15 November 2013

Third party payments allowed for import and export transactions

Reserve Bank of India has allowed third party payments for import and export transactions. As per A.P. DIR Circular No. 70, dated 8-11-2013, such transactions shall be subject to the conditions such as availability of tripartite agreement, declaration in Export Declaration Form (EDF), mention in bill of entry and invoice, reporting of outstanding, etc. These third party payments further should come from, or made to, a Financial Action Task Force (FATF) compliant country and through the banking channel only.        

Normally payment for exports should be received from the overseas buyer named in the EDF. It shall be received in a currency appropriate to the place of final destination mentioned in the EDF irrespective of the country of residence of the buyer. Payments for imports should be made to the original overseas seller of the goods and the importer should furnish relevant documents. This has now been liberalised by allowing receipt of payments from / effecting payments to third parties also, taking into account the evolving international trade practices.          

The present instructions state that the exporter will be responsible for realization and repatriation of export proceeds from the third party named in the EDF. This facility of third party payment is restricted to USD 100,000 for import transactions. 


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