As the regulations are more liberalised compliances become more important. Whenever an entity receives any Foreign Direct Investment (FDI) from outside India there are very strict timelines for reporting the transaction to Reserve Bank of India (RBI). Greenvissage will assist in submitting the Single Master form to the RBI along with necessary certifications within the due date.
Why is it important for entities in India to be FEMA compliant?
To help your company achieve FEMA compliance Greenvissage provides assistance with
External commercial borrowing is a loan obtained by an Indian entity (eligible borrower) from a non-resident entity (eligible lender). Such loan should confirm the parameters such as minimum average maturity, permitted end-use, all-in-cost ceiling etc. The loan should meet all the parameters in totality and not on standalone basis. The ECB has been divided into different frameworks based on the type of borrower, average maturity and currency.
Apart from promoting and regulating FDI, FEMA also covers the current account transactions such as Export/Import of Goods and Services. There are also various timelines for either realising the payments for exports or making the payment for imports. It is pertinent to note that one has to keep a track of such transactions so that there is no non-compliances under FEMA
Whenever an entity receives FDI they have to submit the annual return with RBI in the form – Foreign Assets and Liabilities. The due date for the same is 15 July and has to be submitted for a financial year.
There are instances when there is delay or non-compliance while undertaking the compliances under FEMA. FEMA provides an option for compounding either su-moto or on the notice receipt of notice from RBI. In the process of compounding RBI provides the opportunity of presenting the case and explain the reason for delay or non-compliance. After considering the facts of the case RBI then levy the penalty accordingly. It is important to note that RBI have power of levying the penalty of 300% of the defaulting amount.
Liberalised Remittance Scheme or LRS is a guideline issued by RBI defining the limit of the amount which can be remitted by a Resident Individual outside India. The cycle of the limitation period is a Financial Year (Apr-Mar), resetting the limit at the start of each financial year. This scheme covers both current account transaction and capital account transactions undertaken by an individual, and have a single limit for both. Since this scheme is specific to remittances done by an individual hence this scheme does not cover corporates, partnership firms, HUF, Trusts etc.