Author: admin_gst

BASIC CONCEPTS OF GST (PART-4)
By: – Dr. Sanjiv Agarwal
Goods and Services Tax – GST
Dated:- 23-1-2016

How do we compare the present indirect tax laws vis-à-vis proposed GST law regime ? In this part, an attempt is being made to list down the possible differences between the present tax laws and proposed provisions under GST. This comparison is not final and is only for academic purposes to understand the differences or deviations tax base, origin, structure, approach to tax goods and services, place of provision, powers to levy tax, export and import etc.
Comparison of Present Taxation and Proposed GST
S.No
Particulars
Present Taxation
Proposed GST
1.
Structural Architecture
• Two separate VAT systems operate simultaneously at two levels, Centre and State, and tax paid (input tax credit) under one is not available as set off against the other
• Tax on services is levied under separate legislation by Centre, i.e., Finance Act, 1994 which re

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evel
5.
Basic Customs Duty
Imposed by Centre under separate Act, i.e., Customs Act, 1962. Taxable event is import
No change is proposed
6.
CVD/SAD
Imposed by Centre under separate Act, i.e., Customs Act, 1962. Taxable event is import
To be subsumed in CGST; Taxable event will be import
7.
Service Tax
Imposed by Centre under separate Act (Finance Act, 1994). Taxable event is provision of service
To be subsumed in CGST & SGST; Taxable event will be provision of service
8.
Central Sales Tax
Imposed by Centre under CST Act, 1956. Collection assigned to States; Taxable event is movement of goods from one State to another
Is being phased out
9.
State VAT
Imposed by States; Taxable event is sale within the State
To be subsumed in SGST; Taxable event is sale within State
10.
Inter-State Transactions
Imposed on goods & services by the Centre (CST, Service Tax)
To be subsumed in GST and subject to SGST & CGST
11.
Tax on Manufacturing activity
As Excise Duty by

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nd Service tax : Cross set off allowed
No cross set-off between CGST and SGST will be allowed
19.
Cascading Effect
Allows cenvat tax credit between Excise Duty & Service Tax, but not with VAT (cross set off is not allowed)
Allows seamless tax credit amongst Excise Duty, Service Tax & VAT
20.
Non-Creditable Goods
Do exist
May exist depending upon negative list / exemptions etc
21.
Credit on Inputs used for Exempted Activities
Not allowed
May not be allowed
22.
Various
Exemptions -Excise Free Zone or VAT Exemption
Available
May be phased out
23.
Exemption for transit Inter-State Sale and High Seas Sale
Available
May be taxable
24.
Transactions against Declaration Forms
Allowed under the CST / VAT
Forms likely to be abolished
25.
Taxation on Govt. and Non-Profit Public Bodies
Partially taxed
May not change much
26.
Stamp Duty
Presently taxed concurrently by the Centre and State
Status not clear; If subsumed under GST, big relief to real esta

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es; very minimum; Central taxes are online
Extensive; It will be pre-requisite for implementation of GST
35.
Nature of Present Litigations
* Sale or Service
* Classification of goods
* Situs issue between States
* Interpretational issues
* Sale or works contract
* Valuation of composite
transactions, etc.
* Exemptions
* Suppression / limitation
Likely to be reduced provided GST legislations are properly drafted
(To be continued ………)
Reply By Ashok Aggarwal as =
Very good analysis and comparison between present situation and that after implementation of proposed GST law. Let us hope that the procedures will be simple and more system based to avoid harassment of trade & industry at the hands of those who enforce the law. If the trade will be running to tax departments of Central & State Governments even after GST is reality, the very purpose of bringing GST would be defeated.
At Sr N. 18 it is mentioned that no cross set off between CGST a

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Income Tax Case: Firm Allowed to Carry Forward Losses Despite Changes in Partnership's Profit-Sharing Ratio (Sections 187 & 78.
Case-Laws
Income Tax
Brought forward losses of firm – covered u/s 187 OR u/s. 78 – change in the terms and conditions of the partnership – the reconstitution of the partnership was made only as a result of changes in the profit sharing ratio amongst the partners – CIT(A) has rightly allowed carry forward losses to be set off, as claimed by the assessee – AT

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An Intersting Scenario of GST…
Query (Issue) Started By: – P S Nath Dated:- 21-1-2016 Last Reply Date:- 11-9-2016 Goods and Services Tax – GST
Got 3 Replies
GST
Dear All,
An interesting question on GST who are planning to buy vehicles from different state and want to transfer and register the vehicle in his name in different state where he lives. Assuming a scenario stated under…..
A car which was purchased in 2010 by Person X (First Purchaser) in the State A and given road tax for 10 Years in the State A itself. A Person Y(Second Purchaser) resides in State B and wants to purchase the vehicle, transfer and re-register the vehicle in his own name in State B. So The vehicle age is 6 years and Person X already paid road tax

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BASIC CONCEPTS OF GST (PART-3)
By: – Dr. Sanjiv Agarwal
Goods and Services Tax – GST
Dated:- 20-1-2016

Benefits of GST
Benefits of GST shall accrue to all – trade & industry, Government and consumers. Trade and industry shall benefit in terms of easy compliance, removal of cascading effect of taxes and enhanced competitiveness. The Government shall have better control on leakages, higher revenue efficiency, consolidation of tax base and it may be easier to administer and monitor the law. Consumers will also benefit from likely reduced prices and single transparent tax structure.
* GST will end cascading effects: This will be the major contribution of GST for the business and commerce. At present, there are different state level and centre level indirect tax levies that are compulsory one after another on the supply chain till the time of its final consumption.
* Growth of Revenue in States and Union: It is expected that the introduction of GST will increase the ta

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they would focus on business rather than worrying about their taxation that may crop at later stages. This will help the business community to decide their supply chain, pricing modalities and in the long run helps the consumers being goods competitive as price will no longer be the function of tax components but function of sheer business intelligence and innovation.
* Reduces average tax burdens: Under GST mechanism, the cost of tax that consumers have to bear will be certain and it is expected that GST would reduce the average tax burdens on the consumers.
* Reduces the corruption: It is one of the major problems that India is overwhelmed with. We cannot expect anything substantial unless there exists a political will to root it out. This will be a step towards corruption free Indian Revenue Services.
* Present CST will be removed and need not to be paid. At present there is no input tax credit available for CST.
* There are many indirect taxes in state and central level cu

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d or minimized
* Indian Industry shall more towards an efficient supply chain model from the present day model which suffers from tax considerations and operational hurdles.
* GST is expected to contribute to 'make in India' and 'ease of doing business in India' initiatives of the Government.
* GST addresses the issue of multiplicity of taxes.
* All the rates under to GST will be uniform for are and the place of supply rules will guide the GST India portal to apportion the tax.
* It will boost up economic unification of India; it will assist in better conformity and revenue resilience; it will evade the cascading effect in Indirect tax regime.
* In GST system, both Central and state taxes will be collected at the point of sale. Both components (the Central and state GST) will be charged on the manufacturing cost.
* It will reduce the tax burden for consumers;
* It will result in a simple, transparent and easy tax structure; merging all levies on goods an

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GST- Returns Need and Periodicity
By: – CA Akash Phophalia
Goods and Services Tax – GST
Dated:- 16-1-2016

Background
During the Empowered Committee meeting held on 10th March, 2014, it was decided that a Joint Committee under the co-convenership of the Additional Secretary (Revenue), Government of India and the Member Secretary, Empowered Committee should be constituted to look into the Report of the Sub-Group-I on Business Processes for GST and make suitable recommendations for Registration and Return to the Empowered Committee. It was also decided that the Joint Committee should also keep in view the Registration and Return requirements necessary for IGST Model. The details incorporated here are adapted from the Report of the Joint committee on business process for GST
Return – Meaning
A return is a statement of specified particulars relating to business activity undertaken by the taxable person during a prescribed period. A taxable person has a legal obligation:

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D and will file return for the month (in simpler form) during which they make purchases. They would not be required to file regular return. They would submit their purchase statements (without purchase invoices) as per the periodicity prescribed for claim of refund.
Government entities / PSUs , etc. not dealing in GST supplies or persons exclusively dealing in exempted / Nil rated / non -GST goods or services would neither be required to obtain registration nor required to file returns under the GST law. However, State tax authorities may assign Departmental ID to such government departments/ PSUs / other persons. They will ask the suppliers to quote the Department ID in the supply invoices for all inter-State purchases being made to them. Such supplies will be at par with B2C supplies and will be governed by relevant provisions relating to B2C supplies.
Periodicity of filing of returns
There will be different frequency for filing of returns for different class of taxpayers, after p

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ce Distributor (ISD)
15th of the next month
7
GSTR 7
Return for Tax Deducted at Source
10th of the next month
8
GSTR 8
Annual Return
By 31st December of next FY
9
ITC Ledger of taxpayer
Continuous
10
Cash Ledger of taxpayer
Continuous
11
Tax ledger of taxpayer
Continuous
Important points relating to periodicity of return filing
(i) Normal / Regular taxpayers (including casual taxpayers) would have to file GSTR-1 (details of outward supplies) (Annexure-II), GSTR-2 (details of inward supplies) (Annexure-III) and GSTR-3 (monthly Return) (Annexure-IV) for each registration.
(ii) Normal / Regular taxpayers with multiple registrations (for business verticals) within a State would have to file GSTR-1, GSTR-2 and GSTR-3 for each of the registrations separately.
(iii) Compounding taxpayers would have to file a quarterly return called GSTR-4 (Annexure-V).
(iv) Taxpayers otherwise eligible for the compounding scheme can opt against the compounding and file monthly returns a

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e based on financial records.
(viii) Compounding taxpayer will also file a simple annual return.
(ix) Cut-off date for filing of details of outward supplies (GSTR-1), inward supplies (GSTR-2) and Monthly return (GSTR-3) would be10th, 15th and 20th day respectively of the succeeding month for all Monthly filers.
(x) Cut-off date for filing of Quarterly return (GSTR-4) by compounding taxpayer would be 18thday of the first month of the succeeding quarter.
(xi) Cut-off date for filing of Input Service Distributor return (GSTR-6) (Annexure-VII) would be 15th day of the succeeding month.
(xii) Cut-off date for filing of TDS (Tax Deducted at Source) return (GSTR-7) (Annexure-VIII) by Tax Deductor would be 10th day of the succeeding month.
(xiii) For Annual return, the cut-off date would be 31st December following the end of the financial year for which it is filed.
(xiv) The filing of return would be only through online mode although the facility of offline generation and preparation o

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UNDERSTANDING INTER-STATE GST (IGST)
By: – Dr. Sanjiv Agarwal
Goods and Services Tax – GST
Dated:- 15-1-2016

According to Model IGST Law, IGST shall mean the tax levied under the IGST Act on the supply of any goods and / or services in the course of inter-state trade or commerce. IGST Act shall apply to whole of India.
According to the report of the Task Force on GST, 13th Finance Commission (2009), it had recommended that adoption of the IGST Model for implementation with the caveat that a 'strong IT infrastructure and complete information of the interstate transactions is a precondition and essential prerequisite for considering the IGST model. Without addressing these fundamental concerns of IT infrastructure and information support systems, the adoption of IGST model which is still at a conceptual stage is far from realistic at this stage in adoption of GST in the course of interstate transaction in goods and GST for the nation'.
Central Government would levy

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ST, and SGST on his purchases. The Exporting State will transfer to the Centre the credit of SGST used in payment of IGST. The Importing dealer will claim credit of IGST while discharging his output tax liability in his own State. The Centre will transfer to the importing State the credit of IGST used in payment of SGST. The relevant information is also submitted to the Central Agency which will act as a clearing house mechanism, verify the claims and inform the respective governments to transfer the funds.
Revenue from IGST will be apportioned among Union and States by Parliament on basis of recommendation of Goods and Service Tax Council [Proposed Article 269A(2) and Article 270 (1A) of Constitution of India]. The apportionment will be required as input tax credit of IGST can be used for SGST and vice versa. Since IGST will be on 'supply of goods or services', IGST will be payable on stock transfers, branch transfers and even when goods are dispatched inter-state job work an

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correspondence with them will be by e-mail, the compliance level will improve substantially.
* Model can take 'Business to Business' as well as 'Business to Consumer' transactions into account.
Salient Features Integrated GST
* On inter-state and cross border transactions
* Centre would levy and collect IGST in lieu of CGST and SGST.
* To be shared between Centre / States
* Single IGST rate
* IGST would be levied on all inter-State transactions of taxable goods and services with appropriate provision for consignment or stock transfer of goods and services.
* Inter-State dealer will pay IGST after adjusting available, input IGST, CGST and SGST on purchases.
IGST – Illustration
* Maharashtra seller selling to Karnataka buyer for ₹ 1,00,000/-.
* IGST payable assuming an 8% rate is ₹ 8,000/-.
* Rs.8,000/- can be paid by adjusting
* Inter-State purchases (IGST) ₹ 3,000/-
* Local purchases (CGST) ₹ 1,500/-
* Local purchases (SGST) &#8377

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BASIC CONCEPTS OF GST (PART-2)
By: – Dr. Sanjiv Agarwal
Goods and Services Tax – GST
Dated:- 14-1-2016

Objectives of GST
One of the main objective of Goods & Service Tax (GST) would be to eliminate the cascading effects of taxes on production and distribution cost of goods and services. The exclusion of cascading effects i.e. tax on tax will significantly improve the competitiveness of original goods and services in market which leads to beneficial impact to the GDP growth of the country. It is felt that GST would serve a superior reason to achieve the objective of streamlining indirect tax regime in India which can remove cascading effects in supply chain till the level of final consumers.
Salient Features of the GST Mod

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e prescribed threshold limits.
* The Central GST and State GST are to be paid to the accounts of the Centre and the States separately. It would have to be ensured that account-heads for all services and goods would have indication whether it relates to Central GST or State GST (with identification of the State to whom the tax is to be credited).
* Since the Central GST and State GST are to be treated separately, taxes paid against the Central GST shall be allowed to be taken as input tax credit (ITC) for the Central GST and could be utilized only against the payment of Central GST. The same principle will be applicable for the State GST.
* A taxpayer or exporter would have to maintain separate details in books of account for utilizati

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State GST would be prescribed in the respective legislation for Central GST and State GST.
* The administration of the Central GST to the Centre and for State GST to the States would be given. This would imply that the Centre and the States would have concurrent jurisdiction for the entire value chain and for all taxpayers on the basis of thresholds for goods and services prescribed for the States and the Centre.
* The taxpayer would need to submit periodical returns, in common format as far as possible, to both the Central GST authority and to the concerned State GST authorities.
* Each taxpayer would be allotted a PAN-linked taxpayer identification number with a total of 13/15 digits. This would bring the GST PAN-linked system in l

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Export of Goods and Services – Project Exports
39 Dated:- 14-1-2016 Circular
FEMA
Superseded vide A.P. (DIR Series) Circular No. 20 dated 16-01-2026 w.e.f. 01-10-2026

RBI/2015-16/287

A.P. (DIR Series) Circular No. 39

January 14, 2016

To

All Category – I Authorised Dealer Banks

Madam/ Sir,

Export of Goods and Services – Project Exports

Attention of Authorised Dealers is invited to Regulation 18 of Notification No. FEMA 23/2000-RB dated 3rd May 2000 viz. Foreign Exchange Management (Export of Goods and Services) Regulations, 2000 in terms of which export of goods or services on deferred payment terms or in execution of a turnkey project or a civil construction contract requires prior approval of the app

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/ regulations. Project and service exporters may accordingly approach AD banks / Exim Bank based on their commercial judgment.

2. As it has been advised by the Government of India that i) the 'OCCI' has been renamed as 'Project Export Promotion Council' (PEPC) and ii) civil construction contracts may include turnkey engineering contracts, process and engineering consultancy services and Project construction items (excluding steel & Cement) along with civil construction contracts, it has been decided to make the necessary changes in Memorandum of Instructions on Project and Service Exports (PEM) accordingly.

