CBDT to share wealth tax return detail of loan defaulters with Public Sector Banks
F. No. 328/10/2014-WT
Government of India
Ministry of Finance
Department of Revenue
(Central Board of Direct Taxes)
New Delhi the 28th May 2014
To
The Principal Chief Commissioners of Income Tax
Sub: Sharing of asset details as per Return of Wealth with Public Sector Banks-reg.
During a review meeting on the performance of Public Sector Banks (PSBs) taken by Finance Minister on 5.3.2014, the PSBs raised concern that the details of assets as available in the Wealth Tax Returns of loan defaulters are not being shared by Income Tax Department with the Banks despite repeated requests.
2. In this context, kind attention is drawn to Section 42B of the Wealth Tax Act 1957 which states that where a person makes an application to the Chief Commissioner or Commissioner in the prescribed form, seeking any information relating to any assessee in respect of any assessment made under this Act, the Chief Commissioner or Commissioner may, if he is satisfied that it is in the public interest so to do, furnish or cause to be furnished the information asked for in respect of that assessment
3. In view of the fact that every Return of Wealth filed by the assessee is subject to assessment under section 16 of the Wealth Tax Act, the information contained therein qualifies for being supplied u/s 42B of the Wealth Tax Act, provided the CCWT/CWT is satisfied that supply of such information to PSBs is in public interest. CBDT in this context clarifies that information on assets of loan defaulters to enable recovery of loans by PSBs from such defaulters is in public interest.
4. It is further clarified that such information may be provided in respect of the borrower/mortgager/guarantor of the loan only. At the time of supply of such information a confidentiality clause may be included specifying that such information be used only for the purpose of recovery of loan and will not be shared with any other person/agency. An undertaking to this effect shall be obtained from the Bank (to be signed by an officer not below the rank of the Manager of the Branch concerned) before furnishing the information.
5. In order to ensure that the tax dues of the Department against the defaulter (if any) are safeguarded, an undertaking be obtained from the PSB to obtain a No Objection Certificate (NOC) from the jurisdictional CIT of the loan defaulter before appropriation of the surplus amount recovered from sale of immovable/movable asset of the defaulter, information in respect of which is shared, after adjustment of its loan dues.
- The above guideline may be brought to the notice of all DGsIT, CCsIT and CsIT of your charge.
(Ekta Jain)
Deputy Secretary (OT)
Whether CESTAT Has Powers to Hear Cases Pertaining To Rebate under Service Tax
Of late there have been confusions as to jurisdiction before whom rebate cases pertaining to service tax should be filed when an order is passed by Commissioner of Central Excise (Appeals).
In terms of first proviso to section 35B(1) of Central Excise Act, which states that no appeal shall lie before the Appellate Tribunal and the Appellate Tribunal shall not have jurisdiction to decide any appeal in respect of any order passed by Commissioner (Appeals) if such order relates to
(a)…………………………………………..
(b) Rebate of duty of excise on goods exported to any country or territory outside India or on excisable materials used in the manufacture of goods which are exported to any country or territory outside India.
In terms of section 35EE of Central Excise Act, where the order is of the nature referred to in first proviso to sub-section (1) of section 35B, Central Government may annul or modify such order.
Further section 35EE of Central Excise Act, was incorporated under section 83 of Finance Act, w.e.f 28.5.2012, on the basis of this incorporation there was confusions whether the orders pertaining to rebate of service tax passed by Commissioner (Appeals) where appealable before CESTAT or before the Revisionary Authority.
Considering the above set of provisions, Hon'ble CESTAT in case of M/s Glyph International Ltd, had held that "under section 83 of Finance Act, 1994, read with section 35EE of Central Excise Act, 1944 takes away the right of redressing the matter before CESTAT to hear rebate appeal. Revisionary authority has jurisdiction to hear such cases, as this aspect was clearly demarcated in law. Consequently, Revenue succeeds in saying that rebate claim matters should go to revisionary authority who has jurisdiction over the matter.
Challenging this order of Hon'ble CESTAT, M/s Glyph International Ltd filed a writ before the Delhi High Court, (2014 TIOL-560-HC-DEL-ST), wherein Hon'ble High Court had held that "the amendment to Section 83 by making a specific reference to Section 35EE of the Central Excise Act, did not make any difference to the nature of jurisdiction exercisable by the CESTAT under Section 86; as CESTAT continued to possess jurisdiction to decide on matters pertaining to rebate and refund"
This decision was rendered on the analogy that section 86 of Finance Act, which specifically did not curtail down the powers of CESTAT in hearing appeals pertaining to rebate cases.
