Legal Framework:
Foreign Exchange Management Act, 1999 (FEMA) came into force on 1st June 2000. The legal framework for administration of exchange control (i.e. current account transactions and capital account transactions) in India is provided by the FEMA.
In terms of Section 5 of the FEMA, persons are free to buy or sell foreign exchange for any current account transaction except for those transactions on which the Central Government has imposed restrictions, vide its Notification No.G.S.R.381(E) dated May 3, 2000. All transactions involving foreign exchange have been classified either as Capital or Current Account transactions. All transactions undertaken by a resident that do not alter his assets or liabilities outside India are current account transactions.
Below is the list of permitted current account transactions
- Overseas Education
- Living expense of student studying abroad
- Maintenance of Close Relatives Abroad
- Gift Remittance
- Emigration
- Tour Remittance
- Medical Treatment Abroad
- Participation in Global Conference / Training
- Business Travel Abroad
- Private Visit Abroad
Business travel abroad comes within the ambit of current account transactions and RBI has prescribed few limits on foreign exchange when going abroad from India for business travel.
Under the Liberalised Remittance Scheme, all resident individuals, including minors, are allowed to freely remit up to USD 250,000 per financial year (April – March) for any permissible current or capital account transaction or a combination of both. Further, resident individuals can avail of foreign exchange facility for the purposes mentioned in Para 1 of Schedule III of [Foriegn Exchange Market (FEM) Current Account Transactions (CAT) Amendment Rules 2015](https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=9899#:~:text=20.3%20All%20the%20facilities%20(including,overall%20limit%20of%20USD%20250%2C000.), dated May 26, 2015, within the limit of USD 250,000 only.
Below are the Guidelines on travel related matters:
Who is a resident?
In terms of Section 2(v) of FEMA, 1999, a “person resident in India” means –
a person residing in India for more than one hundred and eighty-two days during the course of the preceding financial year but does not include –
(A) a person who has gone out of India or who stays outside India, in either case -
- for or on taking up employment outside India, or
- for carrying on outside India a business or vocation outside India, or
- for any other purpose, in such circumstances as would indicate his intention to stay outside India for an uncertain period;
(B) a person who has come to or stays in India, in either case, otherwise than –
- for or on taking up employment in India, or
- for carrying on in India a business or vocation in India, or
- for any other purpose, in such circumstances as would indicate his intention to stay in India for an uncertain period;
- any person or body corporate registered or incorporated in India,
- an office, branch or agency in India owned or controlled by a person resident outside India,
- an office, branch or agency outside India owned or controlled by a person resident in India;
From where one can buy foreign exchange?
Foreign exchange can be purchased from any authorised dealer. Besides authorised dealers, full-fledged money changers are also permitted to release exchange for business and private visits.
How much exchange is available for a business trip?
Authorized dealers can release foreign exchange up to USD 25,000 for a business trip to any country other than Nepal and Bhutan. Release of foreign exchange exceeding USD 25,000 for a travel abroad (other than Nepal and Bhutan) for business purposes, irrespective of period of stay, requires prior permission from the Reserve Bank.
What constitutes a business trip?
Visits in connection with attending an international conference, seminar, specialised training, study tour, apprentice training, etc., are treated as business visits. Visit abroad for medical treatment and/or check up also falls within this category.
How much foreign exchange can be purchased in foreign currency notes while buying exchange for travel abroad?
Travellers are allowed to purchase foreign currency notes/coins only up to USD 2000. Balance amount can be taken in the form of traveller’s cheque or banker’s draft. Exceptions to this are (a) travellers proceeding to Iraq and Libya can draw foreign exchange in the form of foreign currency notes and coins not exceeding US$ 5000 or its equivalent; (b) travellers proceeding to the Islamic Republic of Iran, Russian Federation and other Republics of Commonwealth of Independent States can draw entire foreign exchange released in form of foreign currency notes or coins.
