a)Hotel includes any boarding-house, club, dak-banglow, rest house, paying guest house, sarai or
other premises of like nature;
(b)Keeper of a hotel means the person having the management of a hotel and includes
any person authorized by the keeper, and competent to perform the duties of the
keeper of the hotel.
(c)Sign includes, in respect of a visitor who is unable to write, the making of a thumb
impression or other mark by means of which he is accustomed to attest a
document; and
(d) Visitor means a person for whom accommodation is provided at a hotel.
Obligation of masters of vessels, etc.

The master or the person having management of any vessel arriving at or leaving any place in India
shall
(a) require any person who intends to disembark from or embark on any such vessel for the purpose of
entering or leaving India, to furnish in writing a true statement of the particulars set out in Form D
(Disembarkation/Embarkation Card), as the case may be;
(b) cause Form D(Disembarkation/Embarkation Card) to be delivered to the Registration Officer at the
place of arrival or departure
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(c) Take steps to ensure that no foreigner disembarks or embarks until authorized to do so by the
Registration Officer.
(d) If so requested by the Registration Officer, a foreigner who is about to depart from India shall
surrender his certificate of registration and deliver such certificate to Registration Officer;
(e) If so required by the Registration Officer, furnish on arrival at the said place a true statement in writing
showing the name and nationality of every seaman employed on such vessel, and at the time of departing
from such place take such steps as the Registration Officer may specify to ascertain whether or not any
such seaman as aforesaid who is a foreigner is about to depart on board such vessel; and
(f) Generally render to the Registration Officer such assistance as he may reasonably require for carrying
out the purpose of the Act and these rules.
The master or the person having the management of any vessel arriving at, or leaving any place in India
by Sea shall also furnish, before any passenger disembarks or embarks, to the Registration Officer of any
such place, a passenger manifest in prescribed format.
Every particular, other than the signature of a foreign passenger, which is required to be recorded in Form
D, as the case may be, shall be recorded;
(a) if the passenger is able to write in English language, by the passenger , in the English language;
(b) if the passenger is unable to write in English language, by the passenger, in an Indian language; or
(c) if the passenger is unable to write in English language or in an Indian language, by the master of the
vessel or by any person having the management of such vessel or by any seaman authorized in this
behalf by such master or person, in the English language or in an Indian language.
If a foreign passenger does not understand the English language or Indian language it shall be the duty of
the master of the vessel, if so requested, to explain to the foreign passenger the requirements.
Passenger Manifest shall be completed in the English language or in an Indian language
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CHAPTER 57
What is AADHAAR ?
The Aadhaar a 12 digit Number/ UID would be issued to every individual resident in India that satisfies
the verification process laid down by the UIDAI, including NRIs, and foreigners residing in India. The
physical presence in India for providing fingerprints and other bio-metrics etc is necessary. Aadhaar UID
doesnt establish citizenship and is not only for Indians but also foreigners residing in India. No resident
can have a duplicate number since it is linked to each individual. Every citizen of India (either NRI, POI)
must get this identification proof.
The Unique Identification Authority of India (the Authority/ UIDAI) has been constituted and notified as
an attached office under the aegis of Planning Commission of India and it has been given the
responsibility to lay down the plan and policies to implement UID scheme by notification dated January
28th, 2009. The Government appointed Shri. Nandan Nilekani as Chairman of the Unique Identification
Authority of India, on July 2, 2009 in the rank and status of a Cabinet Minister for an initial tenure of five
years. On July 30th, 2009, the Prime Ministers Council on Unique Identification Authority of India was
constituted to advise the UIDAI on programme, methodology and implementation to ensure co-ordination
between Ministries/Departments, various stakeholders and partners. On August 12th, 2009 the first
meeting of the Prime Ministers Council was held to approve the broad UIDAI approach.
The cabinet committee on UIDAI was constituted on October 22, 2009 it is headed by the Honourable
Prime Minister and consists of the Minister of Finance, Minister of Agriculture and Minister of Consumer
Affairs, Food and Public Distribution, Minister of Home Affairs, Minister of External Affairs, Minister of Law
and Justice, Minister of Communications and Information Technology, Minister of Labour and
Employment, Minister of Human Resource Development, Minister of Rural Development and Panchayati
Raj, Minister of Housing and Urban Poverty Alleviation and Minister of Tourism. The Deputy Chairman
Planning Commission and Chairman UIDAI are special invitees. The Cabinet Committee overseas all All
issues relating to the Unique identification Authority of India including its organisation, plans, policies,
programmes, schemes, funding and methodology to be adopted for achieving the objectives of the
Authority.
It is proposed that the UIDAI should be set up as a statutory authority and be named the National
Identification Authority of India, the draft bill is available on www.uidai.gov.in.
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Other Features of Aadhaar
Aadhaar is a 12 digit individual identification number issued by the Unique Identification Authority of India
on behalf of the Government of India.
This number will serve as a proof of identity and address, anywhere in India.
Any individual, irrespective of age and gender, who is a resident in India and satisfies the verification
process laid down by the UIDAI can enrol for Aadhaar.
Each individual needs to enroll only once which is free of cost.
Each Aadhaar number will be unique to an individual and will remain valid for life. Aadhaar number will
help you provide access to services like banking, mobile phone connections and other Govt and NonGovt services in due course.
Some other information about Aadhaar:
Aadhaar will be:
Easily verifiable in an online, cost-effective way
Unique and robust enough to eliminate the large number of duplicate and fake identities in government
and private databases
A random number generated, devoid of any classification based on caste, creed, religion and geography
How to Get an Aadhaar ?
Aadhaar enrolment is free.
You can go to any authorized Aadhaar enrollment center anywhere in India with your identity and
address proof.
UIDAI process accepts 18 PoI (Proof of Identity) and 33 PoA (Proof of Address) documents. Please
click here for a nationally valid list of documents. Common proofs of identity and address are election
photo ID card, Ration card, passport and driving license.
Photo ID cards like PAN card and Govt ID cards are permissible for identity proof. Address proof
documents also include water electricity telephone bills from the last three months.
In case you do not have above common proofs, Certificate of Identify having photo issued by
Gazetted Officer/Tehsildar on letterhead is also accepted as PoI. Certificate of Address having photo
issued by MP or MLA /Gazetted Officer/Tehsildar on letterhead or by Village Panchayat head or its
equivalent authority (for rural areas) is accepted as valid PoA.
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Even if someone in a family does not have individual valid documents, the resident can still enrol if
his/her name exists in family entitlement document. In this case the Head of Family in entitlement
document needs to be enrolled first with valid PoI & PoA document. The head of the household can
then introduce other members in the family while they are enrolling. UIDAI accepts 8 document types
as Proof of Relationship. Please click here for a nationally valid list of documents.
Where there are no documents available, resident may also take the help of Introducers available at
the enrolment centre. The Introducers are notified by the Registrar. For further details please contact
office of the concerned Registrar.
At the enrollment center, please fill your personal details within the form. Your photo, finger-prints and
iris scan will also be taken as a part of the enrollment. You can review the details you have provided
and make corrections during enrolment itself. You will get an acknowledgment slip with an temporary
enrolment number and other details captured during enrolment
You need to enrol only once. Enrolling again is a waste of your time as you will get only one Aadhaar
number.
Based on your information provided, your details will be verified centrally. If your application is
successful, an Aadhaar number will be generated and mailed to your address.
Proof of name and photo identity: (any one from list below)
Passport
PAN card
Ration/PDS photo card
Voter ID
Driving license
Government photo ID cards
NREGS job card
photo ID issued by recognised educational institute
Arms license
photo bank ATM card
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photo credit card
pensioner photo card
freedom fighter photo card
kisan photo passbook
CGHS/ECHS photo card
Address card having name photo issued bu department of post.
Proof of address: (any one from list below):
Passport
Bank Statement
Passbook
Post Office
Account Statement/Passbook
Ration Card
Voter ID /Driving License
Government Photo ID cards
Electricity Bill (not older than 3 months)
Water bill (not older than 3 months)
Telephone Landline Bill (not older than 3 months)
Property Tax Receipt (not older than 3 months)
Credit Card Statement (not older than 3 months)
Insurance Policy
Signed Letter having Photo from Bank on letterhead
Signed Letter having Photo issued by registered Company on letterhead
Signed Letter having Photo issued by Recognized Educational Instruction on letterhead
NREGS Job Card
Arms License
Pensioner Card
Freedom Fighter Card
Kissan Passbook
CGHS / ECHS Card
Certificate of Address having photo issued by MP or MLA or Group A Gazetted Officer on

letterhead
Certificate of Address issued by Village Panchayat head or its equivalent authority (for rural
areas)
Income Tax Assessment Order
Vehicle Registration Certificate
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Registered Sale / Lease / Rent Agreement
Address Card having Photo issued by Department of Posts
Caste and Domicile Certificate having Photo issued by State Govt.
Proof of DoB (optional) : (any one from list below)
Birth Certificate
SSLC Book/Certificate
Passport
Certificate of Date of Birth issued by Group A Gazetted Officer on letterhead
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CHAPTER 58
PROCEDURE FOR THE ADOPTION OF AN INDIAN CHILD BY A FOREIGNER OR NRI
Adoption
Adoption is a beautiful means to enhance the lives of children and parents alike. Its a way to secure a
right of every child to a caring family environment; a permanent family for a child.It enables a parent-child
relationship to be established between persons not biologically related. It is defined as a process by
which people take children not born to them and raises them as a member of their family.
Our endeavor therefore, is to promote adoption among more and more families and spread the
information among the people about
Laws and procedures formulated for adoption

The agencies involved in adoption
Intercountry adoption may be a more viable choice than domestic adoption for many families, especially
those who want to adopt a healthy infant. However, the process can be complex and expensive. We aim
at giving information on various aspects of
Inter country adoption in India

The role of CARA and other agencies involved therein
We offer assistance to applicants especially those from a different culture to adopt a child.
We aim to provide the highest quality of legal advice to be sure that a person or couple can
provide a safe and nurturing environment for a new child.
We also to provide you assistance and expertise for a thorough study, to identify your specific
circumstances your suitability as adoptive parents.
PROCEDURE FOR THE ADOPTION OF AN INDIAN CHILD BY A FOREIGNER OR NRI
Obtain all relevant documentation to support your application for adoption.

Request a social or child welfare agency recognized by the government of the country of which
you are a citizen or permanent resident to sponsor your application.
Forward it to a recognized social or child welfare agency in India.
Please note that:
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Ensure that all certificates, declarations and documents accompanying the application are
attested by the Consular Wing of the Indian Embassy/High Commission/Commission/Consulate
in your country of residence.
Once the Indian agency is satisfied that all legal requirements have been met, it will on
your behalf, file a petition in a competent court of law in whose jurisdiction the child in
question resides.
This court will examine the petition on the merits of the case and grant legal guardianship
to the applicant, as also permission for the child to emigrate, so that you can take the
child out of India to the country of adoption.
Once you have been certified as the legal guardian by the competent court, you need to
apply for a passport for the child so that you can take him/her out of India as your legal
ward pending completion of adoption formalities in your country.
DOCUMENTATION REQUIRED FOR ADOPTION OF AN INDIAN CHILD
Application form, duly filled in (the forms can be obtained from any child welfare agency in India).
A report prepared by a professional social worker/agency confirming that you and your spouse
will be able to provide a suitable environment for the child.
Recent photographs of you and your spouse.
Marriage certificate
Declaration regarding the health and medical fitness condition of you and your spouse duly
certified by a medical doctor.
Certificate of your financial status/suitability along with supporting documents, specifically income
tax returns, bank references, particulars of properties owned by you, and certificate of
employment, where applicable.
A formal declaration from both of you certifying your willingness to be appointed legal guardians
of the child in question.
An undertaking from the social or child welfare enlisted agency sponsoring your application to the
effect that the child would be legally adopted by you and your spouse, according to the laws of
your country, within two years.
(Please note that once the adoption is effected, your sponsoring social or child welfare agency
should send three certified copies of the adoption order to the social or child welfare agency in
India through which the application for guardianship is processed - one copy for the agency, one
for the Court which passed the order and one copy to be filed with the Central Adoption
Resources Agency (CARA), Ministry of Welfare, Government of India).
A formal undertaking that you will provide the adopted child with necessary education and an
upbringing in accordance with your status.
Certificate from your sponsoring social/child welfare agency to the effect that you and your
spouse are permitted to adopt a child according to the laws of your country of residence.
An undertaking from your sponsoring social/child welfare agency to the effect that, in case of
disruption of your family status before legal adoption has been effected, the agency will take care
of the child and find a suitable alternative placement for the child in consultation with the
concerned social or child welfare agency in India. Once a suitable alternative has been identified,
the guardianship status granted by the Indian court would also need to be transferred to the new
adoptive parents, and approval of CARA would also be needed.
An undertaking from your sponsoring social/child welfare agency that it will reimburse, to the
concerned Indian social or child welfare agency, all expenses as fixed by competent court
towards maintenance of the child and processing charges.
An undertaking from your sponsoring social/child welfare agency that reports on the progress of
the child along with recent photographs would be sent quarterly during the first two years and half
yearly for the next three years in the prescribed proforma which can be obtained from the Indian
agency handling your case.
Any other documentation that you feel will help satisfy the competent court with regard to the
following: That as legal guardian, you will be accountable to the concerned court in India for the
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welfare of the child.

That the adopted child will be treated at par with a natural born child with regard to legal
status and inheritance rights.
That if adoption fails, an alternative adoption placement will be arranged by the foreign
social or child welfare agency which sponsored your application.
That migration facilities will be allowed to the child, and that the child will be repatriated to
India, if so required by an Indian court.
That the child will also be granted the citizenship of your country on adoption (this applies
if you are not an Indian citizen resident abroad).
Your Power of Attorney in favor of the social or child welfare agency in India which is to
process the case, so that he can handle the case on your behalf, in case you are not in a
position to come to India.
A financial guarantee from the Indian Social or Child welfare agency concerned, ensuring
that if the child becomes destitute or the guardianship is terminated, the legal guardian,
or the guarantor, will meet all expenses relating to the proper maintenance of the child
abroad and his/her return to India. (This is required when applying for a passport for the
child, after the court has declared you his or her legal guardian).
For any further details and inquiry on this subject kindly log on to: www.cara.nic.in
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CHAPTER 59
For the benefit of the prospective emigrants, there are certain guidelines
issued by the Ministry of Overseas Indian Affairs. Follow these guidelines for your own safety and
security.
General Guidelines
a)
Deal only with those recruiting agents who have registration certificate and authorised license
issued by the Protectors of Emigrants (POEs)
b)
Do not deal with sub-agents as they are not permitted under the Emigration Act, 1983
c)
Carefully go through the Employment contract and review the salary details and other terms
and conditions of the service
d)
Ask the recruiting agent for the Demand Letter and Power of Attorney from the foreign
employer
e)
Do not pay the recruiting agent other than the service charges amounting Rs. 2000 for unskilled workers, Rs.3,000 for Semi-skilled, Rs. 5,000 for Skilled workers and Rs. 10,000 for
other than the above
f)
Ask for the receipt of the payment and prefer paying through Demand Draft or cheque rather
than in cash
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List of Registered Agents

The Ministry of Overseas Indian Affairs has published a list of Registered Agents for the benefit of Indian
Nationals aspiring to go abroad for the purpose of employment. Do not deal with any other recruiting
agent than the ones having a valid registration certificate issued by the Protectors of Emigrants (POEs).
Black Listed Foreign Employers
There are certain employers who have been blacklisted by the Ministry of Overseas Affairs. Prospective
emigrants need to avoid any kind of dealing with them. For a detailed list of these black listed foreign
employers .
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CHAPTER 60
NRIS
PROPERTIES DISPUTES SETTLEMENT
The NRIs living abroad definitely own some properties in India either a piece
of residential land, agricultural land, commercial properties or apartment. These properties they acquired
either through inheritance or bought by their hard earned money. It is very common that relatives/friends
and Tenants to take undue advantage of the absence of an NRI in India. They know it is difficult for an
NRI to make frequent visits, supervise the case personally. So you have to be very careful while dealing
with your valuable properties.
The following are the details of right to inheritance in the properties inherited from their ancestors
a)
b)
c)
d)
e)
Non residents generally leave the properties with the closest relatives, friends to look after the
property, receive rent from the tenants, make any renovations if needed, deal with the
government authorities on their behalf. Some people rent out their property to a tenant
The land is simply transferred by way of natural succession depending on the applicable law i.e.
Hindu Succession Act or Indian Succession Act.
The transfer of property is challenged by relatives in India. The relatives claim to be owners by
way of some forged documents.
The property has to be transferred on basis of the Will.
There are forged Wills made by relatives in India.
Mostly the consequences are:

a) Land/property in India been take over by the relatives unlawfully
b) Tenant refusing to vacate the premises even after the expiration of the lease
c) Property in India been sold by others under a forged Power of Attorney certificate
d) Illegal squatters occupied and/or built property on your land in India
Very common for relatives/friends and Tenants to take undue advantage of the absence of an NRI in
India. They know it is difficult for an NRI to make frequent visits, supervise the case personally.
Mostly remedies include civil suits such injunctions i.e. restraining the other property from alienating the
property, Suit for possession to take back the possession of the property from the relatives/friends, Rent
petition for eviction of property from tenant.
Please take care of your properties from unlawful take over by some unscrupulous people.
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CHAPTER 61
Right to Information Act 2005
mandates timely response to citizen requests for government information

The right to information is implicitly guaranteed by the Constitution. However, with a view to set out a
practical regime for securing information, the Indian Parliament enacted the Right to Information Act,
2005 and thus gave a powerful tool to the citizens to get information from the Government as a matter of
right. This law is very comprehensive and covers almost all matters of governance and has the widest
possible reach, being applicable to Government at all levels- Union, State and Local as well as recipients
of government grants.
.
Object of the Right to Information Act
The basic object of the Right to Information Act is to empower the citizens, promote transparency and
accountability in the working of the Government, contain corruption, and make our democracy work for
the people in real sense. It goes without saying that an informed citizen is better equipped to keep
necessary vigil on the instruments of governance and make the government more accountable to the
governed. The Act is a big step towards making the citizens informed about the activities of the
Government.
What is Information
Information is any material in any form. It includes records, documents, memos, e-mails, opinions,
advices, press releases, circulars, orders, logbooks, contracts, reports, papers, samples, models, data
material held in any electronic form. It also includes information relating to any private body which can be
accessed by the public authority under any law for the time being in force.
What is a Public Authority
public authority is any authority or body or institution of self government established or constituted by or
under the Constitution; or by any other law made by the Parliament or a State Legislature; or by
notification issued or order made by the Central Government or a State Government. The bodies owned,
controlled or substantially financed by the Central Government or a State Government and nonGovernment organisations substantially financed by the Central Government or a State Government also
fall within the definition of public authority. The financing of the body or the NGO by the Government may
be direct or indirect.
Public Information Officer
Public authorities have designated some of its officers as Public Information Officer. They are responsible
to give information to a person who seeksinformation under the RTI Act.
Assistant Public Information Officer
These are the officers at sub-divisional level to whom a person can give his RTI application or appeal.
These officers send the application or appeal to the Public Information Officer of the public authority or
the concerned appellate authority. An Assistant Public Information Officer is not responsible to supplythe
information. The Assistant Public Information Officers appointed by the Department of Posts in various
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post offices are working as Assistant Public Information Officers for all the public authorities under the
Government of India.Right to Information under the Act
A citizen has a right to seek such information from a public authority which is held by the public authority
or which is held under its control. This right includes inspection of work, documents and records; taking
notes, extracts or certified copies of documents or records; and taking certified samples of material held
by the public authority or held under the control of the public authority. It is important to note that only
such information can be supplied under the Act which already exists and is held by the public authority or
held under the control of the public authority. The Public Information Officer is not supposed to create
information; or to interpret information; or to solve the problems raised by the applicants; or to furnish
replies to hypothetical questions.
The Act gives the citizens a right to information at par with the Members of Parliament and the Members
of State Legislatures. According to the Act, the information which cannot be denied to the Parliament or a
State Legislature, shall not be denied to any person.
A citizen has a right to obtain information from a public authority in the form of diskettes, floppies, tapes,
video cassettes or in any other electronic mode or through print-outs provided such information is already
stored in a computer or in any other device from which the information may be e-mailed or transferred to
diskettes etc.
The information to the applicant should ordinarily be provided in the form in which it is sought. However, if
the supply of information sought in a particular form would disproportionately divert the resources of the
public authority or may cause harm to the safety or preservation of the records, supply of information in
that form may be denied.or All Stake Holders
Guide on Right to Information Act, 2005
In some cases, the applicants expect the Public Information Officer to give information in some particular
proforma devised by them on the plea that they have a right to get information in the form in which it is
sought. It need be noted that the provision in the Act simply means that if the information is sought in the
form of photocopy, it shall be provided in the form of photocopy, or if it is sought in the form of a floppy, it
shall be provided in that form subject to the conditions given in the Act. It does not mean that the PIO
shall re-shape the information. This is substantiated by the definition of the term right to information as
given in the Act, according to which, it includes right to obtaining information in the form of diskettes,
floppies, tapes, video cassettes or in any other electronic mode or through print-outs provided such
information is already stored in a computer or in any other device. Everywhere in the Act, the word form
has been used to represent this meaning.
Some Information Seekers request the Public Information Officers to cull out information from some
document(s) and give such extracted information to them. A citizen has a right to get material from a
public authority which is held by or under the control of that public authority. The Act, however, does not
require the Public Information Officer to deduce some conclusion from the material and supply the
conclusion so deduced to the applicant. It means that the Public Information Officer is required to supply
the material in the form as held by the public authority, but not to do research on behalf of the citizen to
deduce anything from the material and then supply it to him. Right to Information Vis--Vis other Acts
The RTI Act has over-riding effect vis--vis other laws inasmuch as the provisions
of the RTI Act would have effect notwithstanding anything inconsistent therewith contained in the Official
Secrets Act, 1923, and any other law for the time being in force or in any instrument having effect by
virtue of any law other than the RTI Act. Supply of Information to Associations etc
The Act gives the right to information only to the citizens of India. It does not make provision for giving
information to Corporations, Associations, Companies etc. which are legal entities/persons, but not
citizens. However, if an application is made by an employee or office-bearer of any Corporation,
Association, Company, NGO etc. indicating his name and such employee/office bearer is a citizen of
India, information may be supplied to him/her. In such cases, it would be presumed that a citizen has
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sought information at the address of the Corporation etc.

