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CMA Final · Corporate and Economic Laws · Foreign Exchange Management Act, 1999

Mehta Traders in Mumbai receives a payment on behalf of a person resident outside India through another person (not directly from abroad), and there is no corresponding inward remittance from any place outside India. Under the Explanation to section 3(c), how is this receipt treated?

Such a receipt is deemed to be received otherwise than through an authorised person. The Explanation to section 3(c) applies this where payment is received for a non-resident through another person, even an authorised person, without a corresponding inward remittance from outside India.

  1. AIt is deemed to be received otherwise than through an authorised personCorrect
  2. BIt is exempt because an intermediary handled the payment
  3. CIt is treated as a current account receipt requiring no permission
  4. DIt is deemed received through an authorised person if the intermediary is a bank

Explanation

The Explanation to section 3(c) says that where a person in India receives payment on behalf of a non-resident through any other person (including an authorised person) without a corresponding inward remittance from outside India, the receipt is deemed to be otherwise than through an authorised person. Involvement of a bank does not cure this.

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