What changed
Previously, only goods supplied by SEZ units to DTA units could be paid for in foreign exchange via AD banks. This circular extends the same facility to services rendered by SEZ units to DTA units, subject to the SEZ unit's Letter of Approval containing an enabling provision.
What it means for you
Banks can now process forex payments for services from DTA to SEZ units, expanding cross-border transaction opportunities. This simplifies compliance for DTA units sourcing services from SEZs and aligns with SEZ policy objectives. Banks must verify the Letter of Approval before processing such transactions.
What you must do
- Update internal forex processing guidelines to include services under SEZ-DTA forex payment rules.
- Train staff to verify the Letter of Approval for enabling provisions before processing such transactions.
- Inform corporate customers about this new facility for service payments to SEZ units.
- Ensure compliance with FEMA Sections 10(4) and 11(1) while processing these transactions.
Who it affects
AD Category-I banks, DTA units purchasing services from SEZ units, SEZ units providing services to DTA units
What types of transactions are covered under this circular?
This circular covers payment in foreign exchange by DTA units to SEZ units for services rendered, not just goods. The SEZ unit's Letter of Approval must explicitly allow such supply and forex payment.
Do we need any additional approval from RBI for each transaction?
No, AD banks can process these transactions without prior RBI approval, provided the SEZ unit's Letter of Approval includes the enabling provision for supply and forex payment.
What should we check before processing such a forex sale?
Verify that the SEZ unit's Letter of Approval from the Development Commissioner contains a clause permitting supply of services to DTA units and receipt of payment in foreign exchange.