Hospitals beware of the foreign exchange received
With the growing healthcare sector and India being a popular designation for the foreign patients. Some of these foreign patients make payment to Indian hospitals for the medical services in foreign currency. Now, what is the nature of these transactions involving forex and their implications under the Foreign Exchange Management Act, 1999 (FEMA) are to be carefully considered.
Foreign Exchange Management (Foreign Currency Accounts by a Person Resident in India) Regulations, 2000 (FCA Regulations) specify the various foreign currency accounts that can be maintained by persons resident in India, and the restrictions regarding debits from and credits to the same.
A person resident in India may open, hold and maintain with an authorised dealer in India, a Foreign Currency Account to be known as Exchange Earners’ Foreign Currency (EEFC) Account, subject to the terms and conditions of the EEFC Account Scheme.A person resident in India may credit to its EEFC Account, 100% of the foreign exchange earnings from, inter alia, inward remittance through normal banking channel. Further, re-credit of unutilised foreign currency earlier withdrawn from the account is also a permissible credit to the EEFC Account of the person resident in India.
FCA Regulations also enumerate the permissible debits from the EEFC Account. Payment outside India towards current account transactions is permissible from EEFC Account. In addition to this, there is no restriction on withdrawal in Rupees of funds held in an EEFC Account. However, the amount withdrawn in Rupees will not be eligible for conversion into foreign currency and for re-credit to the EEFC Account.
It is to be noted that 100% foreign exchange earnings can be credited to the EEFC Account subject to the condition that the sum total of the accruals in the account during a calendar month is converted into Rupees on or before the last day of the succeeding calendar month after adjusting for utilization of the balances for approved purposes or forward commitments.
Incase where the EEFC account is not maintained and the foreign currency is received by a person (not being an individual resident in India) as remuneration for services rendered, whether in India or outside India, then such person shall sell within seven days from the date of its receipt, to an authorised person, the foreign exchange realized.
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