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FEMA

garima (accounts head) (30 Points)

25 May 2010

Can a private company make payment to a foreign company for marketing and promotion.what are the regulations under FEMA.

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3 Replies

Rahul Gupta (CA Final Student) (1780 Points)
Replied 26 May 2010

Hi Garima!!!

As per Section 5, Any person may sell or draw foreign exchange to or from an authorised person if such a sale or drawal is a current account transaction. However, the central government in the public interest & in consultation with RBI may impose such reasonable restrictions as may be prescribed.

Current account transaction means a transaction which is not a capital transaction & includes -

1) Payment due in connection with foreign trade, other current business, services & short term banking & credit facilities in ordinary course of business.

2) Payment due as interest on loans & as net income from Investments.

3) Remittances for living expenses of parents, spouse and children residing abroad &

4) expenses in connection with foreign travel, education and medical care of parents, spouse and children;

Paymen to foreign company for marketing & promotion is made in connetion with business. Hence it falls under the current account transactions. Hence it is freely permissible under FEMA.

NOTE: The Answer is as per my understanding of the section. Please correct me if i am wrong.

Regards

Rahul Gupta

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garima (accounts head) (30 Points)
Replied 26 May 2010

rahul, there are certain transactions for which we require RBI approval.i think it includes a point regarding advertisement and promotion.can you please tell me about that transaction.

Rahul Gupta (CA Final Student) (1780 Points)
Replied 27 May 2010

Hi !!

Are you talking about Advertisement in foreign print media for the purpose other than promotion of tourism etc. I think its not related to your question.

Further i dint find any provision relating to this in current account transaction rules. Can you please draw my attention towards that point?

Regards

Rahul Gupta