Fema

This query is : Resolved

Meera Joisher (Querist)
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20 December 2011 I am Co X & there is another Co. Y in Jersey-UK with a common management.
i.e. Co-X India Company
Co-Y Jersey Company

Y is in the business of tradign buying it's goods from China. X provides offshore handling service to Y.

One day whem X required certain goods from China, it got the same imported & in turn money for the same was paid by Y (as it regularly dealth with that supplier). Now X wants to pay the amount so paid by Y on it's behalf. This involves foreign remmittance. How would FEMA be attracted in this behalf?

Should it be treated as temperory loan from Y to X (two common management companies) which is to be paid?

Can it be adjusted againsts the offshore handling fees received by X from Y?

Or is there any other more beneficial method of tackling the transaction.

rvsekar2000

rvsekar2000 (Expert)
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23 December 2011 Hello,

It cannot be treated as temporary loan as it will fall under ECB and you have to follow ECB guidelines. As per existing guideline , to avail ECB , you have to obtain LRN ( Loan Registration Number) before availing any ECB from RBI through the authorised dealer.

However , you can setoff the export receivables from you against payments for imports made by you.

Please go through the following link to have more details.

http://rvseckarfema.blogspot.com/2011/11/set-off-of-export-receivables-against.html

Regards

R.V.Seckar

Mobile- 09848915177

Pl do visit my blogs :

http://www.rvseckarcompanylaw.blogspot.com/

http://rvseckarfema.blogspot.com/

http://rvseckarindianlaws.blogspot.com

Vishal D Shah

Vishal D Shah (Expert)
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16 January 2012 Agree to Mr seckar.there needs to be amount payable receivable on account of export transaction before hand. Else stringent ecb policy applicable. You can compound this contravention.

Cavishalshah@gmail.com

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