3. The revised Memorandum of Instructions on Project and Service Exports (PEM) is enclosed.

4. Authorized Dealers may bring th

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PROPOSED CGST MODEL
By: – Dr. Sanjiv Agarwal
Goods and Services Tax – GST
Dated:- 13-1-2016

There are three prime models of GST which have been decided to be implemented in India, viz,
* GST at Central (Union) Government level only
* GST at State Government level only
* GST at both, Union and State Government Leve
Canada has GST at Union level extending to all goods and services covering all stages of value addition. In addition, there is tax at province (State) level in different forms which include VAT, Retail Sales tax and so on. European Union (EU) Nations (each one is independent Nation but, part of a Union and have agreed to adopt common principles for taxation of goods and services) have adopted “classic” VAT.
In the Indian context, Constitution of India specifically reserves the power to impose tax on specific activities to specific level of Government, e.g., tax on import of goods can be imposed by Union Government only whereas tax on sale of goods inv

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enue sharing arrangements among them. The tax could be controlled and administered by the Central Government. There are several models for such a tax. Australia is the most recent example of a National GST, where it is levied and collected by the Centre, but the proceeds are allocated entirely to the States.
In the case of a Central GST (where all goods and services are taxed by the Central government only), the Centre will collect most of the country's total tax revenue, leaving very little for the sub-national Governments. As against this, the present proposal is to have a dual GST.
A single national VAT has great appeal from the perspective of establishment and promotion of a common market in India. However, the States may worry about the loss of control over the tax design and rates. Indeed, some control over tax rates is a critical issue in achieving accountable sub-national governance and hard budget constraints. The States may also be apprehensive that the revenue sharing arra

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* Two Governments will combine their various levies into single GST.
* Proceeds to be shared between Centre and States .
Advantages
* If levied on a comprehensive base at a single rate, it would clear the system of virtually all economic distortions and classification disputes.
* Replacing 36 taxing Statutes (of the Centre and 35 States and Union Territories) with only one would lead to a substantial reduction in compliance costs and free up resources for other more productive pursuits.
* It would make common market for India a reality. Goods and services would move freely within India with no check-posts, internal-tax frontiers or other barriers to trade.
Disadvantages
* Near impossibility of achieving the structure – It will require drastic modification to the Constitution of India.
* It might upset the present concept of fiscal federalism, which is the cornerstone of Indian polity.
* Entire infrastructure developed for taxation at both levels will have to undergo h

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BASIC CONCEPTS OF GST (PART-1)
By: – Dr. Sanjiv Agarwal
Goods and Services Tax – GST
Dated:- 12-1-2016

What is Goods and Services Tax (GST)?
GST stands for “Goods and Services Tax”, and is proposed to be a comprehensive indirect tax levy on manufacture, sale and consumption of goods as well as services at the national level. Its main objective is to consolidates all indirect tax levies into a single tax, except customs (excluding SAD) replacing multiple tax levies, overcoming the limitations of existing indirect tax structure, and creating efficiencies in tax administration.
Simply put, goods and services tax is a tax levied on goods and services imposed at each point of sale or rendering of service. Such GST could be on entire goods and services or there could be some exempted class of goods or services or a negative list of goods and services on which GST is not levied. GST is an indirect tax in lieu of tax on goods (excise) and tax on service (service tax). The GS

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the goods and services they sell and can claim credits for the most GST included in the price of goods and services they buy. The cost of GST is borne by the final consumer, who can't claim GST credits, i.e. input credit of the tax paid.
Example: A product whose base price is ₹ 100 and after levying excise duty @ 12%value of the product is ₹ 112. On sale of such goods VAT is levied @ 12.5% and value to the ultimate consumer is ₹ 126. In the proposed GST system on base price of ₹ 100 CGST and SGST both will be charged, say @ 8% each, and then the value to the ultimate consumer is ₹ 116. So, in such a case the industry can better compete in global environment.
Therefore, GST is a broad based and a single comprehensive tax levied on goods and services consumed in an economy.
In particular, it would replace the following indirect taxes as these will be subsumed in the proposed GST:
At Central level
* Central Excise Duty
* Service Tax
* Additional Exc

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Octroi)
Surcharges (e.g. national calamity contingent duty)
Purchase tax
Cesses (e.g., Cess on rubber, Cess on tea etc)
State Cesses
Central Sales tax (to be phased out)
State Surcharges
Taxes/Duties not likely to be subsumed in GST
Central Taxes/Levies
State Taxes/Levies
Basic Customs Duty
Taxes on Liquors
Excise Duty on Tobacco products
Toll Tax/ Road Tax
Export Duty
Environment Tax
Taxes on petroleum products
Property Tax
Stamp Duties
Purchase tax on food grains
Specific Central Cess like Oil Cess etc
Taxes on motor spirit & high speed diesel
Tax on Consumption or Sale of Electricity – Not certain
Stamp Duty – Not certain
(To be continued…………)
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Reply By DEEPAK BHARDWAJ as =
Part 1 in reference to Basic Concepts of GST is an excellent way to share the real concepts proposed in GST. I thank and hope that more such parts will be shared in the time to come.
Deepak Bhardwaj
Dated: 13-1-2016
Scholarly articles

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Foreign Exchange Management (Export of Goods & Services) Regulations, 2015
23(R)/2015-RB Dated:- 12-1-2016 Foreign Exchange Management
FEMA
Foreign Exchange Management Act
FEMA
RESERVE BANK OF INDIA
(Foreign Exchange Department)
CENTRAL OFFICE
NOTIFICATION No. FEMA 23(R)/2015-RB
Mumbai, the 12th January, 2016
Foreign Exchange Management (Export of Goods & Services) Regulations, 2015
G.S.R. 19(E).-In exercise of the powers conferred by clause (a) of sub-section (1), sub-section (3) of Section 7 and sub-section (2) of Section 47 of the Foreign Exchange Management Act, 1999 (42 of 1999) and in supersession of its Notification No.FEMA.23/2000-RB dated May 3, 2000 as amended from time to time, Reserve Bank of India makes the following Regulations in respect of Export of Goods and Services from India , namely:
1. Short title and commencement:-
(i) These Regulations may be called the Foreign Exchange Management (Export of Goods and Services) Regulations, 2015.
(ii) T

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or under any other similar arrangement, includes the charges, by whatever name called, payable in respect of such lease or hire-purchase or any other similar arrangement;
(vi) 'form' means form annexed to these Regulations;
(vii) 'schedule' means schedule appended to these Regulations;
(viii) 'software' means any computer programme, database, drawing, design, audio/video signals, any information by whatever name called in or on any medium other than in or on any physical medium ;
(ix) 'specified authority' means the person or the authority to whom the declaration as specified in Regulation 3 is to be furnished;
(x) the words and expressions used but not defined in these Regulations shall have the same meanings respectively assigned to them in the Act.
3. Declaration of exports:-
(1) In case of exports taking place through Customs manual ports, every exporter of goods or software in physical form or through any other form, either directly or

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orms specified in these Regulations apply, the exporter may export such services without furnishing any declaration, but shall be liable to realise the amount of foreign exchange which becomes due or accrues on account of such export, and to repatriate the same to India in accordance with the provisions of the Act, and these Regulations, as also other rules and regulations made under the Act.
(4) Realization of export proceeds in respect of export of goods / software from third party should be duly declared by the exporter in the appropriate declaration form.
4. Exemptions:-
Notwithstanding anything contained in Regulation 3, export of goods / software may be made without furnishing the declaration in the following cases, namely:
a) trade samples of goods and publicity material supplied free of payment;
b) personal effects of travellers, whether accompanied or unaccompanied;
c) ship's stores, trans-shipment cargo and goods supplied under the orders of Central Government or

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ported from foreign suppliers/collaborators free of cost, found surplus after production operations.
(ga) goods listed at items (1), (2) and (3) of clause (i) to be re-exported by units in Special Economic Zones, under intimation to the Development Commissioner of Special Economic Zones / concerned Assistant Commissioner or Deputy Commissioner of Customs
(h) replacement goods exported free of charge in accordance with the provisions of Foreign Trade Policy in force, for the time being.
(i) goods sent outside India for testing subject to re-import into India;
(j) defective goods sent outside India for repair and re-import provided the goods are accompanied by a certificate from an authorised dealer in India that the export is for repair and re-import and that the export does not involve any transaction in foreign exchange.
(k) exports permitted by the Reserve Bank, on application made to it, subject to the terms and conditions, if any, as stipulated in the permission.
5. Indi

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ion in Form SOFTEX in respect of export of computer software and audio/video/ television software shall be submitted in triplicate to the designated official of Ministry of Information Technology, Government of India at the Software Technology Parks of India (STPIs) or at the Free Trade Zones (FTZs) or Special Economic Zones (SEZs) in India.
(ii) After certifying all three copies of the SOFTEX form, the said designated official shall forward the original directly to the nearest office of the Reserve Bank and return the duplicate to the exporter. The triplicate shall be retained by the designated official for record.
C. Duplicate Declaration Forms to be retained with Authorised Dealers
On the realisation of the export proceeds, the duplicate copies of export declaration forms viz. EDF and SOFTEX and Exchange Control copies of the shipping bills shall be retained by the Authorised Dealers.
7. Evidence in support of declaration:-
The Commissioner of Customs or the postal authority

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Customs of that country.
8. Manner of payment of export value of goods:-
Unless otherwise authorised by the Reserve Bank, the amount representing the full export value of the goods exported shall be paid through an authorised dealer in the manner specified in the Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2000 as amended from time to time.
Explanation:
For the purpose of this regulation, re-import into India, within the period specified for realisation of the export value, of the exported goods in respect of which a declaration was made under Regulation 3, shall be deemed to be realisation of full export value of such goods.
9. Period within which export value of goods/software/ services to be realised:-
(1) The amount representing the full export value of goods / software/ services exported shall be realised and repatriated to India within nine months from the date of export, provided
(a) that where the goods are exported to a warehouse establishe

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repatriated to India within nine months from the date of export.
Provided further that the Reserve Bank, or subject to the directions issued by the Bank in this behalf, the authorised dealer may, for a sufficient and reasonable cause shown, extend the period of nine months.
(b) The Reserve Bank may for reasonable and sufficient cause direct that the said exporter/s shall cease to be governed by sub-regulation (2);
Provided that no such direction shall be given unless the unit has been given a reasonable opportunity to make a representation in the matter.
(c) On such direction, the said exporter/s shall be governed by the provisions of sub-regulation (1), until directed otherwise by the Reserve Bank.'
Explanation:
For the purpose of this regulation, the “date of export” in relation to the export of software in other than physical form, shall be deemed to be the date of invoice covering such export.
10. Submission of export documents:-
The documents pertaining to export s

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ollection, or
b) where the value declared in the declaration is less than the value shown in the documents being negotiated or sent for collection, require the constituent concerned also to sign such declaration and thereupon such constituent shall be bound to comply with such requisition and such constituent signing the declaration shall be considered to be the exporter for the purposes of these Regulations to the extent of the full value shown in the documents being negotiated or sent for collection and shall be governed by these Regulations accordingly.
12. Payment for the Export:-
In respect of export of any goods or software for which a declaration is required to be furnished under Regulation 3, no person shall except with the permission of the Reserve Bank or, subject to the directions of the Reserve Bank, permission of an authorised dealer, do or refrain from doing anything or take or refrain from taking any action which has the effect of securing –
(i) that the payment fo

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ts requiring prior approval :-Exports under trade agreement/rupee credit etc.
(i) Export of goods under special arrangement between the Central Government and Government of a foreign state, or under rupee credits extended by the Central Government to Govt. of a foreign state shall be governed by the terms and conditions set out in the relative public notices issued by the Trade Control Authority in India and the instructions issued from time to time by the Reserve Bank.
(ii) An export under the line of credit extended to a bank or a financial institution operating in a foreign state by the Exim Bank for financing exports from India, shall be governed by the terms and conditions advised by the Reserve Bank to the authorised dealers from time to time.
14. Delay in Receipt of Payment:-
Where in relation to goods or software export of which is required to be declared on the specified form and export of services, in respect of which no declaration forms has been made applicable, the s

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l be under an obligation to ensure that –
i) the shipment of goods is made within one year from the date of receipt of advance payment;
ii) the rate of interest, if any, payable on the advance payment does not exceed the rate of interest London Inter-Bank Offered Rate (LIBOR) + 100 basis points and
iii) the documents covering the shipment are routed through the authorised dealer through whom the advance payment is received;
Provided that in the event of the exporter's inability to make the shipment, partly or fully, within one year from the date of receipt of advance payment, no remittance towards refund of unutilized portion of advance payment or towards payment of interest, shall be made after the expiry of the period of one year, without the prior approval of the Reserve Bank.
(2) Notwithstanding anything contained in clause (i) of sub-regulation (1), an exporter may receive advance payment where the export agreement itself duly provides for shipment of goods extending

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edit or by such other arrangement or document as may be indicated in the order ;
b) that any declaration to be furnished to the specified authority shall be submitted to the authorised dealer for its prior approval, which may, having regard to the circumstances, be given or withheld or may be given subject to such conditions as may be specified by the Reserve Bank by directions issued from time to time.
c) that a copy of the declaration to be furnished to the specified authority shall be submitted to such authority or organisation as may be indicated in the order for certifying that the value of goods or software specified in the declaration represents the proper value thereof.
(2) No direction under sub-regulation (1) shall be given by the Reserve Bank and no approval under clause (b) of that sub-regulation shall be withheld by the Authorised Dealer, unless the exporter has been given a reasonable opportunity to make a representation in the matter.
17. Project exports:-
(1) Whe

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GST REGIME: BASICS OF STATE GST (SGST)
By: – Dr. Sanjiv Agarwal
Goods and Services Tax – GST
Dated:- 8-1-2016

In State GST, the States alone can levy GST and the Centre withdraws from the field of GST or VAT completely. It can be a desirable option given the mismatch in resources and responsibilities of the States. In this case, the State GST will work as the redistributing mechanism. The loss to the Centre from vacating this tax field could be offset by a suitable compensating reduction in fiscal transfers to the States. This would significantly enhance the revenue capacity of the States and reduce their dependence on the Centre. The USA is the most notable example of such arrangements, where the general sales taxes are re

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he revenue capacity of the States and reduces their dependence on the Centre.
Disadvantages
* It would seriously impair the Centre's revenues. The reduction in fiscal transfers to the States would offset this loss, but still the Centre would want to have access to this revenue source for future needs.
* Major amendments to the Constitution of India will be required.
* The option may not be revenue neutral for individual States.
* The incremental revenues from the transfer of the Centre's tax collection would benefit the higher-income States, while a reduction in fiscal transfers would impact disproportionately the lower-income States.
* Businesses will have to comply with tax laws of each State – which will definitely lack unifor

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CONCURRENT AND NON-CONCURRENT DUAL GST
By: – Dr. Sanjiv Agarwal
Goods and Services Tax – GST
Dated:- 7-1-2016

Concurrent Dual GST
Here the GST will be levied by both tiers of Governments concurrently. There will be Central GST to be administered by the Central Government and there will be State GST to be administered by State Governments. Thus, the GST would comprise a Central GST and State GST: a Central-level GST will subsume central taxes, such as, excise duty, CVD, SAD and service tax; and a State-level GST will subsume VAT, octroi, entry taxes, luxury tax, etc.
Therefore, under this model, both goods and services would be subject to concurrent taxation by the Centre and the States. This variant is closer to the model

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y the tax to a comprehensive base of goods and services, at all points in the supply chain.
* It requires least change in infrastructure of tax departments at the Union and State levels.
* It improves the competitive environment for company working globally.
* As single taxation system it reduces cost to the consumer.
Disadvantages
* It is not an ideal model. It can be a temporary or transitional model since tax would continue to be levied at two levels.
* Compliance costs may not reduce significantly.
* There will always be uncertainty since States might depart from the principles of uniformity.
* To frame a comprehensive model for taxation of inter-State transactions of goods and services and sharing of its revenue amongst

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be needed for levying a unified Centre tax on inter- State services.
Under this model, while levying the VAT on services, the Centre would essentially play the coordinating role needed for the application and monitoring of tax on inter-State services. The Centre would withdraw from the taxation of goods. Even the revenues collected from the taxation of services could be transferred back to the States, partially or fully.
Within this framework, cascading could be completely eliminated by the States agreeing to allow an input credit for the tax on services levied by the Centre. Likewise, the Centre would allow an input credit for the tax on goods levied by the States.
However, the said model may not be acceptable to the Centre as well as t

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Exemption Denied for 100% Export Unit Due to Insufficient Exports in 2000-01 and 2001-02 Under PGST/PVAT.
Case-Laws
VAT and Sales Tax
Cancellation of exemption certificate of 100EOU – PGST / PVAT – assessment years 2000-01 and 2001-02, the appellant exported nothing outside India. In the assessment year 2001-02, the appellant exported only 1.68% of its products in the markets outside India. – exemption was rightly denied – HC
TMI Updates – Highlights, quick notes, marquee, annotatio

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APPLICABLE FROM 01/01/2016 -QUOTING OF PAN & REPORTING OF CASH TRANSACTION OF SALE/PURCHASE OF GOODS & SERVICES EXCEEDING RS. 2.00 LAC
By: – CAGOPALJI AGRAWAL
Income Tax
Dated:- 2-1-2016

INCOME TAX NOTIFICATION NO. SO 3545E DT. 30/12/2015
SALIENT FEATURES OF RULE 114 B- SL. NO. 18 OF TABLE
FOR ASSESSEE COVERED U/S 44AB OF IT ACT, 1961
Sales or purchase of any goods and services exceeding ₹ 2.00 lac per transaction
(with effect from (w.e.f.) Jaunuary 1, 2016
[Other than motor vehicles, hotel or restaurant bill, foreign travel expense, securities, LIC, immovable property etc. (covered otherwise by specific rules)]
SITUATION I (W.E.F. JANUARY 1, 2016 ONWARDS)
TRANSACTION OF SALE/PURCHASE OF ANY GOODS/SERVICES EXC

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ber for the half year ending September 30 and 30th April for the half year ending March 31. (since rules are applicable from January 1, 2016 hence first report in form 61 will be for the period January , 2016 to March 31, 2016
CASH TRANSACTIONS OF SALE OR PURCHASE
TO BE REPORTED W.E.F. 01/04/2016
SITUATION III
TRANSACTION OF SALE or PURCHASE OF ANY GOODS/SERVICES EXCEEDING ₹ 2.00 LAC PER TRANSACTION ON CASH BASIS EVEN THOUGH BUYER HAS PAN
ACTION REQUIRED
* One time registration to be obtained by seller as reporting entity from IT Department
* PAN of seller and buyer to be written on the invoice itself
* Verify the PAN of buyer by taking copy of PAN card
* Annual Return in Form no. 61A to be filed latest by 31st May for t

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rom January 1, 2016 hence first report in form 61 will be for the period January , 2016 to March 31, 2016
* Annual return in form no. 61A to be filed latest by 31st May for the complete financial year 2016-17 onwards with Director/Joint Director of Income-tax (Intelligence and Criminal Investigation)
These are the personal views of the authors.
CA. Gopal Ji Agrawal
CA. S.S. Gupta
Reply By Anubhav Jain as =
Hello,
if my CA mentions cash sale( above 2 lakhs) and pan no (let's assume it 12345) with them In my files.
Can the income tax department track this transaction just by the pan no (12345) without opening my files.
how? ( doubt is how do they track the cash transactions excluding bank transactions by the pan no)
Dated: 16

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Master Direction – Import of Goods and Services (Updated as on January 12, 2026)
17/2015-16 Dated:- 1-1-2016 Master Direction
FEMA
RBI/FED/2016-17/12
FED Master Direction No. 17/2016-17
January 1, 2016
(Updated as on January 12, 2026)
(Updated as on October 01, 2025)
(Updated as on June 13, 2025)
(Updated as on August 29, 2024)
(Updated as on March 01, 2024)
(Updated as on November 21, 2022)
(Updated as on May 31, 2022)
(Updated as on January 06, 2022)
(Updated as on December 07, 2021)
(Updated as on October 28, 2020)
(Updated as on January 27, 2020)
(Updated as on April 01, 2019)
(Updated as on February 02, 2018)
(Updated as on January 12, 2017)
(Updated as on October 20, 2016)
(Updated as on March 31, 2016)
(Updated as on February 04, 2016)
To
All Authorised Dealer Category – I banks
Madam / Dear Sir,
Master Direction – Import of Goods and Services
Import of Goods and Services into India is being allowed in terms of Section 5 of the Foreign Exchange

