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July 2011

A.P. (DIR Series) Circular No. 56, dated 29-4- 2011 — Foreign Exchange Management Act, 1999 — Advance remittance for import of goods — Liberalisation.

By Gaurang Gandhi, Chartered Accountant
Reading Time 1 mins
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Presently, banks in India are required to obtain an unconditional, irrevocable stand-by Letter of Credit (LC) or a guarantee from an international bank of repute situated outside India or a guarantee of an AD Category-I bank in India, if a guarantee is issued by them against the counterguarantee of an international bank of repute situated outside India, for an advance remittance exceeding US $ 100,000 or its equivalent.

This Circular has increased this limit of US $ 100,000 to US $ 200,000 or its equivalent, with immediate effect for importers. However, in the case of a Public Sector Company or a Department/ Undertaking of Central/State Governments special permission from the Ministry of Finance, Government of India, for advance remittances exceeding US $ 100,000 or its equivalent where the requirement of bank guarantee is to be specifically waived.

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