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May 2011

A.P. (DIR Series) Circular No. 48, dated 5-4-2011 — Acquisition of credit/debit card transactions in India by overseas banks — payment for airline tickets.

By Gaurang Gandhi Chartered Accountant
Reading Time 1 mins
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Foreign airline companies are permitted to repatriate the surplus arising from sale of air tickets through their agents in India only after payment of the local expenses and applicable taxes in India. However, in some cases where the payment for the tickets are made by the residents using credit/ debit card, card companies have been providing arrangements to the foreign airlines operating in India to select the country and currency of their choice, in respect of transactions arising from the sale of the air tickets in India in Indian Rupees (INR).

This Circular clarifies that this practice adopted by foreign airlines is not in conformity with the provisions of the Foreign Exchange Management Act, 1999 and foreign airlines are advised to immediately discontinue the same.

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