Form FC-TRS (FEMA)

[Madhushri Dhoot]

Hello,
Should Form FC-TRS be filed if the consideration for transfer of shares between the resident and NRI is settled in INR?
Since there is no foreign exchange involved, does FEMA become applicable?

Regards,
Madhushri

[R V SECKAR]

Hello,

 

In this case , there is no flow of forex and the shares held by NRI will be treated as non-repatriation benefits basis and hence , no FC-TRS is needed to be filed.

 

Regards

 

R.V.Seckar

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[Madhushri Dhoot]

Form FC TRS has no mention about anything regarding the currency in which transaction takes place.
It merely says that transfer of shares b/w resident and non resident should be filed.
On what basis are you saying that the form need not be filed?

[R V SECKAR]

Hello,

 

The basis on which I am saying is the only  when their is inflow or outflow of forex involved in the transaction.

 

R.V.Seckar

[Anantha Subramanian]

Dear Seckar Sir,

I just now read the FDI Consolidated Policy issued on Oct'2011 and under the below mentioned clause,

7.2.3 Reporting of transfer of shares

Reporting of transfer of shares between residents and non-residents and vice- versa is to be done in Form FC-TRS (Annex 8). The Form FC-TRS should be submitted to the AD Category-I bank, within 60 days from the date of receipt of the amount of consideration. The onus of submission of the Form FC-TRS within the given timeframe would be on the transferor / transferee, resident in India. The AD Category-I bank, would forward the same to its link office. The link office would consolidate the Form FC-TRS and submit a monthly report to the Reserve Bank.

I still believe that unless there is a flow of Foreign Currency, there is no need to file FC-TRS (as the very letters FC Denote Foreign Currency) but by the plain reading of the form contents I presumed that the intention of TRS is to make RBI know the transaction happened between a resident and NRI. Hence kindly give your opinion on whether the currency is of the highest importance.

As I constantly follow your RBI & FEMA updates in this forum also a frequent visitor of your blog, your comments on the above would be of much help.

Regards
Ananth

[R V SECKAR]

Dear Mr.Anantha Subramanian.

 

Thanks.

 

The issue is very simple.

 

If the NRI transfers from his NRE account and wants to have the shares under repatriation scheme , then form FC-TRS is necessary .( where the transaction between resident and a NRI).

 

If he transfers the funds from his NRO account and wants to have on non-repatriation basis, then there is no need to file FC-TRS.

 

Repatriation benefit is crucial to decide the fact whether to file FC-TRS or not.

 

Regards

[Anantha Subramanian]

Excellent sir thank you.....

Keep on sharing your valuable thoughts on the below topic as its bit tricky no matter how many times we interpret the regulations and procedures.....

Regards
Ananth

[Madhushri Dhoot]

Thank you Sir.

[Narayan S]

Dear Sir,

In what way the concept of repatriation seems to apply between transfer of shares of a Indian Company by one resident individual to a Non-resident individual.

Mostly the above transaction should be of non-repatriation basis only.

Also if the tranfer of shares happen between holding indian company and Subsidiary foreign company, then there are chances of repatriation.

Please advice the concept of repatriation with respect to transfer of shares between 2 individuals.

Regards

S.Narayan

Regards
S.Narayan