Doing Business in India - RSM Austria

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3.2.6 End Use not permitted i. Utilization of ECB proceeds is not permitted for on-lending or investment in capital market or acquiring a company (or a part thereof) in India by a corporate except specified banks and financial institutions . ii. iii. 3.2.7 Guarantee 3.2.8 Creation of charge on immovable assets 3.2.9 Prepayment Utilization of ECB proceeds is not permitted in real estate excluding development of integrated township Utilization of ECB proceeds is not permitted for working capital, general corporate purpose and repayment of existing Rupee loans. Issuance of guarantee, standby letter of credit, letter of undertaking or letter of comfort by banks, financial institutions and NBFCs relating to ECB is not normally permitted. Applications for providing guarantee/standby letter of credit or letter of comfort by banks, financial institutions relating to ECB in the case of SME will be considered on merit subject to prudential norms. With a view to facilitating capacity expansion and technological upgradation in Indian Textile industry, issue of guarantees, standby letters of credit, letters of undertaking and letters of comfort by banks in respect of ECB by textile companies for modernization or expansion of textile units will be considered under the Approval Route subject to prudential norms. The ‘no objection’ for creation of charge on immovable assets may be conveyed under FEMA, 1999 either in favour of the lender or the security trustee, subject to the prescribed conditions. i. Prepayment of ECB up to US$ 500 million may be allowed by the AD bank without prior approval of Reserve Bank subject to compliance with the stipulated minimum average maturity period as applicable to the loan. ii. Pre-payment of ECB for amounts exceeding US$ 500 million would be considered by the Reserve Bank under the Approval Route. 3.2.10 Refinancing of existing ECB Existing ECB may be refinanced by raising a fresh ECB subject to the condition that the fresh ECB is raised at a lower all-in-cost and the outstanding maturity of the original ECB is maintained. 3.3 ECB under the erstwhile US$ 5 Million Scheme Designated AD banks are permitted to approve elongation of repayment period for loans raised under the erstwhile US$ 5 Million Scheme, provided there is a consent 78 DOING BUSINESS IN INDIA
letter from the overseas lender for such reschedulement without any additional cost. Such approval with existing and revised repayment schedule along with the Loan Key/Loan Registration Number should be initially communicated to the Chief General Manager-in-Charge, Foreign Exchange Department, Reserve Bank of India, Central Office, ECB Division, Mumbai within seven days of approval and subsequently in ECB - 2. 3.4 Trade Credits for imports into India Trade Credits’ (TC) refer to credits extended for imports directly by the overseas supplier, bank and financial institution for maturity of less than three years. Depending on the source of finance, such trade credits include suppliers’ credit or buyers’ credit. Suppliers’ credit relates to credit for imports in to India extended by the overseas supplier, while buyers’ credit refers to loans for payment of imports in to India arranged by the importer from a bank or financial institution outside India for maturity of less than 3 years. It may be noted that buyers’ credit and suppliers’ credit for 3 years and above come under the category of ECB governed by ECB guidelines. 3.4.1 Amount and Maturity AD banks are permitted to approve trade credits for imports into India up to US$ 20 million per import transaction for imports permissible under the current Foreign Trade Policy of the Directorate General of Foreign Trade (DGFT) with a maturity period up to one year (from the date of shipment). For import of capital goods as classified by DGFT, AD banks may approve trade credits up to US$ 20 million per import transaction with a maturity period of more than 1 year and less than 3 years. No roll-over/extension will be permitted beyond the permissible period. AD banks shall not approve trade credit exceeding US$ 20 million per import transaction. 3.4.2 All-in-cost ceilings The current all-in-cost ceilings are as under: Maturity period Up to three years All-in-cost ceilings over 6 months LIBOR* 200bps * for the respective currency of credit or applicable benchmark. The all-in-cost ceilings include arranger fee, upfront fee, management fee, handling/ processing charges, out of pocket and legal expenses, if any. 3.4.3 Guarantee AD banks are permitted to issue Letters of Credit/guarantees/Letter of Undertaking (LoU) /Letter of Comfort (LoC) in favour of overseas supplier, bank and financial institution, up to US$ 20 million per transaction for a period up to one year for import of all non-capital goods permissible under Foreign Trade Policy (except gold) and up to three years for import of capital goods, subject to prudential guidelines DOING BUSINESS IN INDIA 79
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International global excellence in
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Doing business in India
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Marine Drive, Mumbai
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Contents Hawa Mahal, Jaipur
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Education .........................
