FEMA provision with respect to foreign consultants

[Reshma]

Hi,

 

There must be some limitation for payment of consultancy fee to foreign consultants.  And also there must be some conditions for appointment.

 

Please let me know if there is any circular, provision under FEMA with respect to this.

 

Thanks,

 

Reshma

Mysore   

[R V SECKAR]

Hello,

In the RBI Circular “RBI/ 2004/39 A.P. (DIR Series) Circular No. 64 February 4, 2004, which is available in the web link http://72.14.235.104/search?q=cache:Plso0YnjCZUJ:www.personalfn.com/globalInvest/rbi.pdf+remittance+exceeding+USD+100,000&hl=en&ct=clnk&cd=1, in Schedule III(See Rule 5), under paragraph 13 it has been clearly stated that authorised dealers can release the payment as per details given below :

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Remittance exceeding USD 1,000,000 per project, for any consultancy service procured from outside India needs RBI prior approval.

 

Thus as per the above circular, the Authorised dealers are allowed to release 1 million US dollars for any foreign consultancy services and hence it falls under automatic approval of RBI if the remittance does not exceed USD 1 Million.

R.V.Seckar
Pl do visit my blog :http://rvsekar.blogspot.com/

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[Natesh Kalidevapur]

Dear Seckar,

 

Circular says USD 1 Million per project,  from that project comp. need to realise revenue in foreign currency is it so?  or can a comp  spend consultation fee in USD  for generating revenue in INR? any one pl. throw light on this

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Natesh K
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[Reshma]

Thanks a heap Mr.Seckar!  My boss expects me to work like google which I can't.  Jokes apart, good that we have this forum.

 

Reshma

On Thu, Sep 23, 2010 at 3:44 PM, R V SECKAR <rvsek...@gmail.com> wrote:

[Satish Kumar Subudhi]

U need not earn revenue in USD to honour the payment in USD...... u may convert your INR revenue and pay thru authorised dealer

[Natesh Kalidevapur]

my question is can we incur exp(like consultation fee) in USD for generating income in INR

[Satish Kumar Subudhi]

I think on which context this whole conversation is with regard to hiring services of  foreign consultancy and its payment of fees. So you hired and paid in USD as agreed....... of course you can incur exp in USD for generating income in INR.

[R V SECKAR]

Hello,

There is no link between us dollar earning and paying consultant fees in US dollars as long as if it falls within 1 million US dollars.

If you go for RBI approval for paying more than I million USD as consultant fees , then you have to demonstrate that you are earning in US dollars and hence , out of that revenue , you are paying to the consultant for sourcing business or increasing your business etc.

R.V.Seckar

Please do visit my blog : http://rvsekar.blogspot.com/

[R V SECKAR]

Dear Ms Reshma ,

You are welcome.

R.V.Seckar