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Section 3 in Foreign Exchange Management (Mode of Payment and Reporting of Non-Debt Instruments) Regulations, 2019
3. Mode of Payment and Remittance of sale proceeds.
- 3.1| Schedule of the Rules | Instructions on Mode of payment and Remittanceof sale proceeds |
| I. Schedule I(Purchase or sale of equity instruments of anIndian company by a person resident outside India) | A. Mode of payment(1) The amount ofconsideration shall be paid as inward remittance from abroadthrough banking channels or out of funds held inNRE/FCNR(B)/Escrow account maintained in accordance with theForeign Exchange Management (Deposit) Regulations, 2016.Explanation :The amount of consideration shall include:(i) Issue of equityshares by an Indian company against any funds payable by it tothe investor(ii) Swap of equityinstruments.(2) Equityinstruments shall be issued to the person resident outside Indiamaking such investment within sixty days from the date of receiptof the consideration.Explanation:In case of partly paid equity shares, the period of 60 days shallbe reckoned from the date of receipt of each call payment(3) Where such equityinstruments are not issued within sixty days from the date ofreceipt of the consideration the same shall be refunded to theperson concerned by outward remittance through banking channelsor by credit to his NRE/ FCNR (B) accounts, as the case may bewithin fifteen days from the date of completion of sixty days.(4) An Indian companyissuing equity instruments under this Schedule may open a foreigncurrency account with an Authorised Dealer in India in accordancewith Foreign Exchange Management (Foreign currency accounts by aperson resident in India) Regulations, 2016.B. Remittance ofsale proceedsThe sale proceeds (net of taxes) of the equityinstruments may be remitted outside India or may be credited tothe NRE/ FCNR (B) of the person concerned. |
| II. Schedule II(Investments by Foreign Portfolio Investors) | A. Mode of payment(1) The amount ofconsideration shall be paid as inward remittance from abroadthrough banking channels or out of funds held in a foreigncurrency account and/ or a Special Non-Resident Rupee (SNRR)account maintained in accordance with the Foreign ExchangeManagement (Deposit) Regulations, 2016.Provided balances inSNRR account shall not be used for making investment in units ofInvestment Vehicles other than the units of domestic mutual fund.(2) The foreigncurrency account and SNRR account shall be used only andexclusively for transactions under this Schedule.B. Remittance ofsale proceedsThe sale proceeds(net of taxes) of equity instruments and units of domestic mutualfund may be remitted outside India or credited to the foreigncurrency account or a SNRR account of the FPI.The sale proceeds (net of taxes) of units ofinvestment vehicles other than domestic mutual fund may beremitted outside India. |
| III. Schedule III(Investments by Non- Resident Indian (NRI) orOverseas Citizen of India (OCI) on repatriation basis) | A. Mode of payment(1) The amount ofconsideration shall be paid as inward remittance from abroadthrough banking channels or out of funds held in a Non-ResidentExternal (NRE) account maintained in accordance with the ForeignExchange Management (Deposit) Regulations, 2016.(2) The NRE accountwill be designated as an NRE (PIS) Account and the designatedaccount shall be used exclusively for putting throughtransactions permitted under this Schedule.(3) Investment inunits of domestic mutual fund shall be paid as inward remittancefrom abroad through banking channels or out of funds held inNRE/FCNR(B) account.(4) Subscription toNational Pension System shall be paid as inward remittance fromabroad through banking channels or out of funds held inNRE/FCNR(B)/NRO account.B. Remittance ofsale proceedsThe sale proceeds(net of taxes) of equity instruments may be remitted outsideIndia or may be credited to NRE (PIS) account of the personconcerned.The sale proceeds (net of taxes) of units ofmutual funds and subscription to National Pension System may beremitted outside India or may be credited to NRE(PIS)/FCNR(B)/NRO account of the person concerned at the optionof the NRI/OCI investor. |
