Liberalised Remittance Scheme - Issues and Controversies
BCAS Lecture MeetingMumbai13th November 2019
CA Rutvik Sanghvi
Liberalised Remittance Scheme – Issues and Controversies
CA Rutvik Sanghvi 2
Sr. No. Particulars
1 Overview
2 Liberalised Remittance Scheme
3 LRS for Immovable Property Outside India
4 LRS-ODI by Resident Individuals
5 LRS for Emigration
6 LRS for Other Remittances
7 LRS – Other important points to note
8 Practical & Tax Issues
Overview
FEMA – A Policy Law
FEMA is a policy law
Drafted loosely
Compounded by change in position later in timePrinciples keep changing as individuals keep changing
No Institutional Memory
Multiple notifications and rules can apply to a particular transaction
Inconsistencies between Govt and RBI
Recourse to appellate options limited
CA Rutvik Sanghvi Slide No. 4
What cannot be done directly, cannot be done indirectly
Compliance with FEMA a must
FEMA is now more draconian than FERA
Seizure of assets in IndiaSection 37A newly introduced vide Finance Act, 2015 in FEMA
Provides that if any person holds any foreign exchange, foreign security or any immovable property outside India in contravention of Section 4 of FEMA, the equivalent value of property in India can be seized
No opportunity is to be given to prove that the accused is actually innocent before seizure, only later
Exemption for assets under value of Rs. 1 crore
Can lead to penalty and prosecution
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Liberalised Remittance Scheme
Liberalised Remittance Scheme
LRS brought in as a relief to all Indian Residents to remit money outside India
Brought in partial capital account convertibility by allowing specified capital account transactions up to the LRS limit
Available to all Resident Individuals including minors
Up to USD 250,000 per financial year can be remitted
Introduced on February 4, 2004, with a limit of USD 25,000
Limit has increased over the years but reduced in between due to forex reserve position
All earlier facilities for release of exchange or for remittances for current account transactions under Para 1 of Schedule III are subsumed under the overall limit of USD 250,000 – no separate limits for gifts, donations, etc.
7CA Rutvik Sanghvi
LRS Limit over the years
CA Rutvik Sanghvi 8
25000
50000
100000
200000
75000
125000
250000
25000 50000 100000 200000 75000 125000 250000
Feb-04 Dec-06 May-07 Sep-07 Aug-13 Jun-14 May-15
Lim
it i
n U
SD
Date
Remittances under LRS over the years
CA Rutvik Sanghvi 9
10 25 73441
808 983 1164 1002 1206 1094 1326
4643
8171
11334
13788
0
2000
4000
6000
8000
10000
12000
14000
16000
04-05 05-06 06-07 07-08 08-09 09-10 10-11 11-12 12-13 13-14 14-15 15-16 16-17 17-18 18-19
In U
SD
Mil
lio
ns
Financial Year
How it operates
Section 4 of FEMA: Blanket prohibition: No person resident in India shall acquire, hold, own, possess or
transfer any foreign exchange, foreign security or any immovable property situatedoutside India
Section 5 of FEMA: Any person may sell or draw foreign exchange to or from an authorised person if such
sale or drawal is a current account transaction: Provided that Central Government may, in public interest and in consultation with RBI, impose
such reasonable restrictions for current account transactions as may be prescribed
FEM(Current Account Transaction) Rules, 2000
Section 6 of FEMA: Section 6(1) - Any person may sell or draw forex for a capital account transaction
subject to Sections 6(2) and 6(3) gave powers to RBI to prescribe, regulate, prohibit or restrict
transactions Section 6(3) deleted post Finance Act 2015 Notifications now issued by Government First such notification issued in 2019 – RBI regulating in legal vacuum between 2015 and 2019
Legislated by Ministry of Finance, Regulated by RBI & Enforced by ED
CA Rutvik Sanghvi 10
Difference between Current and Capital Account Transactions
Capital Account transaction means a transaction which alters Assets or liabilities including contingent liabilities outside India for
persons resident in India Assets of liabilities in India of persons resident outside India
Transactions other than Capital Account transactions are Current Account Transactions
Current Account transactions freely allowed unless restrictedCapital Account transactions prohibited unless specifically
allowed
Distinction to be viewed from the perspective of India’s Current Account position Accounting terminology not to be used
Not exactly classified as revenue and capital in nature
Will the transaction have a lasting impact on India’s foreign assets and liabilities position internationally or get squared off?
