1. REMITTANCES AND INVESTMENT FACILITIES FOR NON RESIDENT INDIVIDUALS (NRIS/PIO/ FOREIGN NATIONALS) INCLUDING REGULATIONS IMMOVABLE PROPERTY & DEPOSITIN INDIA

2. Section 3 of Foreign Exchange Management Act, 1999 Save as otherwise provided in this Act, rules or regulations made there under, or with the general or special permission of the Reserve Bank, no person shall- (a) Deal in or transfer any foreign exchange or foreign security to any person not being an authorized person;

3. (b) Make any payment to or for the credit of any person resident outside India in any manner; (c) Receive otherwise through an authorized person, any payment by order or on behalf of any person resident outside India in any manner; Section 3 of Foreign Exchange Management Act, 1999

4. Explanation: For the purpose of this clause, where any person in, or resident in, India receives any payment by order or on behalf of any person resident outside India through any other person (including an authorized person) without a corresponding inward remittance from any place outside India, then, such person shall be deemed to have received such payment otherwise than through an authorized person; Section 3 of Foreign Exchange Management Act, 1999

5. (d) Enter into any financial transaction in India as consideration for or in association with acquisition or creation or transfer of a right to acquire, any asset outside India by any person. Explanation: For the purpose of this clause, "financial transaction" means making any payment to, or for the credit of any person, or receiving any payment for, by order or on behalf of any person, or drawing, issuing or negotiating any bill of exchange or promissory note, or transferring any security or acknowledging any debt. Section 3 of Foreign Exchange Management Act, 1999

6. Dealings in foreign exchange are not permitted unless specifically permitted under the Act, rules or regulations made under the Act or with general or special permission of the Reserve Bank of India (RBI).

7. IMPORTANT DEFINITIONS  "Foreign currency" means any currency other than Indian currency  "Foreign exchange" means foreign currency and includes, (a) Deposits, credits and balances payable in any foreign currency, (b) Drafts, travelers cheques, letters of credit or bills of exchange, expressed or drawn in Indian currency but payable in any foreign currency, (c) Drafts, travelers cheques, letters of credit or bills of exchange drawn by banks, institutions or persons outside India, but payable in Indian currency.

8.  Person resident in India means- 1. 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) Person who has gone out of India or stays outside India, in either case- (i)For or on taking up employment outside India, or (ii)For carrying on outside India a business or vocation, or (iii)For any other purpose, in such circumstances as would indicate his intension to stay outside India for an uncertain period; IMPORTANT DEFINITIONS

9. (B) A person who has come to or stays in India, in either case, otherwise than- (i)For taking up employment in India, or (ii) For carrying on in India a business or vocation in India, or (iii) For any other purpose, in such circumstances as would indicate his intension to stay in India for an uncertain period; 2. Any person or body corporate registered or incorporated in India, 3. An office, branch or agency in India owned or controlled by a person resident outside India, 4. An office, branch or agency outside India owned or controlled by a person resident in India; IMPORTANT DEFINITIONS

10.  Person resident outside India means a person who is not resident in India; NRI and PIO are defined under Foreign Exchange Management (Deposit) Regulations 2000 as under:  Non-resident Indian means a person resident outside India who is a citizen of India or is a person of India origin. IMPORTANT DEFINITIONS

11.  Person of Indian origin: Regulation 2(iv) of the Foreign Exchange Management (Remittance of Asset) Regulations, 2000 reads as: ‘Person of Indian Origin (PIO)’ means 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) IMPORTANT DEFINITIONS

12. RELEVANT RULES, REGULATIONS, CIRCULARS and POLICIES 1. Foreign Exchange Management (Current Account transaction) Rules, 2000. 2.Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations, 2000. 3.Foreign Exchange Management (Deposit) Regulations, 2000. 4.Foreign Exchange Management (Permissible Capital Account Transactions) Regulations, 2000. 5.Foreign Exchange Management (Remittance of Assets) Regulations, 2000. 6.Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000.