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found in Master Direction on reporting (Master Direction No. 18 dated January 01, 2016).
4. It may be noted that, whenever necessary, Reserve Bank shall issue directions to Authorised Persons through A.P. (DIR Series) Circulars in regard to any change in the Regulations or the manner in which relative transactions are to be conducted by the Authorised Persons with their customers/ constituents. The Master Direction issued herewith shall be amended suitably simultaneously. This Master Direction is issued under Sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 and is without prejudice to permissions/ approvals, if any, required under any other law.
Yours faithfully,
 
(Dr. Aditya Gaiha)
Chief General Manager-in-Charge
Master Direction 17 – Import of Goods and Services
INDEX
Section I – Introduction
Section II – General Guidelines for imports
B.1.
General Guidelines
B.2.
Remittances for Import Payments
B.3.
Import Licenses
B.4.
Obligation of Purc

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currencies not having a direct exchange rate
C.17
Import Data Processing and Monitoring System (IDPMS) – reconciliation of import entries – Special Procedure
 
Consolidated List of Circulars in the Master Direction
Section I – Introduction
(i) Import trade is regulated by the Directorate General of Foreign Trade (DGFT) under the Ministry of Commerce & Industry, Department of Commerce, Government of India. Authorised Dealer Category – I (AD Category – I) banks should ensure that the imports into India are in conformity with the Foreign Trade Policy in force and Foreign Exchange Management (Current Account Transactions) Rules, 2000 framed by the Government of India vide Notification No. G.S.R.381 (E) dated May 3, 2000 and the Directions issued by Reserve Bank under Foreign Exchange Management Act, 1999 from time to time.
(ii) AD Category – I banks should follow normal banking procedures and adhere to the provisions of Uniform Customs and Practices for Documentary Credits (UC

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ory – I banks from the foreign exchange angle while undertaking import payment transactions on behalf of their clients are set out in the following paragraphs. Where specific regulations do not exist, AD Category – I banks may be governed by normal trade practices. AD Category – I banks may particularly note to adhere to “Know Your Customer” (KYC) guidelines issued by Reserve Bank (Department of Banking Regulation) in all their dealings.
B.2. Remittances for Import Payments
AD Category I Banks may allow remittance for making payments for imports into India, after ensuring that all the requisite details are made available by the importer and the remittance is for bona fide trade transactions as per applicable laws in force.
B.3. Import Licences
Except for goods included in the negative list which require licence under the Foreign Trade Policy in force, AD Category – I banks may freely open letters of credit and allow remittances for import. While opening letters of credit, the 'For

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IDPMS as explained in para C.7, Postal Appraisal Form or Customs Assessment Certificate, etc., and satisfy himself that goods equivalent to the value of remittance have been imported. 4AD bank should ensure that all import remittances outstanding on the notified date of IDPMS are uploaded in IDPMS.
5ommitted
B.5. Time Limit for Settlement of Import Payments
B.5.1. Time limit for Normal Imports
(i) In terms of the extant regulations, remittances against imports should be completed not later than six months from the date of shipment, except in cases where amounts are withheld towards guarantee of performance, etc. 6Further, for the disruptions due to outbreak of COVID-19 pandemic, with effect from May 22, 2020, the time period for completion of remittances against normal imports (except in cases where amounts are withheld towards guarantee of performance etc.) was extended from six months to twelve months from the date of shipment for such imports made on or before July 31, 2020.
(

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ided, interest payment, if any, is as per the instructions in para C.2 of Section III of this Circular.
8B.5.4 Extension of Time
(i) AD Category – I banks can consider granting extension of time for settlement of import dues up to a period of six months at a time (maximum up to the period of three years) irrespective of the invoice value for delays on account of disputes about quantity or quality or non-fulfilment of terms of contract; financial difficulties and cases where importer has filed suit against the seller. In cases where sector specific guidelines have been issued by Reserve Bank of India for extension of time (i.e. rough, cut and polished diamonds), the same will be applicable.
(ii) While granting extension of time, AD Category -I banks must ensure that:
* The import transactions covered by the invoices are not under investigation by Directorate of Enforcement / Central Bureau of Investigation or other investigating agencies;
* While considering extension beyond one

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overned by Foreign Exchange Management (Export and Import of Currency) Regulations 2000, issued by Reserve Bank vide 11Notification No. FEMA 6(R)/2015-RB dated December 29, 2015.
(ii) Reserve Bank may allow a person to bring into India currency notes of Government of India and / or of Reserve Bank subject to such terms and conditions as the Reserve Bank may stipulate.
B.6.1. Import of Foreign Exchange into India
A person may-
(i) Send into India, without limit, foreign exchange in any form other than currency notes, bank notes and travellers cheques;
(ii) Bring into India from any place outside India, without limit, foreign exchange (other than unissued notes), subject to the condition that such person makes, on arrival in India, a declaration to the Custom Authorities at the Airport in the Currency Declaration Form (CDF) annexed to these Regulations; provided further that it shall not be necessary to make such declaration where the aggregate value of the foreign exchange in the f

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ed to make payments to a third party for import of goods, subject to conditions as under:
* Firm irrevocable purchase order / tripartite agreement should be in place. However this requirement may not be insisted upon in case where documentary evidence for circumstances leading to third party payments / name of the third party being mentioned in the irrevocable order / invoice has been produced.
* AD bank should be satisfied with the bonafides of the transactions and should consider the Financial Action Task Force (FATF) Statement before handling the transactions;
* The Invoice should contain a narration that the related payment has to be made to the (named) third party;
* Bill of Entry should mention the name of the shipper as also the narration that the related payment has to be made to the (named) third party;
* Importer should comply with the related extant instructions relating to imports including those on advance payment being made for import of goods.
B.8. Issue of Gu

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and the AD Category – I bank is satisfied about the track record and bonafides of the importer, the requirement of the bank guarantee / standby Letter of Credit may not be insisted upon for advance remittances up to USD 5,000,000 (US Dollar five million). AD Category – I banks may frame their own internal guidelines to deal with such cases as per a suitable policy framed by the bank's Board of Directors.
(c) A Public Sector Company or a Department/Undertaking of the Government of India / State Government/s which is not in a position to obtain a guarantee from an international bank of repute against an advance payment, is required to obtain a specific waiver for the bank guarantee from the Ministry of Finance, Government of India before making advance remittance exceeding USD 100,000.
(ii) All payments towards advance remittance for imports shall be subject to the specified conditions 13and AD banks are required to create Outward Remittance Message (ORM) for all such outward remi

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red accounts or otherwise and AD banks should ensure that they have created the Outward Remittance Message (ORM) for all such outward remittances in IDPMS.
v. Further, due caution may be exercised to ensure that remittance is not permitted for import of conflict diamonds (Kimberly Certification).
vi. KYC and due diligence exercise should be done by the AD Category – I banks as per the existing guidelines.
vii. AD Category – I banks should follow-up submission of the Bill of Entry / documents evidencing import of rough diamonds into the country by the importer, in terms of the Act / Rules / Regulations / Directions issued in this regard.
b) In case of an importer entity in the Public Sector or a Department / Undertaking of the Government of India / State Government/s, AD Category – I banks may permit the advance remittance subject to the above conditions and a specific waiver of bank guarantee from the Ministry of Finance, Government of India, where the advance payments is equivalen

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Policy to import aircrafts and helicopters (including used / second hand aircraft and helicopters) or any other person who has been granted permission by the Directorate General of Civil Aviation (DGCA) to operate Scheduled or Non-Scheduled Air Transport Service (including Air Taxi Services), can make advance remittance without bank guarantee or an unconditional, irrevocable Standby Letter of Credit, up to USD 50 million. Accordingly, AD Category – I banks may allow advance remittance, without obtaining a bank guarantee or an unconditional, irrevocable Standby Letter of Credit, up to USD 50 million, for direct import of each aircraft, helicopter and other aviation related purchases.
2. Importers of Aircrafts/ Helicopters and other Aviation related Purchases, not eligible under clause (1) above can make advance remittance without bank guarantee, in terms of Para C.1.1 above.
3. The remittances for the transactions at 1 and 2 above shall be subject to the following conditions:
i. The

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pital goods) from the date of remittance and the importer gives an undertaking to furnish documentary evidence of import within fifteen days from the close of the relevant period. It is clarified that where advance is paid as milestone payments, the date of last remittance made in terms of the contract will be reckoned for the purpose of submission of documentary evidence of import.
vi. Prior to making the remittance, the AD Category – I bank may ensure that the requisite in principle approval of the Ministry of Civil Aviation in case of Scheduled Air Service Operators and in other cases approval of the Director General of Civil Aviation / other agencies in terms of the extant Foreign Trade Policy has been obtained by the company, for import.
vii. In the event of non-import of aircraft and aviation sector related products, AD Category – I bank should ensure that the amount of advance remittance is immediately repatriated to India.
Prior approval of the concerned Regional Office of t

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outside India, should be obtained from the overseas beneficiary.
(b) In the case of a Public Sector Company or a Department/ Undertaking of the Government of India/ State Governments, approval from the Ministry of Finance, Government of India for advance remittance for import of services without bank guarantee for an amount exceeding USD 100,000 (USD One hundred thousand) or its equivalent would be required.
(c) AD Category – I banks should also follow-up to ensure that the beneficiary of the advance remittance fulfils his obligation under the contract or agreement with the remitter in India, failing which, the amount should be repatriated to India.
17(d) AD Category – I banks should ensure generation of ORMs and marking off in the IDPMS etc., as per extant IDPMS guidelines.
C.2. Interest on Import Bills
(i) AD Category – I bank may allow payment of interest on usance bills or overdue interest on delayed payments for a period of less than three years from the date of shipment at t

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Control Copy of the import licence has already been utilised to cover the opening of a letter of credit against the original goods which have been lost, the original endorsement to the extent of the value of the lost goods may be cancelled by the AD Category – I bank and fresh remittance for replacement imports may be permitted without reference to Reserve Bank, provided, the insurance claim relating to the lost goods has been settled in favour of the importer. It may be ensured that the consignment being replaced is shipped within the validity period of the license. 20AD bank should ensure that proper remark/indicator is entered for ORM mark off/closure of Bills in IDPMS etc. as per extant IDPMS guidelines.
C.4. Guarantee for Replacement Import
In case replacement goods for defective import are being sent by the overseas supplier before the defective goods imported earlier are reshipped out of India, AD Category-I banks may issue guarantees at the request of importer client for dis

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ef Executive Officer (CEO) or auditor of the importer company that the goods for which remittance was made have actually been imported and installed at overseas sites.
21(v) The AD Category I bank should ensure compliance with IDPMS guidelines as applicable.
C.6. Receipt of Import Bills/Documents
22Concerned AD Category banks to ensure generation of ORMs, BoE entries and BoE settlement with the respective ORMs in compliance with IDPMS guidelines as applicable.
C.6.1 Receipt of import documents by the importer directly from overseas suppliers
Import bills and documents should be received from the banker of the supplier by the banker of the importer in India. AD Category – I bank should not, therefore, make remittances where import bills have been received directly by the importers from the overseas supplier, except in the following cases:
(i) Where the value of import bill does not exceed USD 300,000.
(ii) Import bills received by wholly-owned Indian subsidiaries of foreign compa

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semi- precious stones can receive import bills directly from the suppliers without any ceiling. AD Category – I banks may undertake such transactions subject to the following conditions:
(i) The import would be subject to the prevailing Foreign Trade Policy.
(ii) The transactions are based on their commercial judgment and they are satisfied about the bonafides of the transactions.
(iii) AD Category – I banks should do the KYC and due diligence exercise and should be fully satisfied about the financial standing / status and track record of the importer customer. Before extending the facility, they should also obtain a report on each individual overseas supplier from the overseas banker or reputed overseas credit rating agency.
C.6.3. Receipt of import documents by the AD Category – I bank directly from overseas suppliers
(i) At the request of importer clients, AD Category – I bank may receive bills directly from the overseas supplier as above, provided the AD Category – I bank is f

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sessment Certificate or Postal Appraisal Form, as declared by the importer to the Customs Authorities, where import has been made by post, or Courier Bill of Entry as declared by the courier companies to the Customs Authorities in cases where goods have been imported through couriers, as evidence that the goods for which the payment was made have actually been imported into India, or
(c) For goods imported and stored in Free Trade Warehousing Zone (FTWZ) or SEZ Unit warehouses or Customs bonded warehouses, etc., the Exchange Control Copy of the Ex-Bond Bill of Entry or Bill of Entry issued by Customs Authorities by any other similar nomenclature the importer shall submit applicable BoE number, port code and date for marking evidence of import under IDPMS as detailed in para C.8.
(ii) In respect of imports on Delivery against acceptance basis, AD Category – I bank shall verify the evidence of import from IDPMS at the time of effecting remittance of import bill. However, if importers f

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exchange remitted is less than USD 1,000,000 or its equivalent and
(b) The importer is a company listed on a stock exchange in India and whose net worth is not less than Rs.100 crore as on the date of its last audited balance sheet, or, the importer is a public sector company or an undertaking of the Government of India or its departments.
(ii) The above facility may also be extended to autonomous bodies, including scientific bodies/academic institutions, such as Indian Institute of Science / Indian Institute of Technology, etc. whose accounts are audited by the Comptroller and Auditor General of India (CAG). AD Category – I bank may insist on a declaration from the auditor/CEO of such institutions that their accounts are audited by CAG.
26(iii) Outward Remittance Message has to be created & BoE has to be downloaded from “BoE Master “in IDPMS (in case of EDI ports). In case of Non-EDI ports duplicate copy/customs certified copy have to be submitted or BoE waiver obtained from RBI.

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y the importer, the banks shall download the Bill of Entry (BoE) issued by EDI ports from “BOE Master” in IDPMS. For non-EDI ports, AD bank of the importer shall upload the BoE data in IDPMS as per message format “Manual BOE reporting” on daily basis on receipt of BoE from the customer/Customs office. 29In order to enhance the ease of doing business and reduce transaction costs, submission of hardcopy of evidence of import documents i.e., BoE Exchange Control copy has been discontinued with effect from December 1, 2016 as the same is available in IDPMS. The revised procedure is as under:
(iv) AD banks shall enter BoE details (BoE number, port code and date) for ORM associated with the advance payments for import transactions as per the message format “BOE settlement”.
(v) In case of payment after receipt of BoE, the AD bank shall generate ORM for import payments made by its importer customer as per the message format “BOE settlement”.
(vi) Multiple ORMs can be settled against single

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lves write off to the extent of 5% of invoice value in cases where the amount declared in BoE varies from the actual remittance due to operational reasons and AD bank is satisfied with the reason/s submitted by the importer.
(xi) AD Category I banks may close the BoE for such import transactions where write off is on account of quality issues; short shipment or destruction of goods by the port / Customs / health authorities in terms of extant guidelines on the matter subject to submission of satisfactory documentation by the importer irrespective of the amount involved. AD Bank shall settle and close ORM/BoE with appropriate “Adjustment Indicator” in IDPMS.
(xii) The above operational guidelines for extension and write off are meant to facilitate closure of bills in IDPMS and will be subject to extant guidelines on the matter and not absolve the importer from remitting / receiving the amount in case of change in circumstances.
(xiii) While allowing write off, AD Category – I banks m

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nual BOE reporting” in IDPMS.
Follow-up for Evidence of Import
33(xvi) AD Category – I banks shall continue to follow up for outward remittance made for import (i.e. unsettled ORM) in terms of extant guidelines and instructions on the subject. In cases where relevant evidence of import data is not available in IDPMS on due dates against the ORM, AD Category – I bank shall follow up with the importer for submission of documentary evidence of import. Similarly, if BoE data is not settled against ORM within the prescribed period, AD Category – I banks shall follow up with the importer in terms of extent instructions.
34C.9. Verification and Preservation
(i) Internal inspectors and IS auditors (including external auditors appointed by AD Category – I bank) should carry out verification and IS audit and assurance of the “BOE Settlement” process in IDPMS. Data and process followed by AD Category -I bank for “BOE Settlement” should be preserved in terms of the guidelines under Cyber Secur

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-up for the next 3 months, 36by using various modes of communications. It should, however, be ensured that atleast one communication with the importer in this regard is by issuance of registered letter.
37(ii) In IDPMS, all outstanding import remittances, irrespective of the amount involved, should be reported by the AD Category-I banks. Further, submission of a separate BEF Statement by the AD Category-I bank would be required till the half year ended December 2017 and discontinued thereafter.
38Omitted
C.11 Import of Gold
C.11.1 Import of Gold.
i. The 20:80 scheme of import of gold was withdrawn on November 28, 2014. However, the obligation to export under the 20:80 scheme would apply to the unutilised gold imported before November 28, 2014.
39ii. Nominated banks and nominated agencies, as notified by DGFT, are permitted to import gold on consignment basis. In addition to the above, qualified jewellers and Tariff Rate Quota Holders (TRQ Holders) under India-UAE CEPA, as notifie

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encies/ qualified jewellers/ EOUs/ SEZs in Gem & Jewellery Sector, mode of payment-wise under return code R133 named 'Import of gold by EOUs, units in SEZ/EPZ and nominated agencies(HY)'
* Return on monthly basis showing the quantity and value of gold imports by the nominated agencies (other than the nominated banks)/ EOUs/ qualified jewellers/ SEZs in Gem & Jewellery sector during the month under report as well as the cumulative position as at the end of the said month beginning from the 1st month of the Financial Year. The return code R132 is named as 'Import of gold by EOUs, units in SEZ/EPZ and nominated agencies(M)'. Both the returns shall be submitted, even if there is 'Nil' position, by the 10th of the following month / half year, to which it relates
C.11.2. Import of Gold Jewellery Including Jewellery Made of Precious Metals or/and Studded With Diamonds / Precious Stones /Semi-precious.
Suppliers' and Buyers' credit (trade credit) including the usanc

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ure the remittances sent are only for the bona fide import transactions through exchange/s authorised by IFSCA.
* The advance remittance for import of Gold should not be leveraged in what-so-ever form for importing Gold worth more than the advance remittance made.
* In case the import of Gold through IFSCA authorised exchange, for which advance remittance has been made, does not materialise, or the advance remittance made for the purpose is more than the amount required, the unutilized advance remittance shall be remitted back to the same AD bank within the specified time limit of eleven days.
* For gold imported through IIBX, QJ shall submit the Bill of Entry (or any other such applicable document issued/approved by Customs Department for evidence of import), issued by Customs Authorities to the AD bank from where advance payment has been remitted.
* All payments by Qualified Jewellers for imports of gold through IIBX, shall be made through exchange mechanism as approved by IF

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ts under FEMA, 1999, FTDR Act 1992, Foreign Trade Policy and regulations of IFSCA.
AD banks may frame their own internal guidelines to deal with such cases, with the approval of their Board of Directors.
iv. Reporting requirement by AD banks
* AD bank shall create Outward Remittance Message (ORM) for all such outward remittances in IDPMS in terms of extant guidelines.
* All these transactions need to be reported in FETERS in terms of extant guidelines.
* AD bank shall report the import of gold through QJ in CIMS as prescribed at para C.11.1 above.
v. The above mentioned arrangement is for the sole purpose of facilitating physical import of gold through IIBX or any similar exchange authorised by IFSCA, by Qualified Jewellers in India.
C.11.4 Import of gold by valid India-UAE CEPA Tariff Rate Quota Holders as notified by -The International Financial Services Centres Authority (IFSCA)
AD Category-I banks may allow valid India-UAE CEPA Tariff Rate Quota (TRQ) Holders to remit ad

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Further, AD banks may allow extension of time in respect of such clean credit for import of rough, cut and polished diamonds, for a period exceeding 180 days from the date of shipment to a maximum period of 180 days beyond the prescribed period/ due date beyond which they may refer the cases to the respective Regional Office of the Reserve Bank. Such extension by AD banks may be subject to the conditions such as: (i) AD banks being satisfied of the genuineness of the reason and bonafides of the transaction and also that no interest payment is involved for the additional period; (ii) reasons for such extension are due to financial difficulties and/ or quality disputes; (iii) importer is not under investigation and is not a frequent offender. AD banks may submit a half yearly report (half year shall be April- September and October-March) of such extensions allowed customer-wise, to the respective Regional Office of the Reserve Bank within 15 days of the end of the respective half year45.

