1. Issues in Capital Account And Current Account Transactions
BARODA BRANCH OF WIRC, ICAI
CA Rajesh H. Gandhi
16 February 2013

2. Agenda
Overview
Capital Account Transactions
Foreign Direct Investment (FDI)
External Commercial Borrowing (ECB)
Overseas Direct Investment (ODI)
Current Account Transactions
Liberalized Remittance Scheme (LRS)

3. Overview

4. Overview Of Current And Capital Account Transactions
Current Account
Remittance
Prohibited unless
specifically permitted
Freely permitted
Subject to ceilings**
Approving
authority
Foreign Investment Promotion Board
Authorized Dealers
Central Government/RBI
Purchase of machinery on credit or borrowing outside India for such purchase
Purchase of machinery for cash
Illustration
**Approval required
where ceilings breached

5. Capital Account Transactions

6. Capital Account Regulations
Permissible Capital Account Transactions – Para 3 of the Capital Account Regulations
(A) transactions of a person resident in India specified in Schedule I
(B) transactions of a person resident outside India specified in Schedule II
Prohibited Capital Account Transactions – Para 4 of the Capital Account Regulations
Business of chit fund
Nidhi Company
Agricultural or plantation activities
Real estate business, or construction of farm houses,
Trading in Transferable Development Rights (TDRs)
Real estate business does not include development of townships, construction of residential/commercial premises, roads or bridges.

7. Permissible Capital Account Transactions
Investment by person resident in India [Schedule I, Regulation 3(1)(A)]
Investment by person resident outside India [Schedule II, Regulation 3(1)(B)]
Direct investment in India
External commercial borrowings
Transfer of immovable property outside India
Guarantees issued in favour of a person resident outside India
Export, import and holding of currency/currency notes
Maintenance of foreign currency accounts in India and outside India
Loans and overdrafts to a person resident outside India.
Remittance outside India of capital assets of a person resident in India.
Sale and purchase of foreign exchange derivatives in India and abroad and commodity derivatives abroad.
Investment in India i.e.,—
In security issued by a body corporate or an entity in India; and
to the capital of a firm or a proprietorship concern or an association of persons in India.
Acquisition and transfer of immovable property in India.
Guarantee in favour of, or on behalf of, a person resident in India.
Import and export of currency/currency notes into/from India
Deposits between a person resident in India and a person resident outside India.
Foreign currency accounts in India
Remittance outside India of capital assets in India of a person resident outside India.
Subject to applicable conditions

8. FDI

9. Background Inbound investments are regulated by
Reserve Bank of India ("RBI")
Department of Industrial Policy & Promotion (FC Section), Ministry of Commerce, Government of India
Under section 6(3)(b) of the FEMA
RBI has the power to prohibit, restrict or regulate the transfer or issue of any security by a person resident outside India
RBI has issued FEM (Transfer or issue of security by a person resident outside India) Regulations, 2000 ("FEMA 20/2000")
to regulate the transfer / issue of shares by certain persons resident outside India subject to certain terms and conditions specified in Schedules to the aforesaid Regulations
FEMA 20/2000-RB, dated 3 may 2000 [GSR 406(E), dated 3 May 2000]
RBI also issues annual master circular on "Foreign Investments in India" that deals with inbound investment in India
Latest Master Circular on "Foreign Investments in India“ is dated 2 July 2012 (updated as on 12 February 2013)

10. Background…
Further, Ministry of Commerce and Industry (Department of Industrial Policy and Promotion), Government of India (GOI) has released Consolidated FDI Policy vide Circular 1 of 2012 dated 10 April 2012 which is effective from the same date.
DIPP issues Press Notes which provide guidance on various issues including foreign investment in India
Press Notes and FEMA Regulations are to be read together
FAQs on foreign Direct Investment in India updated on October 11, 2011

11. Background… Foreign Investments FDI Portfolio Investments
Venture Capital Investments
Other investments (G-sec, NCDs, etc.)
Investment on non repartriable basis
Automatic route
Approval Route
FIIs
NRI, PIO, QFI
NRI, PIO NR
FII
NRI, PIO, QFI
SEBI regd. FVCIs
VCF, IVCUs

