WOS in Mauritius and funds transfer

Co Act 2013 146 views 3 replies
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391 Points Joined June 2021

India based parent is having one wholly owned subsidiary in Mauritius. Pending certain issues, Indian parent is unable to remit funds to Mauritius. Can Mauritius company take a short term loan from One Indian's USA account.

Do Indian parent and Individual notify RBI?

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On 02 November 2024 at 13:32 Report
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Master in Accounts & high court Advocate
9123 Points Joined December 2011

The Mauritius company can take a short-term loan from the Indian individual's USA account, but there are certain regulatory requirements and notifications that need to be considered:

 1. Foreign Exchange Management Act (FEMA) regulations: The transaction should comply with FEMA regulations, which govern foreign exchange transactions in India.

2. Reporting requirements: The Indian individual and the Mauritius company may need to report the transaction to the Reserve Bank of India (RBI) through the following: -

 Form LRS (Liberalized Remittance Scheme): The Indian individual may need to file this form to report the remittance to the USA account. - Form ODI (Overseas Direct Investment):

 The Mauritius company may need to file this form to report the receipt of the loan. - Form FC-TRS (Foreign Currency Transaction Reporting): The transaction may need to be reported on this form.

 3. Approval from RBI: Depending on the nature and amount of the loan, the Indian individual and/or the Mauritius company may require approval from the RBI.

4. Tax implications: The transaction may have tax implications in India, the USA, and Mauritius.

 It's essential to consult a tax professional to understand the tax implications. Please consult a chartered accountant, tax professional, or legal expert to ensure compliance with all regulatory requirements and notifications.

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On 02 November 2024 at 14:46
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Master in Accounts & high court Advocate
9123 Points Joined December 2011

The Mauritius company can take a short-term loan from the Indian individual's USA account, but there are regulatory requirements and notifications to consider:

1. Foreign Exchange Management Act (FEMA) regulations: The transaction should comply with FEMA regulations, which govern foreign exchange transactions in India. 

2. Reporting requirements: 

a. Indian individual: Needs to report the remittance to the USA account through Form LRS (Liberalized Remittance Scheme).

 b. Mauritius company: Needs to report the receipt of the loan through Form ODI (Overseas Direct Investment).

 c. Both:

 May need to report the transaction through Form FC-TRS (Foreign Currency Transaction Reporting).

 1. Approval from RBI: Depending on the nature and amount of the loan, the Indian individual and/or the Mauritius company may require approval from the RBI.

2. Tax implications: The transaction may have tax implications in India, the USA, and Mauritius. 

Consult a tax professional to understand the tax implications. To ensure compliance:

 a. Consult a chartered accountant or tax professional.

 b. Ensure proper documentation.

c. Obtain necessary approvals from the RBI, if required.

d. Report the transaction through the required forms. 

Please consult a chartered accountant or tax professional for guidance on regulatory compliance and tax implications.

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On 02 November 2024 at 14:57
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391 Points Joined June 2021

Many thanks. Sir.

Bank refers to HQ.

Mauritis Co is not under RBI ambit. Then why they would report in ODI?

Indian citizen remitting thru USA account, possibly binds himself wrt RBI,I TAX depts in varying degree.

Regards 

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On 03 November 2024 at 11:53


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