There was one school of thought, which felt that in terms of section 86(7) of Finance Act, which states that "Subject to the provisions of this Chapter, in hearing the appeals and making orders under this section, the Appellate Tribunal shall exercise the same powers and follow the same procedure as it exercises and follows in hearing the appeals and making orders under the [Central Excise Act, 1944] (1 of 1944)"
Considering the provision of section 86(7), the said school of thought was of the view that even though section 86 did not specifically pose any restriction, however reading of section 86(7), in terms of this provision of the law, reading first proviso to section 35B (1) of Central Excise Act and section 35EE of Central Excise Act, which goes without saying that CESTAT did not have jurisdiction to hear cases pertaining to rebate.
However this view was negated by the Hon'ble High Court of Delhi in the above referred decision, by stating "It may be seen that Parliament always intended that an appellate remedy should be available in respect of refund and rebate claims. That power was exercisable by the CESTAT. The amendment of Section 83, in 2012 did not disturb the appellate remedy, i.e Section 86; the amendment did not limit the appellate power in any manner whatsoever. It is a settled position of law that exclusion of jurisdiction of courts and tribunals should be by way of express provisions, or through necessary intendment. This was stated as follows, by the Supreme Court in Subal Paul v. Malina Paul & Anr. (2003) 10 SCC 361 held as follows:
If a right of appeal is provided for under the Act, the limitation thereof must also be provided therein. A right of appeal which is provided under the Letters Patent cannot be said to be restricted. Limitation of a right of appeal in absence of any provision in a statute cannot be readily inferred.
Considering this development of law, the paper writers are of the view that orders of Commissioner (Appeals) pertaining to rebate of service tax, could be appealed before CESTAT.
However if there are any other contrary high court decisions in any State, then such State is bound to follow its jurisdictional high court's decision.
Author- Paper writers below are practicing Chartered Accountants at Bangalore
CA Madhukar Hiregange
Revised TDS returns to be accepted without Original Provisional receipts wef 01.06.2014
Circular No: NSDL/TIN/2014/024, May 28, 2014
Subject: Revised procedure for acceptance of e-TDS/TCS correction statements and upload of scanned documents to TIN Central System
Attention of all TIN Facilitation Centers (TIN-PCs) is invited to the procedure of acceptance of e-TDS/TCS correction statements and upload of scanned images as provided in chapter 6 and 7 of the TIN-PC Operating Manual (TOM).
As per approval from Income Tax Department, the procedure for acceptance of e-TDS/TCS correction statement stands revised. The same is intimated vide this circular. The revised procedure applicable with effect From June 1, 2014 is as per table below:
| Sr. No. | Documents to be accepted along with e- TDS/TCS correction statements – Existing procedure | Documents to be accepted along with eTDS/TCS correction statements – Revised procedure (From June 1, 2014) |
| 1 | Physical Form 27A | Physical Form 27A |
| 2 | Statement Statistics Report (SSR) | |
| 3 | Copy of Provisional Receipt of Original Statement |
In view of the above, TIN-PCs are required to accept e-TDS/TCS correction statements from Deductors/Collectors with .FVU file and duly signed Form 27A (generated from the latest File Validation Utility). The copy of Original Provisional Receipt and Statement Statistic Report need not be accepted from Deductor/Collector.
The verification of control total screen has to be carried out on the basis of information present on Form 27A.
Further, the revised procedure for upload of scanned images of e-TDS/TCS correction Statements, is as per the following table wherein e-TDS/TCS statements are accepted on or after June 1, 2014.
| Documents accepted at the time ofacceptanceof e-TDS / TCS Statement | Documents to be returned to Deductor / Collector | Scanning of documents |
| 1. CD/ Pen Drive | 1, Form 27A2. Provisional receipt copy generated from SAM In case of multi-hatch correction statements, following documents to be scanned; Batch 1
Batch 2
Batch 3
|
Note: For e-TDS/TCS statements accepted upto May 31, 2014, the scanned images of Form 27A and Provisional Receipt needs to be scanned and uploaded as referred vide circular number NSDL/T1N/2011/009 dated May 6, 2011.
The version of TOM after the above said updates is 5.10. The version control sheet is attached as Anneyure A
In case of any clarifications, contact TIN Support Desk on 022-24994201.