How much in advance one can buy foreign exchange for travel abroad?
The foreign exchange acquired for any purpose has to be used within 60 days of purchase. In case it is not possible to use the foreign exchange within the period of 60 days it should be surrendered to an authorised dealer.
Can one pay by cash the full rupee equivalent of foreign exchange being purchased for travel abroad ?
Foreign exchange for travel abroad can be purchased from banks against rupee payment in cash up to Rs.50,000/-. However, if the rupee equivalent exceeds Rs.50,000/-, the entire payment should be made by way of a crossed cheque/banker’s cheque/pay order/demand draft only.
Within what period a traveler who has returned to India is required to surrender foreign exchange?
On return from a foreign trip travellers are required to surrender unspent foreign exchange held in the form of currency notes within 90days and travellers’ cheques within 180 days of return. However, they are free to retain foreign exchange upto USD 2,000, in the form of foreign currency notes or TCs for future use or credit to their RFC(Domestic) Account without any limit.
On return to India can one retain some foreign exchange?
Residents are permitted to hold foreign currency up to USD 2,000 or its equivalent or credit to their RFC(Domestic) Account without any limit provided the foreign exchange was -
- acquired by him while on a visit to any place outside India by way of payment for services not arising from any business in or anything done in India; or
- acquired by him, from any person not resident in India and who is on a visit to India, as honorarium or gift or for services rendered or in settlement of any lawful obligation, or
- acquired by him by way of honorarium or gift while on a visit to any place outside India; or
- acquired by him from an authorised person for travel abroad and represents the unspent amount thereof.
While going abroad how much foreign exchange can a person carry?
Residents are free to carry the foreign exchange purchased from an authorised dealer or money changer in accordance with the Rules. In addition, they can also carry up to USD 2,000, or higher amounts representing the unutilized balance of a previous trip, if already held by them (see item13 above) in accordance with the Regulations.
While going abroad how much foreign exchange, in cash, can a person carry?
Residents are free to carry the foreign exchange purchased from an authorised dealer or money changer in accordance with the Rules. They are, however, allowed to carry foreign exchange in the form of currency notes/coins upto USD 2,000 or its equivalent only. Balance amount can be carried in the form of traveller’s cheque or banker/s draft. (In this connection please see item No.9).
While coming into India how much foreign exchange can be brought in?
A person coming into India from abroad can bring with him foreign exchange without any limit. However, if the aggregate value of the foreign exchange in the form of currency notes, bank notes or travellers cheques brought in exceeds USD 10,000/- or its equivalent and/or the value of foreign currency exceeds USD 5,000/- or its equivalent, it should be declared to the Customs Authorities at the Airport in the Currency Declaration Form (CDF), on arrival in India.
Can remittances be made only in US Dollars?
The remittances can be in any currency equivalent to USD 25,000 in a calendar year.
List of documents required for buying foreign currency for Business Travel Abroad
Required KYC documents;
- Company Incorporation Certificate Copy
- Company PAN Card Copy
- GST Certificate Copy
- Two address-proof Copies (Govt approved – BSNL/Shop Est Certificate/Govt License Copy etc.)
- A letter requesting for releasing foreign exchange in company letterhead with seal (Format prescribed by authorised dealer)
- Passenger’s Passport, Visa & Air Ticket Copy
- Filled A2 Form with company seal (Format prescribed by authorised dealer)
- An ID Proof of authorised official signing the request letter.
Thank you for visiting my blog. If this article has helped you in any way, then like, share or leave a comment.
Disclaimer: The information given on this site is based on my understanding and knowledge on the subject and does not constitute legal opinion or advice to the users. All information is provided in good faith, to create awareness of legal provisions, compliance and procedures and are solely for knowledge sharing purpose. however, we make no representation of any kind, express or implied, regarding the accuracy, adequacy and completeness of any information on site all the time. Hence you are advised to opt for professional advice before acting on the information provided herein.