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The information in this page are obtained from various NRI portals. We have tried to give you the accurate information. Anyhow, if there are some error(s) in any part, we are not responsible for that.

Rupee Exchange Rates (as of April 4, 2003)
1 US $ = 47.4 1 Can $ = 32.18
1 Euro = 50.76 1 UK Pound = 73.97
1 Sing.$ = 26.69 1 Aust.$ = 28.5

(Rates are for referrence only)


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Who is an NRI
The Official Definition

The Government of India defines Non-Resident Indians (NRIs) separately under the Foreign Exchange of India Act (FERA) and the Income Tax (IT) Act.
Under FERA, an Indian Citizen who stays abroad for employment, or carrying on business, or vocation outside India, or stays abroad under circumstances indicating an intention of an indefinite duration of stay abroad, is a Non-Resident Indian.
Non-resident foreign citizens of Indian origin are treated on par with the Non-Resident Indian citizens. A person is deemed to be of Indian Origin if he at any time held an Indian Passport, or he or either of his parents or grand parents was an Indian and a permanent resident in undivided India.
Under the IT Act, the number of days a person is in India in a financial year (April to March) defines the Non-Resident status.

Non-Resident:

If a person in India, in a single or multiple visits, does not exceed 182 days in a financial year.

Not Ordinarily Resident:

An individual who has not been residing in India in 9 out of the 10 previous years preceding that year, or has not during the previous 7 years preceding that year been in India for a period of, or periods amounting in all to 730 days or more. For persons falling in this category, the income arising or accuring outside India is exempt from Income Tax.


Passport Information

New Passports (After expiry of normal validity of 10 years):
  • EAP-I Form + 3 recent photographs (colour or black & white) frontal view.
  • The applicant should present old passport. Additional Booklet alone is not acceptable while applying for new passport.
  • Name, fatherís name, place and date of birth and signatures should tally.
  • Individual should come personally.
  • If passport expired for more than six months, Sworn Affidavit for late submission to be submitted.

    New Passport for Children:
    A) When entered in parentís passport:
  • EAP-I Form + Passport in which childís name is entered.
  • If there is a change in the name to be effected, Sworn Affidavit is to be taken
    (If child is minor from the parent).
    B) When not entered in Parentís Passport( For New Born child):
  • EAP I form with three recent photographs
  • Registration Certificate Application form<\li>
  • Copy of original Birth Certificate duly attested by Ministry of Foreign Affairs.
  • Both Parents original Passports along with Photocopy.

    Additional Booklet:
  • EAP-II Form +3 Photographs + Original Passport.

    New Passport in married name:
  • If the husbands name is not endorsed in the passport, EAP-I Form + Marriage Certificate OR
    If Marriage Certificate is not there - both have to give Sworn Affidavit.
  • If Marriage Certificate issued by Marriage Registrar, no Sworn Affidavit is required.

    Passport in Maiden name from married name:
  • EAP-I Form + Divorce Certificate + Sworn Affidavit (if the marriage is performed in India, divorce certificate from Indian Court and should be attested by concerned State Home Department).

    Passport in new name due to change of religion:
    Due to change of religion passport can be issued in new name for which requirements are EAP I form + advertisement in one Indian and one Local newspaper in original + Deed Poll (Sworn Affidavit).

    Passport in new name (General):
  • EAP I form + 3 photographs
  • Advertisement in one Indian and one Local newspaper in original
  • Deed Poll (Sworn Affidavit).

    Change of Photo :
    (Children): Of age up to 18 years - EAP I form + 3 recent photographs

    Passports (Extension of Validity):
  • EAP-II form with one recent photograph pasted on the form.
  • If the renewal is done after six months of the expiry of the passport, a Sworn Affidavit affirming his national status as also the explanation for delay should be given.
    Passports, which fall within six months of expiry, a simple, letter giving the reasons for delay to be given.

    House Maid:
  • EAP-II form with one recent photograph.
  • Applicant has to come personally
    Passport is renewed for a period of one year only.

    Ladies married to Foreign Nationals:
  • EAP-II form with one recent photograph.
  • Applicant has to come personally
    Passport is renewed for a period of two years only.

    Reference cases for renewal:
  • EAP-II form with one recent photograph.
  • No passport fee
    Remaining validity is given to the passports issued by other Passport offices/Missions, only after receipt of confirmation.