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ed Jewellers to remit advance payment for eleven days for import of silver through IIBX subject to the conditions as mentioned in A.P. (DIR Series) Circular No.04 dated May 25, 2022.
C.13. Import Factoring
(i) AD Category – I bank may enter into arrangements with international factoring companies of repute, preferably members of Factors Chain International, without the approval of Reserve Bank.
(ii) They will have to ensure compliance with the extant foreign exchange directions relating to imports, Foreign Trade Policy in force and any other guidelines/directives issued by Reserve Bank in this regard.
C.14. Merchanting Trade47
C.14.1. AD banks may handle the Merchanting Trade Transactions (MTT) subject to the following guidelines:
* For a trade to be classified as merchanting trade, goods acquired shall not enter the Domestic Tariff Area.
* Considering that in some cases, the goods acquired may require certain specific processing/ value-addition, the state of goods so acquired

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satisfy itself about the genuineness of the trade. The AD bank may, if satisfied, rely on online verification of Bill of Lading/ Airway Bill on the website of International Maritime Bureau or Airline web check facilities. However, the AD bank shall ensure that the requisite details are made available /retrievable at the time of Inspection/Audit/investigation of the transactions.
* The entire MTT shall be completed within an overall period of nine months and there shall not be any outlay of foreign exchange beyond six months48. The commencement date of merchanting trade shall be the date of shipment / export leg receipt or import leg payment, whichever is first. The completion date shall be the date of shipment / export leg receipt or import leg payment, whichever is the last.
* Short-term credit either by way of suppliers' credit or buyers' credit may be extended for MTT to the extent not backed by advance remittance for the export leg, including the discounting of export

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d at point no. 2 (viii) above.
* Payment for import leg may also be allowed to be made out of the balances in EEFC account of the merchant trader.
* Merchanting traders may be allowed to make advance payment for the import leg on demand made by the overseas supplier. In case where inward remittance from the overseas buyer is not received before the outward remittance to the overseas supplier, AD bank may handle such transactions based on its commercial judgement. It may, however, be ensured that any such advance payment for an import leg beyond USD 500,000/- per transaction, shall be made against Bank Guarantee / an unconditional, irrevocable standby Letter of Credit from an international bank of repute. Overall prudential limits on allowing such advance payments by a customer may be fixed by the AD bank.
* Letter of Credit to the supplier for the import leg is permitted against confirmed export order, keeping in view the foreign exchange outlay of six months and completion of th

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d expenses from export proceeds for the specific MTT.
C.14.3 Write-off of unrealized amount of export leg:
i. AD bank may write-off the unrealized amount of export leg, without any ceiling, on the request made by the Merchanting trader, in the following circumstances:
* The MTT buyer has been declared insolvent and a certificate from the official liquidator specifying that there is no possibility of recovery of export proceeds has been produced.
* The goods exported have been auctioned or destroyed by the Port / Customs / Health authorities in the importing country and a certificate to that effect has been produced.
* The unrealized amount of the export leg represents the balance due in a case settled through the intervention of the Indian Embassy, Foreign Chamber of Commerce or similar Organization;
provided, the MTT is in adherence to all other provisions except the delays in timelines (either for outlay or completion period of MTT or both) attributed to reasons mentioned at

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t result in the MTT ending into a loss.
* The Merchanting trader shall make a specific request to the AD bank in this regard.
C.14.6 AD bank may approach Regional Office (RO) concerned of the Reserve Bank for regularization of the MTT for deviation, if any, from the prescribed guidelines and the MTT shall be closed only after receiving approval from the RO concerned of the Reserve Bank.
C.14.7 Reporting for merchanting trade transactions under FETERS shall be done on gross basis, against the undermentioned codes:
Trade
Purpose Code under FETERS
Description
Export
P0108
Goods sold under merchanting /receipt against export leg of merchanting trade
Import
S0108
Goods acquired under merchanting /payment against import leg of merchanting trade
C.14.8. Merchanting trade to Nepal and Bhutan
As Nepal and Bhutan are landlocked countries, there is a facility of transit trade whereby goods are imported from third countries by Nepal and Bhutan through India under the cover of Custom

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he date of credit to the collection account.
(b) The AD Category -I bank will obtain a copy of invoice and airway bill from the OPGSP containing the name and address of the beneficiary as evidence of import and report the transaction in R-Return under the foreign currency payment head.
(c) The permitted credits in the OPGSP Import Collection account will be:
* collection from Indian importers for online purchases from overseas exporters electronically through credit card, debit card and net banking and
* charge back from the overseas exporters.
(d) The permitted debits in the OPGSP Import Collection account will be:
* payment to overseas exporters in permitted foreign currency;
* payment to Indian importers for returns and refunds;
* payment of commission at rates/frequencies as defined under the contract to the current account of the OPGSP; and
* bank charges
49C.16. Settlement of Import transactions in currencies not having a direct exchange rate
To further liberaliz

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which FATF has called for counter measures.
50C.17 Import Data Processing and Monitoring System (IDPMS) – reconciliation of import entries – Special Procedure
Notwithstanding anything contained in this master direction, AD banks shall adopt the following procedure while closing entries (including outstanding entries) in IDPMS of value equivalent to Rs.10 lakh per entry/bill or less:
a. Such entries shall be reconciled and closed based on a declaration provided by the concerned importer that the amount has been paid.
b. Any reduction in declared value or invoice value of the bills of entry shall also be accepted, based on the declaration by the concerned importer.
c. The declarations referred above may also be received on a quarterly basis from the importers in a consolidated manner (by combining several bills in one declaration) for bulk reconciliation and closing of IDPMS entries.
ii. Accordlingly, AD banks shall also review the charges levied for handling these small-value imp

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ts in SEZ/EPZ, and (iii) Nominated Agencies
July 9, 2004
9
34
Import of Gold on Loan Basis – Tenor of Loan and Opening of Stand-By Letter of Credit
February 18, 2005
10
1
Import of Goods of Value USD 100,000 and Less -Clarification on Follow up for Evidence of Import
July 12, 2005
11
33
Liberalisation of Export and Import procedures
February 28, 2007
12
34
Import of Goods of Value USD 100,000 and Less -Clarification on Follow up for Evidence of Import
March 2, 2007
13
63
Import of Equipments by BPO Companies in India for International Call Centre
May 25, 2007
14
77
Advance Remittance for Import of aircrafts / helicopters / other aviation related purchases
June 29, 2007
15
18
Direct Receipt of Import Bills / Documents – Liberalisation
November 7, 2007
16
37
Direct Receipt of Import Bills / Documents for Import of Rough Precious & Semi-Precious Stones
April 16, 2008
17
03
Advance Remittance for Import of Rough Diamonds
August 4, 2008
18
08
Advance

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2
29
83
Import of precious and semi precious stones- Clarification
February 20, 2013
30
103
Import of Gold by Nominated Banks/Agencies
May 13, 2013
31
107
Import of Gold by Nominated Banks/Agencies
June 4, 2013
32
122
Import of Gold by Nominated Banks/Agencies
June 27, 2013
33
15
Import of Gold by Nominated Banks /Agencies/Entities
July 22, 2013
34
39
Export import of Currency
September 6, 2013
35
70
Third party payments for export / import transactions
November 8, 2013
36
71
Advance Remittance for Import of Rough Diamonds
November 8, 2013
37
73
Import of Gold by Nominated Banks /Agencies/Entities
November 11, 2013
38
82
Import of Gold by Nominated Banks/Agencies/Entities
December 31, 2013
39
95
Merchanting Trade Transactions
January 17, 2014
40
100
Third party payments for export / import transactions
February 04, 2014
41
103
Import of Gold / Gold Dore by Nominated Banks /Agencies /Entities – Clarifications
February 14, 2014
42
115

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6, 2015
54
30
Advance Remittance for Import of aircrafts / helicopters /other aviation related purchases
November 26, 2015
55
42
Settlement of Export/ Import transactions in currencies not having a direct exchange rate
February 4, 2016
56
57
Import of Rough, Cut and Polished Diamonds
March 31, 2016
57
65
Import of goods- Import Data Processing and Monitoring System (IDPMS)
April 28, 2016
58
05
Import Data Processing and Monitoring System (IDPMS)
October 06, 2016
59
11[(1)/14(R)]
Foreign Exchange Management (Manner of Receipt and Payment) Regulations 2016
October 20, 2016
60
27
Evidence of Import under Import Data Processing and Monitoring System (IDPMS)
January 12, 2017
61
33
Import of goods and services- Extension of time limits for Settlement of import payment
May 22, 2020
62
04
Guidelines on import of gold by Qualified Jewellers as notified by – The International Financial Services Centers Authority (IFSCA)
May 25, 2022
63
13
Use of any Alterna

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(Guarantees) Regulations, 2026
January 12, 2026
1 Modified vide AP (DIR Series) Circular No.65 dated April 28, 2016 and AP (DIR Series) Circular No.5 dated October 06, 2016 prior to modification it read as ''Issue of acknowledgement”
2 Inserted vide AP (DIR) Series Circular 42 dated February 4, 2016
3 Modified vide AP DIR Series Circular No. 27 dated January 12, 2017 prior to modification it read as “Exchange Control Copy of the Bill of Entry”
4 Inserted vide AP DIR Series circular No.5 dated October 06, 2016
5 omitted
6 Inserted vide AP DIR Series Circular No.33 dated May 22, 2020
7 Modified. Prior to modification it read as “Deferred payment arrangements (including suppliers' and buyers' credit) upto five years, are treated as trade credits for which the procedural guidelines as laid down in the Master Circular for External Commercial Borrowings and Trade Credits may be followed.”
8 Inserted vide AP DIR Series circular No.65 dated April 28, 2016
9 Clarification: may be con

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s permitted under the Foreign Trade Policy announced by Government of India from time to time and subject to such terms and conditions as may be specified by Reserve Bank of India from time to time.
B.8.3 An authorised dealer may, in the ordinary course of his business, give a guarantee in favour of a non-resident service provider, on behalf of a resident customer who is a service importer, subject to such terms and conditions as stipulated by Reserve Bank of India from time to time:
Provided that no guarantee for an amount exceeding USD 500,000 or its equivalent shall be issued on behalf of a service importer other than a Public Sector Company or a Department / Undertaking of the Government of India / State Government:
Provided further that where the service importer is a Public Sector Company or a Department / Undertaking of the Government of India / State Government, no guarantee for an amount exceeding USD 100,000 or its equivalent shall be issued without the prior approval of t

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r No 07 dated June 13, 2025
17 Inserted vide AP (DIR Series) Circular No.65 dated April 28, 2016 and AP (DIR Series) Circular No.5 dated October 06, 2016
18 Inserted vide AP (DIR Series) Circular No. 13 dated September 28, 2021
19 Inserted vide AP (DIR Series) Circular No.65 dated April 28, 2016 and AP (DIR Series) Circular No.5 dated October 06, 2016
20 Inserted vide AP (DIR Series) Circular No.65 dated April 28, 2016 and AP (DIR Series) Circular No.5 dated October 06, 2016
21 Inserted vide AP (DIR Series) Circular No.65 dated April 28, 2016 and AP (DIR Series) Circular No.5 dated October 06, 2016
22 Inserted vide AP (DIR Series) Circular No.65 dated April 28, 2016 and AP (DIR Series) Circular No.5 dated October 06, 2016
23 Modified vide AP (DIR Series) Circular No.65 dated April 28, 2016 prior to modification it read as “In case of all imports, where value of foreign exchange remitted / paid for import into India exceeds USD 100,000 or its equivalent, it is obligatory on the p

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for goods imported and stored in Free Trade Warehousing Zone (FTWZ) or SEZ Unit warehouses or Customs bonded warehouses, etc.
(ii) In respect of imports on Delivery against acceptance basis, AD Category – I bank should insist on production of evidence of import at the time of effecting remittance of import bill. However, if importers fail to produce documentary evidence due to genuine reasons such as non- arrival of consignment, delay in delivery/ customs clearance of consignment, etc., AD bank may, if satisfied with the genuineness of request, allow reasonable time, not exceeding three months from the date of remittance, to the importer to submit the evidence of import.
25 Inserted vide AP (DIR Series) Circular No.65 dated April 28, 2016 and AP (DIR Series) Circular No.5 dated October 06, 2016
26 Inserted vide AP (DIR Series) Circular No.65 dated April 28, 2016 and AP (DIR Series) Circular No.5 dated October 06, 2016
27 Clarification: ORM not applicable for non physical imports

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ed vide AP (DIR Series) Circular No. 27 dated January 12, 2017 prior to modification it read as “(i) Internal inspectors or auditors (including external auditors appointed by AD Category – I bank) should carry out verification of the documents evidencing import, e.g. Exchange Control copies of Bills of Entry or Postal Appraisal Forms, or Customs Assessment Certificates, etc.
35 Modified vide AP (DIR Series) Circular No.65 dated April 28, 2016 prior to modification it read as “exceeding USD 100,000”
36 Modified. Prior to modification it read as “including issuing registered letters to the importer”
37 Modified. Prior to modification it read as” On operationalization of IDPMS, all outstanding import remittances, irrespective of the amount involved, will be reported into the system by banks and submission of a separate BEF statement would be discontinued from a date, to be notified separately”. which was modified vide AP (DIR Series) Circular No.65 dated April 28, 2016 prior to modific

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cument against Payment (DP) basis as per entitlement without any end use restrictions”.
Clarification: Import by such entities, if permitted under FTP shall be on Document against Payment (DP) basis.
41 Inserted vide A.P.(Dir Series) Circular No. 12 dated December 22, 2023.
42 Inserted vide A.P.(Dir Series) Circular No. 04 dated May 25, 2022.
43 Inserted vide A.P.(DIR Series) Circular No. 14 dated January 31, 2024
44 Inserted vide A.P.(DIR Series) Circular No. 57 dated March 31, 2016
45 Updated. Prior to updation it read as “AD banks may submit a half yearly report of such extensions allowed customer-wise, to the respective Regional Office of the Reserve Bank.”
46 Inserted vide A.P.(DIR Series) Circular No. 07 dated November 10, 2023
47 Revised guidelines on merchanting trade transactions issued vide A.P. (DIR Series) Circular No.20 dated January 23, 2020 in supersession of guidelines contained in A.P. (DIR Series) Circular No.115 dated March 28, 2014.
48 Inserted vide A.P. (D

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Master Direction – Export of Goods and Services (Updated as on January 12, 2026)
16/2015-16 Dated:- 1-1-2016 Master Direction
FEMA
RBI/FED/2015-16/11
FED Master Direction No. 16/2015-16
January 1, 2016
(Updated as on January 12, 2026)
(Updated as on November 14, 2025)
(Updated as on October 09, 2025)
(Updated as on October 01, 2025)
(Updated as on August 05, 2025)
(Updated as on April 29, 2025)
(Updated as on April 23, 2025)
(Updated as on March 17, 2025)
(Updated as on January 16, 2025)
(Updated as on August 29, 2024)
(Updated as on November 22, 2022)
(Updated as on January 08, 2021)
(Updated as on October 19, 2020)
(Updated as on January 12, 2018)
(Updated as on November 16, 2017)
(Updated as on September 15, 2017)
(Updated as on May 26, 2016)
(Updated as on May 12, 2016)
To,
All Authorised Dealer Category – I banks
Madam / Sir,
Master Direction – Export of Goods and Services
Export of Goods and Services from India is governed by Section 7 of the F

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his Master Direction is furnished in the Appendix. Reporting instructions can be found in Master Directions on reporting (Master Direction No. 18 dated January 01, 2016)
4. It may be noted that, whenever necessary, Reserve Bank shall issue directions to Authorised Persons through A.P. (DIR Series) Circulars in regard to any change in the Regulations or the manner in which relative transactions are to be conducted by the Authorised Persons with their customers/ constituents. The Master Direction issued herewith shall be amended suitably simultaneously. This Master Direction is issued under Sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 and is without prejudice to permissions/ approvals, if any, required under any other law.
Yours faithfully,
(Dr Aditya Gaiha)
Chief General Manager-in-Charge
 
INDEX
PART – A General
A.1
Introduction
A.2
Realization and repatriation of proceeds of export of goods / software / services
A.3
Manner of receipt and paym

