How to import used Gramophone at eBay

There is email exchange on the import of Gramophone between me and Shardul . It is in reverse order.
Dear Shardul,
I happy to read that you have received your parcel.There is overall thrust in the Govt to act as facilitator.The goods intended for personal use are not revenue driven compared to commercial goods. Any goods even charged duty only if the the duty payable increase more than Rs 100/-.
regards
Ravindra Kumar

Dear Sir,

I got my records passed duty free. In fact two different parcels. One from UK and the other from US. Is it that low value items are generally cleared without much hassle?

Regards
Shardul
On Wed, Sep 3, 2008 at 2:02 AM, Shardul Sharma <shardul1004@gmail.com> wrote:
Thank you, sir for your reply. Highly apprecited. Great work truly.

Best regards
Shardul

Thank you, sir for your reply. Highly apprecited. Great work truly.

Best regards
Shardul
On 9/2/08, ravindra kumar <http://in.f941.mail.yahoo.com/ym/Compose?To=ravindraeakumar_iitd@yahoo.co.in> wrote:
Dear Shardul,
Thanks for appreciation. The second hand goods import attract fine and penalty,in addition to duty.Therefore, the customs may levy nominal penalty and release your goods.But before imposing any fine and penalty,you will get detention letter from Customs.Hence,you should worry only after getting detention letter.Some times goods are released on warning ,depending upon go reply to my quarey.enuineness of the case . As far duty is concerned,normally @ 17.34% on personal import.
war sir for you help and taking out time tm regards
Ravindra Kumar
Shardul Sharma <http://in.f941.mail.yahoo.com/ym/Compose?To=shardul1004@gmail.com> wrote:
Dear Sir,

You're blog is fantastic for someone who has any doubts about exports and imports. Very, very informative. I am a music lover and have bought rock t-shirts and audio Cd's from eBay regularly. The value of the products did not exceed $25 at anytime. Till date I have not faced any custom issue. However, recently I have bought 8 old and used gramophone records from eBay UK. The value of these records are again very low at about 13 pounds plus shipping cost of 16 pounds which totals up to 29 pounds or almost 2400 rupees. This is the first time i am buying gramophone records.

Will this parcel attract any import duties and how much?

Thanking you

Best regards
Shardul Sharma

Whether consumer electronics goods above Rs 2000(C.I.F) are restricted when the same goods are allowed free in the ITC(HS)

The consumer electronic goods like Mobile phone, digital camera,iPhone, digital TV,Laptop,etc ,if costing more than Rs 2000/-(C.I.F), are not exempted form the Foreign Trade (Regulation)Rules,1993.[As per Rule 3(1) (i)(h) of the Foreign Trade (Exemption from Application of Rules in Certain cases) order,1993]
The above Foreign Trade order,1993 is issued under section 19 of the Foreign Trade (Development and Regulation) Act,1992.

THE ITC(HS) is governed by the Section 5 of the Foreign Trade (Development and Regulation) Act, 1992 (No.22 of 1992) read with paragraph 2.1 of the Export and Import Policy – 2004-09, as amended from time to time.
Therefore, any item,may be consumer electronic goods,if allowed to be imported freely as per ITC(HS),then, same may also be allowed to freely importable through Postal channel.
In another words,digital camera and other consumer electronics goods should not attract any fine and penalty ,if it cost more than Rs 2000/(CIF).

As far duty is concerned, if the goods are imported for personal use then duty to be charged @ 17.34%. OTHERWISE, for commercial use ,it should be @ 31.703%.But in no case ,it should attract fine and penalty.
Clarification is required on the above facts.
Ravindra Kumar

Foodstuffs and provisions, imported by foreigners for personal use

No customs duty on import of food stuff by foreigners for personal use . Provided that -
(i) the aggregate c.i.f. value of such foodstuffs and provisions so imported by any such person in a year
shall not exceed Rs. 1,00,000; and
(ii) the importer secures the foreign currency required for importing such foodstuffs and provisions from the funds available to him in the foreign country.