    Miscellaneous Services:
    1. Deletion of Profession : EAP-II form with one recent photograph
    2. Change of Address: EAP II form with one recent photograph Service is rendered after reference is made to the original Passport issuing Authority in India and After receipt of confirmation.
    3. Detachment of passports: EAP II form with one recent photograph
    4. Emigration Clearance Not Required:
      • Emigration Check Not Required application with original passport
      • Individual should be staying abroad for more than 3 years excluding short stays to India.
      • Persons holding Diploma/Graduation or higher degrees (degrees should be attested by the Ministry of Human Resources Development, New Delhi and Ministry of External Affairs, New Delhi)
      • On the basis of ECNR Status of the spouse (original Passport of spouse to be submitted along with application)
      • Dependent children of parents eligible for ECNR (up to 24 years of age) [Original passport of parent to be submitted along with application with photocopy)
      • All the persons above the age of 60
    5. Birth Certificate (On the basis of Passport): EAP II form with recent photograph along with original passport
    6. Correction in Date of Birth: Date of Birth already endorsed on a passport can be corrected only on the basis of declaratory Orders of First Class Judicial Magistrate in India instructing the Consulate for correction of the Date of Birth. The order in original has to be produced.
    7. Police Clearance Certificate:
    8. EAP II form with recent photograph PCCs for the period of stay in India are issued only after confirmation from the concerned Passport Issuing Authorities or after a waiting period of 45 days.

    Loss of Passports:

  • EAP I form along with three photocopies (with original photographs pasted on each form ) + additional 3 recent photographs.
  • Additional Details forms( original + six copies =total seven) with seven photographs.
  • Sponsors letter in original (on letterhead)
  • Letter from applicant
  • Two days advertisement in the Local English Daily Newspaper in original (Full page)
  • Police report in original (If in Arabic, English Translation) + copy
  • Two Sworn Affidavits (one for Nationality and other for status of the old passport) Both in Duplicate.
  • Photocopy of the old passport (s) reported lost along with visa status<\ul>
    Duplicate Passports are issued only after receipt of confirmation from the original Passport Issuing Authority in India/Abroad.
    When is Emigration Check Not Required (ECNR) Following persons are entitled to get the ECNR stamp on their passports:
  • Persons staying abroad for more than three years from the date of entry (period of short visits to India to be excluded)
  • Persons holding Diploma/Graduation or higher degrees(Degrees should be attested by the Ministry of Human Resources Development, New Delhi, and Ministry of External Affairs, New Delhi)
  • On the basis of ECNR Status of the Spouse (original passport of spouse to be submitted alongwith application)
  • Dependent children of parents eligible for ECNR(upto 24 years of age) - [Original passport of the parent to be submitted alongwith application]
  • All the persons above the age of 60 years.
    A child already endorsed on his/her parentís passport can travel with the parents. However, the childís passport has to be separated and a new passport made as and when the concerned parentís passport is submitted for any service.

    Government/Reserve Bank: Rules for NRIs

    The Reserve Bank of India, the country's central bank, used to issue a guide for Non-Resident Indians. However, the economic reforms programme has resulted in the liberalisation of these laws. The Foreign Exchange Regulation Act (Fera), which was the main law concerning foreign exchange transactions, has been scrapped and replaced by the Foreign Exchange Management Act (Fema).
    Fema has simplified things, both for NRIs and resident Indians. It has done away with several complex rules and regulations, and has sharply reduced the number of approvals/clearances needed by NRIs, OCBs, foreign investors and businessmen.
    For NRIs who interact a lot with institutions in India, including banks, mutual funds, stock markets, housing finance companies, etc., the paperwork has been slashed. The rules and regulations are clear-cut, framed to make things easy. We highlight some of the major features of the Fema especially those concerning NRIs. We have presented the text in a question-and-answer format. The answers form part of the official RBI notifications.

    Bank Accounts, Deposits, Loans

    Who is a Non-Resident Indian?

    Non-Resident Indian (NRI) means a person resident outside India who is a citizen of India or is a person of Indian origin.

    Who is a person of Indian origin?
    Person of Indian origin 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 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).

    What is an OCB?
    Overseas Corporate Body (OCB) means a company, partnership firm, society and other corporate body owned directly or indirectly to the extent of atleast 60 percent by NRIs and includes overseas trust in which not less than 60 percent beneficial interest is held by NRIs directly or indirectly but irrevocably.

    What are the deposits that an authorised dealer/authorised bank can accept from persons resident outside India?
    An authorised dealer in India may accept deposit
    (i) under the non-resident (external) account scheme (NRE account), specified in schedule 1, from an NRI or an OCB;
    (ii) under the Foreign Currency (Non-resident) account banks scheme (FCNR-B account), specified in schedule 2, from an NRI or an OCB;
    (iii) under the Non-Resident (Ordinary) account scheme (NRO account), specified in schedule 3, from any person resident outside India;
    (iv) under the Non-Resident (Non-Repatriable) Rupee Account scheme, (NRNR Account), specified in schedule 4, from any person resident outside India;
    (v) under the Non-Resident (Special) Rupee Account Scheme (NRSR account), specified in schedule 5, from an NRI.
    Without prejudice to sub-regulation (1), deposits under the NRE, NRO and NRSR account schemes referred to in clauses (i), (iii) and (v) of that sub-regulation, may also be accepted by an authorised bank, in accordance with the provisions contained in the respective schedules.

    What are the deposits that persons other than authorised dealer/authorised bank can accept?
    (1) A company registered under the Companies Act, 1956, or a body corporate or created under an act of Parliament or State Legislature may accept deposits from an NRI on repatriation basis, subject to the terms and conditions mentioned in schedule 6.
    (2) An Indian company, a proprietorship concern or a firm in India may accept deposits from an NRI on non-repatriation basis, subject to the terms and conditions mentioned in schedule 7.