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SIGNIFICANT COMPANY LAW REGULATIONS
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ANNEXURE 1 Sectors Prohibited for F
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Chapter 1 India - A Profile Golden
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2.2 Language India is a land of man
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5.2 Communication The Indian teleph
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7.5 Public Holidays The statutory p
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CHAPTER 2 INDIAN BUSINESS AND INVES
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This resulted in a fall in the Bomb
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4.3.3 Designs After expiry of three
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non-banking finance activities viz.
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trading in derivative based on BSE
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same as those where concessional fi
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10.3 Low Research and Development C
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CHAPTER 3 BUSINESS ENTITIES 1.0 FOR
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Sr. No. Criteria Requirements 1 Tra
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The project is funded by inward rem
Page 44 and 45: cause the disassociation of the par
Page 46 and 47: 2.1.2 MOA 2.1.3 AOA Companies for r
Page 48 and 49: paid up equity capital can be less
Page 50 and 51: The requirements for public and pri
Page 52 and 53: 3.0. STATUTORY REQUIREMENTS FOR COM
Page 54 and 55: 3.4 Online Filing System Ministry o
Page 56 and 57: Section Nature of default 168 Defau
Page 58 and 59: 4.0 SIGNIFICANT COMPANY LAW REGULAT
Page 60 and 61: 4.7 Audit Committees For better cor
Page 62 and 63: The meetings of the board are requi
Page 64 and 65: Chapter 4 Human Resources Kathakali
Page 66 and 67: Employee benefit What is it? Applic
Page 68 and 69: Employee benefit D e p o s i t L i
Page 70 and 71: 2.5 The Equal Remuneration Act, 197
Page 72 and 73: The Factories Act safeguards agains
Page 74 and 75: CHAPTER 5 FOREIGN INVESTMENT IN IND
Page 76 and 77: 2.3 Prohibition on investments 2.3.
Page 78 and 79: ii. Subject to compliance with the
Page 80 and 81: ii. iii. iv. The NRI investor has t
Page 82 and 83: ii. On repatriation basis An NRI ca
Page 84 and 85: Indian company can issue ESOPs to e
Page 86 and 87: ii. iii. iv. The foreign equity aft
Page 88 and 89: vi. Branch Offices have to submit A
Page 90 and 91: ii. ECB up to US$ 20 million or equ
Page 92 and 93: 3.2 Approval Route 3.2.1 Eligible B
Page 96 and 97: issued by Reserve Bank from time to
Page 98 and 99: Sr. No. Sector/Activity FDI Cap / E
Page 100 and 101: Sr. No. II C POWER Sector/Activity
Page 106 and 107: Sr. No. 29. Sector/Activity Telecom
Page 108 and 109: Chapter 6 Taxation System India Gat
Page 110 and 111: Entity Domestic Company Financial y
Page 112 and 113: **** Mutual funds, other than equit
Page 114 and 115: interest deductible is restricted t
Page 116 and 117: 2.4 Tax Relief In order to encourag
Page 118 and 119: Section Details of Exemption / Dedu
Page 120 and 121: Section 35 DDA 54G 54GA 54EC 10(34)
Page 122 and 123: Sr. No. Nature of activity and loca
Page 128 and 129: Sr. No. xviii Nature of activity an
Page 130 and 131: No deduction under 80IA, 80IB, 80IA
Page 132 and 133: Tax is payable in advance on income
Page 134 and 135: 3.1.2 Other Non-corporate Entities
Page 136 and 137: the Finance Act 2010, 'bullion' is
Page 138 and 139: Rs. 40,00,000. The scheme is applic
Page 140 and 141: 4.5 Income of Offshore Funds Income
Page 142 and 143: 7.3 Advance Rulings The Indian gove
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9.0 INDIRECT TAXES 9.1 Goods and Se
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on goods manufactured and vice vers
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Annexure I Double Taxation Avoidanc
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Sr. No. Country Dividend [Note 1] T
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ANNEXURE II: TAX DEDUCTION AT SOURC
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NOTES 142 DOING BUSINESS IN INDIA
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RSM International Executive Office,
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