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Difference between Current and Capital Account Transactions
Current Account
• Machinery imported by Resident on normal credit terms
• Payment of Guarantee Fee to non-resident
• House rental payments
• Gold imported into India
• Interest payments
Capital Account
• Machinery imported on instalment basis or EMI
• Guarantee provided by a Resident outside India
• Purchase of foreign Immovable property
• Gold purchased and kept in locker abroad
• Loans taken abroad
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Illustrations:
Pre-LRS position
Current Account Transactions (CAT) Rules under Schedule I prohibited and Schedule II allowed only with prior approval of Government
Current Account Transactions under Schedule III allowed only with Government Permission
Other than above transactions, no restriction or limit on any Current Account Transaction
CAT Rules sought to provide restrictions on only certain transactions
All Capital Account transactions restricted
Allowed only as specified under Notifications issued by RBI under Section 6 of FEMA, now by Government directly
LRS sought to provide relief from these restrictions up to LRS Limit
Both restrictions on Current Account Transactions and relief for Capital Account Transactions covered under LRS Leads to confusion
CA Rutvik Sanghvi 13
Liberalised Remittance Scheme – Flip Flop Policy
LRS when introduced was with clear objective to allow Resident Individuals to remit funds within LRS limit for “any purpose”:
For any Current Account Transaction; or
For any Capital Account Transaction; or
For a combination of both!
Funds up to the limit would be partial capital account convertibilityCan be used to purchase any asset outside India without approval of RBI
Limit of LRS was in addition to limit under Schedule III
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Liberalised Remittance Scheme – Flip Flop Policy
Famous Quotes:
RBI Deputy Governor: “We are flush with funds. Use LRS for any purpose – you can as well throw the remitted funds from the Alps.” In 2004 forex reserves were around USD 100 Billion
RBI Governor Dr. Y V Reddy in his book “Advice & Dissent” quotes Mr. Jaswant Singh, then FM:
“Go and conquer the world, we will be your supporters.”
“This is a no-questions asked window and was in addition to all the existing facilities.”
The oppressive forex regime that had haunted individuals in India since 1957 was put to an end on 19 February 2004”
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Liberalised Remittance Scheme – Flip Flop Policy
Drastic change in position brought in from May 2007
LRS can be used to remit for any ‘permissible’ current or capital account transaction or a combination of both No guidance on what is ‘permissible’ transaction in 2007
Paradoxical situation as LRS was introduced to allow transactions which required prior approval!
Permissible capital account transactions under LRS specified only in 2015 as: Opening of foreign currency account abroad with a bank;
Purchase of property abroad;
Making investments abroad;
Setting up Wholly owned subsidiaries and Joint Ventures abroad;
Extending loans including loans in Indian Rupees to Non-resident Indians (NRIs) who are relatives as defined in Companies Act, 2013.
CA Rutvik Sanghvi 16
Liberalised Remittance Scheme - Prohibitions
Capital account remittances, directly or indirectly, to countries identified by the Financial Action Task Force (FATF) as “noncooperative countries and territories”, from time to time.North Korea and Iran
For remittances directly or indirectly to those individuals and entities identified as posing significant risk of committing acts of terrorism
For remittance from India for margins or margin calls to overseas exchanges / overseas counterparty
Remittances for purchase of FCCBs issued by Indian companies in the overseas secondary market.
Remittance for trading in foreign exchange abroad
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LRS for Immovable Property outside India
Immovable Property Outside India - LRS
Resident individual can send remittances under the Liberalised Remittance Scheme for purchasing IP outside India
Such IP can be:Leased
Sold
Funds from lease and sale can be retained outside India
Funds retained can be reinvested
Multiple LRS remittances can be clubbed for purchase ofhigh value IPOne individual can remit USD 250,000 in foreign bank account over
multiple years until sufficient funds are collected
CA Rutvik Sanghvi Slide No. 19
Case Study 1 – Investment in immovable property abroad under LRS
Facts:
Adani Family intends to purchase immovable property in UAE
Property investment is of USD 1 Million
Issues:
Can multiple family members invest together?