Fee for Seeking Information
A person who desires to seek some information from a public authority is required
to send, along with the application, a demand draft or a bankers cheque or an Indian Postal Order of Rs.
10/- (Rupees ten), payable to the Accounts Officer of the public authority as fee prescribed for seeking
information. The payment of fee can also be made by way of cash to the Accounts Officer of the public
authority or to the Assistant Public Information Officer against proper receipt. 19. The applicant may also
be required to pay further fee towards the cost of providing the information, details of which shall be
intimated to the applicant by the PIO as prescribed by the Right to Information (Regulation of Fee and
Cost) Rules, 2005. Rates of fee as prescribed in the Rules are given below:
(a) rupees two (Rs. 2/-) for each page ( in A-4 or A-3 size paper) created or
copied;
(b) actual charge or cost price of a copy in larger size paper;
(c) actual cost or price for samples or models;
(d) for information provided in diskette or floppy, rupees fifty (Rs. 50/-) per diskette or floppy; and
(e) for information provided in printed form, at the price fixed for such publication or rupees two per page
of photocopy for extracts from the publication.
As already pointed out, a citizen has a right to inspect the records of a public authority. For inspection of
records, the public authority shall charge no fee for the first hour. But a fee of rupees five (Rs. 5/-) for
each subsequent hour (or fraction thereof) shall be charged.
21. If the applicant belongs to below poverty line (BPL) category, he is not required
to pay any fee. However, he should submit a proof in support of his claim to belong to the below poverty
line. The application not accompanied by the prescribed fee of Rs. 10/- or proof of the applicants
belonging to below poverty line, as the case may be, shall not be a valid application under the Act. It may
be pointed out that there is no bar on the public authority to supply information in response to such
applications. However, provisions of Act would not apply to such cases.
NRI can pay RTI fees online now
Department
of
Posts,
Ministry
of
Communications
&
IT,
today
in
association
with
Department of Personnel and Training launched Electronic Indian Postal Order (eIPO) to enable Indian
citizens abroad to pay RTI fee online. This is a facility to purchase an Indian Postal Order electronically by
paying a fee on-line through e-Post Office Portal i.e . https://www.epostoffice.gov.in. It can also be
accessed through India Post website www.indiapost.gov.in.
At present, this facility is available only for Indian Citizens abroad across the globe to facilitate them to
seek information under the RTI Act, 2005. Both Debit and creditcards of any Bank powered by
Visa/Master can be used for this purpose. All the requirements for filling an RTI application as well as
other provisions regarding eligibility, timelimit, exemptions etc; as provided in the RTI Act, 2005 will
continue to apply.
The applicant needs to register on the website to create his/her profile for the first time. He has to select
the Ministry/Department from whom he desires to seek information under the RTI Act and theeIPO so
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generated can be used to seek information from that Ministry/Department only. A printout of the eIPO is
to be attached with the RTI application sent in hard copy. In case RTI application is filed
electronically, eIPO is required to be attached as an attachment.
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CHAPTER 62
NIRs and FINANCIAL PLANNING
1) Ten Tips for a good Financial Planning & Investments
a) Dont invest in any financial products without understanding the actual

return
potential and risk aspects of the product you are planning to invest in. Read the fine prints carefully, try to
understand, make a comparative study with the similar products available in the market. Do not invest at
seeing colorful and attractive advertisements, leaflets etc. Also, please careful about the brand
ambassadors, suppose your favorite celebrity acting as brand ambassador for that company, that doesnt
mean that, the product he promoting is good to buy. His intention is to make cores and cores of money
and he does not bother about whether the end user is going to benefit out of it or not. In case you find it
difficult to understand the products, take the help of an expert financial planner. Keep this in your mind
that, the money you are going to invest is your hard earned money and the investment is going to be
made with the expectation of earning a reasonable return without risking the original amount invested.
b) Track your portfolio/investments regularly, review each and every products in your portfolios on a
regular interval, if you feel that, some of the investments are not giving returns as per your expectation or
in line with the similar products available in market. Watch the performance for one or two quarter, still its
not improving or showing the sign of improvement remove those investments from your portfolio and look
for a better investment option.
c) Keep this in mind that, the return of any investment is not what actually get credited in your bank
account or interest/dividend cheque you received from the company or bank. The actual return is what
you get in hand after paying the taxes (income tax, capital gain tax etc.) and also you need to adjust
inflation factor. So the actual return should be net of taxes and cost inflation factor. Eg. You are earning
10% interest on your bank fixed deposits and present cost inflation is 8%, in this case the inflation
adjusted return is only 2%. When you make investments, if possible select investments whose returns are
tax free or exempted from capital gain tax.
d) In case you wanted to beat inflation, you need to invest in high risk high return assets like equities or
real estate. The traditional bank term deposits, company deposits, Post Office MIS etc can maximum
provide you a return in the range of 8-12%, when you adjust the inflation factor, your actual return may be
much less or even some times negative. So, start investing some amount (depends up on the risk and
return appetite of the investor) in equity market, mutual funds or similar investment products. On medium
to long terms basis, those investment are capable of beating the inflation. A wise investor can earn a
return in the range of 12% -15% from these types of investments in the long term.
e) For protecting yourself and your family for the money required for the treatment of any illness, take a
mediclaim health insurance policy form one of the trusted insurance companies. This will protect your
family for any extra amount required for the treatment of your family members and you are not required to
liquidate your existing investments or take a loan from a bank or money lender, this is basically not an
investment option but this will act as an insurance or protection of your investment.
e) In case you are not an expert in stock market investments, its better to investment in good performing
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Mutual Fund schemes rather than direct investment in stock markets. The expert fund managers in the
asset management company will take care your investments and do the needful by way of selecting,
buying and selling of securities on behalf of the unit holders of the mutual fund schemes you have
invested for.
g) In case your risk appetite is low, try to use the Systematic Investment Plan (SIP) route of investments
for both Mutual Funds and Equity investments. This will average your cost of investments, enhance the
return potential and reduce the risk of losing your capital. Do not stopyour investments like Mutual Fund
SIPs or insurance policy premium just because the stock market is down. You behave like an intelligent
investor when you start investments and become genius when you see correction in the market. You start
saying "market will surely go down further." It's better to invest more when all others are selling. This is
the ONLY way to make friendship with stock market
h) If you are planning to invest in stock market directly, invest with strict stop-loss and aim for target price.
Once that target is achieved or the prices come down to a certain level, go and sell your shares to limit
the loss or book the profit. If you are over confident or sure about the performance of the security, you
can hold those securities absolutely at your personal risk. Before selecting a stock for investment, study
the fundamentals of sector, company, management of company and technical charts etc. Stock market is
like a magnet, be careful.
i) Always take term insurance policiesto cover your life risk. It won't give you anything at maturity but will
surely take care your family, in case of your sudden death. Your wife will not try to seek a job at older age
as she has sufficient funds to manage all responsibilities. Dont consider buying insurance products as
investments, its a protection against any future eventuality of any unexpected events like death, illness or
disability etc.
j) Always think positively and take investment decisions rationally. Dont trust the investment/insurance
products selling agents (either individuals or corporate). Most of their aim is to make money and they are
not bothered about your financial wellbeing (dont think that, all financial products selling agents are like
that, there are exceptions too) It is you to decide, whether your agent or financial adviser is doing justice
to your investment or they are keenly interested in your financial wellbeing rather than earning their share
of commission.
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Why you need an Emergency Saving Fund?
One of the main objectives of a good financial planning is preparing for the future, whatever it may bring.
Therefore, an essential component of a solid

financial plan is an emergency
fund. An emergency fund is designed to cover a financial shortfall when an unexpected expense crops
up. Your emergency fund can serve as a place to get the money you need when you find yourself short.
Because it must be reliable, it needs to hold guaranteed investments. In other words, savings accounts
are good for emergency funds, while stocks are bad. An emergency fund, by nature, also needs to hold
liquid or otherwise short-term, accessible investments with complete safety.
Starting an emergency savings fund is one of the important things in your personal finance. One of the
main aspects in your financial planning is allocating a certain percentage of your savings for the
emergency purposes. Many personal finance experts agree that this is one of the first things you should
do, ranking ahead of paying off high interest debt. This article will cover why you need emergency
savings, how much you need, and where to put it.
Why Save for Emergencies?
There are a number of situations that arise in life that you simply do not have control over. Should these
situations require immediate cash flow, it is essential to have emergency savings to cover it. If you have a
personal investing account or retirement account you could pull funds from these, but for a number of
reasons including bad market timing, early withdrawal penalties, or a delay in the liquidity of actually
selling your investment and receiving your funds, this is the last thing you want to do. Having money set
aside for emergencies not only prevents this from happening, but also gives you the peace of mind that if
something unfortunate was to happen that you will have a little financial cushioning to ride it out.
What Types of Situations May Require Emergency Savings?
Im sure that you have needed fast cash for a number of situations in your life, or seen situations where
others have. Insurance may cover many of these scenarios for you, but there is always a chance that it
wont cover fully what you will need. Here are a few examples:
a) lost job or layoff
b) began a new job that required you to expense a geographic move
c) auto accident, or major auto repair
d) Major home expense such as a broken water line, fire, natural disaster effects, etc.(if not covered by
insurance)
e) death in family that required you to help the family
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f) unexpected medical expenses not fully covered by insurance

Basically you need to create two types of emergency funds
1. Your short-term emergency fund is your go-to place when you have an immediate emergency.
It should be in an accessible account, which will probably bear little interest. The most important
consideration is accessibility. Youll want a debit card attached to this account and check-writing
privileges as well. The purpose of your short-term emergency fund is for smaller emergencies,
such as car repairs or replacing a major appliance that has broken. It can also be used as a
bridge to get you through the few days until you can access your long-term emergency funds in
case of a more extreme situation.
2. A long-term emergency fund allows you to save for large-scale emergencies, such as job loss
or a major natural disaster like an earthquake or fire, and earn a slightly higher level of interest.
Accessibility is still important here, but its okay to choose investments that take a few days to
liquidate as long as you have a short-term emergency fund to cover you in the interim.
When you have an emergency fund, you have peace of mind. Your money is on guard, so to speak, just
waiting to be called into action. You dont have to scramble to come up with money you need and you
dont have to turn to credit cards. Even if your emergency fund isnt big enough to handle everything, it
can still help reduce the amount of money you must look for from friends and family, or credit cards.
How Much Should you Put in Emergency Savings?
This is where the experts tend to differ. There are a wide range of guidelines out there for how much you
should save. Pick one or a combination, but ultimately, you have to choose an amount that youre
comfortable with and that feels right for you. Here are some of the general guidelines out there:
A) 3-6 months worth of take home salary
B) 6 months worth of living expenses
C) Start small and pay off debt before building 3 to 6 months worth of living expenses
I think it is wise to earmark 2-3 months salary for emergency purposes (this varies persons to person
depending on their earnings). Start Focus on paying off high interest debt, paying all of those off first
before adding to your emergency savings is not a good idea. Heres where the twist comes in if you are
anticipating a major life changing event coming up, add to your fund or simply another savings account.
You do not want to be pulling from emergency funds to pay off anticipated expenses.
Where should you put your Emergency Savings?

You should be earning interest from your savings, otherwise, you are losing value due to the effects of
inflation. Place your emergency fund into a high interest savings account, Liquid Fund Account, or money
market mutual fund schemes. Stay away from Bank Fixed Deposits because if you pull your money out
prior to the FD maturity date, you will lose interest in the form of a penalty. Bank SWEEP-IN deposit is
another alternative.
Go with a bank that offers quick and easy access to your fund and a competitive rate. Always open bank
accounts with reputed bank providing good services and modern technologically advanced facilities like
online banking, ATMs etc. Use this as a starting point to see what the current savings bank rate is before
committing. Check back periodically to see if youre getting the best going rate (because recently RBI
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deregulated the savings bank rates, so the banks can change the SB account interest rates at any time at
their description) . If youre not, dont be afraid to switch. If you havent already, start building your
emergency savings. It will help you sleep better at night.
Conclusion
An emergency fund can mean the difference between financial failure and financial success. Not only
must you develop discipline to accumulate one, but an emergency fund will prepare you for unexpected
setbacks and reduce your dependence on borrowing money, most likely at high interest rates.
Carefully examine your expenses and use the information to develop an emergency fund goal, see how
much you can save each month, and identify unnecessary expenses, or wasted money. Make a plan to
build up an emergency fund and decide how you want it allocated. Finally, use your emergency money
wisely.
How to plan for your Childs Higher Education
Saving to pay for your childrens education is similar to any other long-term financial goal. The earlier you
start saving for your children's education, the better.

Education costs are usually a
long-term goal that can take more than 5 -20 years to achieve. The cost of education is one of the fastest
growing life costs in our country, growing at around 5-10% a year. Theres no way of calculating exactly
how much it costs to educate a child. It will depend mainly on the type of schools they attend, the nature
of professional course they wanted to enroll etc. Eg. You may plan your child for management course but
your child may sometimes like to go for Medicine. There is a huge difference in money required to
completing management course and Medicine. When planning to save for your child's education, it can
be hard to know where to start.
Some of the fundamental requirements to build up a good corpus for your childs future include chalking
out a goal with a clear time frame and corpus requirement, making regular and systematic contribution,
being clear about the returns expected in each of the instrument and the tax implications, inflation effects
over a long period for each of the instrument selected. When come to invest another factor you need to
consider is inflation, the persistent changes in the inflation will inevitably decreases your income
regardless of how cautious your saving strategy is. In the future, the cost of living will only increase.
The cost of college/professional education when compiled with a tough unemployment situation will be
the two main issues your child is going to face when he grownup. You may sometimes need to find
means to tackle/finance for the future unemployment situation of your child also. (Does anybody expect
just 10 years back the present unemployment situation in America and other developed countries).
First thing get to know yourself and make sure you are prepared and able to put money for a length of
time. Ask yourself how you would feel it that investment was dropping over time. It is only advisable to
make stocks and shares investments if you are comfortable with risk otherwise go for risk free debt
instruments like bonds, government securities, bank term deposits etc.
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It is worth to say here that, some private schools in western countries allow the parent to pre-pay their
children school fees up to 10 years in advance. With school fees typically increasing for the last so many
years and likely to continue the increase in the future also, the ability to save money by prepaying fees a
number of years ahead becomes significant. I am not sure the same type of pre-payment tuition fees
facility is available in India. This option has got advantages like that so many disadvantages are also
there.
Unfortunately, in India most of us have not realized the importance and benefits of proper and timely
educational planning. This is all because of lack of awareness, huge debts, low income, improper
financial planning and lack of need based investment solutions.
Having the money available when children start school is a better option than borrowing to pay school
fees. Paying interest on the borrowings can sometimes double the amount you would pay if you had
saved the money. The key to funding your child's education is to start early and save regularly. But there
is a catch to saving for your children. It is not as straightforward as opening an account and contributing
regular savings. When planning to save for your child's education, it can be hard to know where to start.
In the following paragraphs I have provided the details of some of major investment options, and what are
all the factors to be considered when reviewing them, as well as the tax treatment of any earnings, you
need to consider things like the nature of the underlying investments, the level of risk they carry and the
likely level of returns that you will receive. Considering all the above, the various instruments that can be
looked at in the current circumstances are:
Mutual Fund Schemes - There are plenty of mutual fund schemes presently available in the market to
meet each and every need of an individual with a various risk appetites. It is always recommend for
Systematic Investment Options to a get the benefit of cost average. Mutual Fund investments are subject
to market risk; this SIP mode investment will reduce the risk aspects and enhance your returns. It is
proved that, in the long run Mutual Fund investments are potential enough to deliver returns when
compared to other investment options. It is better to start early to reap the benefits of compounding. Eg. If
you deposit Rs. 10,000.00 each, every month in one of the good performing mutual fund schemes for 20
years, assume an average 12% return you will get Rs. 91, 98,500.00 at the maturity this is the power of
compounding. Please note that this is only an example just to show the power of compounding. One
should carefully choose a basket of schemes, which should be a combination of debt and equity
investments. There are designated children mutual fund schemes are available, which can be combined
with good diversified equity funds, which together can provide a much better growth opportunities in the
long run. Those schemes launched specially for children named Education Fund, Marriage Fund,
Children Career Plan, Young Citizen Plan, and Children Growth Plan. Dont look for the scheme label or
branding instead look for the consistent performance and track record of the individuals schemes.
Always, select consistently performing schemes with good track records and avoid News Fund Offers
(NFO). Finally the scheme you are going to select should match with your risk appetite.
Insurance Plans - There are many different brand names for this type of children savings plans
especially insurance products. Even though each name mean essentially the same thing, it is sometimes
easy to get confused. Although these insurance plans are sometimes know as Child Welfare Plan,
Children Savings Plan, Children Education Plan , Child Advantage Plan, Marriage Endowment Plan
etc. just remember that the Childrens Saving Plan is simply a way of investing in for children. But I
personally feel this branding is jut for exploiting the sentiments of the parents and give them a feeling that
no other products available exclusively for the investment of their children. Moreover It is also be very
clear that the risk cover under these policies should clearly be on the earning parents and childs life
should not be covered. Another advantage of investing in Insurance Plan is tax benefits; even otherwise
also the parent can claim the tax benefits. Also, the returns generated by insurance policies are much
less when compared to other investment options.
My question here is, why you wanted to go for this branded products when other good financial options
are available for investments. From the point of income tax, finally the parent is liable to pay tax, if the
income from the financial instrument is taxable. Instead of going for child Branded insurance products, it
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is suggested to take a traditional term policy to cover your life at a cheaper premium. This will take care
your family, if some unhappy events happened to your life in future, and invest the balance money in
those financial instruments have the potential to provide an inflation adjusted reasonable return.
Investment in Precious Metals - It is a good strategy to invest a small portion of your investable fund in
precious metals like Gold. It is proved that, gold has high potential to beat the inflation or hedge against
inflation. This is traditionally followed in India, especially where there are girl children, to keep on investing
in commodities like Gold and Silver etc. In the present situation, where commodities might be growing at
a better rate and also to beat the inflation, this is a good strategy. It is not recommend to invest in gold
ornaments ( you will lose lot of money when you convert this), instead of this one should buy gold in the
form of Gold Biscuits or Coins. Again keeping gold in physical form has got lot of disadvantages and
inconvenience especially safe keeping, safe deposit locker charges, quality of the commodity etc. It is
recommend buying gold or precious metals in E-format (E-gold) form stock exchange or ETF (Exchange
Traded Fund). E-gold/ETF even you can buy 1 gram of gold. Even if you have little amount you can buy
and accumulate gold for the future needs of your children
Investment in Guaranteed and Government Sponsored Schemes like PPF, NSC etc - There are dual
benefits in investing in these schemes, first one the parent get income tax benefits other one is interest
income and capital is guaranteed but as per the recent Government Notification, the interest rates of all
Small Savings Schemes will be linked to G-Sec (Government Securities) and rates and varies every year.
Bank Term Deposits Now a days its better option, you will be able get an annual interest ranging
8.50- 10%. Better try to lock the deposit for longer period. Government is expected that, the coming
months, the inflation will come down. Once RBI reduces the bank rates, automatically the FD rates also
will come down.
However success to any financial plan always depends on ones ability to adopt stringent financial
discipline, proper asset allocation, periodical review and rebalancing of the portfolio etc. In case you are
not experienced enough; please take the help of an expert financial planner for guidance
VICTIMS OF BAD FINANCIAL ADVISES
Victims of Bad Financial Advises