Ravindra Kumar

Customs duty on iPhone

iPhone is a smartphone made by Apple that combines an iPod, a tablet PC, a digital camera and a cellular phone. The device includes Internet browsing and networking capabilities. The principal function is telephony.Thus iPhone is classified under CTH 8517 12 and attracts duty of 4% in lieu of sales tax/VAT/Local tax,etc.In addition to this , 1% duty as National Calamity Contingent duty on iphone is charged in India.
It is advisable not to import iPhone through Indian post as iphone ,being consumer electronics goods and valuing more than Rs 2000/(CIF),are restricted.Attracts fine and penalty ,in addition to duty,on iPhone.But through postal you have to pay less freight ,so less value and less duty. Choice is yours.
Ravindra Kumar

import duty on Wall paper,wall covering

Wall paper and similar wall coverings,with or without grained,embossed,coloured,design-printed or otherwise decorated layer of plastics are attracting duty @31.7034 %.No licence is required to import.The duty is always charged on assessable value.

whether digital stiil camera and camcorder are same

As per world customs classification rule,including India,the digital camera and camcorder fall under same sub tariff heading 852580.But both are further sub divided .digital camera tariff 85258010 and camcorder 85258020. Hence they are different from each other.There is also different duty charged under indian customs law.
The digital still camera are considered ITA (Information technology Agreement)goods and NO BASIC CUSTOM DUTY IS CHARGED as per Notification 25/2005-customs.(http://www.cbec.gov.in/customs/cs-act/notifications/notfns-2k5/cs25-2k5.pdf).
However,there is change in sub tariff heading from 852540 to 852580 for digital still camera.
ravindra kumar

No change in duty on personal import in the Budget 2008-2009

The duty on personal import is 17.34% of the value,as it was before the budget.No duty on life saving drugs for personal use.The gifts are free upto Rs 10,000/-.
Happy importing!
Ravindra Kumar

Receving gifts and import of cigar , lighters,sprays

Import of cigars,lighters,scent sprays,toilet sprays, powder-puff,pads can be imported without any licence. If you receive as gifts then upto rs 10,000/- no customs duty to be paid.But if you import for personal use then you have to pay duty @17.34% irrespective of value of the postal parcels.

The cigars,lighters,sprays, powder-puff,pads are charged duty @ 34.130% if imported for commercial purpose. you can claim refund of 4% if you are selling goods after paying sales tax.

Receving gifts and import of cigar , lighters,sprays

Import of cigars,lighters,scent sprays,toilet sprays, powder-puff,pads can be imported without any licence. If you receive as gifts then upto rs 10,000/- no customs duty to be paid.But if you import for personal use then you have to pay duty @17.34% irrespective of value of the postal parcels.

The cigars,lighters,sprays, powder-puff,pads are charged duty @ 34.130% if imported for commercial purpose. you can claim refund of 4% if you are selling goods after paying sales tax.

Import of GPS equipments for commercial purpose

Mobile phone with GPS are charged duty @ 4%.
The GPS receiver and differential receiver are charged duty @ 31.011.
Any radio communication equipment require licence from Ministry of communications and IT.
But walkie-talkie sets used in Vehicle are charged duty@ 21.139% and require no licence.

import of PEN and pencil as personal gifts or commercial purpose

All pen and pencil are importable without any licence.Received as gifts are allowed without any duty upto Rs 10,000/-.

If imported for personal use then you have to pay duty @ 17.34%.

But if you are importing for business purpose then the duty will vary according MRP of pen. If the value of a pen is more than Rs 200/- then you have to pay duty@ 34.130%.

If pen value is less than Rs 200/- then duty will be @14.712%. If are paying sales tax on imported goods then you may get refund of 4% on customs duty paid at the time of importation.

Now import of Laptop attracts 7% duty less than the Desktop

Now import of laptop has become cheaper not only on account of rupee appreciation but also non applicability of additional duty of seven percentages .

As per News items in The Economic Times ,18 th Nov 2007 `` the Supreme Court has held that the government cannot levy additional seven per cent customs duty on notebook PCs (laptops) as in the case of desktop computers since the two are totally different. ``

The exact customs notification is reprodued here:

Customs Notification No-38/2005 dated 02.05.2005Amendments in the Computers (Additional Duty) Rules, 2004