CA Rutvik Sanghvi Slide No. 20
UAE
India
House Property
Adani Family
Adani Family
Adani Family
Adani Family
Case Study 1 – Investment in immovable property abroad under LRS
Adani Family can jointly purchase property – 4 family members can remit funds of USD 250,000 to invest 1M USDProperty has to be in joint
name
Ownership needs to be in proportion to investment made
Family Members covered
No definition for family members
CA Rutvik Sanghvi Slide No. 21
UAE
India
House Property
Adani Family
Adani Family
Adani Family
Adani Family
Case Study 2 – Investment in immovable property abroad under LRS
Facts:
Mr. Ambani intends to purchase immovable property in UAE
Property investment is of USD 1 Million
Issues:
Can property be purchased on instalment basis?
Can property be purchased under EMI or mortgage loan?
CA Rutvik Sanghvi Slide No. 22
UAE
India
House Property
Mr. Ambani
Case Study 2 – Investment in immovable property abroad under LRS
Instalments:Financial commitment
cannot be over and above LRS limit
Even AP Circular 32 dated 4.9.2013 allowed payment in instalments within LRS only for pre-existing contracts as of 14.8.2013 No such relaxation now
Loans:Remittance under LRS
cannot be out of borrowed funds in India
Individuals cannot enter into a loan agreement overseas
CA Rutvik Sanghvi Slide No. 23
UAE
India
House Property
Mr. Ambani
Case Study 3 – Investment in immovable property abroad under LRS through company
Facts:
Mr. A, Mr. B and Mr. C incorporate a Co. in UAE through LRS
ABC Co. purchases immovable property in UAE
Issues:
Can property be purchased through company under LRS?
CA Rutvik Sanghvi Slide No. 24
UAE
India
House Property
Mr. BMr. A Mr. C
ABC Co.
Case Study 3 – Investment in immovable property abroad under LRS through company
Topsy-turvy history Investment in Company allowed freely
under LRS when it was introduced LRS limit could be used for any current or
capital account transaction However, RBI changed its view Investment after 5.8.2013 was not
permitted in a Company which does nothave operating business
Investment before that was also subject to compounding. RBI has taken an adverse view and advises to:
Wind up, bring back proceeds and go forcompounding.
This is because even today, holding IPthrough a foreign entity is not permitted.
If investment was before 8.5.2007, whenword “permissible” was inserted, RBImay permit to hold?
However, even prior to 5.8.2013, debt by foreign co. was not permitted.
CA Rutvik Sanghvi Slide No. 25
UAE
India
House Property
Mr. BMr. A Mr. C
ABC Co.
Immovable Property Outside India - LRS
Points to note:
Remittance to non-cooperative countries listed by FATF not allowed under LRS
LRS limits can be lowered by RBI – has been done before
A Resident can acquire property purchased through LRS by inheritance or giftCan retain such IP abroad from 21.1.2016 as per Notf. 7(R), Reg.
5(2)
However, on sale of such property, funds will have to be brought back to India
Incomes earned on such property will also have to be brought back to India
CA Rutvik Sanghvi Slide No. 26
LRS-ODI by Resident Individuals
Overseas Investment Routes
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Overseas Investments
Resident Individuals
LRS-ODI For Overseas
Business
PortfolioFor Overseas Investment
Indian Company, LLP, Firm
Direct Investment
Automatic
Approval
Other investment
Branch overseas
CA Rutvik Sanghvi
LRS-ODI by Resident Individuals
Resident Individuals allowed to invest in shares – both listed and unlisted since 2004
Suddenly FAQs of 17th September 2010 stated for first time that LRS cannot be used to setup company abroadPoint (v) in reply to Q. 3 of the FAQ
FAQ is not law
Master Circulars of 2011 and 2012 still stated that investment can be made in shares (listed or otherwise)
RBI issued notification to allow JV/WOS outside India under LRS-ODI from 5th August 2013 Incomplete resolution of arbitrary change in LRS Scheme
Notification No. FEMA. 263/RB-2013
CA Rutvik Sanghvi 29
LRS-ODI by Resident Individuals – Restrictions
Investment limited to LRS limit - USD 2,50,000 per Financial Year Includes investment from balances in EEFC and RFC Accounts
Investment can be made singly or in association with other Resident Individuals or with Indian Party
Only for bonafide business outside India
Prohibited to invest in a JV / WOS which is engaged in Real estate business; or
Banking business; or
Financial services activity
Investment only in equity or compulsorily convertible preference shares
CA Rutvik Sanghvi 30