For and on behalf of
NSDL e-Governance Infrastructure Limited
Bushan Maideo
Senior Vice President
TDS/ TCS – No need to submit Provisional Receipt of original statement and Statement Statistics Report wef 01.06.2014
With effect from June 1,2014,Deductors/Collectors need not submit copy of Provisional Receipt of original statement and Statement Statistics Report (SSR) for furnishing e-TDS/TCS correction statement.
Flag raised for 15G/15H despite Income exceeding amount of exemption
CPC(TDS) feels glad to provide you with the new feature of downloading Form 27D, the Tax Collection Certificate for Deductees forming part of TCS Statements, filed in the form of 27EQ.
Centralized Processing Cell (TDS) has observed from its records that Flag "B" (for 15G/H Forms) has been wrongly raised in the quarterly TDS Statements as per the provisions of section 197A(1B) of the Income Tax Act, 1961. Following are the provisions of section 197A(1B) for your ready reference:
"The provisions of this section shall not apply where the amount of any income of the nature referred to in sub-section (1) or sub-section (1A), as the case may be, or the aggregate of the amounts of such incomes credited or paid or likely to be credited or paid during the previous year in which such income is to be included exceeds the maximum amount which is not chargeable to income-tax".
What is Form 15G/ H and its relevance :
- Under section 197A of the Income Tax Act 1961, Form 15G / H is a self-declaration, which is provided by a person resident in India (not being a Company or Firm) to their deductor that the tax on his estimated total income of the previous year, in which such income is to be included in computing his total income, will be NIL.
- The Declaration is made in the following Forms :
- Form 15H – For Senior Citizens
- Form 15G – For other than Senior Citizens
Consequences, if deductor wrongly raises Flag "B" for Forms 15G/H :
- If the deductor raises Flag "B" for non-deduction of tax, despite the total payments made by him exceeding the taxable amount, this results into incorrect reporting in the TDS Statements.
- Your attention is invited to provisions of section 201 of the Act, which reads as follows :
- Where any person who is required to deduct any sum, does not deduct or does not Pay or after deduction, fails to pay,
the whole or any part of the tax, then such person shall be deemed to be an assessee in default in respect of such
tax.
- Where any person who is required to deduct any sum, does not deduct or does not Pay or after deduction, fails to pay,
- Under section 277 of the Act, if a person makes a statement in any verification under this Act or under any rule made thereunder, or delivers an account or statement which is false, and which he either knows or believes to be false, or does not believe to be true is punishable.
This may be noted that obligation to report each transaction correctly in the TDS statements, falls on the deductor and non-compliance amounts to incorrect verification of correctness of TDS statement.
Structurally Valid but actually Invalid PAN in TDS statement – Impact , Action to be taken
Deductees reported in TDS Statements with structurally Valid, but actually Invalid PANs
Centralized Processing Cell (TDS) has observed from its records that you have reported deductees with invalid PANs in your quarterly TDS statements. These PANs appear structurally valid, however, they are actually invalid, as they are not available in the PAN Master records.
For example, ARUPS4625S appears to be a valid PAN according to the alphabets and numerals in its structure, however, this is an invalid PAN, as this is not available in PAN Master.
What is the impact :
- The impact of such errors is significant in nature, in view of following :
- As per section 206AA, the tax is to be deducted at a higher rate, in case of reporting of invalid PANs. Therefore, Short Deduction is charged even if the tax has been deducted at the Section Rate, due to the applicability of section 206AA.
- The deductor will not be able to generate TDS Certificates for their deductees with invalid PANs.
- The taxpayer will not be able to avail correct TDS Credits
What actions to be taken :
The impact of such errors is significant in nature, in view of following :
- PAN Verification facility on TRACES can be used for verifying the deductees. You are requested to Login to TRACES and
navigate to "Dashboard" to locate "PAN Verification" in the Quick Links menu. - You can also use "Consolidated TAN – PAN File" that includes all the valid PANs attached with the respective TANs. To
avail the facility, Login to TRACES and navigate to "Dashboard" to locate "Consolidated TAN – PAN File". - To correct an invalid PAN reported earlier, a C5 Correction Statement is required to be filed.
- The PANs can also be corrected using our Online Correction facility
with Digital Signatures. To avail the facility, you are requested to Login to TRACES and navigate to "Defaults" tab to locate "Request for Correction" from the drop-down menu.
