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November 2009

A.P. (DIR Series) Circular No. 10, dated 5-10-2009 : Foreign Exchange Management Act, 1999 — Advance remittance for import of services.

By Pinky Shah, Sonalee Godbole, Gaurang Gandhi, Nimesh Dedhia, Vijay Kewalramani
Chartered Accountants
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Given below are the highlights of certain RBI Circulars.

  1. A.P. (DIR Series) Circular No. 10, dated 5-10-2009 :
    Foreign Exchange Management Act, 1999 — Advance remittance for import of
    services.

Presently, the limit for advance remittance for all
permissible current account transactions for import of services without
obtaining a Bank Guarantee from the foreign supplier is US $ 500,000 or its
equivalent.

This circular clarifies that the said limit of US $ 500,000
or its equivalent is not applicable to Public Sector Companies/Undertakings
and Central/State Government Departments. And the limit for them continues to
be US $ 100,000 or its equivalent. For advance remittance in excess of US $
100,000 or its equivalent prior permission is required to be obtained from the
Ministry of Finance, Government of India.

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