LRS-ODI by Resident Individuals – Restrictions
Investment only in operating entity
Hence, no step-down subsidiary is allowed Effectively no SPV can be created
No guarantees allowed
No pledge of shares allowed
No non-cash remittances allowed
Charge on domestic or foreign assets not allowed
Write-offs not allowed
Investment needs to be through banking route Use of credit cards or cash withdrawals to open companies outside
a violation of FEMA
Gifting of shares by relatives or non-relatives may not strictly fall within RBI intent – better to go through LRS-ODI RouteWhat cannot be done directly, cannot be done indirectly
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LRS-ODI by Resident Individuals – Restrictions
Valuation to be done as prescribed
Cannot invest in countries identified as “non-cooperative countries and territories” by FATFNorth Korea & Iran
Resident individual should not be on Reserve Bank's Exporters Caution List or List of defaulters to the banking system or under investigation by any investigation/enforcement agency or regulatory body
CA Rutvik Sanghvi 32
LRS-ODI by Resident Individuals – Reporting & Disinvestment
Duly completed Part I of the Form ODI to be filed within 30 days of remittance
APR Form to be filed annually FLA not required
Alteration in shareholding pattern to be reported within 30 days
Disinvestment allowed only after one year from the date of first remittance
Disinvestment proceeds to be repatriated to India immediately and in any case not later than 60 days
No write off shall be allowed Disinvestment may be reported by the designated AD to the Reserve
Bank in Part IV of Form ODI within 30 days of receipt of proceeds
What happens in case of change of residence? No clarity in law Technically investment covered under FEMA, thought investor is not
CA Rutvik Sanghvi 33
Case study 4 – JV vs. Portfolio investment
Facts:
Indian Resident, Mr. A, proposes to invest in PQR Inc., USA
Mr. A intends to acquire 5% stake in PQR Inc.
Issues:
Is Mr. A’s investment under ODI Route?
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USA
India
PQR Inc.
Mr. A
XYZ Inc.
5%
95%
CA Rutvik Sanghvi
Case study 4 – JV vs. Portfolio investment
Decision depends on intention and conduct of Indian Party
ODI is with objective of establishing a lasting interest in the overseas entity
ODI entails significant degree of influence in the management of JV/WOS
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USA
India
PQR Inc.
Mr. A
XYZ Inc.
5%
95%
CA Rutvik Sanghvi
Case Study 5 – Investment Business
Facts:
Mr. S proposes to invest in T Inc., USA
T Inc. will invest in various listed securities in USA
No funds will be invited from outsiders, either by Mr. S or T Inc.
Issues:
Is Mr. S’s investment allowed under ODI Route?
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USA
India
T Inc.
Mr. S
<1%
Shares of Listed Cos.
CA Rutvik Sanghvi
Case Study 5 – Investment Business
Issues:
Financial Services Sector not defined under Notfn. 120
Mr. S is undertaking NBFC activityCannot be done except by
an NBFC
Even if done by an NBFC, T Inc. needs to comply with Regn. 7
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USA
India
T Inc.
Mr. S
<1%
Shares of Listed Cos.
CA Rutvik Sanghvi
Investment in Financial Services Sector
Regn. 7: Indian Party (IP) can make investment in JV/WOS in Financial Services Sector only if:
It is registered with regulatory authority in India for conducting financial services (FS) activities
It has obtained prior approval from regulators in India and abroad
It has earned net profit during the last 3 FYs
It has fulfilled prudential norms for capital adequacy as prescribed by the regulatory authorities
Regulation applies even to JV/WOS and its step-down subsidiary
Investment or Financial activities may lead to FS regulations
Regulator’s (RBI-NBD, SEBI, IRDA, etc.) permission may be required before opening up of overseas entity
“Financial Services Sector” not defined under ODI
Banks following MD on Financial Services provided by Banks
Investment in Securities covered under definition of Financial Services38CA Rutvik Sanghvi
Case Study 6 - Round Tripping
Round Tripping not defined -refers to overseas investment by Indian resident which results in investment back into India
Can be in various forms:By sending funds abroad which
are used to invest back in India
Indian Resident controlling or owning JV/WOS which invests in India
Harmful practice if undertaken to evade tax
CA Rutvik Sanghvi 39
Outside India
India
PQR Inc.