12. India’s FDI Policy – Sectoral view
Sectors – Automatic Route
(Illustrative)
Sectors –Approval Route
(Illustrative)
Sectors – Negative List
(Illustrative)
Agriculture & Animal husbandry
NBFC (subject to minimum capitalization norms)
Insurance – 26%
Special Economic Zones
Alcohol Distillation
Private Sector Banking up to 49%
Mining
Petroleum & Natural Gas
Cash & Carry wholesale trading
Existing Airports beyond 74%
Asset Reconstruction Companies - 49%
Broadcasting
Telecom Service beyond 49% upto 74%
Private Sector Banking beyond 49%
Print Media
Tea Sector
Defence - 26%
Atomic energy
Lottery, betting and gambling
Business of chit fund
Nidhi company
Trading in Transferable Development Rights
Cigars, cheroots, cigarillos and cigarettes
Real estate business
FDI in agricultural activities is prohibited except floriculture, horticulture, apiculture and cultivation of vegetables and mushrooms under controlled conditions, development and production of seeds, and planting material; Animal husbandry, Pisciculture, Aquaculture under controlled conditions; and services related to agro and allied sectors
Banking - Private Sector beyond 49%
Banking - Public Sector – 20%

13. Question Break
Can FDI be received in a business / venture which is not incorporated under any law in India?
FDI in trust also not allowed

14. Single Brand Retail Trading
100% permitted under approval route
Conditions
Single brand products only
Product should be sold under same brand internationally
Products are branded during manufacturing
Only one non-resident entity, whether owner of the brand or otherwise, permitted to undertake single brand product retail trading for the specific brand (earlier condition that foreign investor should be owner of brand deleted)
Retail trading by means of e-commerce not permitted
Application for approval to indicate the product / product categories proposed to be sold under a “single brand”
Fresh approval required for any addition to product / product category
For proposals beyond 51%, mandatory sourcing of at least 30% of value of manufactured / processed products from India preferably from MSMEs, village and cottage industries, artisans and craftsmen
First compliance over a period of 5 years from the year of receipt of 1st tranche of FDI. Subsequently on an annual basis

15. Multi Brand Retail Trading
51% permitted under approval route
Conditions
Minimum amount to be brought in – USD 100 million
50% of the total FDI brought in shall be invested in ‘backend infrastructure’ within 3 years of the first tranche of FDI. It will include capital expenditure on all activities, excluding that on frond-end units (clarified to include investment towards processing, distribution, quality control, storage etc.)
At least 30% of value of manufactured / processed products purchased to be sourced from Indian small industries/village and cottage industries, artisans and craftsmen. First compliance over a period of 5 years from the year of receipt of 1st tranche of FDI. Subsequently, on an annual basis
Retail sales outlets to be set up only in areas meeting specified criteria
Government will have the first right to procurement of agricultural products
Retail trading by means of e-commerce not permitted
Specified areas where retail outlets may be set up:
Retail sales locations may be set up only in cities with a population of more than 1 million as per 2011 Census and may also cover an area of 10 kms around the municipal or urban agglomeration limits of such cities.
Retail sales locations may be set up in States and Union territories not having cities with population of more than 1 million as per 2011 Census in the cities of the choice of such State / Union territory, preferably the largest city and may also cover an area of 10 kms around the municipal or urban agglomeration limits of such cities.
Retail locations will be restricted to conforming areas as per the Master / Zonal Plans of the concerned cities and provision will be made for requisite facilities such as transport connectivity and parking.
For the rest of India, current FDI policy regime for Trading will continue. As per the current FDI regime for Trading, 100% FDI is allowed upto wholesale cash and carry point from which franchise / small retailers are able to source products for sale to the public at large.
Following states have given their concurrence to allow FDI in MBRT:
 Andhra Pradesh  Assam  Delhi  Haryana  Jammu & Kashmir  Maharashtra  Manipur  Rajasthan  Uttarakhand  Daman & Diu and Dadra & Nagar Haveli (Union Territories)
Expenditure on land and rent will not be counted for the purpose of ‘backend infrastructure’

16. Multi Brand Retail Trading ~ Issues…
Whether entire capital of 100 million to be brought upfront or within specified time frame
Whether investment in purchase of existing business would be considered towards meeting the minimum investment criteria
Continuous requirement to invest 50% in backend capital expenditure may be difficult to achieve
Mandatory sourcing of 30% from small scale industries
Challenges in achieving economies of scale and consistency in quality
Increase in cost on account of procurement in small quantity and training of multiple suppliers
Challenges associated with switching to another supplier when small scale supplier outgrows its size