Do you think both insurance/mutual fund agents and investment advisors have the same
responsibility to act in your best interests? Would you be surprised to find out that there are two
different principles that apply to the delivery of financial advice?. The first principle is called
Suitability and other principle is of a fiduciary nature. These are just two principles only but the
second one has presently got no relevance in India. None of the brokers and agents has any
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fiduciary responsibility right now. But we can expect this in future. A fiduciary has the responsibility to
make recommendations in your best interest in all aspects of the financial relationship.
Presently, it is assumed that, insurance/mutual fund agents and share brokers are following the
suitability principles while recommending financial products to their clients. This means their
recommendations must be suitable for you based on your age, risk tolerance and financial and other
personal situation
If they have their choice of several products which are all suitable for your situation, they may
recommend the one which pays them the most in fees and commissions. Keep in mind, this may not
be the product that is best for your situation, but as long as it is suitable, thats ok. They do not have
an obligation to educate you about other choices you may have, it is your duty to disagree if you
have any objection.
The advisor you have selected is working for a large brokerage house, Mutual Fund/Insurance
distributing Banks/Institutions. He did not take the time to educate the client about risk and return
and the benefits of a diversified portfolio. Instead, he put them into a product that met their
expressed need. A few years later when they were not happy, he put them in to a different product.
A few months later, once again, a new product. All of these products may or may not met the
suitability principle. Some unscrupulous advisers normally make money out of your investment by
way of churning your portfolio several times in a year. Each time they advise you to liquidate and reinvest, they earn good amount of commission at your expenses. Some of these advisers are not
bothered your financial wellbeing. If they feel that, you are not bothered or you are not
knowledgeable enough to understand the nitty-gritty of investments theory or the details of the
financial products they recommended. As a result your adviser will earn more than what you are
earning and finally you will be looser.
An investment advisor with a fiduciary obligation to the client would likely have taken the time to
educate the client and direct them toward a more diversified approach, even though that was not
initially what the client thought they. When searching for advice, a good rule of thumb to follow is
simply to ask your advisor how they get paid. That will tell you where their loyalty lies.
I myself was given trainings to thousands of Insurance and Mutual Fund agents especially on
subjects related to mutual funds and insurance schemes. I always advised them to be a good
financial adviser rather than just a product selling commission agent and concentrate more on the
financial well being of their clients. This essentially motivated them to interact more professionally
and gain the confidence of their clients. I still believe that most of them followed my advice and
become very successful in their field of work. But in most of the cases the development offers and
the marketing managers advice their agents to mobilize the maximum business at any cost to
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achieve their business targets. Most of those people are not bothered about the financial wellbeing
of their clients. These all I am writing from my personal experience.
It is certainly worth a bit of extra time to research and interview several potential advisors. You
always ask questions to these people even if you are not an expert and give them a feeling that, you
are aware of the product which they are planning to sell to you and they cant fool you. After all, its
your money and if you are like most people, you cant afford the cost of bad advice. A bad or biased
advice may eat away your entire hard-earned money. So be careful about unscrupulous agents,
advisers or financial planners. If you are little smart, you yourself can handle everything without the
help of an intermediary. Our technology is so advanced; you can buy all products like Mutual Funds,
Insurance, Bank Term Deposits, Shares, other investment products etc online without anyones help.
These unscrupulous intermediaries must be eradicated from this earth (this is applicable only those
agents or intermediaries acting against the interest or financial wellbeing of their clients I am not
against this category of people, but few among them spoilt the image of their counterparts and I am
sure you are also one of the victims of a bad financial advice.
IMPACT OF INFLATION IN RETIREMENT PLANNING
Impact of inflation in Retirement Planning

While planning for retirement
Most people underestimate the impact inflation will have on their retirement plans. Even at relatively low
rates, inflation is a real thief of buying power over time. Most experts feel safe recommending that
individuals calculate their retirement needs using a 3-5% percent inflation rate. But, it is important to
understand that we have sustained inflation rates of around 8-10%. At an average annual rate of 3.75%,
inflation will double approximately every 19 years. Use this as a rule of thumb to figure out how many
times your cost of living will double by the time you need the money. Dont use your retirement date as
the endpoint for your retirement planning. Remember, you could easily live another 20-30 years or more
in retirement time enough for your cost of living to double yet again. Because of the compounding
effect of inflation over time, failing to account for inflation in your retirement savings plan can be as
devastating as losing more than half of your money. However, if you get an early start and make sensible
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investments, you can get the power of compound interest rates working for you rather than against you.
Inflation is defined as a sustained increase in the general level of prices for goods and services. It is
measured as an annual percentage increase. As inflation rises, every rupee you own buys a smaller
percentage of a good or service. Measuring inflation is a difficult problem for government statisticians. To
do this, a number of goods that are representative of the economy are put together into what is referred to
as a "market basket." The cost of this basket is then compared over time. This results in a price index,
which is the cost of the market basket today as a percentage of the cost of that identical basket in the
starting year.
The value of a currency does not stay constant when there is variation in inflation. The value of a
currency is observed in terms of purchasing power, which is the real, tangible goods that money can buy.
When inflation goes up, there is a decline in the purchasing power of money. For example, if the inflation
rate is 7% annually, then theoretically a Re.1 cost an item now will cost Re. 1.07 in a year. After inflation,
your currency can't buy the same goods it could beforehand. In short for an ordinary man the cost of living
will go up proportionately, you need to pay more money to buy same quantity of the goods you purchased
earlier.
To pick an average inflation rate to use for future estimates would require you to make some estimate
about where you think the economy is headed. Were currently in a period of high inflation (9-10%), but
inflation has frequently been over 5%. As per RBI predications, the inflation will be under control by the
end of this year and it is estimated that, the inflation will be 7-8% by end of this financial year(April,2012)
Lot of peoples does not consider inflation while planning their future especially retirement planning. The
temptation of instant satisfaction does not allow one to plan and invest for future at the cost of present
day financial situation. The retirement looks too far away. Put things in perspective and things start to look
scary. Go ahead, enjoy life, but please do not forget what the future may look like. Control your current
expenses and have a good future. Ones lifestyle could be the greatest asset or the biggest liability. It is
all in your hands.
When you plan for future, it is useful to you to calculate the inflation adjusted future expense of your
family compare with present expense. Knowing this fact is a must while doing the financial plan because
of its capacity to predict and calculated inflation adjusted future returns from your investment portfolio.
Causes of Inflation
The following are the main reasons for the inflation
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Demand-Pull Inflation - This is simply can be summarized as "too much money chasing too few goods". In
other words, if demand is growing faster than supply, prices will increase. This usually occurs in growing
economies. In short people have lot of surplus money in their hands but the supply of the goods is limited.
Cost-Push Inflation - When manufacturing costs go up, companies need to increase prices of the goods
to maintain their profit margins. Increased costs can include things such as wages, taxes, or increased
costs of imports etc. This can also case due to the increases in the bank rates by RBI. In that case
companies needs to pay more on account of interest payments for the loan they availed from the banks
for business purposes.
Result of Inflation
Inflation affects different people in different ways. It also depends on whether inflation is anticipated or
unanticipated. If the inflation rate corresponds to what the majority of people are expecting (anticipated
inflation), then we can compensate and the cost isn't high. For example, banks can vary their interest
rates and workers can negotiate contracts that include automatic wage hikes as the price level goes up.
Problems arise when there is unanticipated inflation:
2. Borrowers needs to pay more interest for the loan amount

3. The prices of all essential commodities will go up consequently creating financial problems for
those who are earning fixed amount of salary, pension etc. This will lead to a decline in their
purchasing power.
4. Bank interest rates will go up which leads to hike in loan interest like housing loan, automobile
loans etc
5. Uncertainty about what will happen next makes corporations and consumers less likely to spend.
This hurts economic output in the long run.
6. If the inflation rate is greater than that of other countries, domestic products become less
competitive.
Other Economic Situations
1. Deflation - is just opposite of inflation, in this situation the general level of prices is falling.
2. Hyperinflation is usually rapid inflation. In extreme cases, this can lead to the breakdown of a
nations monetary system.
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3. Stagflation is the combination of high unemployment and economic stagnation with inflation.
Finally, inflation is a sign that an economy is growing. In some situations, little inflation (may be less than
1% or near to deflation) can be just as bad as high inflation. This was happened in India just 2 years
back. Immediately Government had taken remedial steps and brought that under control. The lack of
inflation may be an indication that the economy is weakening. It is very difficult to judge whether inflation
is good or bad, it mainly depends on the situation of overall economy as well as your personal situation.
Inflation may be good for one person, similarly bad for another. In case the inflation is rising similarly
wages are also raising proportionately in that case hike in the prices of goods will automatically adjusted
in the wage hike.
Hope you enjoyed the same and I have not missed any major points. If so, do not forget to comment here
and inform to modify this article
Why Health Insurance is important
Medical Insurance policies has become inevitable in every bodies life mainly due to the ever increasing
hospitalization expenses and also, people are become ill

frequently due to
the changes in life style as well as environmental changes. With the ever-increasing medical costs, an
unexpected disease or accident leading to hospitalisation is likely to make a serious financial burden for
even middle income groups. It is, therefore, essential for one to invest in good health insurance policies to
guard against unexpected contingencies. Now a days its very difficult for even middle income group
people to get treatment from a good hospital due to the cost aspects. Earlier days, people used to buy
insurance policies to just save tax. Investing in medical insurance entitles for tax deduction upto Rs.
15,000.00 (limit for senior citizens is Rs. 20,000.00) under section 80D of the Income-Tax Act. Now, many
buy health insurance as a protective measure for his family, as everyone in the family is bound to go
through unforeseen circumstances and health problems. However, the common man its very difficult to
understand the details and benefits of insurance products and most of the time they confused that on
what product package suites them the best.
Few years back only four Government of India sponsored Insurance companies were operating in India
with limited products and offering same products in different names. Presently more than 24 insurance
companies are operating in India; the entry of private players has managed to change customers'
perception about health insurance policies. With all the information about insurance being readily
available and considering the fast-changing lifestyles, customers are waking up to the fact that it is an
absolute necessity to insure their health. All of the insurance companies are competing each other to
attract customers and thereby grab the market share by way of introducing vibrant insurance products,
and also improve their service level on customer services and customer satisfaction. Most of the products
presently available in the market are designed based on the actual needs of their potential customers. In
other words its all most custom made keeping in mind the future requirements of their clients.
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If you decided to take insurance policies, its better to take at the early ages. This has got many
advantages in terms of reduced insurance premium, health checkups etc . Also each policy has got
minimum and maximum entry age limits. If you cross certain age limit (Eg. 45 years), the insurance
companies insist you to go for comprehensive medical tests and there is likely to reject your application
due to a minor illness dictated in the medical test results. Even for a minor illness like this, insurance
companies may demand you to pay more premiums. So it is better to go for insurance coverage before
40-45 years of age to avoid these types of problems. It is recommended to take insurance coverage for
both self and family members. In case you opt to take insurance coverage for your entire family, you may
sometimes get reductions in the insurance premiums also.
Choosing the proper health insurance plan is a huge decision for most families. Today, trying to find the
best plan for you or your family is very difficult task. You need to know what options are available to you,
what each of those options offers and whether or not you can afford them. Before you go for an insurance
coverage, try to understand the entire policy details such as coverage of illness, exclusions (illness not
covered under for re-imbursement), minimum period after the insurance cover starts, maximum claim
limit, hospitals coverage, medical/related expenses not eligible for re-imbursement, claim settlement
process etc. Try to compare the various insurance policies on offer to decide which one best suits your
needs.
Let us now discuss the financial aspects. Those of us who are operating under a low financial ceiling
need to pay careful attention to where our health care expenses are going. Do you visit the doctor very
often? How much of a monthly premium can you afford? Can you meet your deductable in order to get full
coverage? If you choose a traditional health care plan, how much more will it cost to go out of to buy the
add-on benefits? Is there a limit to the amount you'll have to pay and to the amount paid to you by your
insurance company? Are you caring for any dependents? Do you have any pre-existing decease? How
comprehensive do you want your plan to be? Do you need dental and vision plans? Do you have a
chronic illness that requires monthly treatment?
Please keep it mind that, a good health insurance plan must cover all kinds of medical care. That includes
outpatient treatment, doctor visits, hospitalization, prescription drugs, emergency services, mental-health,
laboratory and imaging tests, preventive care, maternity care, and rehabilitation services etc. Many
medical insurance policies provide add-on benefits either free or at nominal additional cost. It is always
worthwhile to check out these benefits since they cover certain expenses, which would not otherwise be
covered. Some prominent add-on benefits includes: Hospital cash allowance, Home nursing allowances,
ambulance charges re-imbursement, expenses related to physiotherapy, expenses related to companion
accommodation etc
It is also recommended that apart from opting in a basic medical policy that covers expenses incurred
during hospitalisation, one should look at other policies that provide comprehensive medical coverage.
Some of the important products to be considered include: Critical illness policies Hospital cash policies (
eg. SBI Life Insurance), Family Protection Plan (Eg. ICICI Lambard FPP) etc.
Please understand that Insurance Agents are not your financial advisers. Try to understand the difference
between a Financial Adviser and an Insurance Agent. Insurance Agent represents for a single Insurance
company, he always tries to recommend an Insurance policy for which he will be financially benefited. In
case you are not capable enough to choose a right health insurance plan for you and your family, take the
help of an experienced Financial Planner who will definitely suggests you a good health insurance plan
that suite you and your families health care requirements. In short, purchasing a medical insurance policy
is a serious, deliberate and long-term decision. It is imperative for one to opt for a custom-made product
to suit their specific individual needs. Expending some time and effort to select policies with the most
comprehensive coverage would be a very worthwhile investment that would definitely guarantee piece of
mind
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How to choose the right Life Insurance Policy
You need life insurance policy to secure the financial protection for your family members, especially
spouse, children and other dependents, in case

