Entries Tagged 'Investment in India' ↓



A.P. (DIR SERIES 2011-12) CIRCULAR NO. 76, DATED 9-2-2012

Attention of the Authorised Dealer Category – I (AD Category – I) banks is invited to Regulation 4 of Notification No. FEMA 22/2000-RB, dated May 3, 2000, viz., Foreign Exchange Management (Establishment in India of Branch or Office or other Place of Business) Regulations, 2000, as amended from time to time, in terms of which, no person, being a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, Iran or China, shall establish in India, a branch office or a liaison office or a project office or any other place of business by whatever name called, without the prior permission of the Reserve Bank. Attention of the AD Category -I banks is also invited to the A.P. (DIR Series) Circular No. 37, dated November 15, 2003 which provides the guidelines regarding general permission to a foreign entity for setting up a Project office in India, subject to certain conditions.

2. It is clarified that the general permission accorded in terms of the November 15, 2003 guidelines is subject to the adherence to the provisions of Regulation 4 of Notification No. FEMA 22 /2000-RB, dated 3rd May, 2000, ibid, along with their specified conditions.

3. AD Category – I banks may bring the contents of this circular to the notice of their constituents and customers concerned.

4. The directions contained in this circular have been issued under sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions/approvals, if any, required under any other law.

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FDI in Single Brand Retail Trading

Government of India
Ministry of Commerce & Industry
Department of Industrial Policy & Promotion
(FC-I Section)
Press Note No.1 (2012 Series)

Subject: Review of the policy on Foreign Direct Investment- liberalization of the policy in Single-Brand Retail Trading.

1.0 Present Position:

Foreign Direct Investment (FDI), in retail trade, is prohibited except in single brand product retail trading, in which FDI, up to 51% is permitted, subject to conditions specified under paragraph of ‘Circular 2 of 2011 – Consolidated FDI Policy’.

2.0 Revised Position:

The Government of India has reviewed the extant policy on FDI and decided that FDI, up to 100%, under the government approval route, would be permitted in Single-Brand Product Retail Trading, subject to specified conditions, as indicated in paragraph 3.0 below.

3.0 Accordingly, the following amendment is made in ‘Circular 2 of 2011- Consolidated FDI Policy’, dated 30.09.2011, issued by the Department of Industrial Policy & Promotion:

Paragraph is substituted with the following: Single Brand product retail trading 100% Government

(1) Foreign Investment in Single Brand product retail trading is aimed at attracting investments in production and marketing, improving the availability of such goods for the consumer, encouraging increased sourcing of goods from India, and enhancing competitiveness of Indian enterprises through access to global designs, technologies and management practices.

(2) FDI in Single Brand product retail trading would be subject to the following conditions:
(a) Products to be sold should be of a ‘Single Brand’ only.
(b) Products should be sold under the same brand internationally i.e. products should be sold under the same brand in one or more countries other than India.
(c) ‘Single Brand’ product-retail trading would cover only products which are branded during manufacturing.
(d) The foreign investor should be the owner of the brand.
(e) In respect of proposals involving FDI beyond 51%, mandatory sourcing of at least 30% of the value of products sold would have to be done from Indian ‘small industries/ village and cottage industries, artisans and craftsmen’. ‘Small industries’ would be defined as industries which have a total investment in plant & machinery not exceeding US $ 1.00 million. This valuation refers to the value at the time of installation, without providing for depreciation. Further, if at any point in time, this valuation is exceeded, the industry shall not qualify as a ‘small industry’ for this purpose. The compliance of this condition will be ensured through self-certification by the company, to be subsequently checked, by statutory auditors, from the duly certified accounts, which the company will be required to maintain.

(3) Application seeking permission of the Government for FDI in retail trade of ‘Single Brand’ products would be made to the Secretariat for Industrial Assistance (SIA) in the Department of Industrial Policy & Promotion. The application would specifically indicate the product/ product categories which are proposed to be sold under a ‘Single Brand’. Any addition to the product/ product categories to be sold under ‘Single Brand’ would require a fresh approval of the Government.

(4) Applications would be processed in the Department of Industrial Policy & Promotion, to determine whether the products proposed to be sold satisfy the notified guidelines, before being considered by the FIPB for Government approval.