7% additional customs duty levied uniformly on computers CPU, monitor, mouse & keyboard
G.S.R. (E).- In exercise of the powers conferred by sub-section (3) read with sub-section (4) of section 3 of the Customs Tariff Act, 1975 (51 of 1975), the Central Government hereby makes the following rules to amend the Computers (Additional Duty) Rules, 2004,
namely:-1. (1) These rules may be called the Computers Additional Duty (Amendment) Rules, 2005.(2) They shall come into force on the date of their publication in the Official Gazette.2. In the Computers (Additional Duty) Rules, 2004,- (i) for the TABLE, the following shall be substituted, namely:-
''TABLE
S.No.
Description of goods
Additional duty rate
(1)
(2)
(3)
1.
Central processing unit (CPU) imported separately
6% ad valorem
2.
Computers (other than CPU imported separately), of heading 8471 of the First Schedule to the said Customs Tariff Act.Explanation. - For the purpose of this entry, 'computer' shall include central processing unit (CPU) with monitor, mouse and keyboard, cleared together as a set; but shall not include input or output devices or accessories such as monitor, keyboard, mouse, modem, uninterrupted power supply system, or web camera imported separately.
7% ad valorem '' ;
(ii) the Explanation shall be omitted.[F.No. B-1/4/2005-TRU]
(V. Sivasubramanian)Deputy Secretary to the Government of India
Note: The principal rules were published vide notification No. 76/2004-Customs, dated the 26th July, 2004 in the Gazette of India, Extraordinary vide number G.S.R. 479(E), dated the 26th July, 2004.re:

Import customs duty on Mobile phone,PDA,smart phone,GSM

There is lot of convergence in mobile space.Now,mobile phone act as camere,video recorder,modem,FM radio,Mobile TV etc.There is only 4% duty on mobile phone irrespective additional features.This duty is also refundable for the trader who are importing and paying sales tax.However , the government circular to clarify classification aspect is reproduced for reference:
Circular No.17/2007-Cus
F. No.528/26/2005-Cus(TU)
Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise & Customs

North Block, New Delhi.
Dated the 19th April, 2007.

Sub: Clarification in respect of classification of higher technology featured mobile / cellular handset or telephones – regarding.
****

Board has received certain representations from the trade and industry regarding classification of higher technology featured mobile / cellular handsets or telephones, which contain GPS features apart from other functions like music, camera, voice recording, e-mail, internet and related editing features. Field formations have also requested to issue a clarification in the matter of classification of a hybrid product containing PDA, mobile phone with camera and GPS, which are being imported presently.

2. It is represented that mobile, cellular handset / telephone has the essential characteristic of transmission and reception apparatus, such as aerial, display screen, keypad and that the same should be of small size so that it can be hand-held and is of lightweight for use as telephone instrument. The other functions such as radio receivers, music players, e-mail, net browsers, calculators, stopwatch, alarm, computing on software platform are subsidiary to the main function of transceiver.

3. The issue was examined in the Board. Telephones for cellular networks or other wireless networks are presently classified under sub-heading 8517 12 of the First Schedule of the Customs Tariff Act, 1975. This Act does not provide specific Chapter Note or Sub heading Note on this product. As per Harmonized Commodity Description and Coding System (HS in short) effective from 1.1.2007, ‘telephones for cellular networks or for other wireless networks’ are classified under heading 8517. Earlier, prior to HS changes 2007, cellular phones were classified under heading 8525. There is no mention of the mobile phones that also have features of word processing, e-mail, internet, Global Positioning System (GPS) Receiver, Personal Digital Assistant (PDA), Smart phone etc. in the HS Notes. Further, tariff Item 8526 91 90 covers ‘other radio navigational aid apparatus’, which, inter alia, includes Global Positioning System (GPS), radar apparatus. Similarly, sub-heading 8471 30 covers ‘portable digital automatic data processing machines, weighing not more than 10 kg., consisting of at least a central processing unit, a keyboard and a display’. HS explanatory notes to sub-heading 8471 30 state that machines which are equipped with flat screen, capable of operating without an external source of electric power and having an acoustic modem for establishing a link via the switched network are classifiable under sub heading 8471 30. However, there is no exclusion or specific note for classification of mobile/cellular phones with other functions as described above, in the HS Notes. Therefore, field formations were experiencing difficulty in classifying a product having combination of characteristics of a Personal Digital Assistant (PDA) / Personal Computer, GPS receiver, Camera and cellular phone.
4. The First Schedule to the Customs Tariff Act, 1975 specifies the various categories of imported goods in a systematic and well-considered manner, in accordance with an international scheme of classification of internationally traded goods, i.e. ‘Harmonized Commodity Description and Coding System (HS). Accordingly, goods are to be classified taking into consideration the scope of headings / sub-headings, related Section Notes, Chapter Notes and the General Rules for the Interpretation (GRI) of the First Schedule to the Customs Tariff Act, 1975. Rule 1 of the GRI provides that the classification of goods shall be determined according to the terms of the headings of the tariff and any relative Section notes or Chapter notes and thus gives precedence to this while classifying a product. Rules 2 to 6 provide the general guidelines for classification of goods under the appropriate sub heading. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require, the remaining Rules 2 to 6 may then be applied in sequential order. Further, while classifying goods, the foremost consideration is the ‘statutory definition’, if any, provided in the Customs Tariff Act. In the absence of any statutory definition, or any guideline provided by HS explanatory notes, the principle of how goods are known in ‘common trade parlance’ is adopted, giving due importance for the common dictionary meanings.
5. In terms of the First Schedule to the Customs Tariff, ‘telephones for cellular networks or other wireless networks, push-button type or other’, would be classifiable under sub-heading 8517 12. Similarly, ‘portable automatic data processing machine weighing not more than 10 Kgs., consisting of at least a CPU, a key board and a display’ would be classifiable under sub heading 8471 30; and ‘radio navigational aid apparatus’ would be classifiable under sub heading 8526 91. From the scope of the headings / sub-headings, Board found that all mobile or cellular telephones whether working on the Global System for Mobile Communications (GSM) standard, Code Division Multiple Access (CDMA) cellular systems, Wireless Local Loop (WLL) or any other Mobile technologies, principally used as communication device would get covered under sub-heading 8517 12. These are essentially communication devices working on the basis of towers and base stations arranged into a network of cells, which send and receive radio signals for the cellular / mobile phone for communication. In view of the above, Board clarifies that sub-heading 8517 12 will cover all types of telephones that work on cellular networking technology or other wireless network.

