What changed
RBI issued Master Circular No. 08/2009-10 on July 1, 2009, consolidating all existing instructions on import of goods and services under FEMA. It includes a sunset clause, meaning it will be withdrawn and replaced by an updated version on July 1, 2010. The circular covers general guidelines, operational guidelines for imports, and specific provisions for gold, platinum, and silver imports.
What it means for you
For AD Category-I banks, this circular streamlines import payment procedures by bringing all prior circulars into one reference document. Banks must ensure import transactions comply with FEMA, DGFT policies, and UCPDC. The one-year validity means banks should prepare for an updated circular by July 2010.
What you must do
- Ensure all import payments comply with FEMA and DGFT Foreign Trade Policy.
- Follow UCPDC norms for letters of credit and normal banking procedures.
- Verify compliance with Research & Development Cess Act, 1986 for drawings/designs imports.
- Advise importers to comply with Income Tax Act provisions where applicable.
- Prepare to replace this circular with the updated version by July 1, 2010.
Who it affects
All Category-I Authorised Dealer Banks, Importers of goods and services into India, Nominated banks/agencies importing gold, platinum, silver
What is the legal basis for this Master Circular?
It is issued under Section 5 of FEMA, 1999, read with Foreign Exchange Management (Current Account) Rules, 2000.
Does this circular cover advance remittance for imports?
Yes, Part III Section C includes guidelines for advance remittance for goods, rough diamonds, aircraft, and services.
What happens after July 1, 2010?
This circular will be withdrawn and replaced by an updated Master Circular on the same subject.