FEMA
This query is : Resolved
03 March 2010
Dear Sir/ Madam,
A construction company entered into an agreement with a NRI for construction and transfer of flats in India. But due to unforeseen circumstances company was not able to complete the construction within time and as per agreement the company have to refund the purchase consideration. The original inward remittance came through normal banking channel and the company wants to remit the refund to NRI's NRE account. AP DIR Circular No. 46 dated November 12, 2002 allows such refund and as per the circular there is no RBI approval is required and no time limit is stipulated. But authorised person stipulates RBI approval is required as 180 days has elapsed after the original inward remittance and the company has to give application both to the AP and RBI. Please guide me whether I can follow the above circular or any other circular is there in this regard and whether authorised person's contention is right?
A construction company entered into an agreement with a NRI for construction and transfer of flats in India. But due to unforeseen circumstances company was not able to complete the construction within time and as per agreement the company have to refund the purchase consideration. The original inward remittance came through normal banking channel and the company wants to remit the refund to NRI's NRE account. AP DIR Circular No. 46 dated November 12, 2002 allows such refund and as per the circular there is no RBI approval is required and no time limit is stipulated. But authorised person stipulates RBI approval is required as 180 days has elapsed after the original inward remittance and the company has to give application both to the AP and RBI. Please guide me whether I can follow the above circular or any other circular is there in this regard and whether authorised person's contention is right?
03 March 2010
Authorised person's contention is correct. You have to apply to RBI for permission and based on the specific persmission you can pay the amount.
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