4.0 The above decision will take immediate effect.

5.0 The above provisions will be incorporated in the next Circular on Consolidated FDI Policy to be issued on 31.3.2012.

(Anjali Prasad)
Joint Secretary to the Government of India

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Deregulation of Savings Bank Deposit Interest Rate

RBI/2011-12/ 281
UBD.BPD.(PCB)CIR No. 13 /13.01.000/2011?12 November 25, 2011
The Chief Executive Officers
All Primary (Urban) Co-operative Banks

Dear Sir/Madam,
Deregulation of Savings Bank Deposit Interest Rate
Please refer to our circular No.UBD.BPD.(PCB)CIR No.45/13.01.00/2010-11 dated May 3, 2011 enclosing a Directive UBD.BPD.DIR. No.3/13.01.00/2010-11 dated May 3, 2011 on interest rates on deposits.
2. As indicated in the Second Quarter Review of Monetary Policy announced on October 25, 2011, it has been decided to deregulate the savings bank deposit interest rate with immediate effect. Accordingly, banks are free to determine, with immediate effect, their savings bank deposit interest rate, subject to the following two conditions:
o First, each bank will have to offer a uniform interest rate on savings bank deposits up to Rs. 1 lakh, irrespective of the amount in the account within this limit.
o Second, for savings bank deposits over Rs.1 lakh, a bank may provide differential rates of interest, if it so chooses, subject to the condition that banks will not discriminate in the matter of interest paid on such deposits, between one deposit and another of similar amount, accepted on the same date, at any of its offices.
3. The above revised instructions would be applicable to savings bank deposits of resident Indians only.
4. Interest rate on Non-Resident (External) Accounts Scheme and Ordinary Non-Resident Deposit under savings account, which has been prescribed at 4 per cent per annum at present, will continue to be regulated until further review.
5. An amending directive UBD.BPD.DIR. No. 4 /13.01.000/2011-12 dated November 25, 2011 is enclosed.

Yours faithfully
Chief General Manager-in-Charge
Encls: As above

RBI liberalises Forex Facilities for Individuals

The Reserve Bank of India has further liberalised foreign exchange facilities for individuals under the Foreign Exchange Management Act, (FEMA) 1999. The facilities are:
1. NRIs can be Joint Holders in Resident’s SB/EEFC/RFC Accounts
Individual residents in India are now permitted to include non-resident close relative(s) as joint holder(s) in their resident bank accounts, namely, savings(SB), Exporter Earners’ Foreign Currency (EEFC) and Residents’ Foreign Currency (RFC) accounts, on ‘former or survivor’ basis.
2. Residents can be Joint Holders in NRE/FCNR Accounts
Non-Resident Indians (NRIs)/ Person of Indian Origin (PIO) , are now permitted to open Non-Resident (External) (NRE) Rupee Account Scheme/Foreign Currency (Non-Resident) (FCNR) Account (Banks) Scheme with their resident close relative(s) as joint holder(s) on ‘former or survivor’ basis.
3. Residents can gift Shares/Debentures upto USD 50,000 Value
A person resident in India can now give to a person resident outside India, by way of gift, any security/shares/debentures of value upto USD 50,000 in value per financial year subject to certain conditions. Earlier, a person resident in India could give to a person resident outside India, by way of gift, any security/shares/debentures of value upto USD 25,000 per calendar year.
4. Sale Proceeds of FDIs can be credited to NRE/FCNR (B) Account
Sale proceeds of Foreign Direct Investment (FDI) can be credited to Non-Resident (External) Rupee (NRE) Account Scheme/Foreign Currency (Non-Resident) Account FCNR (Banks) Scheme provided the original acquisition was by way of inward remittance or funds held in their NRE/FCNR (B) accounts.
5. Gifts to NRIs can be credited to NRO Accounts in Rupees
Resident individuals are now permitted to make rupee gifts within the overall limit of USD 200,000 per financial year as permitted under the Liberalised Remittance Scheme (LRS) to an NRI/PIO who is a close relative by way of crossed cheque/electronic transfer to the Non-Resident (Ordinary) Rupee Account (NRO) of the NRI/PIO. 2
6. Loans to NRI Close Relatives can be given in Rupees
Similarly, Resident individuals are now permitted to lend in Rupees within the overall limit under the Liberalised Remittance Scheme of USD 200,000 per financial year to a Non Resident Indian (NRI)/ Person of Indian Origin (PIO) close relative by way of crossed cheque/electronic transfer, subject to certain conditions.
7. Residents can repay the loans given to NRI Close Relatives
Resident individuals are now granted general permission to repay loans availed of in Rupees from banks in India by their NRI close relatives. Earlier, repayment of loans by close relative in respect of Rupee loan availed by NRIs was restricted only to housing loans.
8. Residents can bear Medical Expenses of NRIs
Residents will now be allowed to bear the medical expenses of visiting NRIs/PIOs close relatives. Earlier, residents were allowed to make payment in rupees towards meeting expenses on account of boarding, lodging and services related to it or travel to and from and within India of a person resident outside India and who is on a visit to India.