17. Transfer of Shares
Transfer of shares from NR to R or R to NR freely permitted subject to sectoral restrictions
However transfer of shares from NRI to NR requires prior permission of RBI
Deferred payment
Transfer from R to NR – Prior approval required from RBI
Transfer from NR to R – No specific provision
Reporting in form FC TRS to be done within 60 days from date of receipt of consideration (initial/final?)
Reduction of share capital – no specific reporting requirement
Liquidation of companies
Proceeds can be remitted to NR only after receipt of approval of official Liquidator ~ Liquidator would grant final approval only after remittance is made

18. Question Break
Can a foreign company (other than FII/QFI) buy/sell Indian shares on the stock market

19. Indirect Foreign Investment
Direct Investment
Any non-resident investment in an Indian company
Indirect Foreign Investment
Investment in an Indian company by another Indian company having foreign investment.
Investing company
An Indian company holding only investment in other Indian company/(ies), directly or indirectly, other than for trading of such holding / securities.

20. Indirect Foreign Investment
Owned by RIC and IC
If more than 50% of the equity interest is beneficially owned by RIC and ICs which are owned and controlled ultimately by RICs
Control by RIC and IC
If RIC and IC which are owned and controlled by RIC have the power to appoint majority of its directors
Whether indirect foreign investment by investing company in Indian company counted?
Yes
Not counted
NREs
Shareholding of investing company into Indian company will not be considered as foreign investment
In this case, foreign investment will be NIL
Overseas
India
RICs / ICs
Say, 51%
Say, 49%
Investing Company
Say, 26% / 80%
Indian Company

21. Indirect Foreign Investment
Owned by RIC and IC
If more than 50% of the equity interest is beneficially owned by RIC and ICs which are owned and controlled ultimately by RICs
Control by RIC and IC
If RIC and IC which are owned and controlled by RIC have the power to appoint majority of its directors
Whether indirect foreign investment by investing company in Indian company counted?
Yes No
Counted
Proportionate theory will not apply
Shareholding of investing company into Indian company will be considered as foreign investment
In this case, 80%
NREs
Overseas
India
RICs / ICs
Say, 49%
Say, 51%
Investing Company
80%
Indian Company

22. Indirect Foreign Investment
Exception – if operating-cum-investing company / investing company invests 100% in Indian company then the foreign investment limited to the foreign investment in the operating cum investing / investing company
It is clarified that this exception is being made since the downstream investment of a 100% owned subsidiary of the holding company is akin to investment made by the holding company and the down Stream investment should be a mirror image of the holding company.
In this case, 51%
NREs
Overseas
India
RICs / ICs
Say, 49%
Say, 51%
Investing* Company
Say, 100%
Indian Company
*Including operating-cum-investing company

23. Issues in Indirect Foreign Investment
Operating-cum-investing Indian company is owned or controlled by NREs
Operating-cum-holding company holds 95% in its subsidiary
Whether indirect foreign investment will be considered in Indian Company?
Whether loan or investment in redeemable preference shares will be allowed?
NREs
Overseas
India
RICs / ICs
Say, 26%
Say, 74%
Operating-cum-Investing Company
Say, 95%
Indian Company
The Indirect Foreign Investment rules only cover cases of Operating-cum-Investing companies which own 100% of Indian Company

24. Question Break
Can Downstream Investment be made using internal accruals?

25. Investment in Limited Liability Partnership (‘LLP’)
FDI in LLPs is permissible under the approval route where operating in sectors / activities where 100% FDI is allowed under the automatic route
No FDI linked performance conditions
FDI in agricultural/plantation activity, print media or real estate not allowed
No FDI by FII and FVCI
Downstream investment by IC having FDI allowed, if both (the IC and LLP) operate in 100% automatic sector
No downstream investment by LLP with FDI
An LLP is not allowed to make an outbound investment under the automatic route. It would need to access the approval route which could be ordinarily granted (ROC does not allow LLPs to register if they have investments as part of their objects).
RBI approval would be needed for a company wanting to convert itself into an LLP if it holds overseas investments
FDI linked performance conditions - such as ‘NBFC’ or “Development of Townships, Housing, Built up infrastructure and Construction-development project
LLP with a body corporate that is a designated partner or nominates an individual to act as a designated partner in accordance with the provisions of Section 7 of the LLP Act, 2008, such a body corporate should only be a company registered in India under the Companies Act, 1956 and not any other body, such as an LLP or a trust.