    Is nomination facility available for these accounts?
    Authorised dealers may provide nomination facility in respect of the following deposit accounts; accounts maintained by individual account holders under the NRE, FCNR(B), NRO, NRNR AND NRSR account schemes.
    What are the types of accounts allowed under the Non-Resident (External) Rupee account scheme? The accounts may be maintained in any form, e.g. savings, current, recurring or fixed deposit account, etc.

    What are the permitted credits under this account?
    (a) Proceed of remittances to India in any permitted currency.
    (b) Proceeds of personal cheques drawn by the account holder
    on his foreign currency account and of travellers cheques, bank drafts payable in any permitted currency including instruments expressed in Indian rupees for which reimbursement will be received in foreign currency, deposited by the account holder in person during his temporary visit to India, provided the authorised dealer/bank is satisfied that the account holder is still resident outside India, the travellers' cheques/drafts are standing/endorsed in the name of the account holder and in the case of travellers' cheques they were issued outside India.
    (c) proceeds of foreign currency/bank notes tendered by account holder during his temporary visit to India, provided
    (i) the amount was declared on a currency declaration form, where applicable, and (ii) the notes are tendered to the authorised dealer in person by the account holder himself and the authorised dealer is satisfied with that account.
    (d) Transfers from NRE/FCNR accounts.
    (e) Interest accruing on the funds held in the account.
    (f) Interest and dividend on units of mutual funds, provided the
    securities/units were purchased by debit to the account holder's NRE/FCNR account or out of inward remittance through normal banking channels.
    (g) Maturity proceeds of government securities including National Plan/Savings Certificates as well as proceeds of government securities and units of mutual funds sold on a recognised stock exchange in India and sale proceeds of units received from the account holder's NRE/FCNR account or out of remittances received from outside India in free foreign exchange.
    (h) Refund of share/debenture subscriptions to new issues of Indian companies or portion thereof, if the amount of subscription was paid from the same account holder or by remittance from outside India through normal banking channel.
    (i) Refund of application/earnest money made by the house building agencies on account of non-allotment of flat/plot, together with interest, if any (net of income tax payable thereon), provided the original payment was made out of NRE/FCNR account of the account holder or remittance from outside India through normal banking channels and the authorised dealer is satisfied about the genuineness of the transaction.
    (j) Any other credit if covered under general or special permission granted by Reserve Bank.

    What are the permitted debits?
    (a) Local disbursements.
    (b) Remittances outside India.
    (c) Transfer to NRE/FCNR accounts of the account holder or any
    other person eligible to maintain such account.
    (d) Investment in shares/securities/commercial paper of an Indian company or for purchase of immovable property in India provided such investment/purchase is covered by the regulations made, or the general/special permission granted, by the Reserve Bank.
    (e) Any other transaction if covered under general or special permission granted by the Reserve Bank.

    Are loans available against security of funds held in the account?

    (a) To account holder:
    Authorised dealers and banks maintaining such accounts are permitted to grant loans in India to the account holder for -
    i) personal purposes or for carrying on business activities except for the purpose of re-lending or carrying on agricultural/plantation activities or for investment in real estate business. The authorised dealer/bank should ensure that the advances are fully secured by the fixed deposits and regulations relating to normal margin, interest rate, etc., are complied with. Repayment shall be made either by adjustment of the deposit or by fresh inward remittances from outside India through normal banking channels.

    The loan can also be repaid out of local rupee resources in the NRO account of the borrower. The interest on such loans shall be in accordance with directives issued by Reserve Bank from time to time; ii) the purpose of making direct investment in India on non-repatriation basis by way of contribution to the capital of Indian firms/companies subject to compliance with the provisions of the Foreign Exchange Management (Transfer of Indian security by a person resident outside India) Regulations, 2000 and Foreign Exchange Management (Investment in proprietary or a partnership firm) Regulations, 2000, iii) the purpose of acquisition of flat/house in India for his own residential use subject to the provisions of the relevant Regulations made under the Act.

    (b) To third parties:
    Authorised dealers and banks may grant any type of fund based and/or non-fund based facilities to resident individuals/ firms/companies in India against the collateral of fixed deposits held in NRE account subject to the following conditions:
    i)There should be no direct or indirect foreign exchange consideration for the non-resident depositor agreeing to pledge his deposits to enable the resident individual/firm/ company to obtain such facilities. ii) Regulations relating to margin, interest rate, purpose of loan, etc. as stipulated by Reserve Bank from time to time should be complied with.

    iii) The loan should be utilised for personal purposes or for carrying on business activities other than agricultural/plantation activities or real estate business. The loan should not be utilised for re-lending. iv) The usual norms and considerations as applicable in the case of advances to trade/industry shall be applicable to such credit facilities.(c) Loans outside India
    Authorised dealers may allow their branches/correspondents outside India to grant any type of fund based and/or non-fund based facilities to or in favour of non-resident depositor or to third parties at the request of depositor for bona fide purpose against the security of funds held in the NRE accounts in India and also agree to remittance of the funds from India, if necessary, for liquidation of the outstandings.

