Indians Pay Attention!

Abhishek · 05-30-2006, 04:59 AM

Have posted this already on DP forums,
And there maybe many such members here who musnt have read it!
So reposting here ....
Fellow Indians,
I have a suggestion for you all. DO NOT bring your money home by any false procedures. Remember you are handling foreign transactions and aint no joke. Follow a shortcut procedure and you might fall into violation of FEMA act which is NON-BAILABLE.

And if you dont get what I am saying its time to read some stuff for yourself -
http://www.indiaitlaw.com/softexplaw.htm

Remember one thing - If you do not have a IEC number you are doing foreign services ILLEGALY. No exceptions.

DO NOT! again I say DO NOT! use XOOM.COM for transfering your funds. First of all you should know what are the methods you should NOT use for transfers -
1. Western Union
2. Money Gram
3. XOOM.COM
4. Cash2India
5. Any ATM Debit card

These methods are mainly done for NRI Indians who want to send funds to their relatives or loved ones to India fast. They are meant for PERSONAL money transfer only and *NOT* for any business deals.

Always remember one basic thing - Whatever Funds you are bringing in it should hit your business bank account first. If you are doing business in your own name then the funds should come right to your savings bank account. No exceptions. Whatever bank it may be but it must be a bank.

The 2 legal ways that you can use are -
Wire your money to your bank account.
Bring a check (eg. Paypal Check) and deposit it to your account.

And when your bank account gets funds from foreign banks remember they are reported to RBI as a bank's policy. RBI -> Reserve Bank of India.

So, keep your IEC code number handy and try to submit the softex forms (if you are into serious business you must!)

To get the IEC code you have to visit the Office of the Director General, Foreign Trade in your city. You have to buy a form for application of IEC code. To submit the form you will need 2 mandatory things
1. PAN card
2. Your Banker's Ceritificate ( The format you will get in the application form).
Your Bank will certify your account in their letterhead.
It takes around 15-20 days to get the code if everything is ok.

The difference between Wire/Check and WU,Cash2India is very simple. As I said earlier a legal money enters your bank account first and does not fall cash in your hand. WU etc all deliver you cash which means ... the RBI has actually no trace of it. Wire and check will never give you cash. They will be credited to your bank account which means that is a legal money and you have to pay the taxes for it.

To increase the potential of your business do everything through your bank account and not via cash. You may have to wait for a few days to get funds or may loose some fees but I tell you the legal side is worth it.

Now most people think that PayPal sends check to you in Indian currency, but please understand that PayPal is just your source of fund, still it is a foreign transaction.So at the end of the year put all the Xerox copies of the received checks and take out a print out of your all year long paypal statement. File them up. Proceed to STPI, fill out a Softex form and submit it. Done. The IEC code is needed when you submit the softex form and believe me its not so comlicated as you are thinking. Moreover you will get Tax exemption on foreign revenue.
Its true we do not get enough time to do all this but official formalities to keep ourselves completely legal and clean.
Just remember one basic thing if you DO NOT have a IEC number you are not elligible to give * any * foreign service or consultation or anything.
If you are doing it you are doing it unofficially and if you want to keep it unofficial you can always keep it.
I do know a lot of guys who work like this and has been working like this for years...
well i have mentioned the rules and regulations andit now depends entirely on you what will you do.
I have been working on this post and stuff, for a long time now.
this post was made by a friend in another forum! So read on!
I had a talk with STPI and here is the news (you all get excited)

1. The IEC number is MUST for just anyone!!!
2. Softex forms are to be deposited only if your Invoice Amount exceeds 25000 USD for a single project. If your invoice amount is below 25000 USD it is NOT MANDATORY to submit.

Regarding payment options they only mentioned that Bank Wire is the safest and most trusted method.

here is a list of STPI offices and I will recommend everyone to contact over telephone and get the info and put them here...

http://www.stph.net/contact/ocenters.html

Ok, one more thing, if you are into serious business like me and your invoice amount goes above 25000 USD, then fill the softex form and register your UNIT with STPI and get a green card (thats what they call it), once you have done that you can enjoy a tax holiday!

Cost for IEC code - Rs 1000.00
Cost of Softex - Nil

So, the moral of the story is, its better to follow the rules then to say a "sorry" later.

Hope it helps.
Regards,
Abhishek