26. Issues on Indirect Investment in LLP
Operating-cum-investing Indian company is owned or controlled by NREs
Operating-cum-holding company holds 95% in its subsidiary
Does LLP have any foreign investment (direct or indirect)?
- No?
Can LLP make any downstream investment?
- Yes?
NREs
Overseas
India
RICs / ICs
Say, 26%
Say, 74%
Operating-cum-Investing Company
Say, 95%
LLP
.??
A Co

27. ECBs

28. Discussion points Conversion of ECB into Equity End-use
Conversion permissible even though the ECB is not due for repayment
End-use
Permitted end-use includes investment in new projects and modernization / expansion of existing production units
Can proceeds of ECB be used for acquiring an industrial undertaking on a slump sale basis

29. ODI

30. Background Outbound investments are regulated by
Reserve Bank of India ("RBI")
Under section 6(3)(a) of the FEMA
RBI has the power to prohibit, restrict or regulate the transfer or issue of any foreign security by a person resident in India
RBI has issued Foreign Exchange Management (Transfer or issue of any foreign security) Regulations, 2004
to regulate acquisition and transfer of a foreign security by a person resident in India i.e. investment by Indian entities in overseas joint ventures (“JV”) and wholly owned subsidiaries (“WOS”) as also investment by a person resident in India in shares and securities issued outside India
FEMA 120/RB-2004 dated July 7, 2004
RBI also issues annual Master Circular on "Direct Investment by Residents in Joint Venture (JV) / Wholly Owned Subsidiary (WOS) Abroad " that deals with Outbound investment of India
Latest Master Circular on Direct Investment by Residents in Joint Venture (JV)/ Wholly Owned Subsidiary (WOS) Abroad dated 02 July 2012
FAQ on Overseas Direct Investment updated on June 20, 2012

31. Outbound investment under the automatic route
An Indian party can invest upto 400% of its net worth (as per last audited Balance Sheet) in JV / WOS for any bona fide activity permitted as per the law of the host country, if certain other specified conditions are satisfied.
For the purpose of reckoning the net worth of 400%, the Indian party may use the net worth of its parent company (holding at least 51% in Indian company) or its subsidiary company (in which 51% is held by the Indian Company) to the extent holding or subsidiary have not availed of by the holding company or subsidiary company independently.
Discussion Points
Does the 400% net worth criterion apply only at the time of making the investment or through out the period of investment (fall in net worth)?
Net worth of indirect parent and subsidiary cannot be considered
JV not defined ~ level of investment / contribution?
Net worth means paid up capital (including preference shares) and free reserves

32. Other Points JV / WOS through a Special Purpose Vehicle
Direct investment through the medium of a SPV is permitted under the Automatic Route for the purpose of investment in JV / WOS overseas
Can an Indian company have more than one SPV for making investment in various JV / WOS
Loan not permitted to step down subsidiary unless Indian company has equity investment in step down ~ extent of equity investment required not specified
No clarity on whether Indian resident can be a beneficiary of a foreign trust ~ discretionary vs. non discretionary trust ~ whether a capital account transaction
Designated Authorized Dealer
In case the JV/WOS is being set up abroad by two or more Indian promoters, then all Indian promoters would be required to route all transactions in respect of that JV/WOS only through one ‘designated authorized dealer’

33. Expatriates
Whether foreign citizens and other persons permanently resident in India allowed to invest abroad out of foreign currency resources
In terms of section 6(4) of FEMA person resident in India can continue to hold or invest in foreign assets if such asset was held when the person was a resident outside India
RBI Circular 37 of 19/10/2011 clarifies that under section 6(4), person resident in India can reinvest out of proceeds of assets sold outside India and income and sale proceeds of assets need not be brought to India
Whether above relaxation applies to foreign citizens (heading of Circular only refers to NRIs)
As per ODI regulations, only persons not permanently resident in India allowed to purchase foreign securities from foreign resources outside India – Whether persons permanently resident in India (including foreign citizens) not allowed to invest out of foreign resources inspite of relaxation under Circular 37

34. Current Account Transactions

35. Current Account Transaction Rules
Any person may sell or draw foreign exchange to or from an authorised person if such sale or drawal is a current account transaction, unless restricted by RBI
FEM( Current Account Transactions) Rules, 2000
Transactions for which foreign exchange withdrawal is prohibited (Schedule I)
Transactions require approval of the Central Government ( Schedule II)
Transactions require approval of Reserve Bank of India (Schedule III)