Press Release : 2011-2012/455

External Commercial Borrowings – Simplification of Procedure

RBI/2011 -12/169
A. P. (DIR Series) Circular No. 11 September 07, 2011
To All Category – I Authorised Dealer Banks

Madam / Sir,

External Commercial Borrowings – Simplification of Procedure

Attention of Authorized Dealer Category-I (AD Category-I) banks is invited to the Foreign Exchange Management (Borrowing or lending in foreign exchange) Regulations, 2000, notified vide Notification No. FEMA 3/2000-RB dated May 3, 2000, amended from time to time and the A.P. (DIR Series) Circular No. 5 dated August 1, 2005, amended from time to time relating to the External Commercial Borrowings (ECB).

2. As per the extant ECB procedures, any request for change of the lender for an existing ECB is required to be referred by the Authorised Dealer Bank to the Reserve Bank for necessary approval.

3. As a measure of simplification of the existing procedures, it has been decided to delegate powers to the designated AD Category-I banks to approve the request from the ECB borrowers with respect to change in the recognized lender when the original lender is an international bank or a multilateral financial institution (such as IFC, ADB, CDC, etc.) or a regional financial institution or a Government owned development financial institution or an export credit agency or supplier of equipment and the new lender also belongs to any one of the above mentioned categories, subject to the Authorised Dealer ensuring the following conditions:-
(i) the new lender is a recognized lender as per the extant ECB norms;
(ii) there is no change in the other terms and conditions of the ECB; and
(iii) the ECB is in compliance with the extant guidelines.

4. However, changes in the recognized lender in case of foreign equity holder and foreign collaborator will continue to be examined by the Reserve Bank.

5. The changes in the recognized lender should be promptly reported to the Department of Statistics and Information Management, Reserve Bank of India in Form 83.

6. The above modifications to the ECB guidelines will come into force with immediate effect. All other aspects of the ECB policy, such as, USD 500 million limit per company per financial year under the automatic route, eligible borrower, end-use, all-in-cost ceiling, average maturity period, prepayment, refinancing of existing ECB and reporting arrangements shall remain unchanged.

7. AD Category -I banks may bring the contents of this circular to the notice of their constituents and customers concerned.
8. The directions contained in this circular have been issued under sections 10 (4) and 11 (1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.


Yours faithfully,
(Rashmi Fauzdar)
Chief General Manager

Process of incorporation of Companies and establishment of principal place of business in India by Foreign Companies – Procedure simplified

The Ministry has got the issue examined by Business Process Re-engineering Group under MCA-21 and in order to speed up and simplify the process of incorporation of Companies and establishment of principal place of business in India by Foreign Companies for reduction in time taken by Registrar of Companies, the below mentioned procedure have been recommended :

1.Only Form-1 shall be approved by the RoC Office. Form 18 and 32 shall be processed by the system online.

2.There shall be one more category, i.e., Incorporation Forms ( Form 1A, Form 37, 39, 44 and 68) which will have the highest priority for approval.

3.Average time taken for incorporation of company should be reduced to one (1) day only.

4.A Notification to notify minor changes in e-forms 18 and 32 to enable them to be taken on record through STP mode for aforesaid procedure is being issued separately.