6. Further, such cellular / mobile phones may contain certain facilities such as storage of contact information such as phone numbers (dialed / received / missed call), names and addresses, to-do lists, notes, appointments, E-mail address, facility for Short Message Service (SMS) / Multimedia Messaging Service (MMS), calculator, alarm clock, calendar, games and other similar facilities as a standard feature. These facilities assist the user to make calls to desired person, identify the caller, keep track of his calls, send/receive messages and enhanced use of communication using any of the above facility. Hence, these features of cellular/ mobile phones do not change the principal function of such equipment i.e., ‘telephony’.

7. Certain cellular/ mobile phones called as ‘smart phones’ may also have other additional features such as accessing the Internet, sending and receiving E-mails, video recording/camera, word processing, radio or audio capabilities with color screens, QWERTY keyboard, touch screen. It may also run application software and synchronize with PCs, function as Global Positioning System (GPS) receiver. These devices work on operating systems (software) like Symbian OS, Microsoft Windows Mobile OS, Linux OS, which are similar to the software used in desktop PC / laptop. All these functionalities grouped as PDA or pocket PC or camera or GPS receiver, contained in cellular/ mobile phones, though represent as composite machine, for the purpose of classification, it will be governed by the Customs Tariff Act and the General Rules for Interpretation (GRI) as explained in para 4 above. Accordingly, in terms of Section Note 3 to Section Note XVI when the goods satisfy the following conditions these would be characterized as transmission apparatus in cellular / wireless network rather than as an Automatic Data Processing (ADP) machine or camera or GPS receiver.

(i) use transmission of signals (representing speech, messages, data or pictures) by means of electro-magnetic waves which are transmitted through the ether without any line connection i.e., wireless, in any of the bandwidth allotted to mobile/cellular networks say 850 MHz to 1900 MHz; and

(ii) consist of transmission and reception hardware such as transceivers, antenna, microphone, speaker, battery, radio-frequency chip, basic band chip, power management chip, Subscriber Identity Module (SIM), International Mobile Equipment Identity (IMEI) or other unique identity for cellular/mobile phone as well as radio-frequency transmission software such as GSM, General Packet Radio Service (GPRS) and Enhanced Data rates for GSM Evolution (EDGE) etc.,

Hence, such cellular/ mobile phones remain classified in sub-heading 8517 12, as the principal function of these equipments remain as ‘telephony’.

8. It is further explained that cellular / mobile phones can also be employed as data modems to form a wireless access point connecting a personal computer to the Internet. In this use, the mobile phone is providing a gateway between the cellular service provider's data network and PCs. In terms of chapter note 5 D (ii), it is made clear that such mobile phones shall not be classified under heading 8471 when they are presented separately. In other words, only when such phones are presented along with ADP machine or when composite machines consisting of ADP and mobile phones, where ADP is the principal function, these would be classified under heading 8471. Further, it is clarified that GPS receivers having phone function that does not operate through any of the cellular network or mobile technologies for the transmission or reception of signals, but operates exclusively through direct satellite connection or differential GPS (on the longwave radio frequencies between say 285 kHz to 325 kHz) is however classifiable under sub-heading 8526 91 as other radio navigational aid apparatus.