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solidation of air cargo/ sea cargo
B.12
Exemption from Declaration
PART -C Obligations of Authorised Dealers
C.1
Grant of EDF waiver
C.2
Receipt of advance against exports
C.3
EDF Approval for Trade Fair/Exhibitions abroad
C.4
EDF approval for export of goods for re-imports
C.5
Re-export of unsold rough diamonds from Special Notified Zone of Customs without Export Declaration Form (EDF) formality
C.6
Foreign Currency accounts of Overseas branches/office, representatives of Indian entities
C.7
Delay in submission of shipping documents by exporters
C.8
Return of documents to exporters
C.9
Landlocked countries
C.10
Direct dispatch of documents by the exporter
C.11
Part Drawings /Undrawn Balances
C.12
Consignment Exports
C.13
Opening / hiring of warehouses abroad
C.14
Export Bills Register
C.15
Follow-up of overdue bills
C.16
Reduction in invoice value on account of prepayment of usance bills
C.17
Reduction in invoice value in other cases
C.18
Change

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gional offices, functioning under the Ministry of Commerce and Industry, Department of Commerce, Government of India. Policies and procedures required to be followed for exports from India are announced by the DGFT, from time to time.
(ii) AD Category – I banks may conduct export transactions in conformity with the Foreign Trade Policy in vogue and the Rules framed by the Government of India and the Directions issued by Reserve Bank from time to time. In exercise of the powers conferred by clause (a) of sub-section (1) and sub-section (3) of Section 7 and sub-section (2) of Section 47 of the Foreign Exchange Management Act, 1999 (42 of 1999), the Reserve Bank has notified the 2Foreign Exchange Management (Export of Goods and Services) Regulations, 2015 relating to export of goods and services from India, hereinafter referred to as the 'Export Regulations'. These Regulations have been notified vide Notification No. FEMA 23(R)/2015-RB dated January 12, 2016.
(iii) The directions contai

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, provided it is through a freely convertible Vostro account of a non-resident bank situated in any country other than a member country of Asian Clearing Union (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 bank service charges) on account of this transaction would be taken as export realization under export promotion schemes of FTP.
(c) Contracts (for which payments are received through Asian Clearing Union (ACU) shall be denominated in ACU Dollar. However, participants in the ACU may settle their transactions in ACU Dollar or in ACU Euro as per RBI Notifications. 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.
(d) Invoicing, payment

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ndent bank of the partner country.
(vi) Any reference to the Reserve Bank should first be made to the Regional Office of the Foreign Exchange Department situated in the jurisdiction where the applicant person resides, or the firm / company functions, unless otherwise indicated. If, for any particular reason, they desire to deal with a different office of the Foreign Exchange Department, they may approach the Regional Office of their jurisdiction for necessary approval. Such references should be routed through the Compliance Head of the AD bank.
(vii) “Financial Year” (April to March) is reckoned as the time base for all transactions pertaining to trade related issues.
A.2 Realization and repatriation of proceeds of export of goods / software / services
It is obligatory on the part of the exporter to realise and repatriate the full value of goods / software / services to India within a stipulated period from the date of export, as under:
(i) It has been decided in consultation with

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23, 2025, AD banks may allow exporters to realise and repatriate full export value of goods exported to 'Bharat Mart' within nine months from the date of sale of the goods from the warehouse.
A.3 Manner of receipt and payment
(i) The amount representing the full export value of the goods exported shall be received through an AD Bank in the manner specified in the Foreign Exchange Management (Manner of Receipt & Payment) Regulations, 2023 notified vide Notification No. FEMA 14(R)/2023-RB dated December 21, 2023.
(ii) When payment for goods sold to overseas buyers during their visits is received in this manner, EDF (duplicate) should be released by the AD Category – I banks only on receipt of funds in their Nostro account or if the AD Category – I bank concerned is not the Credit Card servicing bank, on production of a certificate by the exporter from the Credit Card servicing bank in India to the effect that it has received the equivalent amount in foreign exchange, AD Category – I b

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aintain ACU Dollar, ACU Euro and ACU Japanese Yen accounts with their correspondent banks in other participating countries. All eligible payments are required to be settled by the concerned banks through these accounts.
c) Relaxation from ACU Mechanism- Indo-Myanmar Trade – Trade transactions with Myanmar can be settled in any freely convertible currency in addition to the ACU mechanism.
d) In view of the difficulties being experienced by importers/exporters in payments to / receipts from Iran, it has been decided that with effect from December 27, 2010, all eligible current account transactions including trade transactions with Iran should be settled in any permitted currency outside the ACU mechanism, until further notice.
e) 10All eligible current account transactions including trade transactions with Sri Lanka may be settled in any permitted currency outside the ACU mechanism with effect from July 08, 2022, until further notice.
f) In view of the understanding reached among the

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/ import transactions
Taking into account the evolving international trade practices, it has been decided to permit third party payments for export / import transactions subject to conditions as under:
a) Firm irrevocable order backed by a tripartite agreement should be in place. However, it may not be insisted upon in cases where documentary evidence for circumstances leading to third party payments / name of the third party being mentioned in the irrevocable order/ invoice has been produced subject to:
(i) AD bank should be satisfied with the bona-fides of the transaction and export documents, such as, invoice / FIRC.
(ii) AD bank should consider the FATF statements while handling such transaction.
b) Third party payment should be routed through the banking channel only;
c) The exporter should declare the third party remittance in the Export Declaration Form and it would be responsibility of the Exporter to realise and repatriate the export proceeds from such third party named

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payment being made for import of goods.
(vi) 12Settlement of Export transactions in currencies not having a direct exchange rate
To further liberalise the procedure and facilitate settlement of export transactions where the invoicing is in a freely convertible currency and the settlement takes place in the currency of the beneficiary, which though convertible, does not have a direct exchange rate, it has been decided that AD Category-I banks may permit settlement of such export transactions (excluding those put through the ACU mechanism), subject to conditions as under:
* Exporter shall be a customer of the AD Bank,
* Signed contract / invoice is in a freely convertible currency,
* The beneficiary is willing to receive the payment in the currency of beneficiary instead of the original (freely convertible) currency of the invoice/ contract, Letter of Credit as full and final settlement,
* AD bank is satisfied with the bonafides of the transactions, and
* The counterparty to

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i) Exchange rate between the currencies of the two trading partner countries may be market determined.
(iii) The settlement of trade transactions under this arrangement shall take place in INR in accordance with the procedure laid down in Para c.
c) In terms of Regulation 7(1) of Foreign Exchange Management (Deposit) Regulations, 2016, AD banks in India have been permitted to open Rupee Vostro Accounts. Accordingly, for settlement of trade transactions with any country, AD bank in India may open Special Rupee Vostro Accounts of correspondent bank/s of the partner trading country. In order to allow settlement of international trade transactions through this arrangement, it has been decided that:
(i) Indian importers undertaking imports through this mechanism shall make payment in INR which shall be credited into the Special Vostro account of the correspondent bank of the partner country, against the invoices for the supply of goods or services from the overseas seller /supplier.
(ii

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unts are first used towards payment obligations arising out of already executed export orders / export payments in the pipeline. The said permission would be in accordance with the conditions mentioned in para-C.2 on Receipt of advance against exports under Master Direction on Export of Goods and Services 2016 (as amended from time to time). In order to ensure that the advance is released only as per the instructions of the overseas importer, the Indian bank maintaining the Special Vostro account of its correspondent bank shall, apart from usual due diligence measures, verify the claim of the exporter with the advice received from the correspondent bank before releasing the advance.
f) 'Set-off' of export receivables against import payables in respect of the same overseas buyer and supplier with facility to make/receive payment of the balance of export receivables/import payables, if any, through the Rupee Payment Mechanism may be allowed, subject to the conditions mentioned in para C

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company in terms of guidelines and limits prescribed vide AP DIR Circular No.13 dated October 03, 2025.
i) Reporting of cross- border transactions need to be done in terms of the extant guidelines under FEMA 1999.
j) AD Category-I banks may open/close Special Rupee Vostro Accounts in the name of their overseas branches or correspondents without prior reference to the Reserve Bank16 AD bank maintaining the Special Rupee Vostro Account shall ensure that the correspondent bank is not from a country or jurisdiction in the updated FATF Public Statement on High Risk & Non Co-operative Jurisdictions on which FATF has called for counter measures.
A.4 Foreign Currency Account
(i) Participants in international exhibition/trade fair have been granted general permission vide 17Regulation 5(E)(5) of Foreign Exchange Management (Foreign Currency Accounts by a person Resident in India) Regulations dated January 21, 2016 for opening a temporary foreign currency account abroad. Exporters may depos

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a foreign currency account with a bank outside India, in the name of its overseas office/branch, by making remittance for the purpose of normal business operations of the said office/branch or representative subject to conditions stipulated in 18Regulation 5 (B) of Foreign Exchange Management (Foreign Currency Accounts by a person Resident in India) Regulations dated January 21, 2016.
(iv) A unit located in a Special Economic Zone (SEZ) may open, hold and maintain a Foreign Currency Account with an AD Category – I bank in India subject to conditions stipulated in 19Regulation 4 (D) of Foreign Exchange Management (Foreign Currency Accounts by a person Resident in India) Regulations dated January 21, 2016.
(v) A person resident in India being a project / service exporter may open, hold and maintain foreign currency account with a bank outside or in India, subject to the standard terms and conditions in the Memorandum PEM.
20(vi)
A person resident in India, being an exporter, may open

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and / or studded with / without diamond and / or other stones, with a track record of at least three years21 in import / export of diamonds / colored gemstones / diamond and colored gemstones studded jewellery / plain gold jewellery and having an average annual turnover of Rs. 3 crores or above during the preceding three licensing years (licensing year is from April to March) are permitted to transact their business through Diamond Dollar Accounts.
(ii) They may be allowed to open not more than five Diamond Dollar Accounts with their banks.
(iii) Eligible firms and companies may apply for permission to their AD Category – I banks in the format prescribed.
22
(iv) Conditions mentioned at Para A.6 (iv) a) & b) shall also apply.
A.6 Exchange Earners' Foreign Currency Account (EEFC Account)
(i) A person resident in India may open with, an AD Category – I bank in India, an account in foreign currency called the Exchange Earners' Foreign Currency (EEFC) Account, in terms of 23Regulatio

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rd commitments.
b) The facility of EEFC scheme is intended to enable exchange earners to save on conversion/transaction costs while undertaking forex transactions. This facility is not intended to enable exchange earners to maintain assets in foreign currency, as India is still not fully convertible on Capital Account.
(v) The eligible credits represent –
a) inward remittance received through normal banking channel, other than the remittance received pursuant to any undertaking given to the Reserve Bank or which represents foreign currency loan raised or investment received from outside India or those received for meeting specific obligations by the account holder.
b) payments received in foreign exchange by a 100 per cent Export Oriented Unit or a unit in Export Processing Zone, Software Technology Park or Electronic Hardware Technology Park for supply of goods to similar such unit or to a unit in Domestic Tariff Area and also payments received in foreign exchange by a unit in Dom

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er trade proposals involving adjustment of value of goods imported into India against value of goods exported from India in terms of an arrangement voluntarily entered into between the Indian party and the overseas party through an Escrow Account opened in India in US Dollar will be considered by the Reserve Bank subject to following conditions:
(i) All imports and exports under the arrangement should be at international prices in conformity with the Foreign Trade Policy and Foreign Exchange Management Act, 1999 and the Rules and Regulations made there under.
(ii) No interest will be payable on balances standing to the credit of the Escrow Account but the funds temporarily rendered surplus may be held in a short-term deposit up to a total period of three months in a year (i.e., in a block of 12 months) and the banks may pay interest at the applicable rate.
(iii) No fund based/or non-fund based facilities would be permitted against the balances in the Escrow Account.
(iv) Applicatio

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ey will collect the EDF for goods loaded at these stations so that the goods may move straight on to the foreign country without further formalities at the border. The list of designated railway stations can be obtained from the Railways. For goods loaded at stations other than the designated stations, exporters must arrange to present EDF to the Customs Officer at the Border Land Customs Station where Customs formalities are completed.
A.9 Border trade with Myanmar
In supersession of instructions contained in A.P. (DIR Series) Circular No. 17 dated October 16, 2000, barter system of trade at the Indo-Myanmar border has been discontinued and replaced with normal trade with effect from December 1, 2015. Accordingly, all trade transactions with Myanmar, including those at the Indo-Myanmar border with effect from December 1, 2015 shall be settled in any permitted currency in addition to the Asian Clearing Union mechanism.
A.10 Counter -Trade arrangements with Romania
The Reserve Bank

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de in advance in one lump sum or at monthly intervals as approved by the authority concerned.
A.13 Export factoring on non-recourse basis
AD banks have been permitted to factor the export receivables on a non-recourse basis, so as to enable the exporters to improve their cash flow and meet their working capital requirements subject to conditions as under:
* AD banks may take their own business decision to enter into export factoring arrangement on non-recourse basis. They should ensure that their client is not over financed. Accordingly, they may determine the working capital requirement of their clients taking into account the value of the invoices purchased for factoring. The invoices purchased should represent genuine trade invoices.
* In case the export financing has not been done by the Export Factor, the Export Factor may pass on the net value to the financing bank/ Institution after realising the export proceeds.
* AD bank, being the Export Factor, should have an arrange

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'Project Exports' and 'Service Exports' are laid down in the revised Memorandum of Instructions on Project and Service Exports (PEM-July 2014).
(ii) Accordingly, AD banks / Exim Bank may consider awarding post-award approvals without any monetary limit and permit subsequent changes in the terms of post award approval within the relevant FEMA guidelines / regulations. Project and service exporters may approach AD banks / Exim Bank based on their commercial judgment. The respective AD bank / Exim Bank should monitor the projects for which post-award approval has been granted by them.
(iii) In order to provide greater flexibility to project & service exporters in conducting their overseas transactions, facilities have been provided as under:
a) Inter-Project transfer of machinery – The stipulation regarding recovery of market value (not less than book value) of the machinery, etc., from the transferee project has been withdrawn. Further, exporters may use the machinery / equipment for

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ating of which should be at least A-1/AAA by Standard & Poor or P-1/-AAA by Moody's or F1/AAA by Fitch IBCA etc., and as deposits with branches / subsidiaries outside India of AD Category – I banks in India.
d) Repatriation of funds in case of On-site Software Contracts – The requirement of repatriation of 30 per cent of contract value in respect of on-site contracts by software exporter company / firm has been dispensed with. They should, however, repatriate the profits of on-site contracts after completion of the contracts.
A.15 Export of goods on lease, hire, etc.
Prior approval of the Reserve Bank is required for export of machinery, equipment, etc., on lease, hire basis under agreement with the overseas lessee against collection of lease rentals/hire charges and ultimate re-import. Exporters should apply for necessary permission, through an AD Category – I banks, to the Regional Office concerned of the Reserve Bank, giving full particulars of the goods to be exported.
A.16 Exp

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isiting India may take outside India currency notes of Government of India and Reserve Bank of India notes up to an amount not exceeding Rs. 25,000 (Rupees twenty five thousand only) while exiting only through an airport.
PART-B EDF / SOFTEX Procedure
B.1 Export of goods through Customs ports
(i) Customs shall certify the value declared and give running serial number on the two copies of Export Declaration Form (EDF), submitted by exporter at Non- Electronic Data Interchange (EDI) port.
(ii) Customs shall retain the original EDF for transmission to the Reserve Bank and return the duplicate copy to the exporter.
(iii) At the time of shipment of goods, exporters shall submit the duplicate copy of the EDF to Customs. After examining the goods, Customs shall certify the quantity in the form and return it to the exporter for submission to AD for negotiation or collection of export bills.
(iv) Within 21 days from the date of export, exporter shall lodge the duplicate copy together with

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uthority concerned shall hand over to the exporter, one copy of the shipping bill marked 'Exchange Control (EC) Copy' for being submitted to the AD bank within 21 days from the date of export for collection/negotiation of shipping documents. However, in cases where EC copy of shipping bill is not printed in terms of CBEC's Circular No. 55/2016-Customs dated November 23, 2016 and data of shipping bill is integrated with EDPMS, requirement of submission of EC copy of shipping bill with the AD bank would not be there.
(iii) The manner of disposal of EC copy of Shipping Bill shall be the same as that for EDF. The duplicate copy of the form together with a copy of invoice etc. shall be retained by ADs and may not be submitted to the Reserve Bank. The question of disposal of EC copy of shipping bill will, however, not arise where EC copy of shipping bill is not printed in terms of CBEC's Circular No.55/2016-Customs dated November 23, 2016 and data of shipping bill is integrated with EDPMS.

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r ensuring that the parcel has been addressed to their branch or correspondent bank in the country of import and return the original copy to the exporter, who shall then submit the EDF to the post office with the parcel.
(ii) The duplicate copy of EDF shall be retained by the AD to whom the exporter shall submit relevant documents together with an extra copy of invoice for negotiation/collection, within the prescribed period of 21 days.
(iii) The concerned overseas branch or correspondent shall be instructed to deliver the parcel to consignee against payment or acceptance of relative bill.
(iv) AD may, however, countersign EDF covering parcels addressed direct to the consignees, provided:
* An irrevocable letter of credit for the full value of export has been opened in favor of the exporter and has been advised through the AD concerned.
Or
* The full value of the shipment has been received in advance by the exporter through an AD.
Or
* The AD is satisfied, on the basis of

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gard has been rationalised in consultation with the Government of India as outlined below should be followed by the exporter in conformity with Regulation 3 of Notification No.FEMA.23 (R)/2015-RB dated January 12, 2016.
a) The exporters may submit the EDF, duly signed by the Master of the vessel in lieu of Custom certification, indicating the composition of the catch, quantity, export value, date of shipment (date of transfer of catch), etc duly supported by a certificate from an international cargo surveyor.
b) Bill of Lading / receipt of trans-shipment issued by the carrier vessel should include the EDF Number.
c) The prescribed period of realization and repatriation should be reckoned with reference to the date of transfer of catch as certified by the Master of the vessel or the date of the invoice, whichever is earlier.
d) The EDF, both original and duplicate, should indicate the number and date of Letter of Permit issued by Ministry of Agriculture for operation of the vessel.

