Foreign exchange for Travel
1.1 Foreign travel
Provisions for release of foreign exchange for travel are quite liberal but have not been completely removed.
Instructions are summarised in RBI Master Circular No. 6/2014-15 dated 1-7-2014 on ‘Miscellaneous Remittances from India – facilities for Residents’ [earlier Master Circular No. 6/2013-14 dated 1-7-2013].
Release of exchange for following is permitted without any approval of RBI –
(a) Exchange upto US $ 10,000 or equivalent in one financial year for one or more private visits abroad (except to Nepal and Bhutan) is permitted. [The BTQ amount increased from USD 5,000 to USD 10,000, vide RBI circular No. 51 dated 18-11-2002] [Item 2 of Schedule III of Foreign Exchange Management (Current Account Transactions) Rules, 2000]
(b) Exchange upto US $ 25,000 for business travel, attending conference, specialised training or maintenance of patient going abroad for medical treatment or check up abroad or for accompanying as attendant to a patient going abroad for medical treatment/check-up [Item 8 of Schedule III of Foreign Exchange Management (Current Account Transactions) Rules, 2000]
(c) Exchange upto US $ 1,00,000 for persons going abroad for employment is permitted [Item 10 of Schedule III of Foreign Exchange Management (Current Account Transactions) Rules, 2000]. [Exchange above USD 1,00,000 requires RBI approval. RBI has stated that permission will be granted on same day by nodal officers situated at its regional offices. Application can be forwarded by fax or e-mail. – RBI circular No. 31 dated 18-10-2002].
1.1-1 Basic Travel Quota
The eligibility upto US $ 10,000 for private visit abroad is termed as ‘Basic Travel Quota’ (BTQ). No foreign exchange will be released for travel to Nepal or Bhutan.
No restriction if payment through RFC/EEFC account – Restrictions on foreign exchange for travel abroad do not apply if payment is through RFC/EEFC account [see rules 5 and 6 of Foreign Exchange Management (Current Account Transactions) Rules, 2000].
1.1-2 Some other payments in Indian Rupees for travel abroad
Traveller can pay for his to and fro air ticket in Indian rupees, if he purchases tickets in India. Similarly, following payments can be made in Indian Rupees – (a) Eurorail passes (b) Cost of rail/road/water transportation abroad (c) Pre-paid telephone cards of reputed overseas companies by making payment in Indian Rupees. Thus, his BTQ, obtained in foreign exchange, can be used exclusively for expenses abroad. – RBI circular No. 54 dated 25-11-2002.
A traveller can make hotel booking abroad through Indian travel agent. However, advance paid will be adjusted against BTQ (basic travel quota).
1.1-3 Release of foreign exchange partly in cash and partly in TC
Out of the allowance of foreign exchange, US $ 3,000 can be given in cash, while balance has to be taken in form of traveller’s cheques (Till 4-5-2010, the limit was USD 2,000). In case of Iraq and Libya, exchange upto US $ 5,000 can be released in form of currency notes and coins. The traveller’s cheques should be issued only when the traveller signs the cheques in presence of authorised official of authorised dealer. If visit is to Iran, Russia or Commonwealth of Independent States – CIS – States earlier comprising of USSR separated after disintegration; full amount can be given in foreign currency notes and coins – para A.2 of RBI Master Circular No. 6/2014-15 dated 1-7-2014 on ‘Miscellaneous Remittances from India – facilities for Residents’ [earlier Master Circular No. 6/2013-14 dated 1-7-2013].
Exchange can be released upto 60 days in advance – The sale of foreign exchange should not be made earlier than 60 days from date of departure as recorded in journey ticket.
1.1-4 Buy exchange for country where you are going
It may be remembered that the authorised dealers in foreign exchange levy charges for converting currency. Thus, a person should take currency or traveller’s cheques in currency of the country where he is visiting e.g. if a person is going to UK and buys traveller’s cheques in US dollars, he has to pay commission while converting his rupees to US dollars in India. When he goes to UK, he will have to pay charges for converting the US dollars into UK pounds.
1.2 Payment for the foreign exchange
The traveller has to buy the foreign exchange at the selling rate decided by FEDAI on daily basis. This rate is different from the RBI reference rate and higher.