13. 7.Foreign Exchange Management (Deposit) Regulations, 2000.. 8. Foreign Exchange Management (Permissible Capital Account Transactions) Regulations, 2000. 9. Foreign Exchange Management (Remittance of Assets) Regulations, 2000. 10.Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000. 11. Foreign Exchange Management (Investment in Firm or Proprietary Concern in India) Regulations, 2000 RELEVANT RULES, REGULATIONS, CIRCULARS and POLICIES

14. 12. Master Circular No. 2/2010-11,dated 1/7/2010 - Master Circular on Remittance Facilities for Non-Resident Indians/Persons of Indian Origin/Foreign Nationals 13. Master Circular No. 13/2010-11,dated 1/7/2010 - Master Circular on Foreign Investment in India 14. Master Circular no.15/2010-11,dated 1/7/2010 - Master Circular on Acquisition and Transfer of Immovable Property in India by NRIs/PIOs/Foreign Nationals of Non-Indian Origin 15. Consolidated Foreign Direct Investment Policy, Circular 1 of 2011 RELEVANT RULES, REGULATIONS, CIRCULARS and POLICIES

15. REMITTANCES As per Black’s Law Dictionary ‘remittance’ means: A sum of money sent to another as payment for goods and services. An instrument (such as a cheque) used for sending money. The action or process of sending money to another person or place.

16. In addition to the usual inward remittances for purchase of goods and services from India NRIs and PIOs remit funds into India mainly on account of the following: (i) Remittance of salaries to their families in India; (ii) Gifts to their families and friends in India; and (iii) Contributions to charitable organizations. REMITTANCES

17. CURRENT ACCOUNT TRANSACTION "current account transaction" means a transaction other than a capital account transaction and without prejudice to the generality of the foregoing such transaction includes:- (i) payments due in connection with foreign trade, other current business, services, and short-term banking and credit facilities in the ordinary course of business, (ii) payments due as interest on loans and as net income from investments, (iii) remittances for living expenses of parents, spouse and children residing abroad, and (iv) expenses in connection with foreign travel, education and medical care of parents, spouse and children.

18. INVESTMENT The investments can mainly be categorized into the following: Investment in Securities. Investment in Immovable Property Investment in Deposits

19. CAPITAL ACCOUNT TRANSACTIONS ‘capital account transaction’ to mean a transaction which alters the assets or liabilities, including contingent liabilities, outside India of persons resident in India or assets or liabilities in India of persons resident outside India, and includes transactions referred to in sub-section (3) of section 6.

20. Classes of Capital Account Transactions of person’s resident outside India 1.Investment in India by a person resident outside India, that is to say, (i) issue of security by a body corporate or an entity in India and investment therein by a person resident outside India; and (ii) investment by way of contribution by a person resident outside India to the capital of a firm or a proprietorship concern or an association of persons in India. 2. Acquisition and transfer of immovable property in India by a person resident outside India. 3. Guarantee by a person resident outside India in favor of, or on behalf of, a person resident in India. 4.Import and export of currency/currency notes into/from India by a person resident outside India. 5. Deposits between a person resident in India and a person resident outside India. 6. Foreign currency accounts in India of a person resident outside India. 7. Remittance outside India of capital assets in India of a person resident outside India. CAPITAL ACCOUNT TRANSACTIONS

21. INVESTMENT IN SECURITIES Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulation, 2000. Regulation 5 A person resident outside India may purchase shares or convertible debentures of an Indian company under Foreign Direct Investment Scheme, subject to conditions in Schedule 1.

22. 1. A n NRI may purchase shares or convertible debentures of an Indian company: (i) on a stock exchange under the PIS (Schedule 3); (ii) on non-repatriation basis other than under PIS (Schedule 4). 2. An NRI may purchase securities, other than shares or convertible debentures of an Indian company (Schedule 5). 3. A n NRI may invest in exchange traded derivative contracts approved by SEBI from time to time out of INR funds held in India on non- repatriable basis subject to the limits prescribed by SEBI. REGULATION 5

23. FOREIGN DIRECT INVESTMENT FDI is prohibited in the following activities/sectors: (a) Retail Trading (except single brand product retailing) (b) Lottery Business including Government /private lottery, online lotteries etc. (c) Gambling and Betting including casinos etc. (d) Business of chit fund (e) Nidhi company (f) Trading in Transferable Development Rights (TDRs) (g) Real Estate Business or Construction of Farm Houses (h) Manufacturing of Cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco substitutes (i) Activities / sectors not opened to private sector investment including Atomic Energy and Railway Transport (other than Mass Rapid Transport Systems). 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.

24. ROUTES AVAILABLE FOR INVESTING IN AN INDIAN COMPANY Automatic Route The non-resident investor or the Indian company does not require any approval from the RBI or Government of India for the investment. Government Approval Route Prior approval of the Government of India through Foreign Investment Promotion Board (FIPB) is required.

