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Is it fema violation?

devendra (company secretary) (59 Points)

10 September 2011

Can Foriegn Company awarded project in India and has opened bank account in Rupees. use the same account for another project awarded by the same client after a gap of 2 years? Please note that first project was awarded to consortium of which this foreign company was member and in case of another project, the contract was awarded to the said foreign company alone?

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12 Replies

CA. Anuj Gupta (Practices in NRI Int.Tax FEMA TP FDI/FIPB & FCRA) (7024 Points)
Replied 10 September 2011

I presume the Foreign company must have opened project Office . If the same account has been used for receiving funds for some other project then definitely there is violation of FEMA Regulations and the matter should be reported to RBI and if RBI asks for compounding then the same may be undertaken. ------------------------------------------------------- Anuj +91-9810106211 femaquery @ gmail.com

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rvsekar2000 (212 Points)
Replied 24 September 2011

Hello,

You can regularise your new project office for new project within 14th October 2011 by applying to RBI separtaely.

Please visit the following link to have more idea on the subject:

https://rvseckarfema.blogspot.com/2011/07/regularisation-of-liaison-offices.html

Regards

R.V.Seckar

Pl do visit my blogs :

https://www.rvseckarcompanylaw.blogspot.com/

https://rvseckarfema.blogspot.com/

https://rvseckarindianlaws.blogspot.com

CA. Anuj Gupta (Practices in NRI Int.Tax FEMA TP FDI/FIPB & FCRA) (7024 Points)
Replied 24 September 2011

Mr. Seckar,

As per my understanding the option is only available to Project offices opened during pre-FEMA period i.e. before 01.06.2000. Please correct me if I am wrong.

Anuj

rvsekar2000 (212 Points)
Replied 26 September 2011

Dear Mr. Anuj,

The circular is very specfic about both the foreign branch offices functioning even before 1999 and after the enactment of 2000 circular also ( functioning without RBI approval) and hence , it offers one time chance to regularise their operations in India.

This is a rare chance and I urge all such branch offices in India to avail this golden oppurtunity .

Regards

R.V.Seckaar

CA. Anuj Gupta (Practices in NRI Int.Tax FEMA TP FDI/FIPB & FCRA) (7024 Points)
Replied 26 September 2011

Mr. Seckaar,

Thanks a lot for your clarification, but after going through the circular, I find that there is only mention of regularization of BO/LO and not PO.

Kindly clarify ewhether Project Offices are also covered in the terms of said circular.

Anuj

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rvsekar2000 (212 Points)
Replied 26 September 2011

Hello,

The query does not specifically state that the query is for project office.

In your reply , you have assumed it as project office.

As per FEMA , 'Project Office' means a place of business to represent the interests of the foreign company executing a project in India but excludes a Liaison Office;

Hence , it is more or less a Branch office.

I have assumed it as branch office .

My intention is to cite the latest circular available on the subejct and not to hurt anyone's feelings.

If the queriest still wants detailed answer. let him approach the ECB department of his regional office and they may help them to sort out the issue and whether this circular can be availed for regularisation or not.

Regards

R.V.Seckar

Pl do visit my blogs :

https://www.rvseckarcompanylaw.blogspot.com/

https://rvseckarfema.blogspot.com/

https://rvseckarindianlaws.blogspot.com assumed it as project office.

CA. Anuj Gupta (Practices in NRI Int.Tax FEMA TP FDI/FIPB & FCRA) (7024 Points)
Replied 26 September 2011

Sir,

There is no question of being hurt, rather I feel privalaged to learn so much from you.

Anuj

devendra (company secretary) (59 Points)
Replied 26 September 2011

My query was whether one bank account opened for one project for which project office was established, can be used for another project for which no separate project office was established under the facts and circumstances mentioned in the query. In other words is it a fema violation to operate/use one bank account for two project awarded by the same client without RBI permission? Please note that the account is rupee account. One more clarification sought for in this matter is whether RBI rely on contractor's Auditors about maintaining proper books of accounts or whether it goes into details?

CA. Anuj Gupta (Practices in NRI Int.Tax FEMA TP FDI/FIPB & FCRA) (7024 Points)
Replied 26 September 2011

If the same account has been used for receiving funds for some other project then definitely there is violation of FEMA Regulations and the matter should be reported to RBI and if RBI asks for compounding then the same may be undertaken.

Anuj

+91-9810106211

femaquery @ gmail.com

jonesmiyh2011 (manager) (25 Points)
Replied 03 October 2011

Mr. jonesmiyh

As per my understanding the option is only available to Project offices opened during pre-FEMA period i.e. before 01.06.2000. Please correct me if I am wrong.