B Co.Indian
Resident
Round Tripping
Nothing stated in FEMA prohibiting Round Tripping
However, not allowed in practice without prior RBI ApprovalReason provided – not “bonafide business”
Approval provided by RBI in genuine cases for commercial and / or business reasonsTax not considered as commercial reason
Joint Venture with foreign partner in business requiring Round tripped structure can get an approval
Other laws:GAAR provisions under Income-tax Act, 1961 provide that an
arrangement shall be deemed to lack commercial substance if it involves round trip financing
Revised SEBI Guidelines for Offshore Derivative Instruments make stringent rules for Offshore Derivative InstrumentsCA Rutvik Sanghvi 40
LRS for Emigration
Case Study 8 - Emigrating individuals
CA Rutvik Sanghvi Slide No. 42
India
Outside India
Mr. Modi wants to settle in USA using a US EB5 VISA.
Issues:Obligations of US EB5 VISA
Remittance under LRS
Where can the remittance be used?
Analysis of Case Study 8 – Emigrating Individuals
General LRS for $250,000 available only for incidental expenses for
emigration, not for investment under Visa Programme
Master Direction 7 – Liberalised Remittance Scheme – Regulation 7(d)
Person going on an US EB5 Visa
Needs to make investment in local company in USA to do local business which
employs a minimum of 10 employees; or
Invest in units of a Regional Center which in turn invests in permitted
businesses
Minimum investment required of $ 500,000 ($900,000 from 21.11.2019)
Individual allowed to remit only $ 250,000 under LRS
Joint investment made with family members needs to be in joint names
Letters issued by Regional Center in both names, while investment is recorded
in individual name!
For incorporating a new Co., need to send funds under LRS-ODI
Real Estate business not allowed under ODI Route
CA Rutvik Sanghvi Slide No. 43
Analysis of Case Study 8 – Emigrating Individuals
Things to take care:
Not an easy route, many cases of rejections
Watch out for changes in regulations
Thorough check of Agents required
Beware of frauds in USA
CA Rutvik Sanghvi 44
LRS for Other Remittances
LRS - Other “Current” Account Remittances
LRS specifies “permissible” current account transactions (i) Private visits to any country (except Nepal and Bhutan).
(ii) Gift or donation.
(iii) Going abroad for employment.
(v) Maintenance of close relatives abroad.
(vi) Travel for business or attending a conference or specialised training; or for meeting expenses for meeting medical expenses, or check-up abroad; or for accompanying as attendant to a patient going abroad for medical treatment/ check-up.
(vii) Expenses in connection with medical treatment abroad.
(viii) Studies abroad.
(ix) Any other current account transaction
Other current account transactions not allowed??
Import payments??
CA Rutvik Sanghvi 46
LRS - Other “Current” Account Remittances
Prior Approval needed from RBI for remittance beyond LRS limit for specified current account transactions
Possible if circumstances warrant need for enhanced remittance
Approval not required for Emigration, Medical Treatment and Studies abroad
Can be supported by self-declaration
Banks might ask for more documentation
Limits for Gifts and Donations subsumed under LRS limit
Gift of funds by one resident to another resident outside India not allowed
Any gift made to a resident outside India needs to be brought back to India
Shares allowed to be retained abroad
Intention is to cover portfolio shares
CA Rutvik Sanghvi 47
LRS - Other “Capital” Account Transactions
Opening of foreign currency account abroad with a bank;
Making investments abroad- acquisition and holding shares of both listed and unlisted overseas company or debt instruments;
Acquisition of qualification shares of an overseas company for holding the post of Director;
Acquisition of shares of a foreign company towards professional services rendered or in lieu of Director’s remuneration;
Investment in units of Mutual Funds, Venture Capital Funds, unrated debt securities, promissory notes;
Extending loans including loans in Indian Rupees to Non-resident Indians (NRIs) who are relatives as defined in Companies Act, 2013.
CA Rutvik Sanghvi 48
LRS - Other “Capital” Account Transactions
Capital Account transaction India other than those specifically permitted not allowed: Asset purchase outside India unless brought into India
Gold
Art
Long-term lease tantamount to purchase of asset also covered
Guarantees
CA Rutvik Sanghvi 49
LRS – Other important points to note
Remittance of Assets and incomes thereon
Can assets be kept outside India? Yes
What about inheritance of LRS assets?
Immovable property purchased under LRS need not be brought back on inheritance
What about change of residence of remitter from R to NR?
Does income have to be remitted back to India? Income and sum remitted need not be brought back into India
and can be reinvested overseas
Income from inherited LRS assets to be brought back into India
CA Rutvik Sanghvi 51
Remittance for Current Account Transactions - Exemptions
Use of International Credit Cards Payments made through ICC without any limits by RBI Only limit would be the credit limit available against the card Exemption pre-dates even LRS
AP (DIR Series) Circular No.53 dated June 27 2002; and RBI Press Release dated January 30 2003.