Announcement of New USA Branch of MRC

We are delighted to inform you that Mukesh Raj & Co. (MRC) has inagurated its first foreign branch office at New Jersey, United States Of America. The new foreign office address is:

MRC (Chartered Accountants) 85, Forest Drive, Apartment C Springfield,

New Jersey – 07081, United States of America (USA)

We would concentrate to provide services in relation to US taxation and Accounting. We would be happy to assist you and your team members to provide our professional and IRS services from our USA office.

Warm Regards MRC Team

No Objection Certificate for conversion of Investment Company into LLP

The Limited Liability Partnership Act, 2008 (herein after called “Act”) has brought a new kind of business vehicle in the Country called LLP, allowing small business and entities to carry on business under a flexible business model. The Act is silent about Dividend Distribution Tax, Minimum Alternative Tax, allowing number of corporate houses to escape tax by converting their investment and holding companies (herein after called “Investment Company”) into LLP, which are spared of above mentioned tax incidence, resulting to pay higher payout as dividend to their promoters.
Further, at the time of conversion of Investment Company into LLP, Registrar of Companies ask for a “No Objection Certificate” form the Central Bank of India since the porposed LLP wold be dealing with investment activities. However, Reserve Bank of India is not willing to give NOC for the reason as these Investment Company would be out of the perview of supervision of RBI.
Adding to this, there is a need to amend the exixting Act in line with the requrirement of RBI. The Officials of RBI are in talk with Ministry of Corporate Affairs to arrive at a workable solution.

Department of Industrial Policy and Promotion (DIPP)discussion paper on Compulsory Licencing of Patents

The Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce and Industry, Government of India, has kick off the issue of compulsory licencing, in a direction of ramifications of policies. In a move to curb excessive monopolistic prices of medicines, DIPP has threw open a draft discussion paper on Compulsory Licencing of Patents.
This seems to be a magnificent tool to curb/ regulate such practices and to make sure the availability of medicines at a competitive prices.
Compulsory Licencing:
The Compulsory Licencing is noting but a Government order to patentee, compelling him to licence his patents to third party on certain terms and conditions. The third party is supposed to pay a royalty for using his patent. The Patent Act provides that a third party can apply for a Compulsory Licence, subject to certain grounds, after a period of three (3) years from the grant of patent to patanee.
It is to be noted that below are the grounds on which third party can apply for Compulsory Licencing:
  1. The prices of the products are excessive;
  2. The products are not suitably quantified to the general public;
  3. The products are not worked in the country; and
  4. The products are not manufactured in the country.
It is of worth noting that number of pharmaceutical patents have been granted since 2006 by the Indian Patent Office and despite of efflux of four (4) years, no Compulsory Licence has been issued so far.
By opening this issue to the public discussion, the DIPP seeks to unearth the cause of this situation.
Curtsy: Gaurav Garg (Company Secretary)


Section 195 of the Income-tax Act, 1961 mandates deduction of income-tax from payments made or credit given to non-residents at the rates in force. The person making the remittance to a non-resident needs to furnish an undertaking (in Form 15CA) accompanied by a Chartered Accountants Certificate in Form 15CB. The purpose of the undertaking and the certificate is to collect taxes at the stage when the remittance is made as it may not be possible to recover the tax at a later stage from non-residents.

What is Form 15CA?

Form 15CA is an undertaking by the remitter furnished in an electronic mode at the website of the Tax Information Network (http://www.tin-nsdl.com) giving details of the proposed remittance and tax deducted at source in accordance with the provisions of section 195(6) of the Income-tax Act, 1961.
This information should be furnished after obtaining a Certificate in Form 15CB from a Chartered Accountant. The print out of the Form 15CA (furnished online) should be signed by authorized signatory and submitted to the bank prior to remitting the payment along with certificate of a Chartered Accountant in duplicate in Form 15CB.
The fields marked with (*) are mandatory. Select the values from the drop down wherever provided. Each transaction detail should be filled in separately.

Guidelines in filling up form 15CA

The following guidelines may be kept in mind while furnishing Form 15CA

Remitter :

  • Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) allotted by the Income Tax Department should be mentioned. TAN is mandatory in cases where-

– tax has been deducted or will be deducted at source;

– the remitter has obtained an order under section 195(2) of the Income-tax Act from the Assessing Officer.

