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The import of goods means bringing goods into a country. The importer and the seller are the leading players in it and are required to comply with the laws for the import of goods. There are specific laws and compliance for importing goods under FEMA that must be followed by the importer and the concerned parties. The Director-General of Foreign Trade deals with the import of goods. Apart from it, the Government of India brought the Foreign Trade Policy (FTP), which needs to be complied by the importers and all the authorized dealers. It was introduced in 1992. The law that applies to India’s import of goods is the Foreign Exchange Management Act of 1999. It is also covered under the Foreign Exchange Management (Current Account Transactions) Rules 2000.
When the import transactions are executed, specific guidelines must be followed, and in the absence of such guidelines, normal banking conditions must be adhered to by the authorized banks. Import licenses are essential for carrying out the import of goods. Some goods are prohibited as per the foreign trade policy, and for goods not having restrictions, the authorized dealers may open letters of credits and allow remittances for conducting imports. A copy of the letter of credit and import license is essential for an authorized bank. To increase the efficiency of import transactions, the RBI streamlined and developed Import Data Processing and Monitoring System (IDPMS). It can be used to monitor import transactions effectively, and the authorized banks are required to upload all remittances of import to the IDPMS.
The mode of payment for import transactions can be through an international credit card or debit card. The importer of goods can make payment in rupees for the expenses incurred due to boarding and lodging, and the payment can be made through crossed cheque or draft for purchase of gold or silver outside India. For a company, the payment may be made in rupees to its director, who is outside India.
The payment made for the imports through the authorized banks by the importer must not be longer than six months from the date of shipment of goods provided the payment is not withheld towards some form of guarantee for performing the service. In a case where there is any form of interest that applies to the bills, then payment of interest is only permitted for three years. In the case of deferred payment, differential treatment is applied at the time of payment where five years are allowed. For the import of goods, time can be extended under some circumstances under FEMA. To complete remittances for import transactions, authorized banks provide six months, but the period may be extended to three years under specific cases like disputes settlement. It may be noted the period cannot be extended beyond three years under any circumstance by the authorized bank. A third party may receive payment from an authorized dealer provided it fulfills certain conditions like there must be an agreement between the parties; the importer must comply with the regulations pertaining to importing goods etc. there is certain evidence that is to be provided as import evidence for import of goods and the importer. The authorized banks must strictly comply with these rules.
Compliance for Import of Goods under FEMA
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