The Foreign Exchange Management Act, 1999, provides the legal framework for administration of exchange control in India. Under the Act, freedom has been granted for buying and selling of foreign exchange for undertaking current account transactions. However, the Central Government has been vested with powers in consultation with Reserve Bank to impose reasonable restrictions on current account transactions. Accordingly, the Government has issued Notifications GSR.381 (E) dated May 3, 2000, and S.O. 301(E) dated March 30, 2001, imposing certain restrictions on current account transactions in public interest.
These details are available on the Bank’s website besides with the authorized dealers and regional offices of the Foreign Exchange Department. Our experience so far has been that the residents like to get information on several matters relating to various current account transactions and other incidental issues. This pamphlet attempts to answer to all such questions in simple language. While preparing replies to questions, special care has been taken to ensure that the replies are drafted in simple words and reference to technical details are avoided.
The Foreign Exchange Management Act, 1999 (FEMA), has come into force with effect from June 1, 2000. With introduction of the new Act (in place of FERA), certain structural changes have been introduced and now all transactions involving foreign exchange have been classified either as Capital or Current Account transactions. All transactions undertaken by a resident that do not alter his assets or liabilities outside India are current account transactions. In terms of Section 5 of the FEMA, persons are free to buy or sell foreign exchange for any current account transaction except for those transactions on which Central Government has imposed restrictions, vide its Notification No.G.S.R.381 (E) dated May 3, 2000 (as amended from time to time). Full text of the said Notification is available in the Official Gazette. It is also available as annexure to our Master Circular on Miscellaneous remittances available at our website Some of the commonly or frequently asked questions by residents in connection with foreign exchange facilities or restrictions have been answered in the following paragraphs.
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Guidelines on travel related matters
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Who is a resident?
In terms of Section 2(v) of FEMA, 1999, a "person resident in India" means –
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A person residing in India for more than one hundred and eighty-two days during the course of the preceding financial year but does not include –
(A) A person who has gone out of India or who stays outside India, in either case -
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for or on taking up employment outside India, or
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for carrying on outside India a business or vocation outside India, or
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for any other purpose, in such circumstances as would indicate his intention to stay outside India for an uncertain period;
(B) A person who has come to or stays in India, in either case, otherwise than –
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for or on taking up employment in India, or
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for carrying on in India a business or vocation in India, or
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for any other purpose, in such circumstances as would indicate his intention to stay in India for an uncertain period;
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any person or body corporate registered or incorporated in India,
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an office, branch or agency in India owned or controlled by a person resident outside India,
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an office, branch or agency outside India owned or controlled by a person resident in India;
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From where one can buy foreign exchange?
Foreign exchange can be purchased from any authorized dealer. Besides authorized dealers, full-fledged moneychangers are also permitted to release exchange for business and private visits.
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Who is an authorized dealer?
An authorized dealer is normally a bank specifically authorized by the Reserve Bank under Section 10(1) of FEMA, 1999, to deal in foreign exchange or foreign securities.
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How much exchange is available for a business trip?
Authorized dealers can release foreign exchange up to USD 25,000 for a business trip to any country other than Nepal and Bhutan. Release of foreign exchange exceeding USD 25,000 for a travel abroad (other than Nepal and Bhutan) for business purposes, irrespective of period of stay, requires prior permission from Reserve Bank. Visits in connection with attending of an international conference, seminar, specialized training, study tour, apprentice training, etc., are treated as business visits. Visit abroad for medical treatment and/or check up also falls within this category.
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Can one obtain additional foreign exchange for medical treatment outside India?
Authorized dealers may release foreign exchange up to USD 100,000 or its equivalent to resident Indians for medical treatment abroad on self-declaration basis of essential details, without insisting on any estimate from a hospital/doctor in India/abroad.
A person visiting abroad for medical treatment can obtain foreign exchange exceeding the above limit, provided the request is supported by an estimate from a hospital/doctor in India/abroad.
This exchange is to meet the expenses involved in treatment and in addition to the amount referred to in paragraph 1 above.
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How much exchange is available for studies outside India?
Students going abroad for studies are treated as Non-Resident Indians (NRIs) and are eligible for all the facilities available to NRIs under FEMA. In addition, they can receive remittances up to USD 100,000 from close relatives from India on self-declaration, towards maintenance, which could include remittances towards their studies also. Educational and other loans availed of by students as resident in India can be allowed to continue. There is no dilution in the existing remittance facilities to students in regard to their academic pursuits.
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How much foreign exchange can one buy when going for tourism to a country outside India?
In connection with private visits abroad, viz., for tourism purposes, etc., foreign exchange up to USD10, 000, in any one calendar year may be obtained from an authorized dealer. The ceiling of USD10, 000 is applicable in aggregate and foreign exchange may be obtained for one or more than one visit provided the aggregate foreign exchange availed of in one calendar year does not exceed the prescribed ceiling of US$10,000 {The facility was earlier called B.T.Q or F.T.S.}. This limit of USD10, a person along with foreign exchange for travel can avail of 000 abroad for any purpose, including for employment, immigration, or studies. However, no foreign exchange is available for visit to Nepal and/or Bhutan for any purpose.
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How much foreign exchange is available to a person going abroad on employment?
Person going abroad for employment can draw foreign exchange up to USD100, 000 from any authorized dealer in India on the basis of self-declaration.
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How much foreign exchange is available to a person going abroad on emigration?
Person going abroad on emigration can draw foreign exchange up to USD100, 000 on self- declaration basis from an authorized dealer in India. This amount is only to meet the incidental expenses in the country of emigration.
No amount of foreign exchange can be remitted outside India to become eligible or for earning points or credits for immigration. All such remittances require prior permission of the Reserve Bank.