something will happen to
you in future. Insurance companies offer many plans such as Whole Life, ULIP, Child Plans, Money Back
Policies etc. However, choosing the appropriate coverage for you and its benefits for your dependents or
beneficiaries is of great importance. Some people believe that buying life insurance is like planning for
their death, the fact is that life insurance is not about death, it's about realizing a peace of mind prepared
to face any financial crisis that would hit the family in case of your untimely demise. It provides you with a
sense of security that no other form of investment provides. Life Insurance is considered one of the most
popular savings/investment schemes that provides reasonable returns as well as protection and also
serves as a Tax saving mechanism. Funny part of this story is that , people still believes that life
insurance means LIC.
The concept of life insurance is not properly understood and also provisions are very complicated. While
every Insurance Policy provides you with the life cover you can either choose between a policy that
results in long-term savings such as Endowment or Whole Life policies or a term-life policy that is much
more affordable which provides only life cover . By doing some careful planning, research, shopping
around and spending time to understand the various Life Insurance options you can take care of your
familys future needs at an affordable price.
Life insurance needs for each individual vary depending on their personal situation. If you have no
dependents, you probably don't need life insurance. If you don't contribute a significant percentage of
your family's income, you may not need life insurance. Now a days taking life insurance policies have
become a passion rather than the actual requirement mostly among the youngsters. This is the result of
overcrowding of advertisements in the visual/ print Medias and mushrooming of insurance agents. At the
root of the problem is the advice given to the investor by the insurance agent. In most of the cases, the
clients choice is largely determined by the agent's incentives rather than the advantage of the product.
If your salary/regular income is important to supporting your family, re-payment of loan or other recurring
bills, or sending your children to college, life insurance is important to ensure that these financial
obligations are covered in the event of your death.
It's difficult to apply a rule-of-thumb because the amount of life insurance you need depends on factors
such as your other sources of income, how many dependents you have, your debts, and your lifestyle.
The general guideline is between seven and ten times your annual salary. In other words an estimate of
how much money you want to leave for your family and also an estimate of how much money you can
afford to pay on a monthly basis.
Estimate the amount you want to leave behind taking into consideration: your current age, number of
family members who will need financial support, if married whether your spouse currently works, and
educational needs if you have any children. Also factor in other routine support needs like rent, living
expenses, etc (also consider increases in cost of living). Use a spreadsheet or find insurance estimation
calculators on the internet that might help you to develop this. Be sure to include your spouse or other
family members in this planning effort.
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Search for Life Insurance Policy Options contacting insurance agents or browsing websites of Insurance
companies like LIC, ICICI,HDFC, Bharati, Tata, Reliance, etc. Develop an understanding of the various
types of policies and their terms and benefits.
The following are the major types of policies
a) Term Insurance - Term life insurance is called "term" because it provides coverage for a specific period
or term, it is that Policy which provides life coverage only. On the death of the insured it pays the face
amount of the policy to the named beneficiary within the Term. However, once the term is over and if the
policy is not renewed, the coverage ceases & if death occurs after that, you dont receive any Cash
benefits. It is the most straightforward type of Life Insurance, It is also called Pure Insurance since the
policy has no financial investment value & most of your premium goes to pay for coverage.
b) Children Insurance Plans : The Children Plans are designed to secure your child's future by giving your
child (the beneficiary) a guaranteed lump sum, on maturity or in case of your unfortunate demise, early in
the policy term. There are two types of Childrens Policy, under the first Plan; the child himself is insured
although the premium is paid by the parents. In the second Plan, it is the parent who is insured but in
case of his untimely death, or at time of the maturity of the policy, the child gets the benefit.
c) Annuities and Pension: There is an increased need for Retirement Plan due to Increase in Life
Expectancy & Increase in the Cost of Living (Medical Expenditure). In an annuity, the insurer agrees to
pay the insured a stipulated sum of money periodically. The main purpose of an annuity is to protect
against risk as well as provide money in the form of pension at regular intervals.
d) There are two kinds of Pension policies:- The Immediate Annuity and The Deferred Annuity. In the
former, you have to invest a lump sum and start receiving pensions immediately. In the latter, you start
building a corpus at a young age & on retirement; you receive annuities out of this corpus.
e) Whole Life Policy : It is probably the simplest policy to understand. Every year you pay a fixed premium
based on your age and other such factors. And then, as the years go by, you earn a certain interest on
your policy's cash value. The policy continues into your old age for the same premium you started out
with. This policy provides protection that is permanent and also accumulates handsome returns. Whole
Life Policy is an insurance cover against death, irrespective of when it happens. This policy, however,
fails to address the additional needs of the insured during the post-retirement years. It doesn't consider a
person's increasing financial needs either. While the insured buys the policy at a young age, his/her
needs typically increase over time. By the time he/she dies, the value of the sum assured might be too
low to meet his/her family's needs. As a result of these drawbacks, insurance firms now offer either a
modified Whole Life Policy or combine in with another type of policy.
f) Endowment policy : Endowment policy is the most popular policy in the world of life insurance as it is
the combination of risk cover with financial savings. An Endowment Life Insurance Policy provides more
of an investment. One can earn more capital for specific purposes and is also protected against the
insured's premature death. If the insured dies during the tenure of the policy, the insurance firm has to
pay the sum assured just as any other pure risk cover. Endowment Life insurance is mostly used by many
for anticipated financial needs, like children's education or ones' retirement. Premium for an Endowment
Life policy is much higher compared to a Whole Life policy. The cost of such a policy is higher but worth
its value.
g) Money Back policy : This is more of an Endowment policy as part of the amount assured is paid at
fixed periods, before the maturity date, in the form of survival benefits. These policies are structured to
provide sums required as anticipated expenses over a stipulated period of time. The premium is payable
for a particular period of time. If the insured survives till the expiry of maturity date of the policy, the
survival benefits are deducted from the maturity value.
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h) Unit plans (ULIP)- wherein insurance companies invests in stocks ,with caution, on your behalf, at least
possible risk to your money. This types polices are very risky.
When choosing life insurance, use the Internet's resources to educate yourself about life insurance
basics, find an agent you trust, then have the policies he or she recommends evaluated by an
independent financial adviser. Also consider the reputation of the Insurance Company, life insurance is a
long term business, please ensure that, you are dealing with an insurance company having stability to
protect your investment for a long term and capable of taking care of the financial needs of your family in
your absence.
Internationally known financial advisors strongly believes that if you want insurance, buy term; if you want
an investment, buy an investment, not insurance. Don't mix the two. For the record, unless you're a very
savvy investor and understand all the implications of the various types of life insurance policies. The
bottom line is that the average person should be purchasing term life insurance
Insurance cover for your bank deposits
Most of us believe that, our deposits in banks are 100% guaranteed by Government of India and if
something happen to the Bank; Government will come for our rescue and arrange to pay back the
deposited amount. But this is a wrong thinking.
Deposit Insurance and Credit Guarantee Corporation (DICGC) is an organization constituted by
Government of India which insures and covers all bank accounts of schedule commercial banks licensed
by Reserve Bank of India. All commercial banks including branches of foreign banks functioning in India,
local area banks and regional rural banks are insured by the DICGC.
How this DICGC Scheme works?
In the event of a bank failure, DICGC protects bank deposits that are payable in India.
The DICGC insures all deposits such as savings, fixed, current, recurring, etc. except the following types
of deposits.
(i) Deposits of foreign Governments;
(ii) Deposits of Central/State Governments;
(iii)Inter-bank deposits;
(iv) Deposits of the State Land Development Banks with the State co-operative bank;
(v) Any amount due on account of any deposit received outside India
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(vi) Any amount, which has been specifically exempted by the corporation with the previous approval of
Reserve Bank of India.
Deposits in scheduled banks are insured up to Rs 1 lakh for that each schedule banks needs to pay
certain premium to DICGC. So, if a bank goes into liquidation, the depositor is paid up to a maximum of
Rs 1 lakh. The deposits kept in different branches of a bank are aggregated for the purpose of insurance
cover and a maximum amount upto Rupees one lakh is paid. If you have deposits with more than one
bank, deposit insurance coverage limit is applied separately to the deposits in each bank. The DICGC
insures principal and interest upto a maximum amount of Rs. One lakh. Banks have the right to set off
their dues from the amount of deposits. The deposit insurance is available after netting of such dues.
Please note the following points in this connection.
1) Regardless of the number of accounts and branches in which the amount is deposited, the insurance
cover is for the actual amount of loss, subject to a maximum of Rs. 1 lakh per individual per bank.
Suppose you deposited Rs. 5 lakh each in 3 different branches of the same bank, as per rule you are
eligible to get only Rs. 1 lakh insurance cover.
2) If the same individual operates different accounts in different capacities, each account would be
insured up to Rs. 1 lakh separately.
3) In the case of joint accounts, accounts in various combinations of the same persons are added
together and the combined total is insured up to Rs 1 lakh. Thus, when there are two accounts one in
the name of husband and wife and the other wife and husband the insurance on the two accounts will
be Rs 1 lakh. However, if the husband has one independent account and the wife has another, each
account would be separately insured up to Rs 1 lakh. Although, logically, this may sound absurd, the
scheme of insurance has been drafted in this fashion.
How will you know whether you bank is insured by the DICGC or not?
The DICGC while registering the banks as insured banks furnishes them with printed leaflets for display
giving information relating to the protection afforded by the Corporation to the depositors of the insured
banks. In case of doubt, depositor should make specific enquiry from the branch official in this regard. My
opinion all bank customers especially those who are having accounts with co-operative and regional
banks must do this once in a while.
Conclusion
In India, RBI has given license to so many Scheduled Commercial Banks/ Regional Rural Banks
promoted by various companies and individuals and RBI has got strict control over all these banks
operating in both private and public sector. As an investor, we must ensure to deposit or bank with a wellestablished banks to minimize the risk. In the present situation Rs.1 lakh insurance cover is nothing, so
there is a need to increase the insurance cover provided by DICGC
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13 TIPS TO AVOID INVESTMENT FRAUD
13 Tips to avoid Investment Fraud

1) Always ensure to use your own pen while filling application form and/or cheques. The era of frauds
using invisible ink of agents has just begun and ensures to put lines in the blank areas both in the
cheques and application, not leaving space for anyone to fill the blank columns. In case the
application is filled by the agent, read all the writings carefully and ensure that, the data filled is correct
and matches with your records.
2) Always ensure to write application number, your name, mobile phone no., fund/scheme name at the
back of the cheque. If you're giving renewal premium cheque, write your policy/folio number also.
3) Check for renewal date and payment frequency carefully in your policy document. It has come to
notice that many agents had taken the cheque from customers for yearly mode or half-yearly mode &
has submitted the documents on monthly mode. If possible use online premium payment.
4) Deal with only certified financial planner, AMFI certified distributor or IRDA certified insurance
agent. Do not deal with sub-brokers as they're not fully trained and do not have complete knowledge
about the products they are selling on behalf of the main agent.
5) Always check the identity card of the person to whom youre dealing with. Check the company name
and date of validity of the card. Generally, IRDA license is valid for 3 years and AMFI license is valid
for 5 years from the date of issuance / renewal.
6) Do not blindly trust anyone even if you know him / her from several years. Always ask for official
brochure of the product you're dealing with and see everything written there. Read all fine prints
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carefully and ensure that, whatever your agent explained to you related to the products are correctly
matching with official offer documents or the policy proposal form.
7) Ask for official illustration of the insurance product or fact sheet of mutual fund before investing. In
most of the cases the investment returns and other benefits explained in the illustration is based on
some assumptions. In 90% cases the agent will try to convince you that, the return worked out in the
illustration should be guaranteed and you are going to receive all the benefits at the maturity of the
investment. This investment mistakes had happed to so many investors those who have invested in
ULIP policies issued by insurance companies and badly burned their fingers. Lakhs of people are
victims of this scam ( I can confidently use the word scam here, because the poor investors are
cheated by the agents and insurance companies showing unimaginable returns and other benefits
otherwise we can call this as day light robbery). Mostly all insurance products are long term in nature.
After 10-20 years, if happened something wrong also, who is going to complain and you will not be
able to trace your agent also.
8) Understand the product fully before investing to ensure that the investment you are making is
match with your risk appetite and return expectations
9) Insist your adviser to show the comparison with other competitive products. You may like some
feature of other product which your advisor does not like.
10) Note down the your agent / distributor full contact details before submitting application forms like
full name, ARN No. or IRDA license no., branch address & phone no., residential address & phone no.
mobile phone & landline, email address etc.
11) Always put the date whenever you sign on important documents.
12) When you get your policy bond / statement of account/ investment certificate, check all the details
like your name, contact details, nominee name and other relevant details. Go through all the
documents. Pay attention to the charges portion carefully. Insurance companies normally give
photocopy of your filled application form along with your signed official illustration with policy bond. If
you're not satisfying with the terms and conditions, you can return the original policy bond with 15days free look-up period and get your money back.
13) Whenever you sign on a document having multiple pages, ensure to sign on all pages
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CHAPTER 63
Impact of proposed Direct Tax Code on NRIs
The Direct Tax Code (DTC) which was expected to be implemented from April 2013, has been deferred
for
the
time
being
and
expected
to
be
implemented
later.
In his Budget three years ago, the Finance Minister announced the introduction of the New Direct Taxes
Code (DTC) and a draft of the same was also circulated for comments and discussion. Thereafter, based
on the inputs from various lobbies; the revised draft was constructed and the DTC Bill was introduced in
the Parliament in August 2010.
Since last two years, the Finance Minister has been communicating its introduction from the ensuing
financial year, but the same has not been happening. The result is the same even in this year. However,
the Report of the Parliamentary Standing Committee on the DTC has been submitted and therefore the
chances are very bright that the DTC may come into effect from the next year i.e. Assessment Year 201516 relevant to Financial Year 2014-15.
Standing Committee on Finance headed by Senior BJP leader Yashwant Sinha scrutinised the DTC Bill
and submitted the report to Parliament on March 9,2012.
The following are some of the provisions in DTC negatively affecting the interest of NRIs
NRI can draw comfort from the fact that there are no changes in the manner of taxability or scope of
income. But having said that one of the biggest blows in the DTC for an NRI is the removal of the NOR
or the Not Ordinarily Resident Category. Under the existing Act, basis physical presence, a Resident is
further classified as Resident and Resident Ordinary (ROR) and Not Ordinarily Resident (NOR). A person
is said to be not ordinarily resident in India in any previous year if such person is an individual who has
not been a resident in India in nine out of the ten previous years preceding that year, or has not during the
seven previous years preceding that year been in India for a period of, or periods amounting in all to,
seven hundred and thirty days or more. The latter two differ in the scope of Income that is held taxable.
The RORs are subject to tax in India on their worldwide income but the NORs/NRs are taxable in India
only on their India sourced income. Now under DTC, every NRI visiting India for greater than 182 days in
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a financial year would become a Resident by default, and he would be subject to taxes on his global
income.
The concept of NOR has been replaced by providing exemption to the individual on the income which is
sourced out of India. This exemption will be available from the financial year in which the NRI becomes a
resident and the immediately succeeding financial year, if such individual was a non resident for nine
years immediately preceding the financial year in which he becomes a resident. So typically, in case of a
returning Indian who has been out of India for a long period of time, he may become liable for tax on his
worldwide income (if he retains sources of income overseas) from 3rd or 4th year of coming to India.
Another change is in the DTAA claims. India has signed treaties with 82 different countries to avoid dual
taxation on the income of a NRI who is paying taxes in the other country. This is called the Double
Taxation Avoidance Agreement or DTAA, under which the NRI could enjoy the benefit of lower
withholding of tax. While the current tax law, required the NRI to merely declare that he was a tax
resident, under the DTC structure, he will need to submit a Tax residency certificate from the country of
his residency. This makes claiming the benefit more stringent and cumbersome.
For the last few months financial advisors and ordinary investors have been worried about how savings
and investment structure will have to be changed because of the Direct Tax Code. Once its implemented
practically all the popular tax savings instruments tax savers are using for years become irrelevant.. For
example, ELSS mutual funds, National Savings Certificates (NSC) and ULIPs will no longer be the easy
and automatic options tax-savers that they are now. Tax-saving patterns will change drastically when
the DTC comes into effect. Broadly, the DTC tends to higher limits and a much smaller menu from which
tax-saving investments have to be chosen. Like this lot of changes are proposed in the forthcoming DTC.
A. P. (DIR Series) Circular No. 20, August 29, 2012
Attention of Authorised Dealer Category I (AD Category I) banks is invited to Notification No. FEMA
29 / 2000-RB dated September 26, 2000 viz. Payment to person resident outside India on invocation of
guarantee, A.P. (DIR Series) Circular No. 28 dated March 30, 2001 and A.P. (DIR Series) Circular No. 5
dated August 1, 2005 relating to External Commercial Borrowings (ECB).
2. Borrowing and lending of Indian Rupees between two persons resident in India does not attract the
provisions of the Foreign Exchange Management Act, 1999. In case where a Rupee loan is granted
against the guarantee provided by a person resident outside India, there is no transaction involving
foreign exchange until the guarantee is invoked and the non-resident guarantor is required to meet the
liability under the guarantee. The Reserve Bank vide Notification No. FEMA 29/2000-RB dated
September 26, 2000 has granted general permission to a person resident in India, being a principal
debtor, to make payment to a person resident outside India, who has met the liability under a guarantee.
3. On a review, it has been decided to extend the facility of non-resident guarantee under the general
permission for non-fund based facilities (such as Letters of Credit/guarantees/Letter of Undertaking (LoU)
/Letter of Comfort (LoC) ) entered into between two persons resident in India. The method of discharge of
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liability by the non-resident guarantor under the guarantee and the subsequent repayment of the liability
by the principal debtor would continue, as hitherto, as detailed in A.P. (DIR Series) Circular No. 28 dated
March 30, 2001.
4. It has also been decided to introduce a reporting format to capture such guarantees issued and
invoked. Authorized Dealer Category-I banks are required to furnish such details by all its branches, in a
consolidated statement, during the quarter, as per the format in Annex to the Chief General Manager,
Foreign Exchange Department, ECB Division, Reserve Bank of India, Central Office Building, 11th floor,
Fort, Mumbai 400 001 (and in MS-Excel file through email) so as to reach the Department not later than
10th day of the following month.
5. The policy would be reviewed at an appropriate time based on the experience gained in this regard.
6. The modifications to the policy will come into force from the date of this circular. AD Category I banks
may bring the contents of this circular to the notice of their constituents and customers.
Yours faithfully,
(Rashmi Fauzdar)
Facilities for Persons Resident outside India FIIs

RBI/2012-13/258
October 22, 2012
To,
All Authorised Dealer Category I Banks
Madam / Sir,
Facilities for Persons Resident outside India FIIs
Attention of Authorised Dealers Category I (AD Category I) banks is invited to the Foreign Exchange
Management (Foreign Exchange Derivative Contracts) Regulations, 2000 dated May 3, 2000 [Notification
No. FEMA/25/RB-2000] and A.P. (DIR Series) Circular No.32 dated December 28, 2010, as amended
from time to time.
2. As per the extant guidelines, only designated branches of AD Category I banks maintaining accounts
of FIIs are allowed to act as market makers to FIIs for hedging their currency risk on the market value of
entire investment in equity and/or debt in India as on a particular date.
540 | P a g e
3. It has now been decided to allow FIIs to approach any AD Category I bank for hedging their currency
risk on the market value of entire investment in equity and/or debt in India as on a particular date subject
to the following conditions:
i.
ii.
iii.
The eligibility for cover may be determined on the basis of a valuation certificate provided by the
designated AD category bank along with a declaration by the FII to the effect that its global
outstanding hedges plus the derivatives contracts cancelled across all AD category banks is
within the market value of its investments.
The FII should also provide a quarterly declaration to the custodian bank that the total amount of
derivatives contract booked across AD Category banks are within the market value of its
investments.
The hedges taken with AD banks other than designated AD banks, have to be settled through the
Special Non-Resident Rupee A/c maintained with the designated bank through RTGS/NEFT.
4. AD Category I bank may bring the contents of this circular to the notice of their constituents and
customers.
Foreign Exchange Management Act 1999 (42 of 1999) and are without prejudice to
Yours faithfully,
(Rudra
Narayan
Kar)
Loans to Non Residents/Third Parties against Security of NRE Accounts/FCNR (B) Deposits
RBI/2012-13/247
A. P. (DIR Series) Circular No. 44, Dated- October 12, 2012
Madam / Sir,
Foreign Exchange Management (Deposit) Regulations, 2000- Loans to Non Residents / third
parties against security of Non Resident (External) Rupee Accounts [NR (E) RA] / Foreign
Currency Non Resident (Bank) Accounts [FCNR (B)] Deposits
Attention of Authorised Dealer Category-I banks and Authorised banks (the banks) is invited to Para 6 of
Schedule 1 and Para 9 of Schedule 2 to Foreign Exchange Management (Deposit) Regulations, 2000
notified vide Notification No.FEMA 5/2000-RB dated May 3, 2000, as amended from time to time
regarding loans against security of funds held in deposit accounts. Further, attention of the banks is also
invited to A. P. (DIR Series) Circular No.66 dated April 28, 2009 in terms of which it was decided to
541 | P a g e
enhance the then existing cap of Rs.20 lakh to Rs.100 lakh on loans against security of funds held in
NR(E)RA and FCNR(B) deposits either to the depositors or third parties.
2. The Committee to review the facilities for individuals under FEMA, 1999 (Chairperson: Smt.
K.J.Udeshi) has recommended that the banks may sanction Rupee loans in India or foreign currency
loans outside India to either the account holder or a third party to the extent of the balance in the
NRE/FCNR (B) account subject to margin requirements. The existing position in this regard has been
reviewed and it has been decided, in exercise of powers under paragraph 6(d) of Schedule-1 read with
para 9(1) of Schedule-2 of the Foreign Exchange Management (Deposit) Regulations, 2000, that the
banks may now grant loans against NR(E)RA and FCNR(B) deposits either to the depositors or the third
parties as under:Existing
provision
Proposed provision
Rupee loans* in India

Loans against
NRE/FCNR(B) Fixed
Deposits
Rs. 100 lakhs

Rupee loans to be allowed to
ceiling applicable depositor/third party without any
ceiling subject to usual margin
requirements**
Foreign Currency loan* in India/ outside India

