Company : Sol Infotech Pvt. Ltd. Website : www.courtkutchehry.com REMITTANCES OF FOREIGN EXCHANGE AND INVESTMENT IN FOREIGN EXCHANGE BONDS (IMMUNITIES AND EXEMPTIONS) ACT, 1991 41 of 1991 [18th September, 1991] CONTENTS CHAPTER 1 :- PRELIMINARY 1. Short title and extent CHAPTER 2 :- REMITTANCES OF FOREIGN EXCHANGE 2. Definitions 3. Immunities 4. Remittances not to be taken into account in certain cases CHAPTER 3 :- INVESTMENT IN FOREIGN EXCHANGE BONDS 5. Definitions 6. Immunities 7. Foreign Exchange Bonds not to be taken into account in certain cases REMITTANCES OF FOREIGN EXCHANGE AND INVESTMENT IN FOREIGN EXCHANGE BONDS (IMMUNITIES AND EXEMPTIONS) ACT, 1991 41 of 1991 [18th September, 1991] STATEMENT OF OBJECTS AND REASONS The present position relating to balance of payments has become difficult and it has become necessary to attract larger inflow of foreign exchange. In order to encourage such inflow of foreign exchange, it is proposed to allow- (a) remittances of foreign exchange to persons resident in India: and (b) the State Bank of India to issue Foreign Exchange Bonds to non-resident Indians and overseas corporate bodies wherein non-resident Indians have any interest, in acordance with the schemes to be notified by the Reserve Bank of India. It is also proposed to provide immunities to persons receiving such remittances and to persons owning such bonds mainly from Foreign Exchange Regulation Act, 1973 and the Direct Tax Laws. 2. The Bill seeks to achieve the above objects. -Gaz. of Ind., 3-9-1991, Pt. II- S. 2, Ext. p. 6 (No. 30). CHAPTER 1 PRELIMINARY 1. Short title and extent :- ( 1 ) This Act may be called the Remittances of foreign Exchange and Investment in Foreign Exchange Bonds (Immunities and Exemptions) Act, 1991. (2) It extends to the whole of India. CHAPTER 2 REMITTANCES OF FOREIGN EXCHANGE 2. Definitions :- In this Chapter, unless the context otherwise requires.- (a) "recipient" means a person as defined in Clause (31 ) of S.2 of the Income lax Act, 1961 who receives any remittance under this Chapter; (b) "remittance" means remittance made in foreign exchange by any person resident outside India to a person resident in India on or after the date of commencement of this Act but before the specified date, in the form of drafts, traveller's cheques, cheques drawn on banks, situated outside India, tel- egraphic transfers, mail transfers, money orders or by way of transfer from Non- resident (External) Account, Foreign Currency Non-resident Account or Foreign Currency Non-resident Special Deposit Account maintained in India under the rules made under Foreign Exchange Regulation Act, 1973. Explanation.- For the purposes of this clause, "specified date" means the 1 st day of December, 1991 or such other later date as the Central Government may, by notification in the Official Gazette, specify in this behalf; (c) all other words and expressions used in this Chapter hut not defined and defined in Foreign Exchange Regulation Act, 1973 shall have the meanings respectively assigned to them in that Act. 3. Immunities :- ( 1 ) Notwithstanding anything contained in any other law for the time being in force.- (a) no recipient, who claims immunity under this Chapter inaccordance with such scheme as the Reserve Bank. of India may, by notification in the Official Gazette, specify for the purposes of receiving remittances under this Chapter, shall be required to disclose, for any purpose whatsoever, the nature and source of the remittance made to him; (b) no inquiry or investigation shall be commenced against the recipient under any such law on the ground that he has received such remittance; (c) the fact that the recipient has received a remittance shall not be taken into account and shall be inadmissible as evidence in any proceedings relating to any offence or the imposition of any penalty under any such law. (2) Nothing in sub-section (1) shall apply- (a) to any foreign exchange which is required to be brought into India under any of the provisions of- (i) the Foreign Exchange Regulation Act, 1973; or (ii) the Income tax Act, 1961 , read with the Foreign Exchange Regulation Act. 1973, if the period within which such foreign exchange is to be brought into India has not expired or where such period has been extended, in any manner, by the Central Government or the Reserve Bank of India or any other authority, such extended period has not expired on the date of commencernent of this Act; (b) in relation to prosecution for any offence punishable under Chapter 9 or Indian Penal Code, 1860 , the Narcotic Drugs and Psychotropic Substances Act, 1985 , the Terrorist and Disruptive Activities (Prevention) Act, 1987 , the Prevention of Corruption Act, 1988 or for the purpose enforcement of any civil liability. (3) The Central Government shall cause the scheme notified under clause (a) of sub-section (1) to be laid, as soon as may be after it is notified, before each House of Parliament. 