It is totally abnormal that
importer and exporter will make payment to third parties or receive from third parties.
Government should make it clear why and under what condition buyer of any goods
or any services in any foreign country is not in a position to pay the cost of
goods and services it imported and similarly why an Indian exporter will
arrange payment of goods and services from third party in India. After all what
may be the common interest of exporter or importer and that of third party?
AS per Indian contract act any
payment without any consideration will be treated as null and void and hence
new guideline issued by our government allowing exporter and importer to
arrange payment and receipt from or to third parties will be construed will not
hold good in light of Indian contract act until it is also modified giving
rational behind it.
As a layman, one can draw the
conclusion that it is the foul game of black money parked in foreign countries.
It is open secret in India that hitherto if an exporter who wants to park money
in overseas bank uses to import goods worth 100 dollar while inviting bill for higher
amount say,100 lac or more dollar and similarly when he needs such black money back in India he will he will
export goods worth 100 dollar and raise a bill for higher amount say of 100 lac
dollar or 100 million dollar . Inflated bill has always remained the tool to
remit or bring back money to and from abroad.
Government had failed to stop
such malpractices and exporter importers in nexus with custom department were
carrying out their malicious activities causing huge loss to Indian Government.
Now it appears that government has tried to legalize such foul games .It is
therefore necessary and in the interest of the country that government explains
the rational behind such drastic change in rules pertaining to foreign trade.
On the one hand government talks of fighting against black money by using stringent act such Anti Money Laundering Act and by forcing banks and financial Institutes to enforce strict KYC norms (Know Your Customer), on the other government has made illegal payment or receipt as legal by modified guidelines. There is no doubt that illegal transaction will increase through banking channels and bank management will not be in a position to distinguish legal and illegal trade, true and fake trade , genuine bill or inflated false bill.
It is however true that Custom department which were allowing hitherto illegal and inflated export and import of goods and services in nexus with traders will feel relaxed .
However as a common man I would like to know why government needed to take such change in existing rules on the subject and how it is beneficial to India and Indian traders.
Is it due to compulsion arising out of rising CAD or under pressure from black money holders?
On the one hand government talks of fighting against black money by using stringent act such Anti Money Laundering Act and by forcing banks and financial Institutes to enforce strict KYC norms (Know Your Customer), on the other government has made illegal payment or receipt as legal by modified guidelines. There is no doubt that illegal transaction will increase through banking channels and bank management will not be in a position to distinguish legal and illegal trade, true and fake trade , genuine bill or inflated false bill.
It is however true that Custom department which were allowing hitherto illegal and inflated export and import of goods and services in nexus with traders will feel relaxed .
However as a common man I would like to know why government needed to take such change in existing rules on the subject and how it is beneficial to India and Indian traders.
Is it due to compulsion arising out of rising CAD or under pressure from black money holders?
RBI allows third-party payments for export, import transactions--ET 09.11.2013
MUMBAI: Easing procedures, the Reserve Bank allowed third-party payment for export and import transactions.
With a view to further liberalise the procedure relating to payments for exports/imports, banks are allowed payments for export of goods/software to be received from a third-party, the RBI said.
Banks are also permitted to make payments to a third-party for import of goods, it added.
Third-party refers to an entity other than the buyer or the seller.
The RBI said the procedure has been liberalised taking into account evolving international trade practices.
However, banks would have to follow certain conditions. Third-party transaction should take place through the banking channel and with a Financial Action Task Force (FATF) compliant country.
"Normally payment for exports has to be received from the overseas buyer named in the Export Declaration Form (EDF) by the exporter and the payment shall be received in a currency appropriate to the place of final destination as mentioned in the EDF irrespective of the country of residence of the buyer," it said.
Similarly, the payments for the import should be made to the original overseas seller of the goods, RBI added.
With a view to further liberalise the procedure relating to payments for exports/imports, banks are allowed payments for export of goods/software to be received from a third-party, the RBI said.
Banks are also permitted to make payments to a third-party for import of goods, it added.
Third-party refers to an entity other than the buyer or the seller.
The RBI said the procedure has been liberalised taking into account evolving international trade practices.
However, banks would have to follow certain conditions. Third-party transaction should take place through the banking channel and with a Financial Action Task Force (FATF) compliant country.
"Normally payment for exports has to be received from the overseas buyer named in the Export Declaration Form (EDF) by the exporter and the payment shall be received in a currency appropriate to the place of final destination as mentioned in the EDF irrespective of the country of residence of the buyer," it said.
Similarly, the payments for the import should be made to the original overseas seller of the goods, RBI added.
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