Fema Query

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This query is : Resolved

S.M.Gulati

S.M.Gulati (Querist)

14 July 2011 An overseas company(A) dealing in educational books & materials has appointed a distributor in India company (B) on a non exclusive basis for selling of the books to Indian schools & institutions.

Company A has contracted with a printer in India to print the books on its behalf and deliver them to company B for sales. Printer raises an invoice on company A for the work done and company A pays in foreign exchange. For these books delivered by printer to company B , company A raises an invoice on company B in US $.

Can company B remit the amount in foreign currency to company A on the basis of invoice raised? Is it allowed by FEMA?

Will this transaction be covered under deemed income of company A?

In case the printer is in EPZ , then what will be the scenario?

CA. Anuj Gupta

CA. Anuj Gupta (Expert)

15 July 2011 Yes , company B can remit the amount in foreign currency to company A on the basis of invoice raised. It is allowed under FEMA.

As per facts stated by you, Company A shall not be liable to tax in India.

The printer in EPZ shall be entitled to show the export of goods supplied to Company B.

Anuj
0-9810106211

S.M.Gulati

S.M.Gulati (Querist)

16 July 2011 Dear Mr.Anuj Gupta

Thanks for your reply. Kindly also clearify whether the overseas company A will in such circumstances will be considered as PE or Not.

Thanks & Regards

S.M.Gulati

CA. Anuj Gupta

CA. Anuj Gupta (Expert)

16 July 2011 Only if the distributor in india is doing business only for Company A.

Anuj
+91-9810106211

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