36. Current Account Transaction Rules…
Rule 3 [Schedule I] Transaction prohibited
(Illustrative)
Remittance out of lottery winnings
Remittance of income from racing/riding etc, or any other hobby
Remittance for purchase of lottery tickets, banned/prescribed magazines, football pools, sweepstakes etc
Payment of commission on exports made towards equity investment in Joint Ventures/Wholly Owned Subsidiaries abroad of Indian companies
Remittance of interest income on funds held in Non-resident Special Rupee Scheme Account

37. Current Account Transaction Rules…
Rule 4 - Approval of the Central Government
(Illustrative)
Cultural Tours
Remittance of hiring charges of transponders by:
(a) TV Channels Ministry of Information and Broadcasting;
(b) Internet Service Providers Ministry of Communication and Information Technology
Remittance of prize money/sponsorship of sports activity abroad by a person other than International / National / State Level sports bodies, if the amount involved exceeds USD 1,00,000
Advertisement in foreign print media for the purposes other than promotion of tourism, foreign investments and International bidding (exceeding USD 10,000) by a State Government and its Public Sector Undertakings
Multi-model transport operators making remittance to their agents abroad

38. Current Account Transaction Rules
Rule 5 – Approval of the Reserve Bank
(Illustrative)
Release of exchange exceeding USD 10,000 or its equivalent in one financial year for one or more private visits to any country (except Nepal and Bhutan)
Gift remittance exceeding USD 5,000 per financial year per remitter or donor other than resident individual
Exchange facilities exceeding USD 100,000 for persons going abroad for employment
Exchange facilities for emigration exceeding USD 100,000 or amount prescribed by country of emigration.
Remittance for maintenance of close relatives abroad
(i) exceeding net salary (after deduction of taxes, contribution to provident fund and other deductions) of a person who is resident but not permanently resident in India and—
(a) is a citizen of a foreign State other than Pakistan; or
(b) is a citizen of India, who is on deputation to the office or branch or subsidiary or joint venture in India of such foreign company
(ii) exceeding USD 100,000 per year per recipient, in all other cases

39. Foreign Exchange Compliance
Travel Abroad
Purpose
Foreign Exchange Compliance
When can foreign exchange be drawn for going abroad
Not before 60 days prior to the date of travel
One or more private visit to any country
Foreign currency notes equivalent to USD 3,000
Total foreign currency drawal upto USD 10,000.
Exchange facilities for persons going abroad
Upto USD 1,00,000
Exchange facilities for emigration
Upto USD 1,00,00 or amount prescribed by country of emigration
For business travel, or attending a conference or specialized training, study tour, or for maintenance expenses of a patient going abroad
Upto USD 25,000 per visit, for a person, irrespective of period of stay
For meeting expenses for medical treatment abroad
Upto USD 1,00,000 or amount as per the estimate from a hospital/doctor in India/abroad, whichever is higher
For studies abroad
Upto USD 1,00,000 per academic year or as per the estimate from the institution abroad, whichever is higher

40. Drawal of currency permissible
Travel Abroad…
Purpose
Drawal of currency permissible
Maximum amount in INR that could be carried while on a visit abroad and brought back on return
INR 7,500
Maximum cash in foreign currency that could be carried while on a visit abroad and brought back on return
Foreign currency notes equivalent to USD 3,000 while going abroad
On return, without any limit. However, if the aggregate value of foreign exchange exceeds USD 10,000 or foreign currency notes alone exceeds USD 5,000, it should be declared to the Customs Authorities at the Airport in the Currency Declaration Form on arrival in India.
Maximum amount that can be paid in cash for drawing foreign exchange
Upto Rs 50,000
If the Rupee equivalent exceeds Rs. 50,000, entire payment should be made by way of a crossed cheque / banker’s cheque / pay order / demand draft, etc.