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Is there any purpose for which going abroad requires prior approval from the Reserve Bank or Govt. of India?
Dance troupes, artistes, etc., who wish to undertake cultural tours abroad, should obtain prior approval from the Ministry of Human Resources Development, Government of India, New Delhi.
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How much foreign exchange can be purchased in foreign currency notes while buying exchange for travel abroad?
Travelers are allowed to purchase foreign currency notes/coins only up to USD 2000. Balance amount can be taken in the form of traveler’s check or banker’s draft. Exceptions to this are (a) travelers proceeding to Iraq and Libya can draw foreign exchange in the form of foreign currency notes and coins not exceeding US$ 5000 or its equivalent; (b) travelers proceeding to the Islamic Republic of Iran, Russian Federation and other Republics of Commonwealth of Independent States can draw entire foreign exchange released in form of foreign currency notes or coins.
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Do same Rules apply to persons going for studies abroad?
For the purpose of studies abroad, exchange for maintenance expenses is released in the form of (i) currency notes up to US$ 2,000, (ii) the balance foreign exchange may be taken in form of traveler’s checks or bank draft payable overseas.
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How much in advance one can buy foreign exchange for travel abroad?
The foreign exchange acquired for any purpose has to be used within 60 days of purchase. In case it is not possible to use the foreign exchange within the period of 60 days it should be surrendered to an authorized dealer.
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Can one pay by cash full rupee equivalent of foreign exchange being purchased for travel abroad?
Foreign exchange for travel abroad can be purchased from banks against rupee payment in cash up to Rs.50, 000/-. However, if the rupee equivalent exceeds Rs.50, 000/-, the entire payment should be made by way of a crossed check/banker’s check/pay order/demand draft only.
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Within what period a traveler who has returned to India is required to surrender foreign exchange?
On return from a foreign trip travelers are required to surrender unspent foreign exchange held in the form of currency notes within 90days and travelers’ checks within 180 days of return. However, they are free to retain foreign exchange up to USD 2,000, in the form of foreign currency notes or TCs for future use or credit to their RFC(Domestic) Account without any limit.
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On return to India can one retain some foreign exchange?
Residents are permitted to hold foreign currency up to USD 2,000 or its equivalent or credit to their RFC(Domestic) Account without any limit provided the foreign exchange was -
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acquired by him while on a visit to any place outside India by way of payment for services not arising from any business in or anything done in India; or
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acquired by him, from any person not resident in India and who is on a visit to India, as honorarium or gift or for services rendered or in settlement of any lawful obligation, or
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acquired by him by way of honorarium or gift while on a visit to any place outside India; or
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acquired by him from an authorized person for travel abroad and represents the unspent amount thereof
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While going abroad how much foreign exchange can a person carry?
Residents are free to carry the foreign exchange purchased from an authorized dealer or moneychanger in accordance with the Rules. In addition, they can also carry up to USD 2,000, or higher amounts representing the unutilized balance of a previous trip, if already held by them (see item13 above) in accordance with the Regulations.
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Is one required to follow complete export procedure when a gift parcel is sent outside India?
A person resident in India is free to send (export) any gift article of value not exceeding Rs. 5,00,000 provided export of that item is not prohibited under the extant EXIM Policy.
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How much jewellery one can carry while going abroad?
Taking personal jewellery out of India is governed by Baggage Rules framed under Export-Import Policy by the Government of India. No approval of Reserve Bank is required in this case.
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Can a resident extend local hospitality to a non-resident?
A person resident in India is free to make any payment in Indian Rupees towards meeting expenses on account of boarding, lodging and services related thereto or travel to and from and within India of a person resident outside India who is on a visit to India.
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Can residents purchase air tickets in India for their travel not touching India?
Residents may book their tickets in India for their visit to any third country. That is residents can book their tickets for travel for instance to London/New York through domestic/foreign airlines in India itself
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Liberalized Remittance Scheme of USD 25,000.
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What is the liberalized Remittance Scheme of USD 25,000?
This is a new facility extended to all resident individuals under which they may freely remit up to USD 25,000 per calendar year for any permissible current or capital account transaction or a combination of both.
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Who is eligible to avail of this Liberalized Remittance Facility?
The facility is available to resident individuals only.
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Is there any frequency for the remittance?
Resident individuals can avail of the remittance facility under the Scheme once in a calendar year.
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What are the purpose/s for which remittance can be made under the Scheme?
This facility is available for making remittance/s for any permissible current or capital account transaction or a combination of both. It is not available for purposes specifically prohibited (Schedule I) or regulated by the Government of India (Schedule II) of Foreign Exchange Management (Current Account Transactions) Rules, 2000.
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Can residents avail of this facility for acquiring immovable property and other assets abroad?
Yes. Individuals are free to use this Scheme to acquire and hold immovable property, shares or any other asset outside India without prior approval of RBI.
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Can individuals open a foreign currency account abroad for making remittance under the scheme?
Yes. Individuals are free to open, hold and maintain foreign currency accounts with a bank outside India for making remittances under the Scheme without the prior approval of RBI. The account can be used for putting through any transaction connected with or arising from remittances under the Scheme.
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What is the impact of the Scheme on the existing facilities for private/business travel, gift, donation, studies, medical treatment etc./items covered in Schedule III of Foreign Exchange Management (Current Account Transactions) Rules, 2000?
The facility under the Scheme is in addition to those already available under Foreign Exchange Management (Current Account Transactions) Rules, 2000
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Can residents under the Scheme treat OBU in India on par with a branch of the bank outside India for the purpose of opening of foreign currency accounts?
No. For the purpose of the Scheme, an OBU in India is not treated as an overseas branch of a bank in India.
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