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.
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.
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.
CAclubindia