4. Remittances not to be taken into account in certain cases :- Without prejudice to the gener- ality of the provisions of section 3 ,- (a) any remittance received under this Chapter shall not be taken into account for the purpose of any proceeding under the Income tax Act, 1961 and. in particular, the recipient shall not be entitled to claim any set-off or relief in any assessment, re-assessment, appeal, reference or other proceeding under that Act or to reopen any assessment or reassessment made under that Act on the ground that he has received such remittance. Explanation.- For the avoidance of doubt, it is hereby declared that the provisions of Income tax Act, 1961 will apply to any income which accrues or arises or is deemed to accrue or arise to the recipient from the amount of the remittance: (b) any remittance received under this Chapter shall not form part of the assets of any assessee for the purposes of computing his net wealth under the Wealth-tax Act, 1957 in relation to any assessment year commencing before the 1st day of April. 1992. CHAPTER 3 INVESTMENT IN FOREIGN EXCHANGE BONDS 5. Definitions :- (1) In this Chapter, unless the context otherwise requires.- (a) "Foreign Exchange Bonds" means the Bonds, issued by the State Bank of India constituted under the State Bank of India Act, 1955 in accordance with such scheme as the Reserve Bank of India may, by notification in the Official Gazette, specify in this behalf, the investment wherein is made on or after the date of commencement of this Act but before the specified date. Explanation.- For the purposes of this clause, "specified date" means the 1st day of December, 1991 or such other later date as the Central Government may, by notification in the Official Gazette, specify in this behalf: (b) "non-resident Indian" means an individual, being a citizen of India or a person of Indian origin who is resident outside India. Explanation 1.- A person shall be deemed to be of Indian origin if-- (i) he, or either of his parents or any of his grand-parents, was a citizen of India by virtue of the Constitution or Citzenship Act, 1955; or (ii) he at any time held an Indian passport : Provided that the nationals of Pakistan or Bangladesh shall not be deemed to be of Indian origin. Explanation 2.-A spouse (not being a national of Pakistan or Bangladesh) of a person of Indian origin shall also be deemed to be of Indian origin; (c) "overseas corporate body" means any institution, association or body, whether incorporated or not, established under the laws of a country outside India wherein any non-resident Indian has any interest; (d) all other weres and expressions used in this Chapter but not defined and defined in Foreign Exchange Regulation Act, 1973, shall have the meaning respectively assigned to them in that Act. (2) The Central Government shall cause the scheme notified under clause (a) of sub-section ( 1 ) to be laid, as soon as may be after it is notified, before each House of Parliament. 6. Immunities :- ( 1 ) Notwithstanding anything contained in the Wealth-tax Act, 1957, the Gift- tax Act, 1958, the Income tax Act, 1961 the Foreign Exchange Regulation Act, 1973 and the Foreign Contribution (Regulation) Act, 1976,- (a) no non-resident Indian or overseas corporate body who or which owns the Foreign Exchange Bonds or any person resident in India to whom a gift of such Bonds has been made by such non- resident Indian or overseas corporate body shall be required to disclose, for any purpose whatsoever, the nature and source of the investment in such Bonds: (b) no inquiry or investigation shall he commenced against any of the persons referred to in Clause (a) under any of the said Acts on the ground that such person owns such Bonds: (c) the fact that any of the persons referred to in Clause (a) owns such Bonds shall not be taken into account and shall be inadmissible as evidence in any proceedings relating to any offence or the imposition of any penalty under any of the said Acts. (2) Nothing in sub-section (1) shall apply to foreign exchange which is required to be brought into India under any of the provisions of-- (i) the Foreign Exchange Regulation Act, 1973: or (ii) the Income tax Act, 1961 , read with the Foreign Exchange Regulation Act, 1973. if the period within which such foreign exchange is lo be brought into India has not expired or where such period has been extended, in any manner, by the Central Government or the Reserve Bank of India or any other authority, such extended period has not expired on the date of commencement of this Act. 7. Foreign Exchange Bonds not to be taken into account in certain cases :- Without prejudice to the generality of the provisions of section 6 ,- (a) the provisions of the Income tax Act, 1961 shall not apply to any interest accruing in relation to the Foreign Exchange Bonds; (b) the provisions of the Wealth-tax Act, 1957 shall not apply in relation to the Foreign Exchange Bonds. (c) the provisions of the Gift-tax Act, 1958 shall not apply where any non-resident Indian be- comes a resident in India and makes a gift of the Foreign Exchange Bonds.