If the sale of exchange is for >`> 50,000 or more for a single journey (in one or more instalments), the payment should be accepted by way of a crossed cheque on the applicant’s bank or cross check of the firm/ company sponsoring the visit of applicant or demand draft /banker’s cheque. Payment can also be made through debit cards/credit cards/prepaid cards. KYC/AML guidelines should be complied with and payment should be within limits of credit/prepaid cards prescribed by bank Purchaser of foreign currency and the credit/debit card/prepaid card holder should be same person – RBI AP (DIR) Circular No. 19 dated 30.10.2000 as amended by RBI AP (DIR) Circular No. 40 dated 10-12-2008 – para A.10 of RBI Master Circular No. 6/2014-15 dated 1-7-2014 on ‘Miscellaneous Remittances from India – facilities for Residents’ [earlier Master Circular No. 6/2013-14 dated 1-7-2013].
1.2-1 Documents required for release of exchange
RBI has not prescribed any documents which are required to be submitted for release of BTQ or foreign exchange for foreign travel. The Money Changers should require the person to make such declaration and give such information as will reasonably satisfy him that transaction will not involve contravention of any provision of FEMA – RBI AP (DIR) Circular No. 1 dated 1.6.2000. – para A.13 of RBI Master Circular No. 6/2014-15 dated 1-7-2014 on ‘Miscellaneous Remittances from India – facilities for Residents’ [earlier Master Circular No. 6/2013-14 dated 1-7-2013].
Form A-2 relating to sale of foreign exchange for travel abroad should be retained by authorised persons for one year together with related documents – RBI circular dated 13.8.2001. For release of exchange upto USD 5,000, application on simplified form A2 is sufficient.
Release on self declaration basis – Release of foreign exchange upto USD 1,00,000 each for employment, emigration, education, maintenance of close relatives and medical treatment abroad will be on the basis of self declaration in form A2 without insisting on supporting documents. However, payment should be received by cheque/draft (if amount exceeds Rs. 50,000) – – Paras A.13.3 and A.10 of RBI Master Circular No. 6/2014-15 dated 1-7-2014 on ‘Miscellaneous Remittances from India – facilities for Residents’ [earlier Master Circular No. 6/2013-14 dated 1-7-2013].
1.2-2 No endorsement on passport unless requested
The amount given in foreign exchange will not be endorsed on the passport of Indian traveller, whether he is going on private visit or for business travel. However, if the traveller requests, the authorised dealer can endorse the traveller’s passport with foreign exchange sold for travel – RBI AP (DIR) Circular No. 19 dated 30-10-2000, No. 20 dated 16-11-2000 amended by No. 12 dated 23-11-2001 – para A.14 of RBI Master Circular No. 6/2014-15 dated 1-7-2014 on ‘Miscellaneous Remittances from India – facilities for Residents’ [earlier Master Circular No. 6/2013-14 dated 1-7-2013].
1.2-3 Return of unspent foreign exchange
The unspent amount in foreign exchange has to be surrendered to authorised dealer or money changer within 180 days from date of return to India – Regulation 6A of Foreign Exchange Management (Realisation, Repatriation and Surrender of Foreign Exchange) Regulations, 2000 – para A.7 of RBI Master Circular No. 6/2014-15 dated 1-7-2014 on ‘Miscellaneous Remittances from India – facilities for Residents’ [earlier Master Circular No. 6/2013-14 dated 1-7-2013].
Authorised person should accept the foreign exchange even if it is surrendered beyond prescribed period.
The notes/coins/traveller’s cheques can be retained upto US $ 2,000 and foreign coins without any ceiling, even beyond 180 days – RBI AP (DIR) Circular No. 19 dated 30.10.2000. The amount of US $ 2,000 can be kept in RFC (Domestic) Account. – para A.8 of RBI Master Circular No. 6/2014-15 dated 1-7-2014 on ‘Miscellaneous Remittances from India – facilities for Residents’ [earlier Master Circular No. 6/2013-14 dated 1-7-2013].
Remittance for Tour arrangements
Remittance can be made at request of traveller towards hotel accommodation, tour arrangements etc. Remittance is also permitted at the request of agents in India who have tie-up arrangements with hotel/agents etc. abroad, if remittance is made out of foreign exchange purchased by concerned traveller.
Foreign currency Account can be opened in name of tour agents in India who have arrangements with hotels/agents etc. abroad – para A.9 of RBI Master Circular No. 6/2014-15 dated 1-7-2014 on ‘Miscellaneous Remittances from India – facilities for Residents’ [earlier Master Circular No. 6/2013-14 dated 1-7-2013].