transacting in dollar for an Indian refers to
Answers
Answer:
Out Of IMAGINATION
Explanation:
Something will happen that is out of IMAGINATION
Explanation:
We all know what foreign currency is and how it is being dealt in day to day business operations. Foreign currency not only being dealt in business transactions but it is also used for multiple personal purpose. In this blog, I will try to brief the background of subject and how important for us in India to handle such transactions as it is need of the business and closely monitored and driven by regulatory norms.
Background:
Let me start with the interested parties who are involved in dealing with foreign currency in India, They are listed as below:
I. Reserve Bank of India
II. Foreign Exchange Management Act
III. Buyer from India who imports the goods and services from outside India
IV. Seller from India who exports the goods and services to outside India
V. Bankers / Financial Institutions
VI. SEBI
VII. Individual from India
VIII. Licensed agent approved by Reserve Bank of India
There are multiple different types of foreign currency exist like USA has US Doller, European countries has EURO, Japan has JPY, United Kingdom has GBP and we in India has INR currency. The most commonly used currency in global market is USD and EURO.
India and Foreign Currency:
India is major contributor in global business environment. Entire world is focusing on India for next growth phase. If there is any potential business opportunity in world, India stands at number one position as its first preference for any multinational investment. The current positive political environment attracting lot of foreign investments in India. Make in India initiative supporting nation to bring huge amount of foreign currency in India. Aviation, manufacturing and IT services are major area of interest for multinationals for investments in India. The boost to “start-up” initiative again supported India in brining huge amount of foreign currency investments. Latest example of flipkart sale shows how India’s all sector attracting the multinationals in India.
India has become IT hub for rest of the world. All multinational IT companies has huge setup in India. Moreover Indian IT companies are successfully demonstrating their ability to deliver quality services to rest of the world which brings in foreign currency inflow in India. India’s IT sector is net exporter to the world. Indian spends lot of foreign currency on travelling abroad. The spending power of Indians on tourism and purchasing also demands foreign currency.
For any country it is most important to have balanced foreign currency reserve to back up foreign currency liabilities. In India, RBI acts as custodian of countries foreign currency reserve.
So what does all this mean? It means lot of positive sentiment in India for dealing with other countries for business growth.
Now let’s see how regulatory body monitor and control entire foreign currency transactions in India.
Foreign currency dealing and compliances in India:
When we deal in foreign currency, it means two countries are dealing with each other for mutual benefits. Hence it becomes very important to strictly adhere to all the laid down regulations in home country so that there are no issues from other country on account of non-compliance. Dealing with foreign currency comes with list of compliances in India. When an organization deals with foreign currency, it has to comply with all regulatory requirements. There are requirements from your bankers who support you to make available foreign currency. There are requirements laid down by RBI where in companies needs to submit the information in periodically in return form. Company auditors ask you to disclose the foreign currency income and expenditure details in your annual financials. Apart from this compliance, if we opt for External Commercial Borrowing loan in foreign currency, it has its own compliance. There are accounting standards you need to follow for all foreign currency income and expenditure including revaluation of all outstanding asset and liabilities in foreign currency. If you do hedging of foreign currency, you have to comply with certain specific banking compliances. If you send foreign currency outward remittance, you have to take certificate in the form of 15CA and 15CB from your Chartered Accountant. These various compliances ensure smooth and hassle free foreign currency handling.
Netting-off (adjustment of receivables with payables) not allowed:
Adjustment on account of receivable versus payables is not allowed under FEMA guideline. Both the transactions have to be treated as independent transactions and remittance from both the end is mandatory to complete the transactions. If at all netting off is required, it requires prior approval from RBI via manual application route.
Outward remittance for personal purpose:
An individual from India can make foreign currency outward remittance up certain limit in one financial year for following purpose.
• Education abroad;
• Employment abroad;
• Emigration;
• Maintenance of close relatives; and,
• Medical treatment abroad.