Exchange Control
Foreign Exchange Facilities for Residents - Frequently Asked Questions
Introduction

The legal framework for administration of exchange control in India is provided by the Foreign Exchange Management Act, 1999. 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 also available on the RBI’s website besides with the authorised dealers and regional offices of the Foreign Exchange Department. Additionally this pamphlet (also published by RBI) 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. Information herein is updated as at 1st July, 2004

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). Incidentally, no release of foreign exchange is admissible for any kind of travel to Nepal and Bhutan or for any transaction with persons resident in Nepal and Bhutan.

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.

1. Who is a Resident?
   In terms of Section 2(v) of FEMA, 1999, a "person resident in India" means –

   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 –

   1. A person who has gone out of India or who stays outside India, in either case -

      1. for or on taking up employment outside India, or

      2. for carrying on outside India a business or vocation outside India, or

      3. for any other purpose, in such circumstances as would indicate his intention to stay outside India for an uncertain period;

   2. a person who has come to or stays in India, in either case, otherwise than –

      1. for or on taking up employment in India, or

      2. for carrying on in India a business or vocation in India, or

      3. for any other purpose, in such circumstances as would indicate his intention to stay in India for an uncertain period;

         1. any person or body corporate registered or incorporated in India,

         2. an office, branch or agency in India owned or controlled by a person resident outside India,

         3. an office, branch or agency outside India owned or controlled by a person resident in India;

2. From where one can buy foreign exchange?
   Foreign exchange can be purchased from any authorised dealer. Besides authorised dealers, full-fledged money changers are also permitted to release exchange for business and private visits.

3. Who is an authorized deale?
   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.

4. 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, specialised 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.

5. Can one obtain additional foreign exchange for medical treatment outside India?
   Authorized dealers may release foreign exchange upto 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.

6. 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 upto 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.

7. 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 authorised 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 USD10,000 can be availed of by a person along with foreign exchange for travel abroad for any purpose, including for employment or immigration or studies. However, no foreign exchange is available for visit to Nepal and/or Bhutan for any purpose.

8. How much foreign exchange is available to a person going abroad on employment?
   Person going abroad for employment can draw foreign exchange upto USD100,000 from any authorised dealer in India on the basis of self-declaration.

9. How much foreign exchange is available to a person going abroad on emigration?
   Person going abroad on emigration can draw foreign exchange upto 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.

10. 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.

11. How much foreign exchange can be purchased in foreign currency notes while buying exchange for travel abroad?
    Travellers are allowed to purchase foreign currency notes/coins only up to USD 2000. Balance amount can be taken in the form of traveller’s cheque or banker’s draft. Exceptions to this are (a) travellers 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) travellers 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.

12. 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 traveller’s cheques or bank draft payable overseas.

13. 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 authorised dealer.

14. 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 cheque/banker’s cheque/pay order/demand draft only.

15. Within what period a traveller who has returned to India is required to surrender foreign exchange?
    On return from a foreign trip travellers are required to surrender unspent foreign exchange held in the form of currency notes within 90days and travellers’ cheques within 180 days of return. However, they are free to retain foreign exchange upto 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.

16. 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 -

    1. 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

    2. 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

    3. acquired by him by way of honorarium or gift while on a visit to any place outside India; o

    4. acquired by him from an authorised person for travel abroad and represents the unspent amount thereto

17. Is one required to surrender foreign coins also to an authorised dealer?
    There is no restriction on residents holding foreign coins.

18. How much foreign exchange can one send as gift / donation to a person resident outside India ?
    Any person resident in India can remit upto USD 5,000 in any one year as a gift to a person residing outside India or as donation to a charitable/educational/religious/ cultural organisation outside India. Remittances exceeding the limit require prior permission from the Reserve Bank.

19. Is one permitted to use International Credit Card (ICC) for undertaking foreign exchange transactions?
    Use of the International Credit Cards (ICCs) / ATMs/ Debit Cards can be made for making personal payments like subscription to foreign journals, internet subscription, etc., and for travel abroad in connection with various purposes. Your entitlement of foreign exchange on International Credit Cards (ICCs) is limited by the credit limit fixed by the card issuing authority only. With ICCs you can i) meet expenses/make purchases while abroad ii) make payments in foreign exchange for purchase of books and other items through internet in India. If you have a foreign currency account in India or with a bank overseas, you can even obtain ICCs of overseas banks and reputed agencies. Use of these instruments for payment in foreign exchange in Nepal and Bhutan is not permitted.

20. While coming into India how much Indian currency can be brought in?
    A person coming into India from abroad can bring in with him Indian currency notes within the limits given below

    1. upto Rs. 5,000 from any country other than Nepal or Bhutan, and

    2. any amount in denomination not exceeding Rs.100 from Nepal or Bhutan.

21. While going abroad how much foreign exchange, in cash, can a person carry?
    Residents are free to carry the foreign exchange purchased from an authorised dealer or money changer in accordance with the Rules. They are, however, allowed to carry foreign exchange in the form of currency notes/coins upto USD 2,000 or its equivalent only. Balance amount can be carried in the form of traveller’s cheque or banker/s draft. (In this connection please see item No.9).

22. While coming into India how much Indian currency can be brought in?
    A person A person coming into India from abroad can bring with him foreign exchange without any limit. However, if the aggregate value of the foreign exchange in the form of currency notes, bank notes or travellers cheques brought in exceeds USD 10,000/- or its equivalent and/or the value of foreign currency exceeds USD 5,000/- or its equivalent, it should be declared to the Customs Authorities at the Airport in the Currency Declaration Form (CDF), on arrival in India.

23. While going abroad how much foreign exchange can a person carry?
    Residents are free to carry the foreign exchange purchased from an authorised dealer or money changer 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

24. 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.

25. 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.