E filing not enabled and Burden of Interest u/s 234 B
CA. M. Lakshmanan
In the Income Tax Website e filing is enabled for ITR – 1, ITR – 2, & ITR – 4S only and for all other categories it is yet to be done.If an assessee has failed to pay 90% of Income Tax payable as Advance Tax within the due dates and if he prefers to file the return now by paying the tax due as Self Assessment Tax with interest under section 234 B & C he is not allowed to file the same since the respective returns of income are not yet enabled in the 'Income Tax site'.Further If the assessee pays the tax now i.e. in the month of May and files the rerun when the same is enabled in the site, say in the month of June or July or later the CPC will charge interest under section 234B till the month of filing the return and will raise demand. Since it is the fault of the department the assessee should not be peanlised. Hence suitable instruction/notification may be issued immediately so that the assessees who are ready with particulars can pay tax now calculating interest till the month of payment and file the returns when they are enabled in the site and the returns are processed at the CPC without charging interest under section 234B for the period form the month of payment till the month of e-filing the return.
Extract of Section 234B is as follows :-
Section 234B – Interest for defaults in payment of Advance tax
(A) Where in any financial year, an assessee who is liable to pay advance tax u/s. 208 has failed to pay such tax or the advance tax paid by such assessee is less than 90% of the assessed tax, the assessee shall be liable to pay simple interest @ 1% for every month or part of a month.
(B) The period for which interest is payable would be the period from the first day of April next following such financial year to the date of determination of total income u/s. 143(1). However, if regular assessment u/s. 143(3) is completed, then interest is chargeble up to the date of regular assessment.
(C) The amount on which interest shall be calculated shall be the amount equal to the assessed tax or on the amount by which the advance tax paid falls short of the assessed tax.
VCES Scheme – Pendency of Audit as on 01.03.2013 – One more ground to deny relief
CA Pooja Indani
Recent Issue under Service Tax-Amnesty Scheme 2013Whether it can be said that Audit was pending as on 01.03.13, if Audit Para was not determined and/ liability was also not quantified till 01.03.13
In F.Y. 2013-14 Finance Minister P. Chidambaram, has announced the said Voluntary Compliance Encouragement Scheme (Amnesty Scheme) for the defaulters under Service Tax Law, through this scheme government has taken a good step in favor of defaulters.
All the defaulters under Service Tax Law has got excellent opportunity through this scheme which is unlikely to come up again in next 20 years.
Brief points regarding the said scheme is as under:-
Chapter VI inserted by the Finance Act 2013 w.e.f. 10.05.13 comprises of the provision related to the service tax Voluntary Compliance Encouragement Scheme,2013 which comprises 11 sections from sec.104 to sec .114.
Basically, this scheme is for giving immunity to the defaulters from payment of interest, penalty for non-filling of S.T. returns, non- payment of service tax as well as immunity from prosecution proceedings etc.
Persons who can applied for the said VCES Scheme:-
There can be two types of persons who can make declaration of tax dues under the Voluntary Compliance Encouragement Scheme 2013.
a) Unregistered
b) Registered
If any person who is not registered as service tax assesses, wishes to declare under the scheme, he can do so, but for the same first he has to comply with Rule 4 of the Service Tax Rules 1994.
Conditions required to be fulfilled to apply under the said VCES Scheme:- ( sec 106)
1) Any person may declare his tax dues in respect of which no notice or an order of determination under section 72 or section 73 or section 73A of the chapter has been issued or made before the 1st day of March 2013.
2) Where a declaration has been made by a person against whom-
a) An inquiry or investigation in respect of a service tax not levied or not paid or short-levied or short paid has been initiated by way of-
i) search of premises under section 82 of the Chapter or
ii) issuance of summons under section 14 of the Central Excise Act,1944 as made applicable to the chapter under section 83 thereof or.
iii) requiring production of accounts, documents or other evidence under the chapter or the rules made thereunder or
iv) An audit has been initiated and such inquiry, investigation or audit is pending as on the 1st day of March 2013 then the designated authority shall by an order and for reasons to be recorded in writing, reject such declaration.
One of the case which is pending before Commissioner (Appeals) for its decision is explained below to determine any violation of Sec 106 in the given case:-
BRIEF FACTS OF THE CASE:-
Appellant is proprietary unit holding a Service Tax registration number and engaged in erection, commissioning and installation service as defined U/S 65(19)(105)(zzb) of Finance Act,1994.
