Advance payment in foreign currency

This query is : Open

Querist : Anonymous

Querist : Anonymous (Querist)

26 August 2014 Experts,

One of my clients has made advance payment for import purchase in foreign currency, but later the order has been cancelled and hence the amount becomes refundable.

The seller (foreign party) wants to arrange that refund through one of its concerned party in India, hence the payment is to be received back in Domestic currency (Indian rupees).

Now my question is, is it ok to receive the refund in rupees against the advance paid in foreign currency, or it will create problem from FEMA point of view.

My simple question is, if advance payment is made in foreign currency then refund is also to be taken in foreign currency ?

Please give your opinion on this.

Thanks

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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26 August 2014 As per FEMA point of view it should be taken in foreign currency and through banking channels.

Rupesh Jain

Rupesh Jain (Expert)
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26 August 2014 ITS no problem if you are receiving the payment through banking channels.

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Querist : Anonymous

Querist : Anonymous (Querist)

26 August 2014 Thank you Seetharamanji and Rupeshji.

Payment is to be received through banking channel only, but its to be received in domestic currency...should we go ahead Rupeshji ??

Querist : Anonymous

Querist : Anonymous (Querist)

26 August 2014
Any declaration need to be filed with bank, as the order is cancelled accordingly there will be no bill of entry to be received.