FEMA: RBI Circular on Non-Resident Guarantees Availed by Persons Resident in India
CA Gaurav Garg
Chairman, NIRC of ICAI [2023-24] I Transfer Pricing I NR Taxation I Income Tax I Chartered Accountant I Student of Vedic Astrology
The Reserve Bank of India (RBI) has identified instances where non-residents issued guarantees, including Standby Letters of Credit and performance guarantees, in favor of Indian residents in violation of FEMA regulations. The RBI has directed AD Category-I banks to ensure that guarantee contracts they process for Indian residents comply with FEMA rules.
It should be noted that a 'guarantee,' being a capital account transaction, is permitted only if specifically allowed by the RBI. Additionally, if a guarantee and its associated charges are not allowed under FEMA regulations, they may also be disallowed under Section 37 of the Income Tax Act, 1961.
Copy of circular attached herewith
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5 个月Here is a video of the Harris administration admitting to using FEMA money on illegal immigrants back in 2022. They continue to lie to the American people! https://www.youtube.com/watch?v=e4Be3muY9-E
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5 个月Such guarantees can not be enforced as the guarantor stays out of Indian jurisdiction. Thanks for sharing knowledge and meaningful information.
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5 个月Very informative