  • In case an invalid PAN and/or TAN is filled in by the remitter, the Form will not be generated.
  • In case the remitter does not have a TAN, it is mandatory to quote PAN of the remitter.
  • PAN of the remitter should invariably be given. However, the same is mandatory if status of entity is Company or Firm. If PAN is not given in such cases, the remitter will not be allowed to generate the Form.
  • Details in at least two address fields for remitter should be mentioned.
  • Name of the entity should be mentioned in the “Name of remitter” field.
  • No value is to be provided in Area code, AO type, Range code & AO number. The fields will be entered by the system after validating the PAN and/or TAN.
  • Email id and mobile no., if any, should be provided.

Recipient of remittance:

  • Complete address of recipient of remittance, separated by coma, should be provided.
  • PAN, allotted by the Indian Income Tax Department should be mentioned.
  • If status of entity is “company”, then provide type of company i.e., “domestic” or “other than domestic”.
  • In the field “Principal Place of Business”, the country of tax residence of the recipient of the remittance should be mentioned.

Information for accountant :

  • Enter name of the Chartered Accountant in the field “Name of the accountant”.
  • Details in at least two address fields should be mentioned.
  • Date of certificate should not be a future date.
  • Registration no. should be numeric.
  • Details of accountant are not required if point no.15 is selected i.e. any order u/s 195(2)/ 195(3)/ 197 of the Income-tax Act has been obtained from Assessing Officer.
  • Certificate number is an alphanumeric field.

Guidelines for Part B of the Form 15CA (Particulars of remittance and TDS) :

  • Provide the values as per the accountant certificate obtained in Form 15CB.
  • In case name of the country is not available in drop down list, select value “other” from the drop down and provide name of the country.
  • In case currency name is not available in drop down then select value ”other” from the drop down and provide name of the currency.
  • Proposed date of remittance should be current date or a future date.
  • Amount of TDS should be less than amount of remittance.
  • Actual amount of remittance after TDS should be less than amount of remittance.
  • BSR code of the bank through which the remittance is made should be mentioned.
  • Rate of TDS as per DTAA (if applicable) should be mentioned upto two decimal places.
  • Amount should be mentioned upto 2 decimal places.
  • Select any one out of fields 12, 13, 14 and 16. One form is to be filled for one type of remittance.
  • Details of “responsible person” should be mentioned for verification.
  • If no tax has been deducted then value “0.00” should be mentioned in “Amount of TDS” field (foreign currency and Indian Rupees.)
  • Value for “rate of deduction as per the Income-tax Act” should be “0.00” if no tax has been deducted and “amount of TDS in Indian and foreign currency” should be “0.00”.

Generation of Form 15CA :

  • After filling up the information, click “submit”. On submission of details if system shows any errors, rectify and re-submit the form.
  • A confirmation screen with all the data filled by the user will be displayed. The same can be either confirmed or edited.
  • On confirmation, a filled up Form 15CA with an acknowledgement number will be displayed. Print out of the Form should be taken, signed and submitted prior to remitting the payment.
  • Form 15CA can be re-printed by selecting the re-print option. For re-printing, please enter “acknowledgement no.”, “PAN” and/or “TAN” mentioned in the Form.

What is 15CB?

  • The person making the payment (remitter) needs to obtain a certificate from a Chartered Accountant in Form 15CB. The format of Form 15CB has been prescribed by Central Board of Direct Taxes (CBDT).

Common discrepancies noted while submitting Form 15CA and 15CB to the bank :

These are some of the common errors that could be avoided to ensure proper submission of these forms to the bank prior to making the remittance.

  • Form 15CA and/or 15CB is not provided prior to the proposed remittance.
  • Details stated in Form 15CA/ 15CB do not tally with each other or with the details in the A2 form and/or supporting documents.
  • Form 15CB is unsigned/ un-stamped : Form 15CB has to be signed and stamped by the Chartered Accountant clearly mentioning the registration number and certificate number.
  • Unsigned 15CA : The print out of the undertaking Form (i.e. Form 15CA) should be physically signed by the remitter.

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