9. In trade parlance too, it is noticed that the goods are sold as cellular or mobile phones with various additional facilities, the use of which is dependant on the cellular service provided. Further consumers purchase such cellular phones mainly because of their ability to transmit data in all situation and locations, and at all times, not just in specified places that offer Wireless / Wi-Fi access. In short, it is found that goods are marketed and consumers purchase a smart phone or other similar cellular/ mobile phone, because of the phone function with additional facilities and not for their PDA or GSM capabilities alone; as such these additional facilities will not become operational without subscribing to a cellular phone service plan. Hence, it is clarified that these instruments are to be categorized as mobile / cellular phones from the point of trade parlance.

10. Further, in terms of Note 5 (E), it is provided that machines incorporating or working in conjunction with an automatic data processing machine and performing a specific function other than data processing are to be classified in the headings appropriate to their respective functions or, failing that, in residual headings. In view of the above, it is clarified by the Board that the smart phones or cellular / mobile phones with the capability described above are machines performing a specific function i.e. ‘telephony’ and hence, even if they satisfy note 5 (C), in view of the Section Note 3 to Section XVI, Notes at 5 (D) (ii), and 5 (E) to chapter 84, such mobile phones would be classified in the headings appropriate to their respective function i.e., ‘Telephones for cellular network or other wireless networks having the principal function of telephony’ under sub heading 8517 12.

11. The above instructions may be brought to the notice of all concerned for effective implementation. Pending assessments, if any, may be finalized accordingly.

12. Please acknowledge receipt of this circular.

Yours faithfully,(Anupam Prakash) Under Secretary (Customs Policy)
Ph. 2309 3859

import customs duty on LCD monitor whether for Computer or TV

There is less custom duty on LCD monitor of computer then the LCD TV.The goverment has issued guideline to diffrentiate between two types LCD display.Pl check techically before importing. In customs parlance the computer is called as ADP. For easy reference the circular is reproduced:
Circular No.33/2007-Cus.
F. No. 528/96/2001-Cus.(TU)
Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise & Customs

159A, North Block, New Delhi-1.
Dated 10th September, 2007.
To
All Chief Commissioners of Customs.
All Chief Commissioners of Customs & Central Excise.
Chief Departmental Representatives, CESTAT.
All Commissioners of Customs.
All Commissioners of Customs & Central Excise.

Subject: Classification of Digital LCD / Flat Panel Monitor - Admissibility of Notification benefits - reg.
***

It has been represented by the trade and industry association that certain difficulties have been faced in classification of monitors for use with Automatic Data Processing (ADP) machine and consequent import duty exemption benefits. Doubts have been expressed by field formations as to whether ‘LCD or Flat Panel Monitors, if used along with ADP Machines would be classifiable as ‘ADP Monitor’ and whether exemption from Customs duty vide Sl.No.17 of Notification No. 24/2005-Cus dated 1.3.2005 would be admissible.

2. The issue was examined in the Board. Monitors used along with ADP machines were classified till 31.12.2006, under heading 8471 of the First Schedule to the Customs Tariff Act, 1975. Due to HS 2007 changes brought into effect from 1.1.2007, such monitors are presently classifiable under sub heading 8528 40. All types of monitors and projectors which are solely or principally used with an ADP machine is covered under the sub headings 8528 41(Cathode Ray Tube Monitors), 8528 51(Other types) and 8528 61(Projectors) and are extended with exemption of customs duty vide Sl.No.17 of notification No. 24/2005-Customs dated 1.3.2005. Further, television or video monitors were classifiable earlier under heading 8528. Presently these monitors used as Television or Video reception apparatus are classified under sub heading 8528 71 or 8528 72 as the case may be, and are not eligible for the aforesaid exemption.

3. This issue was also deliberated at the Conference of Chief Commissioners’ on Tariff and Allied Matters, wherein it was decided that the Board may issue guidelines on the basis of assessment practice that is being followed by Customs Commissionerate, Aircargo, Mumbai to distinguish ‘computer monitors’ from that of monitors for use with TV / Video and for classifying the goods under 8528 41 or 8528 51 (earlier classifiable under CTH 8471). However, to ensure uniformity, it was decided that Board could issue a circular in this regard.