Loans against
NRE/FCNR(B) Fixed
Deposits
Rs. 100 lakhs

Foreign Currency loans to be
ceiling applicable allowed to depositor/third party
without any ceiling subject to usual
margin requirements **
* The term loan shall include all types of fund based/non-fund based facilities.
** In case of FCNR deposits, the margin requirement shall be notionally calculated on the rupee
equivalent of the deposits in accordance with para 9(2) of Schedule-2 of Foreign Exchange Management
(Deposit) Regulations, 2000.
Further, the facility of premature withdrawal of NRE/FCNR deposits shall not be available where loans
against such deposits are to be availed of. This requirement may specifically be brought to the notice of
the deposit holder at the time of sanction of the loan. The existing loans which are not in conformity with
the above instructions shall continue for their existing term and shall not be rolled over/renewed. Other
conditions as regards grant of loan against NRE/FCNR deposits shall remain unchanged.
3. The above instructions shall come into force with immediate effect. The banks may bring contents of
this circular to the notice of their constituents and customers concerned.
4. The directions contained in this circular have been issued under sections 10(4) and 11 (1) of the
Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to
Yours faithfully,
(Rudra Narayan Kar)
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FDI Allotment of Shares to person resident outside India under MoA of an Indian company
Pricing guidelines
RBI/2012-13/223
September 26, 2012
To
Madam / Sir,
Foreign Direct Investment (FDI) in India
Allotment of Shares to person resident outside India under Memorandum of
Association (MoA) of an Indian company Pricing guidelines
Attention of Authorised Dealers Category-I (AD Category I) banks is invited to the Foreign Exchange
Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000
notified vide Notification No. FEMA 20 / 2000 -RB dated May 3, 2000 (hereinafter referred to as
Notification No. FEMA 20), as amended from time to time.
2. In terms of sub-regulation (1) of Regulation 5 of the Notification ibid, a person resident outside India or
an entity incorporated outside India may purchase shares or convertible debentures of an Indian
company under Foreign Direct Investment Scheme, subject to compliance with the issue price specified
in para 5 of Schedule 1 of the Notification ibid.
3. It has been decided that in cases, where non-residents (including NRIs) make investment in an Indian
company in compliance with the provisions of the Companies Act, 1956, by way of subscription to
Memorandum of Association, such investments may be made at face value subject to their eligibility to
invest under the FDI scheme.
4. AD Category I banks may bring the contents of the circular to the notice of their concerned
constituents and customers.
5. The directions contained in this circular have been issued under Sections 10(4) and 11(1) of the
Yours faithfully,
(Rudra Narayan Kar)
Import of gold in any form including jewellery FEMA Clarification

RBI/2012-13/220
September 24, 2012
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To
Madam / Sir,
Foreign Exchange Management Act, 1999-Import of gold in any form including jewellery made of
gold/precious metals or / and studded with diamonds / semi precious / precious stones
clarification
Attention of Authorised Dealer Category I (AD Category I) banks is invited to the provisions contained
in A.P.(DIR Series) Circular No.59 dated May 6, 2011, in terms of which, AD Category I banks have
been permitted to approve Suppliers and Buyers credit (trade credit) including the usance period of
Letters of Credit for import of rough, cut and polished diamonds, for a period not exceeding 90 days, from
the date of shipment.
2. It is clarified that Suppliers and Buyers credit (trade credit) including the usance period of Letters of
Credit opened for import of gold in any form including jewellery made of gold/precious metals or/ and
studded with diamonds/ semi precious / precious stones should not exceed 90 days, from the date of
shipment.
3. All the instructions issued for direct import of gold, vide A.P. (DIR Series) Circular No.2 dated July 9,
2004; import of Platinum / Palladium/ Rhodium /Silver vide A.P. (DIR Series) Circular No.12 dated August
28, 2008; advance remittance for import of rough diamonds, vide A.P. (DIR Series) Circular No. 21 dated
December 29, 2009 and import of rough, cut and polished diamonds, vide A.P.(DIR Series) Circular
No.59 dated May 6, 2011, shall remain unchanged.
4. AD Category I banks may bring the contents of this circular to the notice of their constituents and
5. The directions contained in this circular have been issued under Section 10 (4) and Section 11 (1) of
the Foreign Exchange Management Act (FEMA), 1999 (42 of 1999) and are without prejudice to
permissions / approvals, if any, required under any other law.
Yours faithfully,
(Rashmi
544 | P a g e
Fauzdar)
Establishment of Liaison Offices (LO) /Branch Offices (BO) / Project Offices (PO) in India by
Foreign Entities Reporting
RBI/2012-13/222
A. P. (DIR Series) Circular No. 35
September 25, 2012
To
Madam / Sir,
Establishment of Liaison Offices (LO) /Branch Offices (BO) / Project Offices (PO) in India by
Foreign Entities Reporting requirement
Attention of Authorised Dealer Category I banks is invited to A.P. (DIR Series) Circular No. 6 dated
August 9, 2010 read with paragraph 5 (i) of A.P. (DIR Series) Circular No.24 dated December 30, 2009
regarding submission of Annual Activity Report. Their attention is also drawn to reporting requirements in
respect of Project Offices prescribed in A.P. (DIR Series) Circular No. 44 dated May 17, 2005 in the
matter.
2. It has now been decided that in addition to the reporting prescribed in terms of aforesaid circulars, all
the new entities setting up LO/BO/PO shall also:
i.
ii.
iii.
submit a report containing information as per Annex within five working days of the LO/BO/PO
becoming functional to the DGP of the state concerned in which LO/BO/PO has established its
office; if there are more than one office of such a foreign entity, in such cases to each of the DGP
concerned of the state where it has established office in India;
a copy of the report as per Annex shall also be filed with the DGP concerned on annual basis
along with a copy of the Annual Activity Certificate/Annual report required to be submitted by
LO/BO/PO concerned, as the case may be.
A copy of report thus filed as above shall also be filed with AD by LO/BO/PO concerned.
3. The existing LO/BO/PO shall henceforth report the information as per Annex along with the copy of
Annual Activity Certificate/Annual report to DGP of state concerned and also file a copy of the same with
AD bank.
4. The instructions come into force with immediate effect. AD Category I banks may bring the contents
of this circular to the notice of their constituents and customers concerned.
Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permission/approval,
required under any other law.
Yours faithfully,
(Rudra
545 | P a g e
Narayan
Kar)
Import of Pets as Baggage allowed only to persons transferring their residence to India
Circular No. 15 / 2013-Customs,
th
New Delhi, 8 April, 2013

Subject: Import of Pets under Baggage reg.
Attention is invited to Boards Circular No. 94/2002- Customs dated 23.12.2002 on the above
cited subject wherein it was provided that import of pets upto two numbers per passenger may be allowed
at one time subject to the production of the required healthcertificate from the country of origin
andexamination of the same by the concerned Quarantine officer.
2.
Board has re-examined the present policy of import of two pets by passengers in view of
representations received in this regard. Accordingly, it has been decided to allow import of two pet
animals as baggage only to persons transferring their residence to India after two years of continuous
stay abroad in terms of Baggage Rules 1998 subject to production of the required healthcertificate from
the country of origin and examination of said pets by the concerned Quarantine Officer at this end. This
new dispensation shall come into force with effect from 15th April 2013. Import of animals (pets) in general
would continue to be governed by DGFT policy.
3.
Boards Circular No. 94/2002 Customs dated 23.12.2002 stands modified accordingly to that
extent.
4.
These instructions may be brought to the notice of the trade/airlines/carriers by issuingsuitable
Trade / Public Notices. Suitable Standing orders/instructions may be issued for the guidance of the field
officers.
5.
Difficulties faced, if any, may be brought to the notice of the Board immediately.
Yours faithfully,
(S.C.Ganger)
Under Secretary (Customs)
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Form 15CA,15CB for remittance of payments to non-resident or foreign company

Currently, remittances to non-residents are allowed by banks if the person making the remittance
furnishes an undertaking, accompanied by a certificate from a Chartered Accountant (CA) certifying the
rate for withholding tax as per section 195 of the Act. The banks then forward the certificates to the
Reserve Bank of India (RBI), which in-turn forwards it to the Income tax department.
Finance Act, 2008 inserted a new sub section (6) to section 195 effective from April 1, 2008, which
requires the person responsible for making payment to a non-resident to furnish information relating to
such payments in forms to be prescribed. The Central Board of Direct Taxes (CBDT) has now, by
notification No 30/2009 dated March 25, 2009, prescribed a new rule 37BB in the Income Tax Rules,
1962 (the rules) prescribing Form 15CA and Form 15CB to be filed in relation to remittances to nonresidents under section 195(6) of the Income Tax Act, 1961 (the Act). This new rule is effective from
July 1, 2009 and shall apply to all remittances being made after July 1, 2009. The process that will have
to be followed, before any remittance can be made, is as under
Step 1 : Obtain a certificate from a Chartered Accountant in Form No 15CB
Step 2:Furnish the information in Form No15CA
Step 3:Electronically upload Form 15CA on the designated website
Step 4:Take Print out of Form 15CA and file a signed copy
Step 5:Remit money to the Non Resident
Please note that all the above steps have to be undertaken before remittance of money to the nonresident.
Notification no. 30/2009 is as below:In exercise of the powers conferred by section 295 read with sub-section (6) of section 195 of the Incometax Act, 1961, the Central Board of Direct Taxes hereby makes the following rules further to amend the
Income-tax Rules, 1962, namely:1.
(1) These rules may be called the Income-tax (Seventh Amendment) Rules, 2009.
(2) They shall come into force with effect from 1st July, 2009.
2.
In the Income-tax Rules, 1962, after rule 37BA, the following rule shall be inserted, namely:-
Furnishing of information under sub-section (6) of section 195.

37BB. (1) The information under sub-section (6) of section 195 shall be furnished by the person
responsible for making the payment to a non-resident, not being a company, or to a foreign company,
after obtaining a certificate from an accountant as defined in the Explanation to section 288 of the
Income-tax Act, 1961.
547 | P a g e
(2) The information to be furnished under sub-section (6) of section 195 shall be in Form No. 15CA and
shall be verified in the manner indicated therein and the certificate from an accountant referred to in subrule (1) shall be obtained in Form No. 15CB.
(3) The information in Form No. 15CA shall be furnished electronically to the website designated by the
Income-tax Department and thereafter signed printout of the said form shall be submitted prior to
remitting the payment.
(4) The Director-General of Income-tax (Systems) shall specify the procedures, formats and standards for
ensuring secure capture, transmission of data and shall also be responsible for the day-to-day
administration in relation to furnishing the information in the manner specified.
Clarification Prior intimation to RBI to raise aggregate FII / NRI limits for investments under PMS
RBI/2011-12/453
March 19, 2012
To
Madam / Sir,
Clarification Prior intimation to the Reserve Bank of India for raising the
aggregate Foreign Institutional Investors / Non-Resident Indian limits for
investments under the Portfolio Investment Scheme
Attention of Authorised Dealers Category I (AD Category I) banks is invited to the provisions of
Schedules 2 and 3 to the Notification No. FEMA 20/2000-RB dated May 3, 2000, viz., Foreign Exchange
Management (Transfer or issue of Security by a Person Resident outside India) Regulations, 2000, as
amended from time to time, in terms of which registered Foreign Institutional Investors (FII) and NonResident Indians (NRI) are allowed to purchase/sale shares and convertible debentures of an Indian
company (through registered brokers) on recognized stock exchanges in India subject to, inter-alia,
aggregate investment limit of 24 per cent and 10 per cent, respectively, of the paid up equity capital or
value of each series of convertible debentures of the Indian company.
2. It is hereby clarified that the Indian company raising the aggregate FII investment limit of 24 per cent to
the sectoral cap/ statutory limit, as applicable to the respective Indian company or raising the aggregate
NRI investment limit of 10 per cent to 24 per cent, should necessarily intimate the same to the Reserve
Bank of India, immediately, as hitherto, along with a Certificate from the Company Secretary stating that
548 | P a g e
all the relevant provisions of the extant Foreign Exchange Management Act, 1999 regulations and the
Foreign Direct Policy, as amended from time to time, have been complied with.
3. It may also be noted that the Reserve Bank of India monitors the ceilings on FII/ NRI/ PIO investments
in Indian companies on a daily basis. For effective monitoring of foreign investment ceiling limits, the
Reserve Bank has fixed cut-off points that are two percentage points lower than the actual ceilings. Once
the aggregate net purchases of equity shares of the company by FIIs/NRIs/PIOs reaches the cut-off point
of 2 per cent below the overall limit, the Reserve Bank cautions all the designated bank branches not to
purchase any more equity shares of the respective company on behalf of any FIIs/ NRIs/ PIOs without
prior approval of the Reserve Bank. The link offices are then required to intimate the Reserve Bank about
the total number and value of equity shares/ convertible debentures of the company proposed to be
bought on behalf of their FIIs /NRIs /PIOs clients. On receipt of such proposals, the Reserve Bank
gives clearances on a first-come-first served basis till such investments in companies reaches the
respective limits (such as, 10 / 24 / 30 / 40/ 49 per cent limit or the sectoral caps/statutory ceilings), as
applicable. On reaching the aggregate ceiling limit, the Reserve Bank advises all designated bank
branches to stop purchases on behalf of their FIIs/ NRIs/ PIOs clients. The Reserve Bank also informs the
general public about the `caution and the `stop purchase in these companies through a press release
and an updated list regarding the same is placed on the RBI website (www.rbi.org.in).
4. AD banks are advised to bring the above changes to the notice of their customers and constituents
immediately.
Yours faithfully,
(Meena Hemchandra)
The limit of NRIs Inward Remittance

Foreign Remittances RBI ups limit of inward remittance to 30 in a year
The Reserve Bank of India (RBI) on 8th June,2012 raised the limit on the number of foreign remittances
an individual can receive from 12 to 30 per calendar year. However, the cap on the amount of each
transaction has been kept unchanged at $2,500 per person. This had been a long-standing demand from
money transfer agents who had received such requests from customers.
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RBI/2011-12/596
A. P. (DIR Series) Circular No. 132
June 8, 2012
To,
All Authorised Persons, who are Indian Agents under Money Transfer Service Scheme.
Madam/ Sir,
Money Transfer Service Scheme
Attention of all Authorised Persons (APs), who are Indian Agents under the Money Transfer Service
Scheme (MTSS) is invited to paragraph 5 of the Notification dated June 4, 2003 on MTSS and the
specific permission accorded to them under FEMA, 1999 by the Reserve Bank to undertake inward crossborder money transfer activities in India, through tie-up arrangements with Overseas Principals.
2. It has been decided to increase the number of remittances from 12 to 30 to be received by a single
individual beneficiary in a calendar year.
3. All other instructions contained in the said Notification ibid, as amended from time to time remain
unchanged.
4. These guidelines would also be applicable mutatis mutandis to all Sub Agents of the Indian Agents
under MTSS and it will be the sole responsibility of the APs (Indian Agents) to ensure that their Sub
Agents also adhere to these guidelines.
5. Authorised Persons (Indian Agents) may bring the contents of this circular to the notice of their
constituents concerned.
6. The directions contained in this Circular have been issued under Sections 10(4) and 11(1) of the
Foreign Exchange Management
Act, 1999 (42 of 1999) and are without prejudice to
permissions/approvals if any, required under any other law.
Yours faithfully,
(Rudra Narayan Kar)
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Money Transfer Service Scheme Master Circular No. 1/2012-13

Money Transfer Service Scheme
Master Circular No. 1/2012-13, DATED 2-7-2012
Money Transfer Service Scheme (MTSS) is a quick and easy way of transferring personal remittances
from abroad to beneficiaries in India. Only inward personal remittances into India such as remittances
towards family maintenance and remittances favouring foreign tourists visiting India are permissible. No
outward remittance from India is permissible under MTSS.
2. This Master Circular consolidates the existing instructions on the subject of Money Transfer Service
Scheme at one place. The list of underlying circulars/notifications is set out in Appendix.
on July 1, 2013 and will be replaced by an updated Master Circular on the subject.
PART-A
SECTION I
Guidelines for permitting Indian Agents under Money Transfer Service Scheme (MTSS)
Brief Introduction
1.1 Money Transfer Service Scheme (MTSS) is a quick and easy way of transferring personal remittances
from abroad to beneficiaries in India. Only inward personal remittances into India such as remittances
towards family maintenance and remittances favouring foreign tourists visiting India are permissible. No
outward remittance from India is permissible under MTSS. The system envisages a tie-up between
reputed money transfer companies abroad known as Overseas Principals and agents in India known as
Indian Agents, who would disburse the funds to the beneficiaries in India at ongoing exchange rates. The
Indian Agent is not allowed to remit any amount to theOverseas Principal. Under MTSS, the remitters and
the beneficiaries are individuals only.
Statutory Basis
1.2 In terms of powers granted under Section 10 (1) of Foreign Exchange Management Act (FEMA),
1999, the Reserve Bank of India may accord necessary permission (authorization) to any person to act as
an Indian Agent under the Money Transfer Service Scheme. No person can handle the business of crossborder money transfer to India in any capacity, unless specifically permitted by the Reserve Bank.
2. Guidelines
Entry Norms
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The applicant should be an Authorised Dealer Category-I bank or an Authorised Dealer Category-II or a
Full Fledged Money Changer (FFMC), as defined in the A.P. (DIR Series) Circular No. 25 [A.P. (FL
Series) Circular No. 02] dated March 6, 2006.
3. Procedure for making Applications
The application for necessary permission to act as an Indian Agent may be made to the Chief General
Manager-in-Charge, Forex Markets Division, Foreign Exchange Department, Reserve Bank of India,
Central Office, Mumbai-400 001 and should be accompanied by the following documents:
(a) An undertaking that no cases have been initiated/are pending against the Indian Agent/its directors by
any law enforcing agency.
(b) Name and address of the Overseas Principal with whom the MTS will be conducted.
(c) Full details of the operation of the scheme by the Overseas Principal.
(d) List of branches in India and their addresses where MTS will be conducted by the Indian Agent.
(e) Estimated volume of business per month/year under the scheme.
(f) Audited Balance Sheet and Profit and Loss Account for the last two financial years, if available or a
copy of the latest audited accounts, with a certificate from statutory auditors regarding the position of the
net owned funds as on the date of application.
(g) Memorandum and Articles of Association where either a provision exists for taking up money
transferbusiness or an appropriate amendment thereto has been filed with the Company Law Board.
(h) Confidential Report from the applicants bankers (two) in a sealed cover.
(i) Details of sister/associated concerns functioning in the financial sector.
(j) A certified copy of the board resolution for undertaking money transfer business.
4. Collateral requirement
Collateral equivalent to 3 days average drawings or USD 50,000 whichever is higher, may be kept by
the OverseasPrincipal with a designated bank in India. The minimum amount of USD 50,000 shall be kept
as a foreign currency deposit while the balance amount may be kept in the form of a Bank Guarantee.
The adequacy of collateral should be reviewed at half yearly intervals on the basis of remittances
received during the past six months.
5. Other conditions
(a) Only personal remittances shall be allowed under this arrangement. Donations/contributions to
charitable institutions/trusts, trade related remittances, remittance towards purchase of property,
investments or credit to NRE Accounts shall not be made through this arrangement.
(b) A cap of USD 2500 has been placed on individual remittance under the scheme. Amounts up to Rs.
50,000/- may be paid in cash to a beneficiary in India. Any amount exceeding this limit shall be paid by
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means of account payee cheque/demand draft/payment order, etc. or credited directly to the beneficiarys
bank account only. However, in exceptional circumstances, where the beneficiary is a foreign tourist,
higher amounts may be disbursed in cash. Full record of such transactions should be kept on record for
scrutiny by the auditors/inspectors.
(c) Only 30 remittances can be received by a single individual beneficiary under the scheme during a
calendar year.
SECTION II
Guidelines for Overseas Principals
Indian
Agents
entering
into
arrangements
with Money
Transfer Operators overseas,
known
as Overseas Principals, may note that only Overseas Principals with adequate volume of business, track
record and outreach will be considered under the scheme. Further, since the primary objective of
permitting money transfer business in the country is to facilitate cheaper and more efficient means of
receipt of remittances, operators with limited outreach in terms of branch network in the country and
localized operations overseas will not generally be entertained.
Applicant Indian Agents should submit the following documents/comply with the following requirements, in
respect of Overseas Principals:
(a) The Overseas Principal should obtain necessary authorisation from the Department of Payment and
Settlement Systems, Reserve Bank of India under the provisions of the Payment and Settlement Systems
Act, 2007 to commence/operate a payment system.
(b) The Overseas Principal should be a registered entity, licenced by the Central Bank/Government or
financial regulatory authority of the country concerned for carrying on Money Transfer Activities. The
country of registration of the Overseas Principal should be AML compliant.
(c) The Overseas Principal should be well established in the money transfer business with a track record
of operations in well regulated markets.
(d)
The arrangement with Overseas Principal
should result
in considerably increasing access to
formal money transfer facilities at both ends.