Appellant has filed a declaration dated 17.12.13 under 107(1) of Voluntary Compliance Encouragement Scheme, 2013 for availing the benefits of the said scheme.
The declarant has provided services i.e. design, test, supply, construction, erection, testing and commissioning of transmission, sub-transmission distribution lines etc and allied works on trunk basis to Maharashtra State Electricity Distribution Corporation Ltd.(MSEDCL). All these activities falls under erection, commissioning and installation services.
Declarant has filed a declaration under VCES-1 for the amount of Rs. 65,00,000 and 50% of amount has been paid by the declarant at the time of filing of Declaration in form VCES-1.
On 30.11.2012 Audit was initiated against the declarant's unit and department has alleged that it was pending as on 01.03.2013 which is major violation of section 106 of VCES 2013.
MAJOR ALLEGATIONS MADE BY THE DEPARTMENT IN THE ORDER:-
1) In the order department has alleged that on the basis of Audit report, inquiry was initiated on 26.02.2012 and summons has also been issued on the basis of said Audit Report. final Audit Report was drafted on 16.03.2013(12-13) by Assistant Commissioner(Audit).
2) Audit was pending as on 01.03.2013 and hence assessee is not eligible for filing declaration.
3) SCN was issued to the declarant dated 29.03.2013.
Reply given by the declarant for the above allegations or grounds of appeal taken by the declarant:-
1) For the first and second allegation, if my audit was pending as on 01.03.13 as per departments view then how inquiry will be initiated and summons can be issued dated 26.02.2013 on the basis of pending Audit.
2) By taking wider interpretation of sec.106(1) of the VCES Scheme, major Audit (para) was not pending as on 01.03.2013 as liability itself was not determined till 16.03.2013 (date of draft Audit Report)
3) SCN was issued to declarant dated 29.03.13 which was immediately after 13 days of Audit Report dated 16.03.13. department has not given enough opportunity to the declarant to give reply to the said final Audit Report with the intention that declarant should not get any immunity from penalty and interest i.e. benefits of the said scheme.
4) Circular no.170/5/2013 ST Dated 08.08.2013 (Sr.No.19) has clarified that the pendency of audit as on 01.03.2013 means an audit that has been initiated before 01.03.2013 but has not culminated as on 01.03.2013.the audit process may culminate in any of the following manner:-
i) Closure of audit file if no discrepancy is found in audit;
ii) Closure of audit para by the Monitoring Committee Meeting (MCM);
iii) Approval of Audit Para by MCM & Payment of amount involved therein by the party in terms of the Finance Act,1994;
iv) Approval of audit para by MCM,& issuance of SCN, if party does not agree to the para so raised.
In the said case after raising Audit para on 16.03.2013, immediately SCN was issued on 29.03.2013 before giving opportunity to the declarant to give reply to the said audit para or to disagree with the para so approved.
Summary of Even Dates:-
| Particulars | DATE |
| 30.11.2012 |
| 21.08.2012 |
| 10.09.2012 |
| 21.09.2012 |
| 31.12.2012 |
| 26.02.2013 |
| 16.03.2013 |
Conclusion:-
VCES has basically announced for getting relief from burden of Interest and heavy penalties, but still government has finding so many loopholes so that assessee would not be eligible to take the benefits of the Scheme. Whether this scheme is for getting relief or else its call for a more departmental issues, clarifications and appeal proceedings which is in itself is a lengthy procedure will get to know in due course only.
It has also been observed that Letter has been issued by commissioner calling for Financial records for verification after cut off date of VCES 2013 i.e., 31.12.2013.
Companies CAP Provident Fund (PF) contribution to Rs. 6500
The Provident Fund Office has allowed companies to cap their per-month Provident contribution to employees at Rs. 6,500. At present, companies contribute an amount equal to at least 12 per cent of an employee's basic salary towards his/her PF. Now When an employer is deducting and depositing Employees' Provident Fund contributions upon more than the prescribed salary, he can reduce it to Rs. 6,500 per month and in that event, section 12 of the Employees' Provident Funds & Miscellaneous Provisions Act providing bar for not to reduce wages will not be attracted.
Full Text of the Circular is as follows:-
EMPLOYEES PROVIDENT FUND ORGANISATION
MINISTRY OF LABOUR AND EMPLOYMENT, GOVERNMENT OF INDIA, DELHI
Ref. No. LC(637)2009/Vol.I/203- Dated: 27.05.2014
Subject: Filing of Review Petition against judgement of Hon'ble Supreme Court of India in SIP No. 1205/2009 in the matter of Marathwada Gramin Bank Employees Union Vs. Management of Marathwada Gramin Bank – regarding.