41. Expatriates
Employees of foreign companies on deputation to Indian subsidiary / branch / joint venture allowed to receive salary directly in foreign bank account subject to payment of tax in India
Whether Indian company to whom the employees are deputed can directly pay salary into the foreign bank account
Employees who are (i) citizens of foreign State or (ii) citizens of India on deputation to office/branch/subsidairy/joint venture in India can make remittance for close relatives outside India as under:
Upto net salary if the employment is for a specific duration (irrespective of length) or a specific job which does not exceed a duration of three years
Upto USD 100,000 in other cases

42. Liberalized Remittance Scheme

43. Background
Under the LRS, all resident individuals, including minors are allowed to freely remit up to USD 2,00,000 per financial year for any permissible current or capital account transaction, which is given below
Consolidation of remittance facility in respect of family members, subject to compliance with the terms and conditions of the scheme.
Permissible usage of LRS (Illustrative)
Usage prohibited (Illustrative)
Current account transactions
Permitted capital account transactions
Remittance for purchase of objects of art subject to other relevant regulations
Remittance of funds for acquisition of ESOP (this is in addition to acquisition of ESOPs linked ADR / GDR)
Repayment of loan availed abroad as an NRI
Remittance for any purpose specifically prohibited under Schedule-I (like purchase of lottery tickets/sweep stakes, proscribed magazines, etc.) or any restricted items;
Remittances for purchase of FCCBs issued by Indian companies in the overseas secondary market;
Remittance by a resident individual for setting up a company abroad;
Remittances directly or indirectly to countries identified by the FATF as ‘non co-operative countries and territories’    
No need to repatriate to India the income generated from property acquired abroad out of LRS

44. Issues
Whether remittance can be made under LRS for investment in unlisted (private) companies
Specific restriction for remittance towards setting up new companies
No specific restriction / permission for acquisition of stake in private companies ~ not a “permissible capital account transaction”
However remittance allowed for acquisition of immovable property abroad which is also not a permissible capital account transaction
Form 15CA/CB required even if the remittance is not taxable ~ variance in practice followed by Banks
Cases where Banks have insisted on form A2 even though not required under LRS
Cases of compounding of offences where individuals used LRS for purchase of majority stake in private companies as per Report of Committee to review the facilities for individuals
Remittance for travel, medical, studies etc. (except gift and donation) over and above limit under LRS

45. Issues
Rupee gift by resident to NRI relative allowed under LRS ~ amount to be credited to NRO account
Does it circumvent restriction of USD 5,000 for gifts under current account rules considering NRI can remit USD 1 million out of NRO account balance
Loans to non residents not permitted except to NRI/PIO close relatives subject to conditions
Limit of USD 200,000 cannot be exceeded even if proceeds of investments bought back to India

46. Glossary FEMA Foreign Exchange Management Act, 1999
Capital Account Regulations
The Foreign Exchange Management (Permitted Capital Account Transactions), Regulations 2000
RIC
Resident Indian Citizens IC
Indian Companies
NRE
Non Resident Entities
FII
Foreign Institutional Investors
FVCI
Foreign Venture Capital

47. Section 2(e) – Definition - Capital Account Transaction
“Capital account transaction" means a transaction which alters the assets or liabilities, including contingent liabilities, outside India of persons resident in India or assets or liabilities in India of persons resident outside India, and includes transactions referred to in sub-section (3) of section 6

48. Section 6(3) - Capital Account Transaction
“Without prejudice to the generality of the provisions of sub-section (2), the Reserve Bank may, by regulations prohibit, restrict or regulate the following,—
transfer or issue of any foreign security by a person resident in India;
transfer or issue of any security by a person resident outside India;
transfer or issue of any security or foreign security by any branch, office or agency in India of a person resident outside India;
any borrowing or lending in foreign exchange in whatever form or by whatever name called;
any borrowing or lending in rupees in whatever form or by whatever name called between a person resident in India and a person resident outside India;
deposits between persons resident in India and persons resident outside India;
export, import or holding of currency or currency notes;
transfer of immovable property outside India, other than a lease not exceeding five years, by a person resident in India;
acquisition or transfer of immovable property in India, other than a lease not exceeding five years, by a person resident outside India;
giving of a guarantee or surety in respect of any debt, obligation or other liability incurred,—
i. by a person resident in India and owed to a person resident outside India; or
ii. by a person resident outside India”

49. Section 2(j) – Definition - Current Account Transaction
“current account transaction" means a transaction other than a capital account transaction and without prejudice to the generality of the foregoing such transaction includes,—
payments due in connection with foreign trade, other current business, services, and short-term banking and credit facilities in the ordinary course of business,
payments due as interest on loans and as net income from investments,
remittances for living expenses of parents, spouse and children residing abroad, and
expenses in connection with foreign travel, education and medical care of parents, spouse and children;