Priyanka Gera
In the recent notification of Reserve Bank of India and to align with the Government of India’s startup initiative, it has been decided that an Indian startup* having an overseas subsidiary, may open a foreign currency account with a bank outside India for the purpose of:
- crediting to the account the foreign exchange earnings out of exports/sales made by the said startup; or
- crediting to the account the foreign exchange earnings out of exports/sales made by its overseas subsidiary
The balances held in such accounts, to the extent they represent exports from India, shall be repatriated to India within the period prescribed for realization of exports, in Foreign Exchange Management (Export of Goods and Services) Regulations, 2015 dated January 12, 2016, as amended from time to time.
Also, such payments received in foreign exchange will be a permissible credit to the Exchange Earners Foreign Currency (EEFC) account maintained in India by the startup. (https://taxguru.in/rbi/foreign-exchange-management-foreign-currency-accounts-by-a-person-resident-in-india-regulations-2015.html)
Earlier to this notification, the facility to open foreign currency account outside India was available to:
- Life Insurance Corporation of India and their subsidiaries; or
- General Insurance Corporation of India and their subsidiaries
- Insurance/ reinsurance company registered with the Insurance Regulatory and Development Authority of India (IRDA)
* A startup will mean an entity which complies with the conditions laid down in Notification No. GSR 180(E) dated February 17, 2016 issued by Department of Industrial Policy and Promotion, Ministry of Commerce and Industry, Government of India
(Author can be reached at [email protected])