    What happens when there is a change of resident status of the account holder?

    NRE accounts should be re-designated as resident accounts or the funds held in these accounts may be transferred to the RFC accounts (if the account holder is eligible for maintaining RFC account) at the option of the account holder immediately upon the return of the account holder to India for taking up employment or for carrying on business or vocation or for any other purpose indicating intention to stay in India for an uncertain period. Where the account holder is only on a short visit to India, the account may continue to be treated as NRE account even during his stay in India.

    What are the designated currencies for FCNR(B) scheme accounts?

    Deposit of funds in the accounts may be accepted in Pound Sterling, US Dollar, Deutsche Mark, Japanese Yen, Euro and such other currencies as may be designated by Reserve Bank from time to time.

    What are the types of accounts under this scheme?

    These accounts may be opened only in the form of term deposit for any of the three maturity periods, viz. one year and above but less than two years, two years and above but less than three years and three years only.

    What are the permissible debits/credits?

    All debits/credits permissible in respect of NRE accounts as specified in Schedule I shall be permissible in respect of these accounts also.

    What is the rate for conversion of rupees into designated currencies and vice versa?

    Remittances received in Indian rupees for opening these accounts shall be converted by the authorised dealer into the designated foreign currency at the clean T.T. selling rate for that currency ruling on the date of conversion. For the purpose of payment in rupees, funds held in these accounts shall be converted into rupees at the authorised dealer's clean T.T. buying rate for the concerned currency ruling on the date of withdrawal.

    What is the manner of payment of interest?

    Interest on balances held in these accounts may be paid half-yearly or on an annual basis as desired by the depositor. Interest may be credited to a new FCNR(B) account or an existing/new NRE/NRO/ NRNR/NRSR account in the name of the account holder, at his option.

    Are loans/overdrafts allowed against security of funds held in the account?

    The terms and conditions as applicable to NRE deposits (cf. Schedule 1) in respect of loans and overdrafts in India to depositor and to third parties as also loans outside India against security of deposits, shall apply mutatis mutandis to FCNR(B) deposits. The margin requirement shall be notionally calculated on the rupee equivalent of the deposits.

    What happens in case of change of resident status of the account holder?

    When an account holder becomes a person resident in India, deposits may be allowed to continue till maturity at the contracted rate of interest, if so desired by him. However, except the provisions relating to rate of interest and reserve requirements as applicable to FCNR(B) deposits, for all other purposes such deposits shall be treated as resident deposits from the date of return of the account holder to India. Authorised dealers should convert the FCNR(B) deposits on maturity into resident rupee deposit accounts or RFC account (if the depositor is eligible to open RFC account), at the option of the account holder and interest on the new deposit (rupee account or RFC account) shall be payable at the relevant rates applicable for such deposits.

    What are the types of accounts in the Non-Resident Ordinary Rupee (NRO) account scheme ?
    NRO accounts may be opened/maintained in the form of current, savings, recurring or fixed deposit accounts. The requirements laid down in the directives issued by Reserve Bank in regard to resident accounts shall apply to NRO accounts.

    What are the permissible credits/debits?

    Credits:Proceeds of remittances received in any permitted currency from outside India through normal banking channels or any permitted currency tendered by the account-holder during his temporary visit to India or transfers from rupee accounts of non-resident banks. Legitimate dues in India of the account holder.

    Debits: All local payments in rupees including payments for investments subject to compliance with the relevant regulations made by the Reserve Bank. Remittance outside India of current income in India of the account holder net of applicable taxes.

    Is remittance of funds held in NRO accounts allowed?

    Balances in NRO accounts are not eligible for remittance outside India without the approval of Reserve Bank. Funds received by way of remittances from outside India in foreign exchange which have not lost their identity as remittable funds will only be considered by Reserve Bank for remittance outside India.Where an account (current/savings) is opened by a foreign tourist visiting India, with funds remitted from outside India in a specified manner or by sale of foreign exchange brought by him to India, authorised dealers may convert the balance in the account at the time of departure of the tourist from India into foreign currency for payment to the account holder 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.

    Are loans/overdrafts allowed on NRO accounts?

    Loans to non-resident account holders may be granted in rupees against the security of fixed deposits subject to usual norms as are applicable to resident accounts, for personal purposes or for carrying on business activities except for the purpose of re-lending or carrying on agricultural/plantation activity or for investment in real estate business. ii) Authorised dealer/bank may permit overdraft in the account of the account holder subject to his commercial judgement and compliance with the interest rate etc. directives.

    To Third Parties:Loans/overdrafts to resident individuals/firms/companies in India may be granted against the security of deposits held in NRO accounts, subject to the following terms and conditions.