25. INVESTMENT IN A FIRM OR A PROPRIETARY CONCERN In terms of Foreign Exchange Management (Investment in Firm or Proprietary Concern in India) Regulations, 2000, no person resident outside India shall make any investment by way of contribution to the capital of a firm or a proprietary concern or any association of persons in India. Provided that the RBI may, on an application made to it, permit a person resident outside India subject to such terms and conditions as may be considered necessary to make an investment by way of contribution to the capital of a firm or a proprietary concern or any association of persons in India.

26. An NRI or PIO may invest by way of contribution to the capital of a firm or a proprietary concern in India, provided that – a) The amount invested is received either by inward remittance through normal banking channels or out of an account maintained with an authorized dealer/ authorized bank by the NRI or the PIO in accordance with the relevant Regulations; b) the firm or the proprietary concern is not 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; c) The amount invested shall not be eligible for repatriation outside India; d) The firm or the proprietary concern is not engaged in print media. INVESTMENT IN A FIRM OR A PROPRIETARY CONCERN

27. BANK ACCOUNTS AND DEPOSITS AN NRI/PIO/Foreign National can open following types of Accounts. 1. Non-Resident (Ordinary) Rupee Account (NRO Account)- NRI/PIO/Foreign National 2. Non-Resident (External) Rupee Account (NRE Account)- NRI/PIO 3. Foreign Currency Non Resident (Bank) Account – FCNR (B) Account –NRI/PIO

28. DescriptionFCNR(B)NRENRO Who can open an account NRI Any person resident outside India Restrictions on openingIndividuals/entities of Bangladesh/Pakistan nationality require approval of RBI Currency denominationUS Dollar, UK Pounds, Yen, Euro, Canadian dollars and Australian dollars Indian Rupees Reparability of principal amount Freely repatriable Current income fully repatriable. Up to USD 1 million per year for bona fide purposes permitted

29. Permissible Credits Remittances in foreign exchanges, transfer from other NRE/FCNR account, refund when permissible payment was made from same account Remittances in foreign exchanges, transfer from other NRE/FCNR account, refund when permissible payment was made from same account, current income like rent, dividend, pension, interest etc. subject to TDS and CS certificate Remittances from abroad and legitimate dues in India of the account holder DescriptionFCNR(B)NRENRO

30. Permissible Debits All local/foreign payments for permissible transactions on current/capital account (1) All local payments including permissible investments (2) Remittances abroad of current income in India, net of taxes (3) Remittances of medical expenses, educational expenses, and proceeds of sale op property up to USD 1 million Type of Account Term deposit only between one to five years Current, savings, recurring or fixed deposits Current, savings, recurring, fixed deposit etc. DescriptionFCNR(B)NRENRO

31. INVESTMENT IN IMMOVABLE PROPERTY Foreign Exchange Management (Acquisition and transfer of immovable property in India) Regulations, 2000. Regulation 3 & 4 A person resident outside India who is a citizen of India or a PIO may – (a)acquire immovable property in India other than an agricultural property, plantation, or a farm house through payment made out of funds received in India through normal banking channels by way of inward remittance or funds held in any non-resident account maintained in India (payment either by travelers cheque or by foreign currency notes or by other mode other than those specifically permitted - not permitted ). (b) An NRI can transfer any immovable property in India to a person resident in India. (c) An NRI can 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.

32. INVESTMENT IN IMMOVABLE PROPERTY A PIO : 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; 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 laws in force at the time of acquisition by him or the provisions of these Regulations or from a person resident in India; may transfer any immovable property in India other than agricultural land/farm house/plantation property, by way of sale to a person resident in India; 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; Transfer residential or commercial 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.

33. Of immovable property is allowed subject to the following conditions namely: the immovable property was acquired by the seller in accordance with the provisions of the foreign exchange law in force at the time of acquisition; the amount to be repatriated does not exceed: (a) the amount paid for acquisition of the immovable property in foreign exchange received through normal banking channels or out of funds held in FCNR Account or (b) the foreign currency equivalent, as on the date of payment, of the amount paid where such payment was made from the funds held in NRE Account for acquisition of the property; in the case of residential property, the repatriation of sale proceeds is restricted to not more than two such properties. An NRI/PIO/Foreign National can remit, up to US $ 1.00 Million per financial year out of balances in NRO account or sale proceeds of assets including immovable property, for all bona fide purposes. If the said amount exceeds the limit, remittance shall be done after taking permission from the RBI. REPATRIATION OF PROCEEDS

34. Thank You!!! Disclaimer: This presentation is intended for educational purposes only and does not replace independent professional judgment. © Dua Associates-2011