Reference: This office letter No. LC-2(637)2009/MH/12780 dated 08.10.2013
Please refer to the above Cited letter wherein views on the issue of filing Review Petition/implementation of the order dated 09.09.2011 of the Hon'ble Supreme Court of India in SLP No. 1205/2009 in the matter of Marathwada Gramin Bank Karamchari Sangathan & Ors. Vs. Management of Marathwada Gramin Bank, were called for.
2. The views expressed by the Zonal Addl. Central Provident Fund Commissioners as to whether review petition need to be filed or not has been examined at Head Office. Having analysing the pros and cons of the issue, Competent Authority felt that there is no point in going for review against the said judgement of Hon'ble Supreme Court of India.
3. All the Regional Provident Fund Commissioners-In-charge of Regional /Sub-Regional Offices are, therefore, directed not to force employers to contribute over and above the statutory wage ceiling in respect of their employees. However, option is available for the employees to contribute beyond the statutory wage ceiling if they so desire subject to the conditions enumerated under para 26(6) of the Employees' Provident Funds Scheme, 1952.
Yours faithfully,
(P.K.UDGATA)
Addl. Central Provident Fund Commissioner (Compliance)
All about Types of bank accounts which can be maintained by an NRI / PIO in India
Facilities for Non Resident Indians (NRIs) and Persons of Indian Origin (PIOs)
In terms of the Foreign Exchange Management Act (FEMA), 1999 a person resident outside India means a person who is not resident in India.
What are the different types of accounts which can be maintained by an NRI1/PIO2 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 Authorised Dealer in India, i.e. a bank authorised to deal in foreign exchange. NRO Savings accounts can also be maintained with the Post Offices in India.
Types of accounts which can be maintained by an NRI / PIO in India
A. Non-Resident Ordinary Rupee Account (NRO Account)
Any person resident outside India may open NRO account with an authorised dealer or an authorised bank for the purpose of putting through bona fide transaction in rupees.
Opening of accounts by individual/ entities of Pakistan and entities of Bangladesh require prior approval of Reserve Bank of India.
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. Banks are free to determine the interest rates.
● Term Deposits – Banks are free to determine the interest rates. Interest rates offered by banks on NRO deposits cannot be higher than those offered by them on comparable domestic rupee deposits.
● 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/PIOs.
● Other than current income and the limit of USD 1 Mn per financial year applicable to NRIs/PIOs, balances in NRO accounts cannot be repatriated without the prior approval of RBI.
● 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. The details of this facility are given in the FAQs on "Accounts opened by Foreign Nationals and Foreign Tourists" available on the RBI website.
● 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.
B. 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 NRI (as defined under Regulation 2(vi) of Notification No. FEMA 5/2000-RB dated May 3, 2000) himself and not through the holder of the power of attorney.
● NRIs may be permitted to open NRE account with their resident close relatives (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 the extant instructions during the life time of the NRI/PIO account holder.
● Account will be maintained in Indian Rupees.
● 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, overdrawings 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 – Banks are free to determine the interest rates.
● Term deposits – Banks are free to determine the interest rates of term deposits of maturity of one year and above. Interest rates offered by banks on NRE deposits cannot be higher than those offered by them on comparable domestic rupee 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, sale proceeds of FDI investments, 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 can be extended against security of funds held in NRE Account either to the depositors or third parties without any ceiling subject to usual margin requirements.
● Such accounts can be operated through power of attorney in favour of residents for the limited purpose of withdrawal of local payments or remittances through normal banking channels to the account holder himself.
C. Foreign Currency Non Resident (Bank) Account – FCNR (B) Account
● NRIs are eligible to open and maintain these accounts.
● FCNR (B) accounts are only in the form of term deposits of 1 to 5 years
● All debits / credits permissible in respect of NRE accounts, including credit of sale proceeds of FDI investments, are permissible in FCNR (B) accounts also.
● Account can be held in any freely convertible currency.
● Loans can be extended against security of funds held in FCNR (B) deposit either to the depositors or third parties without any ceiling subject to usual margin requirements.