    (i) The loans shall be utilised only for meeting borrower's personal requirements and/or business purpose and not for carrying on agricultural/plantation activities or real estate business, or for
    re-lending.
    (ii) Regulations relating to margin and rate of interest as stipulated by Reserve Bank from time to time shall be complied with.
    (iii) The usual norms and considerations as applicable in the case of advances to trade/industry shall be applicable for such loans/facilities.

    How will the loans/overdrafts be treated in the event of change in the resident status of the borrower?

    In case of persons who have availed of loan or overdraft facilities while resident in India and who subsequently becomes a person resident outside India, the authorised dealer may at his 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.

    What happens in case of change of resident status of the account holder?

    (a) From Resident to Non-Resident
    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.
    (b) From Non-resident to Resident NRO accounts may be re-designated as resident rupee accounts on the return of the account holder to India for taking up employment, or 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.

    What is the period of deposit for the Non-Resident (Non-Repatriable) rupee deposit scheme?

    The deposits may be held for periods ranging from 6 months to 3 years.

    What about repatriability of funds?

    Only interest accrued on the deposits is repatriable.

    How about renewal/transfer of the deposit?

    The principal amount of deposit together with interest accrued thereon may be renewed for a further period ranging from 6 months to 3 years. If the interest accrued on an existing deposit is invested under the Scheme, the amount of interest so invested, will not be eligible for repatriation. The account can also be shifted from one authorised dealer to another.

    Can the deposit be gifted?

    In the case of individual deposit holder, the amount of deposit can be gifted to any resident/non-resident or to any Charitable Trust in India recognised under the Income Tax Act, 1961.

    What about loans/overdrafts?

    Loans/overdrafts in India, against the security of these deposits may be granted by the authorised dealer to account holders/third parties for personal purposes or for carrying on business activities and not for carrying on agricultural/plantation activities or real estate business, or for re-lending, subject to their normal commercial judgement. Repayment of loans/liquidation of overdraft to the account holder shall be by way of inward remittance from outside India through normal banking channels or by debit to NRE/FCNR/NRO/NRNR/NRSR account of the depositor or by adjustment against maturity proceeds of deposit. Repayment of loans availed by third parties may be made out of their own resources.

    Is there nomination facility?

    An authorised dealer may register nomination in favour of either a resident or non-resident. However, nomination in favour of a non-resident may be registered subject to the condition that the amount standing to the credit of the depositor, in the event of his death, will be paid to the non-resident nominee only in Indian rupees by credit to the nominee's NRO/NRNR/NRSR account and will not be allowed to be remitted outside India.

    Who is eligible to open a Non-resident (special) rupee (NRSR) account, and what are the different types of accounts?

    NRIs (other than nationals of Bangladesh/Pakistan) who voluntarily undertake not to seek remittance of funds held in these accounts as also income earned thereon are eligible to maintain NRSR accounts with an authorised dealer. ii) These accounts shall carry the same facilities and restrictions as are applicable to domestic accounts of residents in respect of repatriation of funds held in the account and/or income accrued thereon with an exception of investment in shares/securities or immovable property or agricultural/plantation activities or real estate business in India which shall be governed by the regulations applicable to such investments by non-residents. iii) The directives issued by Reserve Bank in regard to domestic accounts shall be applicable to these accounts. These accounts may be maintained in the form of current, savings, recurring or fixed deposit account.

    What happens in case of change or resident status of the account holder?

    When a person resident in India becomes a person resident outside India (other than Nepal and Bhutan) on account of his taking up employment, or carrying on business or vocation outside India or for any other purpose indicating his intention to stay outside India permanently or for an uncertain period, the person concerned will have the option of designating his existing domestic account as NRO account or NRSR account.

    Currency Import/Export

    What are the rules governing the export and import of Indian currency and currency notes?

    Any person resident in India,
    (a) may take outside India (other than to Nepal and Bhutan) currency notes of Government of India and Reserve Bank of India notes up to an amount not exceeding Rs.5000/- per person;
    (b) may take or send outside India (other than to Nepal and Bhutan) commemorative coins not exceeding two coins each. Commemorative Coin includes coins issued by Government of India Mint to commemorate any specific occasion or event and expressed in Indian currency.
    (c) Who had gone out of India on a temporary visit, may bring into India at the time of his return form any place outside India (other than from Nepal and Bhutan), currency notes of Government of India and Reserve Bank of India notes up to an amount not exceeding Rs.5000/- per person.

    A person may

    (a) send into India without limit foreign exchange in any form other than currency notes, bank notes and travellers cheques;
    (b) bring into India from any place outside India without limit foreign exchange (other than un-issued notes), provided that bringing of foreign exchange into India under clause (b) shall be subject to the condition that such person makes, on arrival in India, a declaration to the Custom authorities in Currency Declaration Form (CDF), provided further that it shall not be necessary to make such declaration where the aggregate value of the foreign exchange in the form of currency notes, bank notes or traveller's cheques brought in by such person at any one time does not exceed US$ 10,000 or its equivalent and/or the aggregate value of foreign currency notes brought in by such person at any one time does not exceed US$ 5000 or its equivalent.

