We are one of the importer of Membranes from USA and sales by High sea sales in India.
We know min. of 2% value should be increased from the purchase price, Kindly clarify us how the HSS invoice to be made, Particularly the conversion of USD into INR. We are usualy invoicing based on the EXIM exchange rate on the date of our invoice ( invoicing date of our supplier @ USA).Is it correct or is there any notification for convrsion of USD to INR.
Kindly clarify.
As per para 2.40 of the Foreign Trade Policy,
All export contracts and invoices shall be denominated either in freely convertible currency or Indian rupees but export proceeds shall be realised in freely convertible currency.
However export proceeds against specific exports may also be realized in rupees provided it is through a freely convertible Vostro account of a non resident bank situated in any country other than a member country of ACU or Nepal or Bhutan.
Additionally, rupee payment through Vostro account must be against payment in free foreign currency by buyer in his non-resident bank account. Free foreign exchange remitted by buyer to his non-resident bank (after deducting the bank service charges) on account of this transaction would be taken as export realization under export promotion schemes of FTP.
Contracts for which payments are received through Asian Clearing Union (ACU)] shall be denominated in ACU Dollar. Central Government may relax provisions of this paragraph in appropriate cases. Export contracts and Invoices can be denominated in Indian rupees against EXIM Bank / Government of India line of credit.
Dear Thiruvallur,
One small correction, 2% value addition in High Sea sales is removed long back, now the transaction price will be the value for HSS.
You can refer CBEC circulr no 32/2004 dated 11th May 2004 in this context, which clarifed very clearly
CAclubindia
