Jan 23, 2024Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2023
On December 21, 2023, the RBI issued the Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2023 which supersedes the Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2016. Pursuant to these Regulations, the receipt and/or payment of money between a person resident in India from/to a person resident outside India will only be permitted: (i) if such payment / receipt is done in the manner provided under the Foreign Exchange Management Act, 1999 (‘FEMA’) or rules and regulations issued thereunder; (ii) if expressly permitted by RBI; or (iii) if routed through an AD Bank / authorised person (‘AP’) in the manner specified below:
i. For Trade Transactions, receipt/payment for export to/ import from different countries for eligible goods and services will be in the following manner:
(a) Nepal and Bhutan: in INR, provided however, where goods and/or services are being exported from India and the importer in Nepal has been permitted by the Nepal Rashtra Bank to make payment in foreign currency, such receipt may be in foreign currency.
(b) Asian Clearing Union (‘ACU’) Member Countries (apart from Nepal and Bhutan): By way of the ACU mechanism or as per the directions issued by RBI to the AD Banks from time to time.
(c) Countries other than ACU Member countries: In INR or in any foreign currency.
Where the goods are shipped to India by any country falling in point (b) above, but the supplier is a resident of a country other than an ACU member country, the payment will be made in accordance with point (c) above.
ii. For transactions other than Trade Transactions, receipt and payment to/from different countries will be in the following manner:
(a) Nepal and Bhutan: In INR. However, if there is an overseas investment in Bhutan, the payment may be made in foreign currency as well.
(b) Other Countries: In INR or in any foreign currency.
iii. Further, for any current account transaction (apart from trade transactions), between a resident in India and a person resident outside India who is on a visit to India, payments and receipts in India must be in INR.