(e) The Overseas Principal should be registered with the overseas trade/Industry bodies.
(f) The Overseas Principal should have a good rating from one of the international credit rating agencies.
(g) The Overseas Principal should submit confidential reports from two banks.
(h) The Overseas Principal should submit a report certified by independent Chartered Accountants,
regarding steps taken to comply with anti money laundering norms in the home/host country.
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(i) The Overseas Principals will be fully responsible for the activities of their Agents and Sub-Agents in
India.
(j) Proper records of remitters as also beneficiaries pertaining to all pay-outs in India are to be maintained
by theOverseas Principals. All records must be made accessible on demand to the Reserve Bank or
other agencies of the Government of India, viz., Customs, Ministry of Home Affairs, FIU-IND, etc. Full
details of the remitters and the beneficiaries should be provided by the Overseas Principals, if called for.
SECTION III
Guidelines for appointment of Sub-Agents by Indian Agents
The Indian Agent may appoint Sub-Agents who have place of business and a minimum net worth of Rs. 5
lakh. The Sub-Agents should operate through the Indian Agents and should not deal directly with
the OverseasPrincipal. The Sub-Agents should act on the payment instructions issued by the
Indian Agents. The Indian Agents are fully responsible for the activities of their Sub-Agents. While the
Indian Agents will be encouraged to act as self-regulated entities, the onus of ensuring the proper
conduct of activities of the Sub-Agents in the prescribed manner will lie solely on the Indian Agents. Every
Indian Agent would be required to conduct due diligence before appointing a Sub-Agent and any
irregularity observed could render the Indian Agents permission liable for cancellation.
SECTION IV
Guidelines for renewal of permission of existing Indian Agents
1. Necessary permission to Indian Agents will be issued initially for a period of one year, which may be
renewed annually on the basis of fulfillment of all conditions mentioned at section I above and other
directions/instructions issued by the Reserve Bank from time to time.
2. The applicant should be an Authorised Dealer Category I bank or an Authorised Dealer Category -II
or a Full Fledged Money Changer.
3. Application for renewal of licence should be submitted to the Regional Office concerned of the
Reserve Bank under whose jurisdiction the registered office of the Indian Agent falls along-with the
following documents:
(a) An undertaking that no cases have been initiated/are pending against the Indian Agent/its directors by
any law enforcing agency.
(b) Volume of business per month/year under the scheme.
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(c) Audited Balance Sheet and Profit and Loss account for the last two financial years, if available or
copy of the latest audited accounts, with a certificate from the statutory auditors regarding the position of
Net Owned Funds on the date of application.
(d) Confidential Report from the applicants bankers (two) in a sealed cover.
(e) Details of sister/associated concerns functioning in the financial sector.
(f) A certified copy of the board resolution for renewal of permission.
SECTION V
Inspection of Indian Agents
Inspections of the Indian Agents may be conducted by the Reserve Bank under the provisions of section
12(1) of FEMA, 1999.
SECTION VI
KYC/AML/CFT Guidelines for the Indian Agents
Detailed
instructions
on
Know
Your
Customer
(KYC)
norms/Anti-Money
Laundering
(AML)
standards/Combating the Financing of Terrorism (CFT) for Indian Agents under MTSS in respect of crossborder inward remittance activities, in the context of the FATF Recommendations on Anti Money
Laundering standards and on Combating the Financing of Terrorism have been prescribed (Annex-I).
PART-B
Reports/Statements
1. A quarterly statement of the volume of remittances received, as per the enclosed format (Annex-II)
should be furnished to the Regional Office concerned of the Reserve Bank within 15 days from the close
of the quarter to which it relates.
2. Agents must arrange to forward to the Chief General Manager-In-Charge, Reserve Bank of India,
Foreign Exchange Department, Forex Markets Division, Central Office, Mumbai 400 001 addresses of
their additional locations on a quarterly basis. Further, list of their sub-agents should be furnished at the
above address on half yearly basis.
3. Indian Agents should also submit to the Chief General Manager-In-Charge, Reserve Bank of India,
Foreign Exchange Department, Forex Markets Division, Central Office, Mumbai 400 001 and to the
Regional Office concerned, the information for the half-year in the format annexed (Annex-III) as at the
end of June and December every year within the 15th of the following month.
Annex-I
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KYC/AML/CFT Guidelines for Indian Agents