    Export of foreign exchange and currency notes:

    (1) An authorised person may send out of India foreign currency
    acquired in normal course of business,
    (2) Any person may take or send out of India, (i) Cheques drawn on foreign currency account maintained in accordance with Foreign Exchange Management (Foreign Currency Accounts by a person resident in India) Regulations, 2000; (ii) foreign exchange obtained by him by drawing from an authorised person in accordance with the provisions of the Act or the rules or regulations or directions made or issued there under; (iii) currency in the safes of vessels
    or aircraft which has been brought into India or which has been taken on board a vessel or aircraft with the permission of the Reserve Bank;
    (3) Any person may take out of India, (i) foreign exchange possessed by him in accordance with the Foreign Exchange Management (Possession and Retention of Foreign Currency) Regulations, 2000; (ii) unspent foreign exchange brought back by him to India while returning from travel abroad and retained in accordance with the Foreign Exchange Management (Possession and Retention of Foreign Currency) Regulations, 2000;
    (4) Any person resident outside India may take out of India unspent foreign exchange not exceeding the amount brought in by him and declared in accordance with the provision to clause (b) of Regulation 6, on his arrival in India.

    Property

    Can an Indian citizen resident outside India acquire and transfer property in India?

    A person resident outside India who is a citizen of India may -
    (a) acquire any immovable property in India other than agricultural/plantation/farm house, and
    (b) transfer any immovable property in India to a person resident in India.
    (c) 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.

    Can a person of Indian Origin acquire and transfer property in India?

    A person of Indian origin resident outside India may
    (a) acquire any immovable property other than agricultural land/farm house/plantation property in India by purchase, from out of (i) funds received in India 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 under the Act;
    (b) 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;
    (c) 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;
    (d) transfer any immovable property in India other than agricultural land/farm house/plantation property, by way of sale to a person resident in India;
    (e) 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;
    (f) 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.

    Can a person resident outside India acquire immovable property for carrying on a permitted activity?

    A person resident outside India who has established in India in accordance with the Foreign Exchange Management (Establishment in India of Branch or Office or other Place of Business) Regulations, 2000, a branch, office or other place of business for carrying on in India any activity, excluding a liaison office, may -
    a) acquire any immovable property in India, which is necessary for or incidental to carrying on such activity; Provided that i) all applicable laws, rules, regulations or directions for the time being in force are duly complied with; and ii) the person files with the Reserve Bank a declaration in the form IPI annexed to these regulations, not later than ninety days from the date of such acquisition;
    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).

    Can sale proceeds of immovable property be repatriated?

    a) A person referred to in sub-section (5) of Section 6 of the Act, 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 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 exchange law in force at the time of acquisition by him or the provisions of these Regulations;
    (ii) the sale takes place after three years from the date of acquisition of such immovable property or from the date of payment of final instalment of consideration for its acquisition, whichever is later; and;
    (iii) 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 Foreign Currency Non-Resident 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 Non-Resident External account for acquisition of the property;
    (iv) in the case of residential property, the repatriation of sale proceeds is restricted to not more than two such properties.

    Stocks & Bonds

    What are the restrictions on investment in a firm or a proprietary concern in India by a person resident outside India?

    Save as otherwise provided in the Act or rules or regulations made or directions or orders issued thereunder, 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 Reserve Bank 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.

    Permission for investment in certain cases

    A non-resident Indian or a Person of Indian Origin resident outside India 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 authorised dealer/authorised bank by the non-resident Indian or the person of Indian origin 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 therefrom;
    (c) the amount invested shall not be eligible for repatriation outside India ;
    (d) where investment is made out of NRSR account of the non-resident investor, the income earned on investment or proceeds of investment shall be credited only to the NRSR account of the investor.

    Permission to a firm or a proprietary concern to make payment to a non-resident Indian or a person of Indian origin who has made investment. A firm or a proprietary concern in India may make payment to or for the credit of a non-resident Indian or a person of Indian origin the sum invested by such person in that firm or the proprietary concern or the income accruing to such person by way of profit on such investment.

    What are the permissions needed for purchase of shares by certain persons resident outside India?

    (1) A person resident outside India (other than a citizen of Bangladesh
    or Pakistan or Sri Lanka) or an entity outside India, whether incorporated or not, (other than an entity in Bangladesh or Pakistan) may purchase shares or convertible debentures of an Indian company under Foreign Direct Investment Scheme, subject to the terms and conditions specified in Schedule 1.
    (2) A registered Foreign Institutional Investor (FII) may purchase shares or convertible debentures of an Indian company under the Portfolio Investment Scheme, subject to the terms and conditions specified in Schedule 2.
    (3) A non-resident Indian or an overseas corporate body may purchase shares or convertible debentures of an Indian company- (i) on a stock exchange under the Portfolio Investment Scheme , subject to the terms and conditions specified in Schedule 3; or/and (ii) on non-repatriation basis other than under Portfolio Investment Scheme, subject to the terms and conditions specified in Schedule 4.
    (4) A non-resident Indian or an overseas corporate body or a registered FII may purchase securities, other than shares or convertible debentures of an Indian company, subject to the terms and conditions specified in Schedule 5.