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electronic format to RBI, the exporters now have to submit the SOFTEX form in duplicate as per the revised procedure. STPI/SEZ will retain one copy and handover duplicate copy to exporters after due certification. As hitherto, the exporters have to provide information about all the invoices including the ones lesser than US$25000, in the bulk statement in excel format.
(ii) A common “SOFTEX Form” has been devised to declare single as well as bulk software exports.
(iii) Reserve Bank of India has extended the facility for online generation of the EDF Form Number and the SOFTEX Form Number (Single as well as Bulk for use in off-site software exports). The facility of manual allotment of single as well bulk SOFTEX form number by Regional Offices of RBI has been dispensed with accordingly.
(iv) Invoicing of software exports
a) For long duration contracts involving series of transmissions, the exporters should bill their overseas clients periodically, i.e., at least once a month or on r

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them.
d) The invoices raised on overseas clients as at (a) to (c) above will be subject to valuation of export declared on SOFTEX form by the designated official concerned of the Government of India and consequent amendment made in the invoice value, if necessary.
B.6 Citing of specific identification numbers
In all applications / correspondence with the Reserve Bank, the specific identification number as available on the EDF and SOFTEX forms should invariably be cited.
B.7 Export of Services
it is clarified that, in respect of export of services to which none of the Forms specified in these Regulations apply, the exporter may export such services without furnishing any declaration, but shall be liable to realise the amount of foreign exchange which becomes due or accrues on account of such export, and to repatriate the same to India in accordance with the provisions of the Act, and these Regulations, as also other rules and regulations made under the Act.
B.8 Third party export

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oon as it is obtained.
(ii) Where a shipment has been entirely shut out and there is delay in making arrangements to re-ship, the exporter will give notice in duplicate to the Customs in the form and manner prescribed, attaching thereto the unused duplicate copy of EDF and the shipping bill. The Customs will verify that the shipment was actually shut out, certify the copy of the notice as correct and forward it to the Reserve Bank together with unused duplicate copy of the EDF. In this case, the original EDF received earlier from Customs will be cancelled. If the shipment is made subsequently, a fresh set of EDF should be completed.
B.11 Consolidation of air cargo/sea cargo
(i) Consolidation of air cargo
a) Where air cargo is shipped under consolidation, the airline company's Master Airway Bill will be issued to the Consolidating Cargo Agent. The Cargo agent in turn will issue his own House Airway Bills (HAWBs) to individual shippers.
b) AD Category – I banks may negotiate HAWBs o

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'relative sale contract' with overseas buyer provides for acceptance of FCR as a shipping document in lieu of bill of lading. However, the acceptance of such FCR for purchase/discount would purely be the credit decision of the bank concerned who, among others, should satisfy itself about the bona fides of the transaction and the track record of the overseas buyer and the Indian supplier since FCRs are not negotiable documents. It would be advisable for the exporters to ensure due diligence on the overseas buyer, in such cases.
B.12 Exemption from Declaration
The requirement of declaration of export of goods and software in the prescribed form will not apply to the cases indicated in Regulation 4 of 24Notification No.FEMA.23 (R)/2015-RB dated January 12, 2016. The exporters shall, however, be liable to realise and repatriate export proceeds as per FEMA Regulations.
PART-C Obligations of Authorised Dealers
C.1 Grant of EDF waiver
25AD Category – I banks may consider request

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verage annual export realisation during preceding three licensing years.
Such free of cost supplies shall not be entitled to Duty Drawback or any other export incentive under any export promotion scheme.
Exports of goods not involving any foreign exchange transaction directly or indirectly requires the waiver of EDF procedure from the Reserve Bank.
C.2 Receipt of advance against exports
(1) In terms of Regulation 15 of Notification No. FEMA 23 (R)/2015-RB dated January 12, 2016, where an exporter receives advance payment (with or without interest), from a buyer outside India, the exporter shall be under an obligation to ensure that the shipment of goods is made within three years26 from the date of receipt of advance payment; the rate of interest, if any, payable on the advance payment does not exceed London Inter-Bank Offered Rate (LIBOR)/ 27any other widely accepted / Alternative reference rate + 100 basis points; and the documents covering the shipment are routed through the AD

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banks can also allow exporters having a minimum of three years' satisfactory track record to receive long term export advance up to a maximum tenor of 10 years to be utilized for execution of long term supply contracts for export of goods subject to the conditions as under:
(i) Firm irrevocable supply orders and contracts should be in place. The contract with the overseas party/ buyer should be vetted and the same shall clearly specify the nature, amount and delivery timelines of the products over the years and penalty in case of non-performance or contract cancellation. Product pricing should be in consonance with prevailing international prices.
(ii) Company should have capacity, systems and processes in place to ensure that the orders over the duration of the said tenure can actually be executed.
(iii) The facility is to be provided only to those entities, which have not come under the adverse notice of Enforcement Directorate or any such regulatory agency or have not been cauti

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among others, prudential requirements based on board approved policy.
a) BG / SBLC may be issued for a term not exceeding two years at a time and further rollover of not more than two years at a time may be allowed subject to satisfaction with relative export performance as per the contract.
b) BG / SBLC should cover only the advance on reducing balance basis.
c) BG / SBLC issued from India in favor of overseas buyer should not be discounted by the overseas branch / subsidiary of bank in India.
Note: AD Category – I banks may also be guided by the Master Circular on Guarantees and Co-acceptances issued by Department of Banking Regulation.
(xii) AD Category – I banks may allow the purchase of foreign exchange from the market for refunding advance payment credited to EEFC account only after utilizing the entire balances held in the exporter's EEFC accounts maintained at different branches/banks.
(3) AD Category- I banks may allow exporters to receive advance payment for export of

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e of refund exceeding 10% of the advance payment received in the last three years;
(vii) The documents covering the shipment should be routed through the same authorised dealer bank; and
(viii) In the event of the exporter's inability to make the shipment, partly or fully, no remittance towards refund of unutilized portion of advance payment or towards payment of interest should be made without the prior approval of the Reserve Bank.
(4) (i) As it has been observed that there is substantial increase in the number and amount of advances received for exports remaining outstanding beyond the stipulated period on account of non-performance of such exports (shipments in case of export of goods), AD Category -I banks are advised to efficiently follow up with the concerned exporters in order to ensure that export performance (shipments in case of export of goods) are completed within the stipulated time period.
(ii) It is further reiterated that AD category -I banks should exercise pr

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items for display or display-cum-sale in trade fairs/exhibitions outside India subject to the following:
(i) The exporter shall produce relative Bill of Entry within one month of re-import into India of the unsold items.
(ii) The exporter shall report to the AD Category – I banks the method of disposal of all items exported, as well as the repatriation of proceeds to India.
(iii) Such transactions approved by the AD Category – I banks will be subject to 100 per cent audit by their internal inspectors/auditors.
C.4 EDF approval for export of goods for re-imports
(i) AD Category – I banks may consider request from exporters for granting EDF approval in cases where goods are being exported for re-import after repairs / maintenance / testing / calibration, etc., subject to the condition that the exporter shall produce relative Bill of Entry within one month of re-import of the exported item from India.
(ii) Where the goods being exported for testing are destroyed during testing, AD

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d by the Central Board of Indirect Taxes & Customs, Department of Revenue, Ministry of Finance, Government of India for the above purpose, Bill of Entry shall be filed by the buyer. AD bank may permit such import payments after being satisfied with the bona-fides of the transaction. Further, AD bank shall also maintain a record of such transactions.
C.6 Foreign Currency Accounts of Overseas branches/office, representatives of Indian entities
(1) (i) At the time of setting up of the office, AD Category – I banks may allow remittances towards initial expenses up to fifteen per cent of the average annual sales/income or turnover during the last two financial years or up to twenty-five per cent of the net worth, whichever is higher.
(ii) For recurring expenses, remittances up to ten per cent of the average annual sales/income or turnover during the last two financial years may be sent for the purpose of normal business operations of the office (trading/non-trading)/branch or representat

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able property outside India for its business and for residential purpose of its staff.
(v) The overseas office / branch of software exporter company/firm may repatriate to India 100 per cent of the contract value of each 'off-site' contract.
(vi) In case of companies taking up 'on site' contracts, they should repatriate the profits of such 'on site' contracts after the completion of the said contracts.
(vii) An audited yearly statement showing receipts under 'off-site' and 'on-site' contracts undertaken by the overseas office, expenses and repatriation thereon may be sent to the AD Category – I banks.
(2) In terms of A.P.(DIR Series) Circular No 03 dated April 23, 2025, AD banks may allow remittances by the Indian exporter for initial as well as recurring expenses for setup and continuing business operations of its offices without any pre-conditions, after verifying the reasonableness of the same.
C.7 Delay in submission of shipping documents by exporters
In cases where exporters

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spatch shipping documents to their overseas branches/correspondents expeditiously. However, they may dispatch shipping documents direct to the consignees or their agents resident in the country of final destination of goods in cases where:
a) Advance payment or an irrevocable letter of credit has been received for the full value of the export shipment and the underlying sale contract/letter of credit provides for dispatch of documents direct to the consignee or his agent resident in the country of final destination of goods.
b) The AD Category – I banks may also accede to the request of the exporter provided the exporter is a regular customer and the AD Category – I bank is satisfied, on the basis of standing and track record of the exporter and arrangements have been made for realization of export proceeds.
(ii) AD Category – I banks may also permit 'Status Holder Exporters' (as defined in the Foreign Trade Policy), and units in Special Economic Zones (SEZ) to dispatch the expo

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ry – I bank is satisfied about the bonafides of the transaction.
In case of doubt, the AD Category – I bank may consider filing Suspicious Transaction Report (STR) with FIU_IND (Financial Intelligence Unit in India).
C.11 Part Drawings/ Undrawn Balances
(i) In certain lines of export trade, it is the practice to leave a small part of the invoice value undrawn for payment after adjustment due to differences in weight, quality, etc., to be ascertained after arrival and inspection, weighment or analysis of the goods. In such cases, AD Category – I banks may negotiate the bills, provided:
a) The amount of undrawn balance is considered normal in the particular line of export trade, subject to a maximum of 10 per cent of the full export value.
b) An undertaking is obtained from the exporter on the duplicate of EDF forms that he will surrender/account for the balance proceeds of the shipment within the period prescribed for realization.
(ii) In cases where the exporter has not been able

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duct from sale proceeds of the goods expenses normally incurred towards receipt, storage and sale of the goods, such as landing charges, warehouse rent, handling charges, etc. and remit the net proceeds to the exporter.
(iii) The account sales received from the Agent/Consignee should be verified by the AD Category – I banks. Deductions in Account Sales should be supported by bills/receipts in original except in case of petty items like postage/cable charges, stamp duty, etc.
(iv) In case the goods are exported on consignment basis, freight and marine insurance must be arranged in India.
(v) AD Category – I banks may allow the exporters to abandon the books, which remain unsold at the expiry of the period of the sale contract. Accordingly, the exporters may show the value of the unsold books as deduction from the export proceeds in the Account Sales.
C.13 Opening / hiring of warehouses abroad
(1) AD Category – I banks may consider the applications received from exporters and grant

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of the same.
C.14 Export Bills Register
AD Category – I banks should maintain Export Bills Register, in physical or electronic form aligned with Export Data Processing and Monitoring System (EDPMS). The bill number should be given to all type of export transactions on a financial year basis (i.e. April to March) and same should be reported in EDPMS.
C.15 Follow-up of overdue bills
(i) AD Category – I banks should closely watch realization of bills and in cases where bills remain outstanding, beyond the due date for payment from the date of export, the matter should be promptly taken up with the concerned exporter. If the exporter fails to arrange for delivery of the proceeds within the stipulated period or seek extension of time beyond the stipulated period, the matter should be reported to the Regional Office concerned of the Reserve Bank stating, where possible, the reason for the delay in realizing the proceeds.
(ii) The duplicate copies of EDF/SOFTEX Forms should, continue to

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on the unexpired period of usance, calculated at the rate of interest stipulated in the export contract or at the prime rate/LIBOR/ 27any other widely accepted / Alternative reference rate of the currency of invoice where rate of interest is not stipulated in the contract.
C.17 Reduction in invoice value in other cases
(i) If, after a bill has been negotiated or sent for collection, its amount is to be reduced for any reason, AD Category – I banks may approve such reduction, if satisfied about genuineness of the request, provided:
a) The reduction does not exceed 25 per cent of invoice value:
b) It does not relate to export of commodities subject to floor price stipulations
c) The exporter is not on the exporters' caution list of the Reserve Bank,
d) The exporter is advised to surrender proportionate export incentives availed of, if any.
(ii) In the case of exporters who have been in the export business for more than three years, reduction in invoice value may be allowed, witho

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f export. Where the reduction in value exceeds 25%, all other relevant conditions stipulated in paragraph C.17 should also be satisfied.
C.19 Export of goods by Special Economic Zones (SEZs)
(i) Units in SEZs are permitted to undertake job work abroad and export goods from that country itself subject to the conditions that:
a) Processing / manufacturing charges are suitably loaded in the export price and are borne by the ultimate buyer.
b) The exporter has made satisfactory arrangements for realization of full export proceeds subject to the usual EDF procedure.
(ii) AD Category – I banks may permit units in DTAs to purchase foreign exchange for making payment for goods supplied to them by units in SEZs. Authorised Dealer Banks are permitted to sell foreign exchange to a unit in the DTA for making payment in foreign exchange to a unit in the SEZ for the services rendered by it (i.e. a unit in SEZ) to a DTA unit. It must be ensured that in the Letter of Approval (LoA) issued to the

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ing extension beyond one year from the date of export, the total outstanding of the exporter does not exceed USD one million or 10 per cent of the average export realizations during the preceding three financial years, whichever is higher.
33
34e) In cases where the exporter has filed suits abroad against the buyer, extension may be granted irrespective of the amount involved / outstanding.
(ii) Cases which are not covered by the above instructions would require prior approval from the concerned Regional Office of the Reserve Bank.
(iii) Reporting should be done in EDPMS.
C.21 Shipments lost in transit
(i) When shipments from India for which payment has not been received either by negotiation of bills under letters of credit or otherwise are lost in transit, the AD Category – I banks must ensure that insurance claim is made as soon as the loss is known.
(ii) In cases where the claim is payable abroad, the AD Category – banks must arrange to collect the full amount of claim due o

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utstanding export dues despite best efforts, may either self-write off or approach the AD Category – I banks, who had handled the relevant shipping documents, with appropriate supporting documentary evidence. The limits prescribed for write-offs of unrealised export bills are as under:
Particulars
Limit
Limit(%) in relation to
Self-write-off by an exporter
(Other than the Status Holder Exporter)
5%
Total export proceeds realised during the calendar year preceding the year in which the write-off is being done
Self-write-off by Status Holder Exporter
10%
Write-off by AD Category-1 Bank
10%
C.23.2. The above limits of self-write-off and write-off by the AD Category-1 Bank shall be reckoned cumulatively and shall be available subject to the following conditions:
a) The relevant amount has remained outstanding for more than one year;
b) Satisfactory documentary evidence is furnished indicating that the exporter had made all efforts to realise the export proceeds;
c) The expo

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ll efforts made by the exporter;
* The cost of resorting to legal action would be disproportionate to the unrealised amount of the export bill or where the exporter even after winning the Court case against the overseas buyer could not execute the Court decree due to reasons beyond his control;
* Bills were drawn for the difference between the letter of credit value and actual export value or between the provisional and the actual freight charges but the amounts have remained unrealised consequent on dishonor of the bills by the overseas buyer and there are no prospects of realization.
C.23.3. Notwithstanding anything contained in para C.23.1 and C.23.2 above, the AD Category-1 bank may, on request of the exporter, write-off unrealised export bills without any limit in respect of cases falling under any of the categories specified at C.23.2 (d) (i), (ii) and (iii) above provided AD Category -1 bank is satisfied with the documentary evidence produced.
C.23.4. AD Category-1 banks m

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shall also indicate that the export benefits, if any, availed by the exporter have been surrendered.
C.23.7. The following cases, however, would not qualify for the “write-off” facility:
* Exports made to countries with externalization problem i.e. where the overseas buyer has deposited the value of export in local currency but the amount has not been allowed to be repatriated by the Central Bank/ authorities of the country concerned.
* EDF/Softex which are under investigation by agencies like, Enforcement Directorate, Directorate of Revenue Intelligence, Central Bureau of Investigation, etc. as also the outstanding bills which are subject matter of civil / criminal suit.
C.23.8. AD Category – 1 banks shall report write-off of export bills in Export Data Processing and Monitoring System  (EDPMS).
C.23.9. AD banks shall put in place a system to carry out random check / percentage check of the export bills so written-off by their internal Inspectors/Auditors (including exter

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tion
As announced in the Foreign Trade Policy (FTP), 2015-20, realization of export proceeds shall not be insisted upon under any of the Export Promotion Schemes under the said FTP, subject to the following conditions:
a) The write off on the basis of merits is allowed by the Reserve Bank or by AD Category – I bank on behalf of the Reserve Bank, as per extant guidelines;
b) The exporter produces a certificate from the Foreign Mission of India concerned, about the fact of non-recovery of export proceeds from the buyer; and
c) This would not be applicable in self write off cases.
37C.26 Set-off of export receivables against import payables
C.26.1. AD category -I banks may deal with the following requests received from their Exporter/Importer constituents for allowing set-off of outstanding export receivables against outstanding import payables:
* Set-off of outstanding export receivables against outstanding import payables from/to the same overseas buyer/supplier.
* Set-off of

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bank shall ensure that import payables/export receivables are outstanding at the time of allowing set-off. Further, set-off shall be allowed between the export and import legs taking place during the same calendar year.
* In case of bilateral settlement, the set-off shall be in respect of same overseas buyer/supplier subject to it being supported by verifiable agreement/mutual consent.
In case of settlement within the group/associates companies, the arrangement shall be backed by a written, legally enforceable agreement/contract. AD Category – I bank shall ensure that the terms of agreement are strictly adhered to;
Set-off shall not result in tax evasion/avoidance by any of the entities involved in such arrangement.
* Third party guidelines shall be adhered to by the concerned entities, wherever applicable;
AD Category – I bank shall ensure compliance with all the regulatory requirement relating to the transactions;
AD Category – I bank may seek Auditors/CA certificate whe

