RBI Makes Furnishing PAN Mandatory For Sending Money Abroad
The Liberalised Remittance Scheme helps resident Indians send money abroad for various purposes such as children’s studies and investment in foreign stocks and property.
The Reserve Bank of India (RBI) on June 6 made the norms for sending money abroad more stringent by making the disclosure of Permanent Account Number (PAN) mandatory for anyone using the Liberalised Remittance Scheme (LRS), it said in a statement. The scheme helps resident Indians to send money abroad for various purposes, such as children’s studies, and investment in foreign stocks of companies, and property, abroad. It also covers medical costs.
The Remittance Scheme, set up in 2004, did not so far insist upon PAN for account transactions up to $25,000. It is only after the central bank noticed that many Indian residents and traders were remitting funds abroad to invest in stocks and properties, which breached specified limits under the scheme, that it made the new decision.
Now, amid fears of black money outflow, the RBI’s developmental and regulatory policy statement said that “pursuant to the announcement made in the first bi-monthly Monetary Policy Statement 2018-19 on April 5, 2018, a system for daily reporting of individual transactions under the Liberalized Remittance Scheme (LRS) by Authorized Dealer (AD) banks has been put in place. This system enables the AD banks to view the remittances already sent by an individual during the financial year, thus improving monitoring and ensuring compliance with the LRS limits.”
The statement added: “Since the said reporting system uses the Permanent Account Number (PAN) of the remitter as a Unique Identifier to aggregate the remitter-wise data, it has been decided that furnishing of PAN, which hitherto was not to be insisted upon while putting through permissible current account transactions of upto USD 25,000, shall now be mandatory for making all remittances under LRS.”
It has also decided to align the definition of relatives, when it comes to remittances, with Companies Act 2013 instead of Companies Act 1956. “Further, in the context of remittances allowed under LRS for maintenance of close relatives, it has been decided to align the definition of ‘relative’ with the definition given in Companies Act, 2013 instead of Companies Act, 1956,” the statement added.
As per the scheme rules, individuals are only allowed to buy stocks and properties abroad, and not spend on speculative bets on instruments like derivatives. The annual Liberalized Remittance Scheme limit per individual was raised in 2015 from $125,000 to $250,000.
The outflow of remittance from Indian residents was as much as $8.17 billion between April 2017 and January 2018, the Economic Times reported earlier, citing RBI figures. The figure was more than double of the corresponding number during the same period the year before, the statistics showed. About $4.6 billion was sent by Indians overseas during the first 10 months of 2016-17.