| IV. Schedule IV(Investment by NRI or OCI on non-repatriationbasis) | 1. Purchase orsale of equity instruments of an Indian company or units orcontribution to the capital of a LLP by Non-Resident Indian (NRI)or Overseas Citizen of India (OCI) on Non-repatriation basis.A. Mode of PaymentThe amount ofconsideration shall be paid as inward remittance from abroadthrough banking channels or out of funds held in NRE/FCNR(B)/NROaccount maintained in accordance with the Foreign ExchangeManagement (Deposit) Regulations, 2016.B. Sale/maturityproceeds(1) The sale/maturityproceeds (net of applicable taxes) of equity instruments or unitsor disinvestment proceeds of a LLP shall be credited only to theNRO account of the investor, irrespective of the type of accountfrom which the consideration was paid;(2) The amountinvested in equity instruments of an Indian company or theconsideration for contribution to the capital of a LLP and thecapital appreciation thereon shall not be allowed to berepatriated abroad.2. Investment in afirm or a proprietary concern.A. Mode of paymentThe amount ofconsideration shall be paid as inward remittance from abroadthrough banking channels or out of funds held in NRE/FCNR(B)/NROaccount maintained in accordance with the Foreign ExchangeManagement (Deposit) Regulations, 2016.B. Sale/maturityproceeds(1) The disinvestmentproceeds shall be credited only to the NRO account of the personconcerned, irrespective of the type of account from which theconsideration was paid;(2) The amount invested for contribution to thecapital of a firm or a proprietary concern and the capitalappreciation thereon shall not be allowed to be repatriatedabroad. |
| V. Schedule V(Investment by other nonresident investors) | A. Mode of PaymentThe amount ofconsideration shall be paid out of inward remittances from abroadthrough banking channels.B.Remittance/credit of sale/ maturity proceedsThe sale/ maturity proceeds (net of taxes) maybe remitted abroad. |
| VI. Schedule VI(Investment in a Limited LiabilityPartnership) | A. Mode of paymentPayment by aninvestor towards capital contribution of an LLP shall be made byway of an inward remittance through banking channels or out offunds held in NRE or FCNR(B) account maintained in accordancewith the Foreign Exchange Management (Deposit) Regulations, 2016.B. Remittance ofdisinvestment proceedsThe disinvestment proceeds may be remittedoutside India or may be credited to NRE or FCNR(B) account of theperson concerned. |
| VII. Schedule VII(Investment by a Foreign Venture CapitalInvestor) | A. Mode of payment(1) The amount ofconsideration shall be paid as inward remittance from abroadthrough banking channels or out of funds held in a foreigncurrency account and/or a Special Non-Resident Rupee (SNRR)account maintained in accordance with the Foreign ExchangeManagement (Deposit) Regulations, 2016.(2) The foreigncurrency account and SNRR account shall be used only andexclusively for transactions under this Schedule.B. Remittance ofsale/maturity proceedsThe sale/maturity proceeds (net of taxes) of thesecurities may be remitted outside India or may be credited tothe foreign currency account or a Special Non-resident RupeeAccount of the FVCI. |
| VIII. Schedule VIII(Investment by a person resident outsideIndia in an Investment Vehicle) | A. Mode of paymentThe amount ofconsideration shall be paid as inward remittance from abroadthrough banking channels or by way of swap of shares of a SpecialPurpose Vehicle or out of funds held in NRE or FCNR(B) accountmaintained in accordance with the Foreign Exchange Management(Deposit) Regulations, 2016.B. Remittance ofsale/maturity proceedsThe sale/maturity proceeds (net of taxes) of theunits may be remitted outside India or may be credited to the NREor FCNR(B) account of the person concerned. |
| IX. Schedule X(Issue of Indian Depository Receipts) | A. Mode of PaymentNRIs or OCIs mayinvest in the IDRs out of funds held in their NRE/FCNR(B)account, maintained in accordance with the Foreign ExchangeManagement (Deposit) Regulations, 2016.B. Remittance ofsale/maturity proceedsRedemption/conversion of IDRs into underlyingequity shares of the issuing company shall be a compliance theForeign Exchange Management (Transfer or Issue of any ForeignSecurity) Regulations, 2004. |