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DF (O) forms / DTR as the case may be while details of import of goods / services are recorded through A1 / A2 form as the case may be. The relative EDF will be treated as complete by the designated AD Category – I banks only after the entire proceeds are adjusted / received.
(iii) Both the transactions of sale and purchase in R- Returns under FETERS are reported separately.
(iv) The export / import transactions with ACU countries are kept outside the arrangement.
(v) All the relevant documents are submitted to the concerned AD Category – I banks who should comply with all the regulatory requirements relating to the transactions.
C.28 Exporters' Caution List
381) An exporter would be caution-listed by the Reserve Bank based on the recommendations of the AD bank concerned, depending upon the exporters track record with the AD bank and investigative agencies.
The AD bank would make recommendations in this regard to the Regional Office concerned of the Foreign Exchange Department of

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having received advance payment or an irrevocable letter of credit in their favour covering the full value of the proposed exports;
* In case of usance bills, the relative letter of credit should cover full export value and also permit such drawings. Besides, the usance bills should also mature within prescribed realisation period reckoned from date of shipment.
* Except under the above mentioned conditions given in 2 (a) (i) and (ii), AD banks should not handle the shipping documents of caution listed exporters.
(b) AD Category – I banks should obtain prior approval of the Reserve Bank for issuing guarantees for caution-listed exporters.
C.29 [Omitted]39
C.30 Issuance of Electronic Bank Realisation Certificate (eBRC)
40AD Category-I banks are required to update the EDPMS with data of export proceeds on “as and when realised basis” and, with effect from October 16, 2017, they are required to generate Electronic Bank Realisation Certificate (eBRC) only from the data available in

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ndling these small-value export transactions, keeping in view the revised procedure/relaxations mentioned above and ensure that the same are commensurate with the services rendered. AD banks shall not levy any penal charges (penalty) for delays in adherence to any regulatory guidelines.
PART-D Remittances connected with Export
D.1 Agency commission on exports
(i) AD Category – I banks may allow payment of commission, either by remittance or by deduction from invoice value, on application submitted by the exporter. The remittance on agency commission may be allowed subject to conditions as under:
a) Amount of commission has been declared on EDF/SOFTEX form and accepted by the Customs authorities or Ministry of Information Technology, Government of India / EPZ authorities as the case may be. In cases where the commission has not been declared on EDF/SOFTEX form, remittance may be allowed after satisfying the reasons adduced by the exporter for not declaring commission on Export Decla

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Category – I banks, through whom the export proceeds were originally realised may consider requests for refund of export proceeds of goods exported from India and being re-imported into India on account of poor quality. While permitting such transactions, AD Category – I banks shall:
* Exercise due diligence regarding the track record of the exporter;
* Verify the bona-fides of the transactions;
* Obtain from the exporter a certificate issued by DGFT / Custom authorities that no export incentive has been availed by the exporter against the relevant export or the proportionate incentives availed, if any, have been surrendered;
* Not insist on the requirement of re-import of goods, where exported goods have been auctioned or destroyed by the Port / Customs / Health authorities/ any other accredited agency in the importing country subject to submission of satisfactory documentary evidence.
D.2.1. In all other cases AD banks shall ensure that procedures as applicable to normal im

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Returns
March 13, 2004
6
A.P. (DIR Series) Circular No.71
Data on Project Export Finance
June 8, 2007
7
A.P. (DIR Series) Circular No.30
Compilation of Bank-wide consolidated R-Return
February 25,2008
8
A.P (DIR Series) Circular No.43
Settlement system under ACU Mechanism
December 26, 2008
9
A.P. (DIR Series) Circular No.84
Compilation of R-Returns : Reporting under FETERS
February 29, 2012
10
A.P. (DIR Series) Circular No.46
Supply of Goods and Services by Special Economic Zones to Units in Domestic Tariff Areas
October 23, 2012
11
A.P. (DIR Series) Circular No.60
Export Outstanding Statement (XOS) Online Bank wide Submission
October 01, 2013
12
A.P. (DIR Series) Circular No.62
Closing of Old Outstanding Bills : Export – Follow-up – XOS Statements
October 14, 2013
13
A.P. (DIR Series) Circular No.63
Memorandum of Procedure for Channeling Transactions through Asian Clearing Union (ACU)
October 18, 2013
14
A.P.(DIR Series) Circular No.146
Export & Imp

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Series) Circular No. 10
Re-export of unsold rough diamonds from Special Notified Zone of Customs without Export Declaration Form (EDF) formality
November 22, 2019
22
A.P. (DIR Series) Circular No. 22
Settlement system under Asian Clearing Union (ACU) Mechanism
March 17, 2020
23
A.P. (DIR Series) Circular No. 27
Export of Goods and Services- Realisation and Repatriation of Export Proceeds-Relaxation
April 01, 2020
24
A.P. (DIR Series) Circular No. 03
Export Data Processing and Monitoring System (EDPMS) Module for 'Caution/De-caution Listing of Exporters' – Review
October 09, 2020
25
A.P. (DIR Series) Circular No. 08
External Trade – Facilitation – Export of Goods and Services
December 04, 2020
26
A.P. (DIR Series) Circular No. 13
Use of any Alternative reference rate in place of LIBOR for interest payable in respect of export / import transactions
September 28, 2021
27
A.P. (DIR Series) Circular No. 09
Asian Clearing Union (ACU) Mechanism – Indo-Sri Lanka trade

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ification No. FEMA 10(R)(7)/2025-RB
Foreign Exchange Management (Foreign Currency Accounts by a person resident in India) (Seventh Amendment) Regulations, 2025
October 06, 2025
36
A.P (DIR Series) Circular No. 19
Foreign Exchange Management (Guarantee) Regulations, 2026
January 12, 2026
–
1 FEM (Export of Goods and Services) Regulations, 2000 was repealed and replaced by FEM (Export of Goods and Services) Regulations, 2015 with effect from January 12, 2016.
2 FEM (Export of Goods and Services) Regulations, 2000 was repealed and replaced by FEM (Export of Goods and Services) Regulations, 2015 with effect from January 12, 2016.
3 Substituted vide A.P. (DIR Series) Circular No. 19 dated January 12, 2026. Prior to substitution, Para A.1(iv) read as follows:
“(iv) In terms of Regulation 4 of the Foreign Exchange Management (Guarantees) Regulations, 2000, notified vide Notification No. FEMA 8/2000-RB dated May 3, 2000, AD Category – I banks have been permitted to issue guarantees

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ncy Accounts by a person Resident in India) Regulations, 2015 with effect from January 21, 2016. Prior to insertion it read as “Regulation 7(7) of the Foreign Exchange Management (Foreign Currency Accounts by a person Resident in India) Regulations, 2000 notified vide Notification No. FEMA 10/2000-RB dated May 3, 2000”
18 Inserted by FEM (Foreign Currency Accounts by a person Resident in India) Regulations, 2015 with effect from January 21, 2016. Prior to insertion it read as “Regulation 7 of Notification No. FEMA 10/2000-RB dated May 3, 2000”
19 Inserted by FEM (Foreign Currency Accounts by a person Resident in India) Regulations, 2015 with effect from January 21, 2016. Prior to insertion it read as “Regulation 6 (A) of Notification No. FEMA 10/2000-RB dated May 3, 2000”
20 Substituted vide Notification No. FEMA 10(R)(7)/2025-RB dated October 06, 2025. Prior to substitution it read as 'A person resident in India, being an exporter, may open, hold and maintain a Foreign Currency Acc

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ulations, 2015 with effect from January 21, 2016
23 Inserted by FEM (Foreign Currency Accounts by a person Resident in India) Regulations, 2015 with effect from January 21, 2016. Prior to insertion it read as “Regulation 4 of the Foreign Exchange Management (Foreign Currency Accounts by a person Resident in India) Regulations, 2000 notified vide Notification No. FEMA 10/2000-RB dated May 3, 2000″
24 FEM (Export of Goods and Services) Regulations, 2000 was repealed and replaced by FEM (Export of Goods and Services) Regulations, 2015 with effect from January 12, 2016
25 Inserted vide Gazette Notification No. 28.2015-2020 dated August 27, 2018. Prior to deletion it read as:” AD Category – I banks may consider requests for grant of EDF waiver from exporters as under: Status holders shall be entitled to export freely exportable items (excluding Gems and Jewellery, Articles of Gold and precious metals) on free of cost basis for export promotion subject to an annual limit of Rupees One Cro

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2016
29 Substituted vide Notification No. FEMA 23 (R)(7)/2025-RB dated November 13, 2025
30 Inserted vide AP(DIR Series) Circular No.10 dated November 22, 2019
31 Inserted vide AP(DIR Series) Circular No.08 dated December 04, 2020
32 Inserted by AP (Dir) Series Circular 74 dated May 26, 2016, to be effected from June 15, 2016. Prior to insertion it read as: “With operationalisation of EDPMS on March 01, 2014, realization of all export transaction for shipping documents after February 28, 2014 should be reported in EDPMS and old outstanding shipping bills prior to March 01, 2014 should continue to be reported in XOS till completion of the cycle.”
33 Omitted by AP (DIR) Series Circular 74 dated May 26, 2016 with effect from June 15, 2016. Prior to deletion it read as: “All the export bills outstanding beyond six months from the date of export may be reported in XOS statement. However, where extension of time has been granted by the AD Category – I banks, the date up to which extensi

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o years in EDPMS provided no extension is granted by AD Category -I bank / RBI. Date of shipment will be considered for reckoning the realisation period. (b) Once related bills are realised and closed or extension for realisation is granted, the exporter will automatically be de-caution listed. (c) The exporters can also be caution listed even before the expiry of two years period based on the recommendation of AD banks. The recommendation may be based on cases where exporter has come to adverse notice of the Enforcement Directorate (ED)/ Central Bureau of Investigation (CBI)/ Directorate of Revenue Intelligence (DRI)/ any such other law enforcement agency or the case where exporter is not traceable or not making any serious efforts for realisation of export proceeds. In such cases, AD may forward its findings to the concerned regional office of RBI recommending inclusion of the name of the exporter in the caution list. (d) Reserve Bank will caution / de-caution the exporters in such c

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REVENUE NEUTRAL RATE (RNR) – WHAT, WHY AND HOW
By: – Dr. Sanjiv Agarwal
Goods and Services Tax – GST
Dated:- 31-12-2015

The golden rule for collection of tax is given by world's oldest economist Sage Kautilya alias Chanakya Muni more than 2000 years ago. He said that 'the King should collect tax from different persons as the humble bee collects honey from different flowers without making any harm to them'. Thus, all efforts should be made to keep the GST rate as low as possible.
In the proposed GST regime, the revenue of the Government would not be the same in comparison with the present tax structure due to tax credit mechanism or otherwise. Therefore, an adjustment in tax rate is required to avoid reduction in revenue of the Government. Hence, the rate of tax will have to be suitably adjusted to ensure that tax revenue does not reduce. This rate is termed as 'Revenue Neutral rate' (RNR). It is the rate at which tax revenue remains the same despite giving c

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nd factors are taken into consideration before arriving at revenue neutral rate. RNR is the good indicator of future requirement in calculating the adequate compensation to both state as well as central government.
For the determination of RNR, the National Institute of Public Finance and Policy had undertaken a study on Revenue Implications of GST and Estimation of Revenue Neutral Rate. NIPFP recommends that GST rate will be same as the combined central and state taxes on Goods at present but it should be lower than the combined central and state taxes on services.
The sub-committee had proposed a total RNR of almost 27 percent for the dual – structure GST. While the state GST component is proposed to be 13.91% , the central GST component is proposed at 12.77 %. This rate computation work in progress and its need to be updated as per the latest figures of revenue collection. As per Dr . P. Shome the RNR rates would be fixed at little higher level to ensure that there would be no rev

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However, Central Govt. can charge excise duty on tobacco products over and above GST.
* Number of taxes to be subsumed in the GST, for example stamp duty, property tax, toll tax, etc. might be kept outside the GST structure.
The success of GST will largely depend on the determination of ideal rate at Central level as well as State level which should be acceptable to the public and revenue neutral to Government.
The GST rates would be fixed after ensuring that there would be no revenue loss from the proposed changes and a normal growth is maintained.
The deadlock in the passage of the GST Bill is not entirely due to opposition in the Parliament. It is largely due to the apprehensions of the States which are , to a great extent , real. It is therefore, hard to tell between the concerns of the opposition and the States that really led to the stalling of the proceedings in the Parliament. The 13th Finance Commission wanted a perfect GST with uniform tax rates across the States and the

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ing the 122nd Amendment. It is quite logical and realistic approach of moving forward in the stated circumstances of our economy.
On a common tax base, the extent of tax occupied by the multiple taxes that the States and the Centre levy in their own taxing jurisdiction has to be estimated and factored into the total tax income to arrive at a realistic GST rate . Like there is need for a dual GST , there is also perhaps a concomitant need for a dual Central and State RNR – one to be reckoned on tax to Gross Domestic Product and the other on tax to Gross Domestic Expenditure as a back room exercise to be assured of revenue neutrality in real time economic mode. That will be real Revenue Neutral Rate.
Recommendation of GST Rates Committee
The Committee headed by the Chief Economic Adviser on GST rates has submitted its reports to the Ministry of Finance on 3 December 2015. It has recommended the Revenue Neutral Rate (RNR) in the range of 15 percent to 15.5 percent (combined rates for c

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ing the exact RNR depends on a number of assumptions and imponderables; because, therefore, this task is as much soft judgement as hard science; and finally also because the prerogative of deciding the precise numbers will be that of the future GST Council, this Committee has chosen to recommend a range for the RNR rather than a specific rate. For the same reason, the Committee has decided to recommend not one but a few conditional rate structures that depend on policy choices made on exemptions, and the taxation of certain commodities such as precious metals.
On the RNR, the Committee's view is that the range should between 15 percent and 15.5 percent (Centre and states combined) but with a preference for the lower end of that range based on the analysis in this report.
On structure, in line with growing international practice and with a view to facilitating compliance and administration, India should strive toward a one-rate structure as the medium-term goal.
Meanwhile, the Commit

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CONCEPT OF DUAL GST
By: – Dr. Sanjiv Agarwal
Goods and Services Tax – GST
Dated:- 28-12-2015

In a federal country like India where the power to tax domestic trade is divided between the Central Government and the State Government, the designing of a destination based GST becomes extremely complicated. A conventional national GST cannot be implemented without the States losing their fiscal autonomy. Dual GST signifies that GST would be levied by both, the Central Government and the State, on supply of goods or services. Under the Constitution, presently the taxing powers are presently split between the State and the Centre. In case of certain transactions, the power to tax is vested with the Centre and while in certain other

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y by the Centre and the States, but independently. It will have two components: one levied by the Centre (hereinafter referred to as CGST), and the other levied by the States and Union Territories (UTs) [hereinafter referred to as SGST]
* Both the CGST and SGST will operate over a common base. That is, the base will be identical.
Benefits of Dual GST
The dual GST is expected to be a simple and transparent tax with one or two CGST and SGST rates. The dual GST is expected to result in:-
* reduction in the number of taxes at the Central and State level
* decrease in effective tax rate for many goods
* removal of the current cascading effect of taxes
* reduction of transaction costs of the taxpayers through simplified tax compliance

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mprehensive base of goods and services, at all points in the supply chain. It also eliminates tax cascading, which occurs because of truncated or partial application of the Centre and State taxes,” said the survey.
Despite improvements in the country's tax design and administration over the past few years, the systems at both Central and State levels are still complex, said the survey.
The complexities, it says, are policy related and also due to the present system of multiple rates and exemptions at State and Centre level.
The survey noted that deficiencies in CENVAT (Central value added tax) and service tax are grave and need to be looked at. For instance, CENVAT's already narrowed base is being further eroded by a variety of area-spec

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Lawmakers let another GST opportunity go abegging with washout of winter session
By: – Bimal jain
Goods and Services Tax – GST
Dated:- 26-12-2015

GST has been missing several deadlines in the past. Perhaps, the only major reform both India and the World were looking at from the Parliament's winter session was the passage of the 122nd Constitutional Amendment Bill, 2014 (“122nd CAB” or “GST Bill”), which promised to bring in the biggest indirect tax-reforms in the Country ever happened.
The Lok Sabha and the Rajya Sabha have been adjourned sine die on December 23, 2015, marking yet another washout due to frequent disruptions by the opposition. The 20-day session was little productive as compared to the monsoon session, which was a virtual washout following the ruckus created by opposition pressing for ouster of external affairs minister Sushma Swaraj, Rajasthan CM Vasundhara Raje and Madhya Pradesh CM Shivraj Singh Chouhan over various allegations.
But the moot questio

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of the Joint Committee on Business Processes for GST on Refund Process;
* Draft Report of the Joint Committee on Business Processes for GST on Registration;
* Draft Report of the Joint Committee on Business Processes for GST Payment Process;
* Draft Report of the Joint Committee on Business Processes for GST on GST Return
This initiative was immensely appreciated by the Trade. Further, the Committee headed by the Chief Economic Adviser, Dr. Arvind Subramanian, had given its recommendations to the Finance Minister in early first week of December, followed by Detailed Report recently released on December 9, 2015, recommending a four-tier rate structure wherein some essential items will be taxed at 12%, gold and precious metals at 2-6%, some so-called sin or demerit goods like luxury cars and tobacco products at 40% and most goods and all services at 17-18%. These rates were derived from a RNR of 15%-15.5%.
Furthermore, on December 21, 2015, Shri. Prakash Kumar, CEO of the Goods a

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P could have dealt with these with a bit more skillful approach and break the Congress barrier. Even, our Hon'ble Finance Minister Arun Jaitley hinted at accepting Congress' stand on scrapping of 1% additional tax but said that their demand for incorporating the GST rate in the Constitution Bill was not agreeable.
What lies ahead?
Clearly, the time is running out for the Modi Government to make major reforms happen in the economy. The promised reforms agenda of the Modi Government is yet to take place in a major way. The Government is mulling waiting till the budget session of the Parliament to secure passage for the GST Bill. The Government is expecting improved numbers in the Rajya Sabha in April 2016 since a number of Congress members are retiring in March and April next year. The Budget session starts in February-end and continues until the first week of May.
Our Comments:
The delay in the passage of the GST bill has put a question mark on the planned roll out of the GST era by