● The interest rates are stipulated by the Department of Banking Operations and Development, Reserve Bank of India. With effect from March 1, 2014, interest rate ceiling on FCNR (B) deposits will revert to the ceiling prior to August 14, 2013. In respect of FCNR (B) deposits of maturities, 1 year to less than 3 years interest shall be paid within the ceiling rate of LIBOR/SWAP rates plus 200 basis points for the respective currency/corresponding maturity. For FCNR(B) deposits with maturity of 3-5 years interest shall be paid within the ceiling rate of LIBOR/SWAP rates plus 300 basis points. On floating rate deposits, interest shall be paid within the ceiling of SWAP rates for the respective currency/maturity plus 200 bps/ 300 bps as the case may be. For floating rate deposits, the interest reset period shall be six months.
● 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.
● Terms and conditions as applicable to NRE accounts in respect of joint accounts, repatriation of funds, opening account during temporary visit, operation by power of attorney, loans/overdrafts against security of funds held in accounts, shall apply mutatis mutandis to FCNR (B). NRI can open joint account with a resident close relative (relative as defined in Section 6 of the Companies Act, 1956) on former or survivor basis. The resident close relative will 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.
Is the permission of the Reserve Bank required for opening the various accounts, mentioned above, by Bangladesh / Pakistan individuals/entities?
Opening of accounts by individuals/entities of Pakistan and entities of Bangladesh nationality 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.However individuals of Bangladesh nationality are permitted to open NRO accounts without the prior approval of Reserve Bank of India subject to conditions.
Can an individual resident Indian borrow money from his close relatives outside India?
Yes, an individual resident Indian can borrow sum not exceeding USD 250,000 or its equivalent from his close relatives3 staying outside India, subject to the conditions that:
- the minimum maturity period of the loan is one year;
- the loan is free of interest; and
- the amount of loan is received by inward remittance in free foreign exchange through normal banking channels or by debit to the NRE/FCNR(B) account of the NRI.
Can an individual resident lend money to his close relative NRI / PIO?
Yes, an individual resident can lend money by way of crossed cheque /electronic transfer within the overall limit prescribed under the Liberalised Remittance Scheme, to meet the borrower's 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.
Can an individual resident repay loans of close relative NRIs to banks in India?
Yes, where an authorised dealer in India has granted loan to a non-resident Indian such loans may also be repaid by resident close relative (relative as defined in Section 6 of the Companies Act, 1956), of the Non-Resident Indian by crediting the borrower's loan account through the bank account of such relative.
What are the other facilities available to NRIs/PIO?
A. Investment facilities for NRIs
NRI may, 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.
NRI may, 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
● 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.
Note : NRIs are not permitted to invest in small savings or Public Provident Fund (PPF).
B. Investment in Immovable Property
● NRI / PIO4 may acquire/transfer immovable property in India other than agricultural land/ plantation property or a farm house out of repatriable and / or non-repatriable funds.
● Foreign national of non Indian origin resident outside India shall not acquire/transfer any immovable property in India other than on lease not exceeding five years, without prior approval of Reserve Bank of India.
● 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 traveller's 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:
● 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.
● 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.
● 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 / PIO, the repatriation of sale proceeds is restricted to not more than two residential properties subject to certain conditions.
● 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.
● 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.
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.
C. Facilities to returning NRIs/PIOs
● Returning NRIs/PIOs may continue to hold, own, transfer or invest in foreign currency, foreign security or any immovable property situated outside India, if such currency, security or property was acquired, held or owned when resident outside India
● The income and sale proceeds of assets held abroad need not be repatriated.
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.
Resident Foreign Currency Account
● A person resident in India may open, hold and maintain with an authorised dealer in India a Resident Foreign Currency (RFC) Account.
● Proceeds of assets held outside India at the time of return can be credited to RFC account.
● 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.
● 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.
RFC accounts are permitted to be held jointly with the resident close relative(s) as defined in the Companies Act, 1956 as joint holder (s) in their RFC bank account on 'former or survivor basis'. However, such resident Indian close relative, now being made eligible to become joint account holder shall not be eligible to operate the account during the life time of the resident account holder.
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.
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 'either or survivor' basis subject to conditions.
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 prescribed under Liberalised Remittance Scheme for the resident individual and the gifted amount should be credited to the beneficiary's 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 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".
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) 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 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. 'Close relative' means relative as defined in Section 6 of the Companies Act, 1956.
4. 'A Person of Indian Origin' 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 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).
(updated as on May 26, 2014)
__._,_.___
No comments:
Post a Comment