    What are the rules governing acquisition of right shares?

    (1) A person resident outside India may purchase equity or preference shares or convertible debentures offered on right basis by an Indian company which satisfies the conditions specified in sub-regulation (2).
    (2) An Indian company which satisfies the following conditions, may offer to a person resident outside India, equity or preference shares or convertible debentures on right basis, namely:-
    (i) The offer on right basis does not result in increase in the percentage of foreign equity already approved, or permissible under the Foreign Direct Investment Scheme in terms of these Regulations;
    (ii) The existing shares or debentures against which shares or debentures are issued by the company on right basis were acquired and are held by the person resident outside India in accordance with these Regulations;
    (iii) The offer on right basis to the persons resident outside India is at a price which is not lower than that at which the offer is made to resident shareholders;
    (3) The right shares or debentures purchased by the person resident outside India shall be subject to same conditions including restrictions in regard to repatriability as are applicable to the original shares against which right shares or debentures are issued:- Provided that the amount of consideration for purchase of right shares or debentures is paid by way of inward remittance in foreign exchange through normal banking channels or by debit to NRE/FCNR account, when the shares or debentures are issued on repatriation basis:- Provided further that in respect of the shares or debentures issued on non-repatriation basis, the amount of consideration may also be paid by debit to NRO/NRSR/NRNR account.

    What are the rules governing issue and acquisition of shares after merger or de-merger or amalgamation of Indian companies?

    (1) Where a Scheme of merger or amalgamation of two or more Indian companies or a reconstruction by way of de-merger or otherwise of an Indian company, has been approved by a Court in India, the transferee company or, as the case may be, the new company may issue shares to the shareholders of the transferor company resident outside India - subject to the following conditions, namely:
    (a) the percentage of shareholding of persons resident outside India in the transferee or new company does not exceed the percentage specified in the approval granted by the Central Government or the Reserve Bank, or specified in these Regulations:- Provided that where the percentage is likely to exceed the percentage specified in the approval or the Regulations, the transferor company or the transferee or new company may, after obtaining an approval from the Central Government, apply to the Reserve Bank for its approval under these Regulations.
    (b) The transferor company or the transferee or new company shall not engage in agriculture, plantation or real estate business or trading in TDRs; and
    (c) The transferee or the new company files a report within 30 days with the Reserve Bank giving full details of the shares held by persons resident outside India in the transferor and the transferee or the new company, before and after the merger/amalgamation/ reconstruction, and also furnishes a confirmation that all the terms and conditions stipulated in the scheme approved by the Court have been complied with.

    What are the rules relating to issue of shares under the Employees' Stock Options Scheme to persons resident outside India?

    (1) An Indian company may issue shares under the Employees' Stock Options Scheme, by whatever name called, to its employees or employees of its joint venture or wholly owned subsidiary abroad who are resident outside India, directly or through a Trust:- Provided that
    a) the scheme has been drawn in terms of regulations issued under the Securities Exchange Board of India Act, 1992; and
    b) face value of the shares to be allotted under the scheme to the non-resident employees does not exceed 5% of the paid-up capital of the issuing company.
    (1) The Trust and the issuing company shall ensure that value of shares held by persons resident outside India under the scheme does not exceed the limit specified in clause (b) of sub-regulation (1).

    (2) The issuing company shall furnish to the Reserve Bank, within thirty days from the date of issue of shares under the scheme, a report giving the following particulars/document, -i) names of persons to whom shares are issued under the scheme and number of shares issued to each of them; (ii) a certificate from the Company Secretary of the issuing company that the value of shares issued under the scheme does not exceed 5% of the paid up capital of the issuing company and that the shares are issued in compliance with the regulations issued by the SEBI in this behalf.

    What about transfer of shares and convertible debentures of an Indian company by a person resident outside India?

    1) Subject to the provisions of sub-regulation (2), a person resident outside India holding the shares or debentures of an Indian company in accordance with these Regulations, may transfer the shares or debentures so held by him, in compliance with the conditions specified in the relevant Schedule of these regulations.

    (2)(i) A person resident outside India, not being a non-resident Indian or an overseas corporate body, may transfer by way of sale, the shares or convertible debentures held by him to any person resident outside India:- Provided that the person to whom the shares are being transferred has obtained prior permission of Central Government to acquire the shares if he has previous venture or tie up in India through investment in shares or debentures or a technical collaboration or a trade mark agreement or investment by whatever name called in the same field or allied field in which the Indian company whose shares are being transferred is engaged.
    (ii) A non-resident India or an overseas corporate body may transfer by way of sale, the shares or convertible debentures held by him or it to another non-resident India or an overseas corporate body only.
    (iii) A person resident outside India may transfer any security held by him, to a person resident in India by way of gift.