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PROCEDURES AND COMPLIANCES UNDER PROPOSED GST LAW IN INDIA
By: – Nexdigm IDT
Goods and Services Tax – GST
Dated:- 25-12-2015

Introduction
After decades of positive deliberation, India has finally accepted the idea of a common indirect tax regime- Goods and Services Tax (GST). Battered with multiplicity of Indirect taxes in the current regime, India Inc has more than welcomed the GST as it brings within its ambit the flavor of 'ease of doing business' in India, seamless credit flow and a vision of common market across India. The draft Indian Model GST Law[1] ('Model GST Law') which was made public on 3rd December 2015, underlines an overview of the Final GST Act. In this article, we have outlined the key compliance proposed in the Model GST Law and ascertain the ground reality of GST's claim on considerable ease in doing business in India.
Returns in GST regime
Every registered assessee will be required to file returns (including NIL returns). It is pertinent to note

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the returns. For example, a service taxpayer, covered by the Central Service Tax legislation, is currently required to file half yearly return and within the GST regime, same Service Tax assessee might be required to file as many as 61 returns (5 returns per month i.e. GSTR 1, 2,3,6,7 and GSTR 8 annual return).
Rectification of Errors in return
Rectification of errors for any omission or incorrect particulars (other than as a result of audit, inspection or enforcement activity by the tax authorities) would be allowed in the return period in which such omission/incorrect particulars to specific restriction such as rectification / omission may not be allowed after filing of the return for the month of November following the end of the FY etc.
Given the aforesaid restrictions, it would be advisable that the taxpayers would need to have a robust mechanism to capture correctly the details of invoices, revenue, input invoices and other data in the original return itself. Thus, the taxpaye

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able for registration under GST law?
As regards registrations, one can also apply voluntarily for GST registration. However, in case of person engaged in inter-state supplies, casual taxable persons or a person liable to GST under reverse charge, irrespective of turnover, registration would be compulsory.
Payments in GST regime
GST law provides that the taxable person will be required to make payment of tax (i.e. CGST, SGST, IGST and Additional Tax) including interest, penalty or fee through electronic cash/credit ledger.
It is worthwhile to know that cross utilisation of electronic cash/credit under IGST for CGST and SGST payment, electronic cash/credit under CGST for IGST payment and electronic cash/credit under SGST for IGST payment will be allowed. However, cross utilisation of cash/credit under CGST for payment of SGST and vice versa will not be allowed.
Further, as per section 47(6) of the Model GST law, where the amount available in the electronic cash or the credit ledger

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h deduction is made in the manner prescribed. The deductor would be furnish a certificate to the deductee within 5 days from crediting such tax at source to the appropriate government and default in furnishing of such certificate would be liable to late fee as prescribed under the Act.
Every deductor would be liable to take registration within specified period as prescribed and furnish the return in the form within due date as prescribed, failing which he would be liable to pay late fee of as prescribed under the Act.
Conclusion
Although the compliances under multiple indirect tax levies such as Excise, VAT etc would cease and grant a relief to the taxpayer (especially manufacturer), the main pain point of reduction in compliances and achieving the objective of “Ease of doing business in India” does not appear to fully achieved given the manifold increase in compliances.
Thus given the drastic change and increase in number of compliances, it is advisable to work towards analysing t

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GST NETWORK (GSTN) TO IMPLEMENT GST
By: – Dr. Sanjiv Agarwal
Goods and Services Tax – GST
Dated:- 22-12-2015

The broad framework of GST model proposed for India now being clear, well-designed and well-functioning Information Technology (IT) infrastructure facility would be a precondition and pre-requisite for smooth administration of taxpayers, processing of returns, controlling collections, making refunds, auditing taxpayers, levying penalties etc. in the new regime. On the IT front, all stakeholders had agreed for a common PAN-based taxpayer ID, a common return, and a common challan for tax payment and therefore a common portal providing three core services (registration, returns and payments) would ease compliance. It al

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der Section 25 of the Companies Act, 1956 (as non-Government, not-for-profit, private limited Company) promoted jointly by Central and State governments (refer Table 5 below). GTSN has a self-sustaining revenue model, based on levy of user charges on tax payers and tax authorities availing its services. The GSTN will provide a front end portal to administer the Inter – State Taxation (IGST). The above network will work as a clearing house mechanism which will pool all the information about taxes levied on the Inter-State transactions and provide data on the amounts to be transferred to the destination state for ensuring seamless input tax credit.
Objectives of GSTN
GSTN has been set-up with the following objectives to act as a pass throug

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provide a common and shared IT infrastructure between Central and State Governments, Banks, CBEC, Reserve Bank of India etc. For the purpose of simplicity for taxpayer, uniformity of tax administration, it is also proposed to have digitization of all documents and automation of related processes such as common PAN-based registration; common standardized return for all taxes (with different account heads for CGST, SGST, IGST); common standardized challan for all taxes (with different account heads for CGST, SGST, IGST) etc. Each tax authority will have full flexibility in using this data for in-house automation, integration, and enforcement.
Implementation of GSTN
Considering the broad role of GSTN in reforming Indirect tax system in Indi

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IMPACT OF GST ON SELECT SECTORS – PART-II
By: – Dr. Sanjiv Agarwal
Goods and Services Tax – GST
Dated:- 21-12-2015

Intangible goods / services
Presently, intangible goods / services / rights are taxed as one of the declared services under section 66E(c) under temporary transfer of intangible property right services. Such services are also liable to VAT and often there is a dispute on levy of Service Tax or VAT or both. This is likely to be resolved in GST regime as such services will suffer one common tax, i.e., GST. In many countries, transfer of such assets / services are taxed as a service only. Examples of such services could be copyright (excluded presently), trademarks, designs, patents, good will, IT software etc.
Electricity / Power
Power to levy tax on the consumption or sale of electricity vets with the State Governments under Entry No. 53 in List-II of Seventh Schedule of the Constitution of India. Though electricity is 'goods', sales tax is no

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tion in the form of VAT and Service Tax being levied on the same transaction.
Products outside the GST ambit
GST shall be applicable across the products and services over the taxing jurisdictions with few exceptions. One such exception is petroleum products. The Centre has decided to keep petroleum production tax out of the taxing jurisdiction of the States while the States have retained the power to tax sale of petroleum products and potable alcoholic liquor with themselves. The reason cited for the same is that petroleum production tax fetches nearly 45% of the Centre's Indirect Tax revenue while sale of petroleum products and potable alcoholic liquor constitutes nearly 55% (35% plus 20%) of the State tax income.
This is to provide fiscal security to stages and ensure that there is a minimum guaranteed income under the proposed GST regime. Another such product is tobacco which will come under the GST but from a future date.
The exclusion of petroleum, liquor and tobacco, whic

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011, States can only impose GST on Tobacco and Tobacco Products while the Centre can impose both GST and Excise Duty. Standing Committee on Constitutional Amendment Bill had recommended that keeping in view the requests received from several States and the fact that the States are already levying VAT at very high rate on Tobacco and Tobacco Products, therefore, the States may also be allowed to levy State Excise Duty or any other tax in addition to GST on Tobacco and Tobacco Products. This could be achieved by making amendment in Entry 51 in the State List of Seventh Schedule of the Constitution by incorporating ―(c) tobacco and tobacco products.
The Constitution Amendment Bill, 2014 has amended List II of Schedule VII of the Constitution according to which states may continue to levy tax on tobacco products.
The proposed entry No. 84 will include duties of excise on the following goods manufactured or produced in India –
* petroleum crude;
* high speed diesel;
* motor sp

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Proposed Return Process – GST
GST
Dated:- 19-12-2015

PROPOSED RETURN PROCESS
PRESENTATION PLAN….
* Basic Features
* Periodicity of Return Filing
* Contents of GSTR-1 Return
* Contents of GSTR-2 Return
* Contents of GSTR-3 Return
* Contents of Compounding Taxpayer Return (GSTR-4)
* Contents of Foreign Non-Resident Return (GSTR-5)
* Contents of ISD Return (GSTR-6)
* Contents of TDS Return (GSTR-7)
* Contents of Annual Return (GSTR-8)
* HSN Codes & SAC
* Typical Invoice Details
* Invoice matching & Credit reversal
* Filing of return
* Revision
BASIC FEATURES….
* Self-assessment of tax liability by the taxpayer
* Common e-Return for CGST, SGST, IGST & Additional Tax
* Separate returns for different categories of taxpayers
* Normal/Regular & Casual Taxpayer (GSTR-1, 2 ,3 & 8)
* Compounding Taxpayer (GSTR- 4 & 8)
* Foreign Non-Resident Taxpayer (GSTR-5)
* Input Service Distributor (GSTR- 6)
* Tax Deductor (GSTR-7)
*

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R-2
* 17th  day of succeeding month: last date for finalizing supply & purchase details
* 20th day of succeeding month: last date for filing GSTR-3
* Compounding taxpayers to file quarterly return: by 18th day of succeeding month of the Quarter – GSTR-4
* Foreign  Non-resident  Taxpayers  to  file  monthly  return: within 7 days after expiry of registration – GSTR-5
* Input Service Distributors (ISD) taxpayers  to file monthly return: by 15th day of succeeding month -GSTR-6
* Tax Deductors to file monthly TDS return: by 10th of succeeding month – GSTR- 7
* Casual taxpayers to file same return as for normal taxpayer  but  with  monthly  periodicity  and / or linked to validity period of registration
* UN agencies to file return for the month in which they make purchases – to claim refunds
*  Annual Return (GSTR-8)
* All Regular and Compounding taxpayers to file Annual Return
* Last date – 31st De

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; of ≥ INR 50,000/- to mandatorily have address of buyer
*  Aggregate summary
* All B2C intra-State taxable supplies
* All exempted, nil rated & non-GST supplies (intra- State & inter-State AND B2B & B2C)
* Export & deemed Export
* Invoice level details along with shipping bill details
* with payment of GST
* without payment of GST
* Debit Notes / Credit Notes: Details of debit note, credit note & changes  in  supply  information  for  earlier  tax  periods  with consequential increase/decrease in tax liability
* Details of tax liability on receipt of advance
* Details of subsequent issuance of invoices issued w.r.t. advance receipt
CONTENTS OF GSTR-2 RETURN….
* Taxpayer details
* Return period details
* Invoice  level  inward  supply  details  received  from registered taxpayer
* To be auto-populated from GSTR-1 of counterparty supplier
* Recipient to have option to add recei

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value of all inward supplies
* Aggregate value of all imports
* Information about adjustments for earlier periods
* Details of cash credit received on account of TDS
* Details of all liabilities (Tax, interest, penalty, late fee, etc.)
* Details of ITC availed, ITC utilized, credit reversible on  account  of  invoice  mismatch  and  other adjustment
* Details of gross & net tax liability
* Details  of  payment  of  tax  and  other  statutory liabilities
* Provision for capturing Debit Entry No. of Cash & ITC Ledger
* A field for return based refund & Bank Account Number
CONTENTS OF COMPOUNDING TAXPAYER  RETURN (GSTR-4)….
* Taxpayer details
* Return period details
* Inward supply details
* Auto-populated from GSTR-1 of counter-party supplier
* Option to add receipts not uploaded by counter-party supplier
* Receipts from unregistered dealers to be added
* Includes  supply  a

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ty supplier
* Option to add receipts not declared by counterparty supplier – if in possession of taxable invoice & have  received supply of goods or services
* Includes supplies attracting reverse charge
* Information about ITC available in the month for Distribution
* Details of credit of CGST, SGST & IGST distributed
* Details of ISD ledger
* Opening and closing balance of ITC
* ITC received, reversed and distributed
CONTENTS OF TDS RETURN (GSTR-7)
* Taxpayer's details
* Return period details
* Details of Tax deducted
* GSTIN of supplier
* Invoice details
* Payment details
* Amount of TDS on account of CGST, SGST & IGST
* Details of payments of any other amount
CONTENTS OF ANNUAL RETURN (GSTR-8)
* Taxpayers Details
* Details of all expenditure
* Details of all income
* Details of all other tax liability
* Other Reconciliation Statement
HSN Codes & SAC
* HSN Code for goods – in invoice level details
* 4-digit HSN Code mandatory for t

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ing & Credit Reversal
* B2B supply information given by the supplying taxpayer in GSTR-1 will be auto-populated into GSTR-2 of the counter-party purchaser
* Purchasing taxpayers will be allowed to add invoice details in GSTR-2 & avail credit if he is in possession of valid invoice & have received supply of goods or services
* Counterparty registered taxpayers shall have a 2-day window to reconcile invoice information among themselves prior to filing of GSTR-3
* Credit availed on unmatched invoices shall be auto-reversed in the next to next return period (e.g. mismatched ITC for April to be auto-reversed in return for June)
FILING OF RETURN
* To be filed by taxpayer at GST Common Portal either:
* by himself logging on to the GST System using his own user ID & password; or
* through his authorized representative using the user Id & password (allotted to the authorized representative by the  tax authorities), as chosen at the time of registration, logging  on to t

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Proposed Payment Process
GST
Dated:- 19-12-2015

PROPOSED PAYMENT PROCESS
PRESENTATION PLAN
*   Broad Features
*   Tax Types & Modes of Payment
*   Stakeholders
*   Basic Features
*   Workflow for Payment under various Modes
*   Features of Accounting Process
*   Proposed Accounting system
*   Banking arrangements
*   Reconciliation of receipts
*   Redressal of grievances
BROAD FEATURES
* Electronic payment process- no generation of paper at any stage
* Single point interface for challan generation- GSTN
* Ease  of  payment three  modes  including  CC/DC  & NEFT/RTGS
* Common challan form with auto-population features
* Use of single challan and single payment instrument
* Common set of authorized banks
* Payment through any bank
* Common Accounting Codes
TAX TYPES & MODES OF PAYMENT
* Under GST, 4 types

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tronically generated Challan from GSTN for all 3 modes  containing  a  unique  14-digit  Common  Portal Identification Number (CPIN) for each challan
* Challan can be generated by
* Taxpayer
* His authorized representative
* Departmental officers
* Any other person paying on behalf of taxpayer
* Certain key details like name, address, email, GSTIN of payer to be auto-populated
* Single challan / instrument for payment of all four types of taxes
* Challan once generated to be valid for 7 days
* Time of payment: from 0000 hrs. to 2000 hrs.
* Proposed  workflow  of  RBI's  e-Kuber  model  to  be followed for payment, accounting and reconciliation:
* Accounting Authorities to interact directly with RBI & not with Authorized banks in case of discrepancies found during reconciliation
* System  of  electronic  Personal  Ledger  Account  (cash ledger) on GSTN for each taxpayer

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* Alongside, GSTN to forward an electronic string to the selected bank carrying specified details of challan on real time basis
* Taxpayer to make payment using the USER ID & Password provided by his bank
* On successful completion of transaction, e-FPB of bank to forward a confirmation electronic string (CIN) to GSTN on real time basis
* GSTN to credit the Taxpayer's ledger
* Copy of paid Challan to be available on GSTN for taxpayer (downloadable/printable)
WORK FLOW FOR PAYMENT UNDER MODE -II ….
Over the Counter Payment:
* For small taxpayers for making payment upto Rs. 10,000/- per challan – by cash / DD / cheque drawn on same bank or on another bank in the same city
* Tax payer to tender only one instrument to pay one  or more type of tax
* For cheque payment, name of authorized bank & its  location to be mandatorily filled in challan
* On real time basis, GSTN to share challan details with Core Banking System (CBS) of the selected authorized  B

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of BTR / BTN
* GSTN to credit the Taxpayer's Ledger
WORK FLOW FOR PAYMENT UNDER MODE -III….
Payment through NEFT/RTGS from any bank
* To be made operational after a pilot run by RBI
* For taxpayers:
* not having a bank account in any of the Authorized Banks
* having a bank account in any of the Authorized Banks
* No limit on amount to be paid through this mode
* Payments to be collected by RBI directly
* RBI to perform the role of e-FPB also
* Challan  and  NEFT/RTGS  mandate  form  generated  on  GSTN
* NEFT/RTGS mandate form to have validity period of CPIN  printed on it
* In challan, the field for name of Authorized Bank to be  auto-populated as RBI
* NEFT/RTGS mandate form will have certain information  auto-populated: 
* CPIN in “Account Name” field
* 'GST Payment' in “Sender to Receiver Information” field
* Taxpayer   to print a copy of Challan and NEFT/RTGS  mandate  for

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s
* RBI to send digitally signed one e-scroll for each type of Tax (CGST, IGST, AT & SGST) per day (39) to Accounting Authorities of Central Government and State Governments & GSTN on T+1 basis
* GSTN  to  send  reconciled  data (challan  data  from Authorized Banks and e-scroll from RBI) to Accounting Authorities at EOD
* For any discrepancy noticed, accounting authority to generate a Memorandum of Error (MOE) & send to RBI
* RBI to resolve the discrepancy in consultation with the Authorized Bank
* RBI to report the corrected data to respective Accounting Authority & GSTN
* Taxpayers Master data to be provided by Tax Authorities to  Accounting  Authorities  for  mapping  of  payment details jurisdiction wise
PROPOSED ACCOUNTING SYSTEM
* Four different Major Heads of accounts to be opened for each tax along with underlying Minor Heads to account  for  various  taxes  &  other  recei

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of only system generated challans – no re-digitization by any actor in the entire work flow
* CPIN to be generated by GSTN to be used as a key identifier up till receipt of payment by Bank
* CIN (actual indicator of receipt of payment) to be generated by collecting Bank to be used as a key identifier thereafter for accounting, reconciliation, etc.
* Accounting  Authorities  to  play  a  paramount  role  in reconciliation –
* Accounting on the basis of RBI data
* Reconciliation on the basis of GSTN and bank data
GRIEVANCE REDRESSAL
* In OTC mode if cash ledger of taxpayer not credited  within   three  days-  approach  bank where instrument presented
* In RTGS/NEFT mode if cash ledger of taxpayer not credited within three days- approach bank where taxpayer's account is
* Each e-FPB required to have front end service branch to resolve payment related issues
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Document 1PAYMENT IN E-MODE
1
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