SECTION-I
Know Your Customer (KYC) norms/Anti-Money Laundering (AML) standards/Combating the Financing of
Terrorism (CFT)/Obligation of Authorised Persons (Indian Agents) under Prevention of Money Laundering
Act, (PMLA), 2002, as amended by Prevention of Money Laundering (Amendment) Act, 2009 Cross
Border Inward Remittance under Money Transfer Service Scheme
1. Introduction
The offence of Money Laundering has been defined in Section 3 of the Prevention of Money Laundering
Act, 2002 (PMLA) as whosoever directly or indirectly attempts to indulge or knowingly assists or
knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime
and projecting it as untainted property shall be guilty of offence of money laundering. Money Laundering
can be called a process by which money or other assets obtained as proceeds of crime are exchanged
for clean money or other assets with no obvious link to their criminal origins.
2. The objective
The objective of prescribing KYC/AML/CFT guidelines is to prevent the system of cross border inward
money transfer into India from all over the world under the MTSS from being used, intentionally or
unintentionally, by criminal elements for money laundering or terrorist financing activities. KYC
procedures also enable Authorised Persons, who are Indian Agents under MTSS [referred as APs (Indian
Agents) hereinafter] to know/understand their customers and their financial dealings better, which in turn
help them manage their risks prudently.
3. Definition of Customer
For the purpose of KYC policy, a Customer is defined as :
a person who receives occasional/regular cross border inward remittances under MTSS;
one on whose behalf a cross border inward remittance under MTSS is received (i.e. the beneficial
owner)
[In view of Government of India Notification dated February 12, 2010 - Rule 9, sub-rule (1A) of PML Rules
- 'Beneficial Owner' means the natural person who ultimately owns or controls a client and or the person
on whose behalf a transaction is being conducted, and includes a person who exercises ultimate effective
control over a juridical person].
4. Guidelines
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4.1 General
APs (Indian Agents) should keep in mind that the information collected from the customer while making
payment of cross border inward remittances is to be treated as confidential and details thereof are not to
be divulged for cross selling or any other like purposes. APs (Indian Agents) should, therefore, ensure
that information sought from the customer is relevant to the perceived risk, is not intrusive, and is in
conformity with the guidelines issued in this regard. Any other information from the customer, wherever
necessary, should be sought separately with his/her consent.
4.2 KYC Policy
APs (Indian Agents) should frame their KYC policies incorporating the following four key elements:
(a) Customer Acceptance Policy;
(b) Customer Identification Procedures;
(c) Monitoring of Transactions; and
(d) Risk Management.
4.3 Customer Acceptance Policy (CAP)
(a) Every AP (Indian Agent) should develop a clear Customer Acceptance Policy laying down explicit
criteria for acceptance of customers. The Customer Acceptance Policy must ensure that explicit
guidelines are in place on the following aspects of customer relationship in the AP (Indian Agent).
(i) No remittance is received in anonymous or fictitious/benami name(s). [APs (Indian Agents) should not
allow any transaction in any anonymous or fictitious name (s) or on behalf of other persons whose identity
has not been disclosed or cannot be verified in view of Government of India Notification dated June 16,
2010 Rule 9, sub-rule (1C)].
(ii) Parameters of risk perception are clearly defined in terms of the nature of business activity, location of
customer and his clients, mode of payments, volume of turnover, social and financial status, etc. to
enable categorisation of customers into low, medium and high risk (APs may choose any suitable
nomenclature viz. level I, level II and level III). Customers requiring very high level of monitoring, e.g.
Politically Exposed Persons (PEPs) may, if considered necessary, be categorised even higher.
(iii) Documentation requirements and other information to be collected in respect of different categories
of customers depending on perceived risk and keeping in mind the requirements of Prevention of Money
Laundering Act, (PMLA), 2002, as amended by Prevention of Money Laundering (Amendment) Act, 2009,
Prevention of Money-Laundering (Maintenance of Records of the Nature and Value of Transactions, the
Procedure and Manner of Maintaining and Time for Furnishing Information and Verification and
Maintenance of Records of the Identity of the Clients of the Banking Companies, Financial Institutions
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and Intermediaries) Rules, 2005, as amended from time to time, as well as instructions/guidelines issued
by the Reserve Bank, from time to time.
(iv) Not to make payment of any remittance where the AP (Indian Agent) is unable to apply appropriate
customer due diligence measures i.e. AP (Indian Agent) is unable to verify the identity and/or obtain
documents required as per the risk categorisation due to non-cooperation of the customer or non
reliability of the data/information furnished to the AP (Indian Agent). It is, however, necessary to have
suitable built in safeguards to avoid harassment of the customer. In the circumstances when an AP
(Indian Agent) believes that it would no longer be satisfied that it knows the true identity of the customer,
the AP (Indian Agent) should file an STR with FIU-IND.
(v) Circumstances, in which a customer is permitted to act on behalf of another person/entity, should be
clearly spelt out, the beneficial owner should be identified and all reasonable steps should be taken to
verify his identity.
(b) APs (Indian Agents) should prepare a profile for each new customer, where regular cross-border
inward remittances are/expected to be received, based on risk categorisation. The customer profile may
contain information relating to customers identity, social/financial status, etc. The nature and extent of
due diligence will depend on the risk perceived by the AP (Indian Agent). However, while preparing
customer profile, APs (Indian Agents) should take care to seek only such information from the customer,
which is relevant to the risk category and is not intrusive. The customer profile is a confidential document
and details contained therein should not be divulged for cross selling or any other purposes.
(c) For the purpose of risk categorisation, individuals (other than High Net Worth) and entities whose
identities and sources of wealth can be easily identified and transactions by whom by and large conform
to the known profile, may be categorised as low risk. Customers that are likely to pose a higher than
average risk should be categorised as medium or high risk depending on customers background, nature
and location of activity, country of origin, sources of funds and his client profile, etc. APs should apply
enhanced due diligence measures based on the risk assessment, thereby requiring intensive due
diligence for higher risk customers, especially those for whom the sources of funds are not clear.
Examples of customers requiring enhanced due diligence include (a) nonresident customers; (b)
customers from countries that do not or insufficiently apply the FATF standards; (c) high net worth
individuals; (d) politically exposed persons (PEPs); (e) non-face to face customers; and (f) those with
dubious reputation as per public information available, etc.
(d) It is important to bear in mind that the adoption of customer acceptance policy and its implementation
should not become too restrictive and must not result in denial of cross border inward remittance facilities
to general public.
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(e) With a view to preventing the system of cross border inward money transfer into India from all over the
world under the MTSS from being used, intentionally or unintentionally, by criminal elements for money
laundering or terrorist financing activities, whenever there is suspicion of money laundering or terrorist
financing or when other factors give rise to a belief that the customer does not, in fact, pose a low risk,
APs (Indian Agents) should carry out full scale customer due diligence (CDD) before making payment of
any remittance.
4.4 Customer Identification Procedure (CIP)
(a) The policy approved by the Board of APs (Indian Agents) should clearly spell out the Customer
Identification Procedure while making payment to a beneficiary or when the AP has a doubt about the
authenticity/veracity or the adequacy of the previously obtained customer identification data. Customer
identification means identifying the customer and verifying his/her identity by using reliable, independent
source documents, data or information. APs (Indian Agents) need to obtain sufficient information
necessary to establish, to their satisfaction, the identity of each new customer, whether regular or
occasional. Being satisfied means that the AP must be able to satisfy the competent authorities that due
diligence was observed based on the risk profile of the customer in compliance with the extant guidelines
in place. Such risk based approach is considered necessary to avoid disproportionate cost to APs (Indian
Agents) and a burdensome regime for the customers. The APs (Indian Agents) should obtain sufficient
identification data to verify the identity of the customer and his address/location. For customers that are
natural persons, the APs (Indian Agents) should obtain sufficient identification document/s to verify the
identity of the customer and his address/location. For customers that are legal persons, the AP (Indian
Agent) should (i) verify the legal status of the legal person through proper and relevant documents; (ii)
verify that any person purporting to act on behalf of the legal person is so authorised and identify and
verify the identity of that person; and (iii) understand the ownership and control structure of the customer
and determine who are the natural persons who ultimately control the legal person. Customer
identification requirements in respect of a few typical cases, especially, legal persons requiring an extra
element of caution are given in paragraph 4.5 below for guidance of APs (Indian Agents). APs (Indian
Agents) may, however, frame their own internal guidelines based on their experience of dealing with such
persons, their normal prudence and the legal requirements as per established practices. If the AP (Indian
Agent) decides to undertake such transactions in terms of the Customer Acceptance Policy, the AP
(Indian Agent) should take reasonable measures to identify the beneficial owner(s) and verify his/her/their
identity in a manner so that it is satisfied that it knows who the beneficial owner(s) is/are [in view of
Government of India Notification dated June 16, 2010 - Rule 9 sub-rule (1A) of PML Rules]..
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(b) Some close relatives, e.g. wife, son, daughter and parents, etc. who live with their husband,
father/mother and son/daughter, as the case may be, may find it difficult to undertake transactions with
APs (Indian Agents) as the utility bills required for address verification are not in their name. It is clarified,
that in such cases, APs (Indian Agents) can obtain an identity document and a utility bill of the relative
with whom the prospective customer is living along with a declaration from the relative that the said
person (prospective customer) wanting to undertake a transaction is a relative and is staying with him/her.
APs (Indian Agents) can use any supplementary evidence such as a letter received through post for
further verification of the address. While issuing operational instructions to the branches on the subject,
APs (Indian Agents) should keep in mind the spirit of instructions issued by the Reserve Bank and avoid
undue hardships to individuals who are, otherwise, classified as low risk customers.
(c) APs (Indian Agents) should introduce a system of periodical updation of customer identification data, if
there is a continuing relationship.
(d) An indicative list of the type of documents/information that may be relied upon for customer
identification is given in SECTION-II. It is clarified that permanent correct address, as referred to in
SECTION-II means the address at which a person usually resides and can be taken as the address as
mentioned in a utility bill or any other document accepted by the AP for verification of the address of the
customer. When there are suspicions of money laundering or financing of the activities relating to
terrorism or where there are doubts about the adequacy or veracity of previously obtained customer
identification data, APs (Indian Agents) should review the due diligence measures including verifying
again the identity of the client and obtaining information on the purpose and intended nature of the
business relationship, as the case may be. [In view of Government of India Notification dated June 16,
2010- Rule 9 sub-rule (1D) of PML Rules].
(e) Payment to Beneficiaries
(i) For payment to beneficiaries in Indian Rupees, the identification documents, as mentioned at
SECTION-II, should be verified and a copy retained.
(ii) A cap of USD 2500 has been placed on individual remittances under the scheme. Amounts up to Rs.
50,000 may be paid in cash. Any amount exceeding this limit shall be paid only by means of
cheque/D.D./P.O., etc. or credited directly to the beneficiarys bank account. However, in exceptional
circumstances, where the beneficiary is a foreign tourist, higher amounts may be disbursed in cash. Only
30 remittances can be received by a single individual during a calendar year.
4.5 Customer Identification Requirements Transactions by Politically Exposed Persons (PEPs)
Indicative Guidelines
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Politically exposed persons are individuals who are or have been entrusted with prominent public
functions in a foreign country, e.g., Heads of States or of Governments, senior politicians, senior
government/judicial/military officers, senior executives of state-owned corporations, important political
party officials, etc. APs (Indian Agents) should gather sufficient information on any person/customer of
this category intending to undertake a transaction and check all the information available on the person in
the public domain. APs (Indian Agents) should verify the identity of the person and seek information about
the source/s of wealth and source/s of funds before accepting the PEP as a customer. The decision to
undertake a transaction with a PEP should be taken at a senior level which should be clearly spelt out in
the Customer Acceptance Policy. APs (Indian Agents) should also subject such transactions to enhanced
monitoring on an ongoing basis. The above norms may also be applied to transactions with the family
members or close relatives of PEPs. The above norms may also be applied to customers who become
PEPs subsequent to establishment of the business relationship. These instructions are also applicable to
transactions where a PEP is the ultimate beneficial owner. Further, in regard to transactions in case of
PEPs, it is reiterated that APs (Indian Agents) should have appropriate ongoing risk management
procedures for identifying and applying enhanced Customer Due Diligence (CDD) to PEPs, customers
who are family members or close relatives of PEPs and transactions of which a PEP is the ultimate
beneficial owner.
4.6 Monitoring of Transactions
Ongoing monitoring is an essential element of effective KYC procedures. APs (Indian Agents) can
effectively control and reduce their risk only if they have an understanding of the normal and reasonable
receipt of remittances of the beneficiary so that they have the means of identifying receipts that fall
outside the regular pattern of activity. However, the extent of monitoring will depend on the risk sensitivity
of the remittance. APs (Indian Agents) should pay special attention to all complex, unusually large
receipts and all unusual patterns which have no apparent economic or visible lawful purpose. APs (Indian
Agents) may prescribe threshold limits for a particular category of receipts and pay particular attention to
the receipts which exceed these limits. High-risk receipts have to be subjected to intense monitoring.
Every AP (Indian Agent) should set key indicators for such receipts, taking note of the background of the
customer, such as the country of origin, sources of funds, the type of transactions involved and other risk
factors. APs (Indian Agents) should put in place a system of periodical review of risk categorization of
customers and the need for applying enhanced due diligence measures. Such review of risk
categorisation of customers should be carried out periodically.
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APs (Indian Agents) should exercise ongoing due diligence with respect to the business relationship with
every client and closely examine the transactions in order to ensure that they are consistent with their
knowledge of the client, his business and risk profile and where necessary, the source of funds [In view of
Government of India Notification dated June 16, 2010 -Rule 9, sub-rule (1B)]
APs (Indian Agents) should examine the background and purpose of transactions with persons (including
legal persons and other financial institutions) from jurisdictions included in the FATF Statements and
countries that do not or insufficiently apply the FATF Recommendations. Further, if the transactions have
no apparent economic or visible lawful purpose, the background and purpose of such transactions
should, as far as possible, be examined and written findings together with all the documents should be
retained and made available to the Reserve Bank/other relevant authorities, on request.
4.7 Attempted transactions
Where the AP (Indian Agent) is unable to apply appropriate KYC measures due to non-furnishing of
information and/or non-cooperation by the customer, the AP should not undertake the transaction. Under
these circumstances, APs should make a suspicious transactions report to FIU-IND in relation to the
customer, even if the transaction is not put through.
4.8 Risk Management
(a) The Board of Directors of the AP (Indian Agent) should ensure that an effective KYC programme is
put in place by establishing appropriate procedures and ensuring effective implementation. It should
cover proper management oversight, systems and controls, segregation of duties, training and other
related matters. Responsibility should be explicitly allocated within the AP (Indian Agent) for ensuring that
the APs policies and procedures are implemented effectively. APs (Indian Agents) should, in consultation
with their Boards, devise procedures for creating risk profiles of their existing and new customers and
apply various anti money laundering measures keeping in view the risks involved in a transaction.
(b) APs (Indian Agents) internal audit and compliance functions have an important role in evaluating and
ensuring adherence to the KYC policies and procedures. As a general rule, the compliance function
should provide an independent evaluation of the APs (Indian Agents) own policies and procedures,
including legal and regulatory requirements. APs (Indian Agents) should ensure that their audit machinery
is staffed adequately with individuals who are well-versed in such policies and procedures. The
concurrent auditors should check all cross border inward remittance transactions under MTSS to verify
that they have been undertaken in compliance with the anti-money laundering guidelines and have been
reported whenever required to the concerned authorities. Compliance on the lapses, if any, recorded by
the concurrent auditors should be put up to the Board. A certificate from the Statutory Auditors on the
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compliance with KYC/AML/CFT guidelines should be obtained at the time of preparation of the Annual
Report and kept on record.
4.9 Introduction of New Technologies
APs (Indian Agents) should pay special attention to any money laundering threats that may arise from
new or developing technologies including transactions through internet that might favour anonymity and
take measures, to prevent their use for money laundering purposes and financing of terrorism activities.
4.10 Combating Financing of Terrorism
(a) In terms of PML Rules, suspicious transaction should include inter alia transactions which give rise to
a reasonable ground of suspicion that these may involve the proceeds of an offence mentioned in the
Schedule to the PMLA, regardless of the value involved. APs (Indian Agents) should, therefore, develop
suitable mechanism through appropriate policy framework for enhanced monitoring of transactions
suspected of having terrorist links and swift identification of the transactions and making suitable reports
to the FIU-IND on priority.
(b) APs (Indian Agents) are advised to take into account risks arising from the deficiencies in AML/CFT
regime of certain jurisdictions viz. Iran, Uzbekistan, Pakistan, Turkmenistan, Sao Tome and Principe,
Democratic Peoples Republic of Korea (DPRK), 1Bolivia, Cuba, Ethiopia, Kenya, Myanmar, Sri Lanka,
Syria, Turkey and Nigeria2 , as identified in FATF Statement (www.fatf-gafi.org) issued from time to time,
while dealing with individuals from these jurisdictions. In addition to FATF Statements circulated by the
Reserve Bank of India from time to time, (latest as on July 2, 2012, circulated vide the A.P. (DIR Series)
Circular No. 108 dated April 17, 2012), APs (Indian Agents) should also consider using publicly available
information for identifying countries, which do not or insufficiently apply the FATF Recommendations. All
A P (Indian Agents) are accordingly advised to take into account risks arising from the deficiencies in
AML/CFT regime of these countries, while entering into business relationships and transactions with
persons (including legal persons and other financial institutions) from or in these countries/jurisdictions
and give special attention to these cases.
4.11 Principal Officer
(a) APs (Indian Agents) should appoint a senior management officer to be designated as Principal
Officer. Principal Officer shall be located at the head/corporate office of the AP and shall be responsible
for monitoring and reporting of all transactions and sharing of information as required under the law. The
role and responsibilities of the Principal Officer should include overseeing and ensuring overall
compliance with regulatory guidelines on KYC/AML/CFT issued from time to time and obligations under
the Prevention of Money Laundering Act, 2002, as amended by Prevention of Money Laundering
(Amendment) Act, 2009, rules and regulations made there under, as amended from time to time. The
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Principal Officer should also be responsible for developing appropriate compliance management
arrangements across the full range of AML/CFT areas (e.g. CDD, record keeping, etc.). He will maintain
close liaison with enforcement agencies, APs (Indian Agents) and any other institution which are involved
in the fight against money laundering and combating financing of terrorism. To enable the Principal
Officer to discharge his responsibilities, it is advised that that the Principal Officer and other appropriate
staff should have timely access to customer identification data and other CDD information, transaction
records and other relevant information. Further, APs (Indian Agents) should ensure that the Principal
Officer is able to act independently and report directly to the senior management or to the Board of
Directors.
(b) The Principal Officer will be responsible for timely submission of CTR and STR to the FIU-IND.
4.12 Maintenance of records of transactions/Information to be preserved/Maintenance and preservation
of records/Cash and Suspicious Transactions Reporting to Financial Intelligence Unit- India (FIU-IND)
Section 12 of the Prevention of Money Laundering Act (PMLA), 2002, as amended by Prevention of
Money Laundering (Amendment) Act, 2009, casts certain obligations on the APs (Indian Agents) in
regard to preservation and reporting of transaction information. APs (Indian Agents) are, therefore,
advised to go through the provisions of Prevention of Money Laundering Act, (PMLA), 2002, as amended
by Prevention of Money Laundering (Amendment) Act, 2009 and the Rules notified there under and take
all steps considered necessary to ensure compliance with the requirements of Section 12 of the Act ibid.
(i) Maintenance of records of transactions
APs (Indian Agents) should introduce a system of maintaining proper record of transactions prescribed
under Rule 3, as mentioned below:
(a) all cash transactions of the value of more than Rupees ten lakh or its equivalent in foreign currency;
(b) all series of cash transactions integrally connected to each other which have been valued below
Rupees ten lakh or its equivalent in foreign currency where such series of transactions have taken place
within a month and the aggregate value of such transactions exceeds Rupees ten lakh;
(c) all transactions involving receipts by non-profit organisations of value more than Rupees ten lakh or
its equivalent in foreign currency [In view of Government of India Notification dated November 12, 2009 Rule 3, sub-rule (1) clause (BA) of PML Rules];
(d) all cash transactions where forged or counterfeit currency notes or bank notes have been used as
genuine and where any forgery of a valuable security or a document has taken place facilitating the
transaction; and
(e) All suspicious transactions whether or not made in cash and by way of as mentioned in the Rules.
(ii) Information to be preserved
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APs (Indian Agents) are required to maintain all necessary information in respect of transactions referred
to in Rule 3 to permit reconstruction of individual transactions including the following information:
a. the nature of the transaction;
b. the amount of the transaction and the currency in which it was denominated;
c. the date on which the transaction was conducted; and
d. the parties to the transaction.
(iii) Maintenance and Preservation of Records
(a) APs (Indian Agents) are required to maintain the records containing information of all transactions
including the records of transactions detailed in Rule 3 above. APs (Indian Agents) should take
appropriate steps to evolve a system for proper maintenance and preservation of transaction information
in a manner that allows data to be retrieved easily and quickly whenever required or when requested by
the competent authorities. Further, APs (Indian Agents) should maintain for at least ten years from the
date of transaction between the AP and the client, all necessary records of transactions, both with
residents and non-residents, which will permit reconstruction of individual transactions (including the
amounts and types of currency involved, if any) so as to provide, if necessary, evidence for prosecution of
persons involved in criminal activity.
(b) APs (Indian Agents) should ensure that records pertaining to the identification of the customer and his
address (e.g. copies of documents like passport, driving license, PAN card, voter identity card issued by
the Election Commission, utility bills, etc.) obtained while undertaking the transaction, are properly
preserved for at least ten years from the date of cessation of the business relationship. The identification
records and transaction data should be made available to the competent authorities upon request.
(c) In paragraph 4.6 of this Circular, APs (Indian Agents) have been advised to pay special attention to all
complex, unusual large transactions and all unusual patterns of transactions, which have no apparent
economic or visible lawful purpose. It is further clarified that the background including all documents/office
records/memoranda pertaining to such transactions and purpose thereof should, as far as possible, be
examined and the findings at branch as well as Principal Officers level should be properly recorded. Such
records and related documents should be made available to help auditors in their day-to-day work relating
to scrutiny of transactions and also to Reserve Bank/other relevant authorities. These records are
required to be preserved for ten years as is required under Prevention of Money Laundering Act, (PMLA),
2002, as amended by Prevention of Money Laundering (Amendment) Act, 2009 and Prevention of
Money-Laundering (Maintenance of Records of the Nature and Value of Transactions, the Procedure and
Manner of Maintaining and Time for Furnishing Information and Verification and Maintenance of Records
565 | P a g e
of the Identity of the Clients of the Banking Companies, Financial Institutions and Intermediaries) Rules,
(iv) Reporting to Financial Intelligence Unit India
(a) In terms of the PML rules, APs (Indian Agents) are required to report information relating to cash and
suspicious transactions to the Director, Financial Intelligence Unit-India (FIU-IND) in respect of
transactions referred to in Rule 3 at the following address:
The Director,
Financial Intelligence Unit-India (FIU-IND),
6th Floor, Hotel Samrat,
Chanakyapuri, New Delhi-110021.
Website http://fiuindia.gov.in/
(b) APs (Indian Agents) should carefully go through all the reporting formats. There are altogether four
reporting formats, as detailed in SECTION-III, viz. (i) Cash Transactions Report (CTR); (ii) Electronic File
Structure-CTR; (iii) Suspicious Transactions Report (STR); and iv) Electronic File Structure-STR. The
reporting formats contain detailed guidelines on the compilation and manner/procedure of submission of
the reports to FIU-IND. It would be necessary for APs (Indian Agents) to initiate urgent steps to ensure
electronic filing of all types of reports to FIU-IND. The related hardware and technical requirement for
preparing reports in an electronic format, the related data files and data structures thereof are furnished in
the instructions part of the formats concerned.
(c) In terms of instructions contained in paragraph 4.3(b) of this Circular, APs (Indian Agents) are
required to prepare a profile for each customer based on risk categorisation. Further, vide paragraph 4.6,
the need for periodical review of risk categorisation has been emphasized. It is, therefore, reiterated that
APs (Indian Agents), as a part of transaction monitoring mechanism, are required to put in place an
appropriate software application to throw alerts when the transactions are inconsistent with risk
categorization and updated profile of customers. It is needless to add that a robust software throwing
alerts is essential for effective identification and reporting of suspicious transactions.
4.13 Cash and Suspicious Transaction Reports
(A) Cash Transaction Report (CTR)
While detailed instructions for filing all types of reports are given in the instructions part of the related
formats, APs (Indian Agents) should scrupulously adhere to the following:
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(i) The Cash Transaction Report (CTR) for each month should be submitted to the FIU-IND by 15th of the
succeeding month. Cash transaction reporting by branches to their controlling offices should, therefore,
invariably be submitted on a monthly basis and APs (Indian Agents) should ensure to submit CTR for
every month to FIU-IND within the prescribed time schedule.
(ii) While filing CTR, details of individual transactions below Rs. 50,000 need not be furnished.
(iii) CTR should contain only the transactions carried out by the AP on behalf of their customers
excluding transactions between the internal accounts of the AP.
(iv) A cash transaction report for the AP as a whole should be compiled by the Principal Officer of the AP
every month in physical form as per the format specified. The report should be signed by the Principal
Officer and submitted to the FIU-IND.
(v) In case of Cash Transaction Reports (CTR) compiled centrally by APs (Indian Agents) for the
branches at their central data centre level, APs (Indian Agents) may generate centralised Cash
Transaction Reports (CTR) in respect of branches under central computerized environment at one point
for onward transmission to FIU-IND, provided:
(a) The CTR is generated in the format prescribed by Reserve Bank in Para 4.12(iv)(b) of this Circular.
(b) A copy of the monthly CTR submitted on its behalf to the FIU-IND is available at the branch
concerned for production to auditors/inspectors, when asked for.
(c) The instruction on Maintenance of records of transactions, Information to be preserved and
Maintenance and Preservation of records as contained above in this circular at Para 4.12 (i), (ii) and (iii)
respectively are scrupulously followed by the branch.
However, in respect of branches not under central computerized environment, the monthly CTR should
be compiled and forwarded by the branch to the Principal Officer for onward transmission to the FIU-IND.
(B) Suspicious Transaction Reports (STR)
(i) While determining suspicious transactions, APs (Indian Agents) should be guided by definition of
suspicious transaction contained in PML Rules, as amended from time to time.
(ii) It is likely that in some cases, transactions are abandoned/aborted by customers on being asked to
give some details or to provide documents. It is clarified that APs (Indian Agents) should report all such
attempted transactions in STRs, even if not completed by customers, irrespective of the amount of the
transaction.
(iii) APs (Indian Agents) should make STRs if they have reasonable ground to believe that the
transaction, including an attempted transaction, involves proceeds of crime generally irrespective of the
amount of transaction and/or the threshold limit envisaged for predicate offences in part B of Schedule of
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Prevention of Money Laundering Act, (PMLA), 2002, as amended by Prevention of Money Laundering
(Amendment) Act, 2009.
(iv) The Suspicious Transaction Report (STR) should be furnished within 7 days of arriving at a
conclusion that any transaction, including an attempted transaction, whether cash or non-cash, or a
series of transactions integrally connected are of suspicious nature. The Principal Officer should record
his reasons for treating any transaction or a series of transactions as suspicious. It should be ensured
that there is no undue delay in arriving at such a conclusion once a suspicious transaction report is
received from a branch or any other office. Such report should be made available to the competent
authorities on request.
(v) In the context of creating KYC/AML awareness among the staff and for generating alerts for
suspicious transactions, APs (Indian Agents) may consider the following indicative list of suspicious
activities.
Some possible suspicious activity indicators are given below:
Customer is reluctant to provide details/documents on frivolous grounds.
The transaction is undertaken by one or more intermediaries to protect the identity of the beneficiary or
hide their involvement.
Large amount of remittances.
Size and frequency of transactions is high considering the normal business of the customer.
The above list is only indicative and not exhaustive.
(vi) APs (Indian Agents) should not put any restrictions on payment to beneficiaries where an STR has
been made. Moreover, it should be ensured that employees of APs shall keep the fact of furnishing such
information as strictly confidential and there is no tipping off to the customer at any level.
4.14 Customer Education/Employees Training/Employees Hiring
(a) Customer Education
Implementation of KYC procedures requires APs (Indian Agents) to demand certain information from
customers which may be of personal nature or which has hitherto never been called for. This can
sometimes lead to a lot of questioning by the customer as to the motive and purpose of collecting such
information. There is, therefore, a need for APs (Indian Agents) to prepare specific literature/pamphlets,
etc. so as to educate the customer of the objectives of the KYC programme. The front desk staff needs to
be specially trained to handle such situations while dealing with customers.
(b) Employees Training
568 | P a g e
APs (Indian Agents) must have an ongoing employee training programme so that the members of the
staff are adequately trained to be aware of the policies and procedures relating to prevention of money
laundering, provisions of the PMLA and the need to monitor all transactions to ensure that no suspicious
activity is being undertaken under the guise of remittances. Training requirements should have different
focuses for frontline staff, compliance staff and staff dealing with new customers. It is crucial that all those
concerned fully understand the rationale behind the KYC policies and implement them consistently. The
steps to be taken when the staff come across any suspicious transactions (such as asking questions
about the source of funds, checking the identification documents carefully, reporting immediately to the
Principal Officer, etc.) should be carefully formulated by the APs (Indian Agents) and suitable procedure
laid down. The APs (Indian Agents) should have an ongoing training programme for consistent
implementation of the AML measures.
(c) Hiring of Employees
It may be appreciated that KYC norms/AML standards/CFT measures have been prescribed to ensure
that criminals are not allowed to misuse the system of money transfer under MTSS. It would, therefore, be
necessary that adequate screening mechanism is put in place by APs (Indian Agents) as an integral part
of their recruitment/hiring process of personnel to ensure high standards.
Note:- The Government of India had constituted a National Money Laundering/Financing of Terror Risk
Assessment Committee to assess money laundering and terror financing risks, a national AML/CFT
strategy and institutional framework for AML/CFT in India. Assessment of risk of Money
Laundering/Financing of Terrorism helps both the competent authorities and the regulated entities in
taking necessary steps for combating ML/FT adopting a risk-based approach. This helps in judicious and
efficient allocation of resources and makes the AML/CFT regime more robust. The Committee has made
recommendations regarding adoption of a risk-based approach, assessment of risk and putting in place a
system which would use that assessment to take steps to effectively counter ML/FT. The
recommendations of the Committee have since been accepted by the Government of India and need to
be implemented. Accordingly, APs (Indian Agents) should take steps to identify and assess their ML/TF
risk for customers, countries and geographical areas as also for products/services/transactions/delivery
channels, in addition to what has been prescribed in the paragraph 4 above. APs (Indian Agents) should
have policies, controls and procedures, duly approved by their boards, in place to effectively manage and
mitigate their risk adopting a risk-based approach as discussed above. As a corollary, APs (Indian
Agents) would be required to adopt enhanced measures for products, services and customers with a
569 | P a g e
medium or high risk rating. APs (Indian Agents) may design risk parameters according to their activities
for risk based transaction monitoring, which will help them in their own risk assessment.
Note:- The above KYC/AML/CFT Guidelines would also be applicable mutatis mutandis to all Sub-agents
of the Indian Agents under MTSS and it will be the sole responsibility of the APs (Indian Agents) to
ensure that their Sub-agents also adhere to these guidelines.
Section -II
Customer Identification Procedure Features to be verified and documents that may be obtained
from customers
Features
Documents
(i) Passport (ii) PAN card (iii) Voters Identity Card (iv) Driving licence (v) Identity card
- Legal name and (subject to the APs satisfaction) (vi) Letter from a recognized public authority or
any other names
public servant verifying the identity and residence of the customer to the satisfaction
used
of the AP
(i) Telephone bill (ii) Bank account statement (iii) Letter from any recognized public
authority (iv) Electricity bill (v) Ration card (vi) Letter from employer (subject to
satisfaction of the AP).
- Correct
(any one of the documents, which provides customer information to the satisfaction of
permanent address the AP will suffice).
Section-III
List of various reports and their formats
1. Cash Transaction Report (CTR)
2. Electronic File Structure- CTR
3. Suspicious Transaction Report (STR)
4. Electronic File Structure-STR
Note:- Formats of the above reports are given in A.P. (DIR Series) Circular No. 18 { A.P. (FL Series)
Circular No. 5 } dated November 27, 2009. APs (Indian Agents) may also visit the website of the FIUIND, i.e.,http://fiuindia.gov.in
Annex-II
Statement showing details of remittances received through Money Transfer Scheme during the quarter
ended ________________
Name of the Agent in India __________________________
Name of the Overseas Principal Total amount of foreign currency received (in USD) Rupee equivalent
570 | P a g e
Note : This statement is required to be submitted to the concerned Regional Office of RBI, FED within 15
days from the close of the quarter to which it relates.
Annex-III
Statement of Collateral kept by Indian Agents
Name of the Indian Agent ________________
Name of the
Overseas
Principal
Total amount of foreign

Amount of
Last review of adequacy of
currency received during Collateral
Collateral kept collateral along-with the
the past 6 months in USD obtained in USD in the form of observations
Appendix
List of Circulars/Notifications which have been consolidated in the Master Circular on Money
Transfer Service Scheme
Sl. No. Notification/Circular
1.
Notification on MTSS
2.
A.P. (DIR Series) Circular No. 18 [ A.P.(FL Series) Circular No. 05]
3.
4.
5.
6.
A.P.(DIR Series) Circular No.26 [A.P.(FL Series) Circular No. 07]
7.
8.
9.
A.P.(DIR Series) Circular No. 52[A.P.(FL Series) Circular No. 14]
10.
11.
12.
13.
14.
15.
16.
17.
18.
Date
June 4, 2003
November 27, 2009
November 25, 2010
November 30, 2010
December 13, 2010
December 22, 2010
December 22, 2010
April 6, 2011
April 6, 2011
May 16, 2011
May 20, 2011
May 20, 2011
September 19, 2011
September 19, 2011
February 15, 2012
February 29, 2012
April 17, 2012
June 8, 2012
____________
1. A.P.(DIR Series) Circular No. 22 dated September 19, 2011
2. A.P.(DIR Series) Circular No. 78 dated February 15, 2012
571 | P a g e
REMITTANCE FACILITIES FOR NON-RESIDENT INDIANS/PERSONS OF INDIAN ORIGIN/FOREIGN