    Is prior permission of the Reserve Bank needed in certain cases for transfer of security?

    Yes, it is needed in certain cases.

    A. Transfer by way of gift or sale by a person resident in India

    A person resident in India who proposes to transfer to a person resident outside India:-
    (a) any security, by way of gift, shall make an application to the Reserve Bank furnishing the following information, namely:
    i) Name and address of the transferor and the proposed transferee
    ii) Relationship between the transferor and the proposed transferee
    iii) Reasons for making the gift
    (b) any share/convertible debenture of an Indian company, by way of sale, shall obtain the Government approval for the transfer and thereafter apply to the Reserve Bank for its approval, which may be granted subject to such conditions as are considered necessary by Reserve Bank, including the price at which such sale may be made.

    B. Transfer by way of sale not covered by Regulation 9 by a person resident outside India

    (1) Transfer by way of sale not covered by Regulation 9 by a person resident outside India of the shares/convertible debentures held by him to a person resident in India, shall require prior permission of the Reserve Bank, for which application in form TS 1 may be made to the Reserve Bank.

    (2) While considering the grant of permission, the Reserve Bank shall take into account the following factors, namely:
    (a) where the shares of an Indian company are traded on stock exchange,
    i) the sale is at the prevailing market price on stock exchange and is
    effected through a merchant banker registered with Securities and Exchange Board of India or through a stock broker registered with the stock exchange;
    ii) if the transfer is other than that referred to in clause (i) the Reserve Bank will satisfy itself that the shares are proposed to be sold at a price arrived at by taking the average quotations (average of daily high and low) for one week preceding the date of application with 5 percent variation. Where, however, the shares are being sold by the foreign collaborator or the foreign promoter of the Indian company to the existing promoters in India with the objective of passing management control in favour of the resident promoters the proposal for sale will be considered at a price which may be higher by up to a ceiling of 25 percent over the price arrived at as above.

    (b) where the shares of an Indian company are not listed on stock exchange or are thinly traded, 1) if the consideration payable for the transfer does not exceed Rs.20 lakh per seller per company, at a price mutually agreed to between the seller and the buyer, based on any valuation methodology currently in vogue, on submission of a certificate from the statutory auditors of the Indian company whose shares are proposed to be transferred, regarding the valuation of the shares, and ii) if the amount of consideration payable for the transfer exceeds Rs.20 lakh per seller per company, at a price arrived at, at the seller's option, in any of the following manner, namely:

    A) a price based on earning per share (EPS linked to the Price Earning (P/E) MULTIPLE, OR A PRICE BASED ON THE Net Asset Value (NAV) linked to book value multiple, whichever is higher, or
    B) the prevailing market price in small lots as may be laid down by the Reserve Bank so that the entire shareholding is sold in not less than five trading days through screen based trading system
    C) where the shares are not listed on any stock exchange, at a price which is lower of the two independent valuations of share, one by statutory auditors of the company and the other by a Chartered Accountant or by a Merchant Banker in Category 1 registered with Securities and Exchange Board of India.

    Explanation:

    i) A share is considered as thinly traded if the annualised trading turnover in that share, on main stock exchanges in India, during the six calendar months preceding the month in which application is made, is less than 2 percent (by number of shares) of the listed stock.
    ii) For the purpose of arriving at Net Asset Value per share, the miscellaneous expenses carried forward, accumulated losses, total outside liabilities, revaluation reserves and capital reserves (except subsidy received in cash) shall be reduced from value of the total assets and the net figure so arrived at shall be divided by the number of equity shares issued and paid up. Alternatively, intangible assets shall be reduced from the equity capital and reserves (excluding revaluation reserves) and the figure so arrived at shall be divided by the number of equity shares issued and paid up. The NAV so calculated shall be used in conjunction with the average BV multiple of Bombay Stock Exchange National Index during the calendar month immediately preceding the month in which application is made and BV multiple shall be discounted by 40 per cent.
    iii) For computing the price based on Earning Per Share, the earning per share as per the latest balance sheet of the company shall be used in conjunction with the average Price Earning Multiple of Bombay Stock Exchange National Index for the calendar month preceding the month in which application is made and Price Earning shall be discounted by 40 per cent.

    What about the remittance of sale proceeds of an Indian security held by a person resident outside India?

    (1) No remittance of sale proceeds of an Indian security held by a
    person resident outside India shall be made otherwise than in accordance with these Regulations and the conditions specified in the relevant Schedule.

    (2) An authorised dealer may allow the remittance of sale proceeds
    of a security (net of applicable taxes) to the seller of shares resident outside India:- Provided -

    a) the security was held by the seller on repatriation basis;
    b) either the security has been sold on a recognised stock exchange
    in India through a stock broker at the ruling market price as determined on the floor of the exchange, or the Reserve Bank's approval has been obtained in other cases for sale of the security and remittance of the sale proceeds thereof; and
    c) a no objection/tax clearance certificate from the Income Tax authority has been produced.



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