ICC can be from card issuers in India ICC can be used for payments on internet
Debit and ATM Cards can also be used for any purpose for which foreign exchange drawals can be made
EEFC account & RFC account In general transactions under Schedules II & III can be made
without prior approvals by remitted out of funds held in these accounts
CA Rutvik Sanghvi 52
LRS – For Entities Other than Individuals
Entities other than individuals covered under LRS?4th Proviso to sub-rule 1 of Schedule III to CAT Rules states that
a person other than individual can also avail of LRS
Conflict with sub-rule 2 which mandates prior RBI approval for persons other than individuals for
Certain Donations exceeding specified limits
Commission to Agents abroad exceeding specified limits
Remittances for certain consultancy projects exceeding specified limits
Reimbursement of Pre-incorporation expenses
Goes against general understanding that there is no limit on Current Account Transactions for entities other than Individuals
Unnecessary “relaxation” leading to restriction
CA Rutvik Sanghvi 53
LRS - Compounding
LRS violations can be compounded with RBI Only route to avoid enforcement by ED
Compounding means you are seeking forgiveness
Violations would need to be regularized before they can be compounded Regularisation can be in the form of filing of forms if investment or
transaction is allowed under FEMA at presentFees should be token and violations are technical in nature
Can be compounded even if transaction was not permissible earlier
Regularisation can be in form of “cease & desist” resulting in winding up of structure or sale of investment in cases where transaction is not permissible under FEMAFee can consider actual gains
At the discretion of the Officer
Intention and severity can be determining factors
CA Rutvik Sanghvi 54
Practical and Tax Issues
Practical Issues
Jurisdictional analysis from non-tax perspective:
Automatic issue of Capital without remittance
Hidden Costs
Lack of proper Accounts and Audit
Judicial strength
Political and Economic risks
Tax Havens under scanner – presumption of guilt
Substance Requirements and BEPS/MLI impact
Foreign laws to be adhered to
Succession Planning
CA Rutvik Sanghvi 56
Tax Issues
POEM
Transfer Pricing
Permanent Establishment in case of Overseas Branch
Foreign Tax Credits
Disclosure in Income-tax Return forms
Automatic Exchange of Information
Valuation under sections 56(2)(viia) / 56(2)(x) and 56(2)(viib)
GAAR
CA Rutvik Sanghvi 57
Outbound Structuring from Tax perspective
CA Rutvik Sanghvi 58
Sr. No.
Particulars Company Firm / LLP Individual
1 On receipt of dividend by Indian Party / Resident Individual
15% (Sec. 115BBD)
30%(Sec. 56)
30% (Sec. 56)
2On distribution to shareholders/ partners
Nil (Deduction u/s.
Sec. 115-O)
Nil(Exempt
u/s. 10(2A))NA
3Effective tax rate in hands of promoter/ owner
15% 30% 30%
Benefit of 15% ETR under Co. Route available only if
investment in JV/WOS is more than 50%
Foreign Assets Disclosure
Mandated as part of Income-tax Forms from AY 2012-13
Schedule FA covers:Depository Accounts from FY 2018-19
Custodial Accounts from FY 2018-19
Foreign Equity & Debt Interest in any entity from FY 2018-19
Foreign Cash Value Insurance or Annuity Contract from FY 2018-19
Financial Interest in any Entity
Immovable Property
Any other Capital Asset
Accounts with Signing Authority
Trusts
Any other “income” derived from source outside India not included above and income under the head business or profession
CA Rutvik Sanghvi Slide No. 59
Consequences of non-disclosure under FEMA
No requirements for disclosure under FEMA If investment is in line with FEMA, no consequences even if not
disclosed under Income-tax
If investment made violating FEMA, stringent consequences
FEMA is now more draconian than FERA for foreign assetsProsecution which was absent from FEMA earlier now part of it
again
Seizure of equivalent assets in IndiaSection 37A introduced vide Finance Act, 2015 in FEMA
Already applied by ED in a few cases to seize assets in India
Can lead to penalty and prosecution
Consequences under Black Money Act primary and substantial
CA Rutvik Sanghvi Slide No. 60
Thank You!
Questions?
Acknowledgements: CA Rashmin Sanghvi & CA Naresh Ajwani
www.rashminsanghvi.com
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