NATIONALS
MASTER CIRCULAR NO. 8/2012-13, DATED 2-7-2012
Remittance facilities for Non-Residents /Persons of Indian Origin /Foreign Nationals are being governed
by sub-section (1) and (2) of section 6 of the Foreign Exchange Management Act, 1999 read with FEMA
Notification No.13/2000-RBForeign Exchange and FEMA Notification No. 21/2000-RB dated May 3,
2. This Master Circular consolidates the existing instructions on the subject of Remittance facilities for
Non-Resident Indians / Persons of Indian Origin / Foreign Nationals at one place. The list of
underlying circulars/notifications consolidated in this Master Circular is furnished in Appendix.
on July 1, 2013 and be replaced with an updated Master Circular on the subject.
1. Remittance facilities for Non Resident Indians (NRIs) / Persons of Indian Origin (PIO) and
Foreign Nationals
The Regulations for transfer of assets outside India by a person, whether resident in India or not, are
given in the Notification Nos. FEMA 13/2000-RB and FEMA 21/2000- RB dated May 3, 2000 and the
related amendments to these Notifications. Accordingly, remittance of funds from the sale of capital
assets in India held by a person, whether resident in or outside India, requires approval of the Reserve
Bank except to the extent provided in FEMA or Rules or Regulations made there under.
2. Definition of NRI/PIO
In terms of Regulation 2 of FEMA Notification No.13 dated May 3, 2000, Non-Resident Indian (NRI)
means a person resident outside India who is a citizen of India. Person of Indian Origin (PIO) means a
citizen of any country other than Bangladesh or Pakistan who had (a) at any time held Indian passport or
(b) he or either of his parents or any of his grandparents was a citizen of India by virtue of the Constitution
of India or the Citizenship Act, 1955 or (c) the person is a spouse of an Indian citizen or a person referred
to in (a) or (b).
3.1 Remittance outside India of current income like rent, dividend, pension, interest, etc. in India of the
account holder is a permissible debit to the NRO account. Authorised Dealer banks may also allow
repatriation of current income like rent, dividend, pension, interest, etc. of NRIs who do not maintain an
NRO account in India based on an appropriate certification by a Chartered Accountant , certifying that
the amount proposed to be remitted is eligible for remittance and that applicable taxes have been
paid/provided for.
3.2 NRIs/PIO have the option to credit the current income to their Non-Resident (External) Rupee
account, provided the Authorized Dealer bank is satisfied that the credit represents current income of the
non-resident account holder and income tax thereon has been deducted / provided for.
3.3 Foreign nationals who come to India on employment and become residents in terms of section 2(v) of
FEMA, 1999, and are eligible to open/hold a resident savings bank account, are permitted to re-designate
572 | P a g e
their resident account maintained in India as NRO account on leaving the country after their employment
to enable them to receive their legitimate dues subject to certain conditions.
4. Remittance of assets by a foreign national of non-Indian origin
4.1 A foreign national of non-Indian origin who has retired from an employment in India or who has
inherited assets from a person resident in India or who is a widow of an Indian citizen who was resident in
India, may remit an amount not exceeding USD one million, per financial year (April-March), subject to the
satisfaction of the Authorised Dealer bank, on production of documentary evidence in support of
acquisition / inheritance of assets, an undertaking by the remitter and certificate by a Chartered
Accountant in the formats prescribed by the Central Board of Direct Taxes vide their Circular No.10/2002
dated October 9, 2002.
4.2 These remittance facilities are not available to citizens of Nepal and Bhutan.
4.3. When a person resident in India leaves India for a country (other than Nepal or Bhutan) for
employment /business / vocation outside India or for with an intention to stay outside India for an
uncertain period, his / her existing account should be designated as a Non-Resident (Ordinary) [NRO]
Account. The extant instructions have been reviewed so as to facilitate the foreign nationals to collect
their pending dues in India. AD Category-I banks may, therefore, permit such foreign nationals to redesignate their resident account maintained in India as NRO account on leaving the country after their
employment to enable them to receive their pending bonafide dues, subject to the following conditions
a. AD Category-I bank should obtain the full details from the account holder about his legitimate dues
expected to be received into his account.
b. AD Category-I bank has to satisfy itself as regards the credit of amounts which have to be bonafide
dues of the account holder when she / he was a resident in India.
c. The funds credited to the NRO account should be repatriated abroad immediately, subject to the AD
Category-I bank satisfying itself regarding the payment of the applicable Income tax and other taxes in
India.
d. The amount repatriated abroad should not exceed USD one million per financial year.
e. The debit to the account should be only for the purpose of repatriation to the account holders
account maintained abroad.
f. There should not be any other inflow/credit to this account other than that mentioned at point (a)
above.
g. AD Category-I bank should put in place proper internal control mechanism to monitor the credits and
debits to this account.
h. The account should be closed immediately after all the dues have been received and repatriated as
per the declaration made by the account holder mentioned at point (a) above.
5. Remittance of assets by NRI/PIO
5.1 A Non-Resident Indian (NRI) or a Person of Indian Origin (PIO) may remit an amount up to USD one
million, per financial year, out of the balances held in his Non- Resident (Ordinary) Rupee (NRO)
account/sale proceeds of assets (inclusive of assets acquired by way of inheritance or settlement), for all
bonafide purposes, subject to the satisfaction of the Authorized Dealer bank, and on production of an
573 | P a g e
undertaking by the remitter and certificate by a Chartered Accountant in the formats prescribed by the
Central Board of Direct Taxes vide their Circular No.10/2002 dated October 9, 2002.
5.2 NRI/PIO may remit sale proceeds of immovable property purchased by him out of Rupee funds (or as
a person resident in India) as indicated in paragraph 5.1 above without any lock-in-period.
5.3 In respect of remittance of sale proceeds of assets acquired by way of inheritance or legacy or
settlement for which there is no lock-in period, NRI/PIO may submit to the Authorised Dealer
documentary evidence in support of inheritance or legacy of assets, an undertaking by the remitter and
certificate by a Chartered Accountant in the prescribed formats. Settlement is also a mode of inheritance
from the parent, the only difference being that the property under the settlement passes to the beneficiary
on the death of the owner/parent without any legal procedures/hassles and helps in avoiding delay and
inconvenience in applying for probate , etc. In case settlement is done without retaining any life interest in
the property i.e. during the lifetime of the owner/parent, it would be tantamount to regular transfer by way
of gift. Therefore, if the property is received by NRI/PIO by way of settlement without the settler retaining
life interest, it may be reckoned as transfer by way of gift and the remittance of sale proceeds of such
property would be guided by the extant instructions on remittance of balance in the NRO account.
5.4 (a) The remittance facility in respect of sale proceeds of immovable property is not available to
citizens of Pakistan, Bangladesh, Sri Lanka, China, Afghanistan, Iran, Nepal and Bhutan. A person or his
successor who has acquired immovable property in accordance with Section 6(5) of FEMA, 1999 cannot
repatriate sale proceeds of such property outside India except with prior permission of the Reserve Bank.
(b) The facility of remittance of sale proceeds of other financial assets is not available to citizens of
Pakistan, Bangladesh, Nepal and Bhutan.
6. Remittance of Salary
6.1 A citizen of a foreign state resident in India, being an employee of a foreign company and on
deputation to the office/ branch/ subsidiary/ joint venture in India of such foreign company or being an
employee of a company incorporated in India, may open, hold and maintain a foreign currency account
with a bank outside India and receive/ remit the whole salary payable to him for the services rendered, by
credit to such account, provided that income tax chargeable under the Income Tax Act, 1961 is paid on
the entire salary as accrued in India.
6.2 A citizen of India, employed by a foreign company outside India and on deputation to the office/
branch/ subsidiary/ joint venture in India of such foreign company, may open, hold and maintain a foreign
currency account with a bank outside India and receive the whole salary payable to him for the services
rendered to the office/ branch/ subsidiary/ joint venture in India of such foreign company, by credit to such
account, provided that income tax chargeable under the Income Tax Act, 1961 is paid on the entire salary
as accrued in India.
[The above provisions on remittance of Salary should be read with Schedule III (7) of FEM (Current
Account Transactions) Rules, 2000]
7. Repatriation of sale proceeds of residential property purchased by NRIs / PIO out of foreign
exchange
7.1 Repatriation of sale proceeds of residential property purchased by NRI / PIO is permitted to the extent
of the amount paid for acquisition of immovable property in foreign exchange received through banking
channels. The facility is restricted to not more than two such properties. The balance amount can be
credited to the NRO account and can be remitted under USD one million facility as mentioned in
paragraph 5.1.
574 | P a g e
7.2 Authorised Dealer banks may permit repatriation of amounts representing the refund of application /
earnest money / purchase consideration made by the house building agencies / seller on account of nonallotment of flat / plot / cancellation of bookings / deals for purchase of residential / commercial property,
together with interest, if any (net of income tax payable thereon), provided the original payment was made
out of NRE / FCNR (B) account of the account holder, or remittance from outside India through normal
banking channels and the Authorized Dealer bank is satisfied about the genuineness of the transaction.
Such funds may also be credited to the NRE / FCNR (B) account of the NRI / PIO, if they so desire.
7.3 Authorised Dealer banks may allow repatriation of sale proceeds of residential accommodation
purchased by NRIs/PIO out of funds raised by them by way of loans from the authorized dealer banks /
housing finance institutions to the extent of such loan/s repaid by them out of foreign inward remittances
received through normal banking channel or by debit to their NRE / FCNR(B) accounts.
8. Facilities for students
8.1 Students going abroad for studies are treated as Non- Resident Indians (NRIs) and are eligible for all
the facilities available to NRIs under FEMA.
8.2 As non-residents, they will be eligible to receive remittances from India (i) up to USD 100,000 from
close relatives in India, on self declaration, towards maintenance, which could include remittances
towards their studies also (ii) up to USD 1 million per financial year, out of sale proceeds of assets /
balances in their NRO account maintained with an Authorised Dealer bank in India and (iii) upto USD
200,000 per financial year under the Liberalized Remittance Scheme.
8.3 All other facilities available to NRIs under FEMA are equally applicable to the students.
8.4 Educational and other loans availed of by them as residents in India will continue to be available as
per FEMA regulations.
9. Income-tax clearance
The remittances will be allowed to be made by the Authorized Dealer banks on production of an
undertaking by the remitter and a certificate from a Chartered Accountant in the formats prescribed by the
Central Board of Direct Taxes, Ministry of Finance, Government of India in their Circular No.10/2002
dated October 9, 2002. [cf. A. P. (DIR Series) Circular] No.56 dated November 26, 2002].
10. International Credit Cards
Authorised Dealer banks have been permitted to issue International Credit Cards to NRIs/PIO, without
prior approval of the Reserve Bank. Such transactions may be settled by inward remittance or out of
balances held in the cardholders FCNR(B) / NRE / NRO accounts.
ANNEX-1
STATEMENT / RETURNS TO BE SUBMITTED TO THE RESERVE BANK
Master Circular on Remittance Facilities for Non-Resident Indians/Persons of Indian Origin / Foreign
Nationals
Particulars of statement
Periodicity Relevant instructions
Facilities to NRIs/PIO and Foreign Nationals
Quarterly
575 | P a g e
Liberalisation- Remittance from NRO account.
dated November 16, 2006
ANNEX-2
OPERATIONAL INSTRUCTIONS FOR AUTHORISED DEALER BANKS
1. General
1.1 Authorised Dealer banks may carefully study the provisions of the Act / Regulations / Notifications
issued under the Foreign Exchange Management Act, 1999 (the Act).
1.2 Reserve Bank will not prescribe the documents which should be verified by the Authorised Dealer
banks while permitting remittances for various transactions. In this regard Authorised Dealer banks may
refer to sub-section (5) of Section 10 of the Act.
1.3 In terms of the provisions contained in sub-section 5 of section 10 of the Act, before undertaking any
transaction in foreign exchange on behalf of any person, Authorised Dealer bank is required to obtain a
declaration and such other information from the person (applicant) on whose behalf the transaction is
being undertaken that will reasonably satisfy him that the transaction is not designed to contravene or
evade the provisions of the Act or any of the Rules or Regulations made or Notifications or directions or
orders issued under the Act. Authorised Dealer banks should preserve the information/ documents
obtained by them from the applicant before undertaking the transactions for verification by the Reserve
Bank.
1.4 In case the person on whose behalf the transaction is being undertaken refuses or does not give
satisfactory compliance of the requirements of an Authorised Dealer bank, he shall refuse in writing to
undertake the transactions. Where an Authorised Dealer bank has reasons to believe that a contravention
or evasion of the Act or the Rules or Regulations made or Notifications issued thereunder was
contemplated in the transaction that he has refused to undertake, he shall report the matter to the
Reserve Bank.
1.5 With a view to maintaining uniform practices, Authorized Dealer banks may consider requirements or
documents to be obtained by their branches to ensure compliance with the provisions of sub-section (5)
of section 10 of the Act.
2.1 Remittance outside India of current income like rent, dividend, pension, interest, etc. in India of the
account holder is a permissible debit to the NRO account. Authorised Dealer banks may allow repatriation
of current income like rent, dividend, pension, interest, etc. of NRIs who do not maintain an NRO
account in India based on an appropriate certification by a Chartered Accountant, certifying that the
amount proposed to be remitted is eligible for remittance and that applicable taxes have been
paid/provided for.
2.2 NRIs/PIO have the option to credit the current income to their Non-Resident (External) Rupee
account, provided the Authorised Dealer bank is satisfied that the credit represents current income of the
non-resident account holder and income tax thereon has been deducted / provided for.
3. Restrictions
(a) The remittance facility in respect of sale proceeds of immovable property is not available to citizens of
Pakistan, Bangladesh, Sri Lanka, China, Afghanistan, Iran, Nepal and Bhutan.
576 | P a g e
(b) The facility of remittance of sale proceeds of other financial assets is not available to citizens of
Pakistan, Bangladesh, Nepal and Bhutan.
4. Tax compliance
Authorised dealer banks can allow remittances to non-residents only on production of an undertaking by
the remitter and a Certificate from a Chartered Accountant in the formats prescribed by the Central Board
of Direct Taxes, Ministry of Finance, Government of India in their Circular No.10/2002 dated October 9,
2002. [cf. A.P. (DIR Series) Circular No.56 dated November 26, 2002].
APPENDIX
LIST OF NOTIFICATIONS/CIRCULARS WHICH HAVE BEEN CONSOLIDATED IN THIS MASTER
CIRCULAR
http://www.rbi.org.in/Scripts/BS_ApCircularsDisplay.aspx
http://www.rbi.org.in/Scripts/Bs_FemaNotifications.aspx
Sl. No. Notification/Circular No.
Date
1.
Notification No. FEMA 62/2002-RB
May 13, 2002
2.
June 29,2002
3.
Notification No. FEMA 93/2003-RB June 9, 2003
4.
5.
Notification No. FEMA 119/2004-RB June 29,2004
6.
Notification No. FEMA 152/2007-RB May 15, 2007
1.
May 14, 2002
2.
July 2, 2002
3.
July 15, 2002
4.
September 12, 2002
5.
September 28, 2002
6.
September 28, 2002
7.
November 01, 2002
8.
A.P.(DIR Series) Circular No.40
November 5, 2002
9.
November 12, 2002
10.
November 26, 2002
11.
December 9, 2002
12.
January 13, 2003
13.
May 5, 2003
14.
May 31, 2003
577 | P a g e
July 8, 2003
15.
December 8, 2003
16.
December 8, 2003
17.
January 31, 2004
18.
May 13,2005
19.
November 16, 2006
20
January 14, 2010
21.
June 09, 2011
NOTE
For the convenience of Authorised Dealer banks, a table of Statements / Returns to be
submitted to Reserve Bank and Operational Guidelines have been given in Annex-1 & 2,
respectively.
It is also clarified for information of all users that the Master Circular need not necessarily be
exhaustive and a reference to the relevant A.P. (DIR Series) Circular is needed, wherever further
information/ clarification is required.
578 | P a g e
Always@your Service
Your comments, suggestions and criticism please send to Prakash@yourownadviser.com
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Disclaimer
The information contained in this e-book is intended to assist/educate NRIs regarding various taxes and other
important information they should know. The information does not constitute tax or investment advice or an to invest
or to provide management services, recommendation to join any plan/scheme or open account with any financial
intermediaries/brokers or other institutions or prepare tax returns or deal with Government related matters and is
subject to errors, omission, correction, completion and amendment, without notice.. It is not my intention to state,
indicate or imply in any manner that current or past results/rules/laws are indicative of future results or expectations
and which are subject to change. As with all investments, there are associated risks and you could lose money
investing. Prior to making any investment or tax related decision , a prospective investor or tax payer should consult
with its own investment, accounting, legal and tax advisers to evaluate independently the risks, consequences and
suitability of that investment.
579 | P a g e
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580 | P a g e

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NRI GUIDE 2013

Join Kerala Syndicate Social Network Group http://groups.google.com/group/kerala-syndicate/

NRI Guide 2013 Ver 3.00

NRI Guide 2013 Ver 3.00

Chapters and contents

A Non Resident Indian (NRI)

A Person of Indian Origin (PIO)

How to Determine the Residential Status of an Indiviudal

Resident and ordinarily resident- ROR

Importance of Residential Status

What is India DIASPORA

List of itmes to be completed before becoming an NRI

Various Types of Bank Account - NRIs are permitted to Open

Non-Resident Ordinary/ Rupee Account (NRO Account)

RBI Master Circular No. 2/2012-13 related to NRO Account

RBI Circular - Condtions for Opening NRO Account by Banglades Nationality

Non-Resident (External) Rupee Account (NRE Account)

Foreign Currency Non Resident (Bank) Account FCNR (B) Account

NRE Current Accounts

NRO Current Account

Resident Foreign Currency Accounts (RFS Accounts)

Foreign Currency Account

Facilities Available to NRIs/PIO

Investment facilities for NRIs

NRIs are allowed, without limit, purchase on repatriation basis

NRIs are allowed, without limit, purchase on repatriation basis

NRI Guide 2013 Ver 3.00

PPF (Public Provident Fund)

NSC (National Savings Certificate) 5 years and 10 years

Senior citizens savings account

Tax saving infrastructure bonds under section 80CCF

Post office time deposits are not available for NRIs.

Restritctions of Investments by NRIs/PIOs residing in US and Canada

Investment in immovable Property

NRI investment norms in real estate eased

RBI Circular - Acquisition & Transfer of Immovable Property in India by

Press Release Ministry of Finance - Acquiring land by NRIs

Expatriates Working Abroad Tax Provisions

Additional Tax Rebate of Rs. 2,000.00 from Assessment Year 2014-2015

Particulars of Income Tax Incidence for various tax status

Tax Exemptions from Income Tax available for NRIs

Other Tax Aspects related to NRIs

What is tax on NSC Maturity ?

Special Provisions Relating to Non-Residents

Income Tax Clearance Certificate

Tax Exemption Certificate - Lower or Nil Rate of TDS:

Renting out of Property by an NRI in India

Tax treatment of rental income

Deemed rental income

NRI Guide 2013 Ver 3.00

Tax Liabilities related to NRIs investments made in Joint basis

Bank Term Deposits - Tax aspects

Property Rental income Tax Aspects

Mutual Fund/Equity Investments Tax Aspects

NRI income and Applicability of TDS on the same

Tax Treatment of overseas Financial Assets.

Other Tax Aspects related to NRIs including Immovable Properties

Tax Treatment of selling property abroad

Tax Treatment of Rental Income Earned Abroad

Tax Treatment of Dividend on overseas Investments

One Time Financial Settlement

Capital Gains earned abroad

Tax Treatment of Interest on Bank Deposits