4. Accordingly the technical features distinguishing the computer monitors from the other types of Television/video monitors are enclosed. These could be used by the officers of the field formation as guidance for assessment, examination of the said goods for determining its proper classification and extension of the notification benefit.
Yours faithfully,
(M.M.Partiban)
Director (Customs)
Tel.No.2309 3908
Click here for technical features

New Prohibited Export goods

No export of any goods in violation of Trade Marks Act,1999 and rules made there under is allowed.

One has to declare all details including an indication of the country or place in which they were made or produced or of the name and address of the manufacturer or the person for whom the goods were manufactured.If no such detail is found on export goods then it will be not allowed to export.
This is step for higher compliance of Intellectual property involved in export goods.

Import of Travel sets for personal toilet,sewing or shoe or clothes cleaning,Tooth brushes including dental-plate brushes,paint ,distemper,varnish

If you are regular traveler and interested in brushing your teeth,home and canvas. All are freely importable .No fine and penalty.

As far duty is concerned,if you receive them as bonafide gift then up to Rs 10,000/- no duty is payable.

For commercial purpose, Travel sets for personal toilet,sewing or shoe or clothes cleaning are attracting duty @ 34.130% and all type of brushes are charged duty @ 24.421%. If you file refund for 4% paid as ACD(additional customs duty) based on your sales tax invoice then the effective duty will be around 30%.

But if you import through Post and for personal use then you have to pay only 17.34% on brushes and travel set and other item mentioned above

Import duty on Perfumes,Beauty or Make-up preparation for skin,Manicure or pedicure preparations

If you import goods related to beauty and body care then you can import without any duty up to Rs 10,000/- if they are bonafide gifts.If they are imported for personal use than duty is @17.34%. The cosmetic goods are freely importable.No fine and penalty but only duty on these goods

Import for Commercial Purpose

The Drugs and Cosmetics Act 1940 are for regulating and quality of the cosmetic goods.The Standards of Weights and Measures Act,1976 and related rules are for Packaging,labelling and MRP price.In India goods meant for retail selling,then Counter Vailing Duty (CVD) is charged on MRP basis.
A suggestive list for duty on certain goods:

Line make-up preparations @ 34.1307%

Eye make-up preparations @ 34.1307%

Manicure or pedicure preparations @ 34.1307%

Perfumes @ 34.1307%

Hair cream @34.1307%

Hair dyes @ 34.1307%

The effective duty may come down to 30%,if you file refund for 4% ACD after clearance as per procedures.

Import of wine,whiskey,Rum,Brandy,Gin,vodka,Tequila

Big no for importing of wine,whiskey,Rum,Brandy,Gin,vodka,Tequila,liquors through post and courier,whether it is for gift,for personal use or commercial purpose.Lot of non tariff barriers.Even EU has taken issue to the WTO that India charges very high import duty. States are also charging state Excise duty. Specially they targetted Tamil Nadu for excise duty.The beverages and spirits are good source of revenue for our nation.

Customs Duty are charged @182% except wine.Fruits based drinks and soya milks are charged @36.136%. wine are charged @100 %.

Receiving gifts of paintings,sculptures and statutary,antiques,used stamps

There is no restriction on importing paintings,sculptures and statutary,used stamps either as gifts or for commercial purpose.

You can import these items without any value limit by paying 14.712% as customs duty for commercial purpose and personal use.Of course bona fide gifts upto Rs 10,000/- is without any duty.

However,antiques are restircted as per Foreign Trade(Exemption from Application of Rules in certain cases) order 1993 and customs Notification 157/90 dated 28.03.90.

But antiquarian books are free to be imported and without any duty.Normally books of an age more than 100 years are considerd antique.

Gold Coin receiving as Gifts

Import of Gold being currency is regulated by the RBI.No import of gold coin is permissible through Post and courier.They are restricted under FEMA act.Pl do not plan to receive any gold coin as gift,whether they are having carvings of Godess Laxmi and Ganesha.It is certain Banks authorised by the RBI to import gold coin,an addition to government agencies like MMTC.
As far customs duty is concerned it varies between Rs 100/- and Rs 250/- per 10 grams.The excise duty and cess is 8.24% .

But passengers under Baggage Rule and transfer of residence can bring gold coins.Next time,ask your friend not to send gold coin as gifts through Post and courier but bring personally at the of returning to India.

Collectors coins including numismatic value are not allowed to import in India.

Customs duty on Toys and Games

There is no restriction on importing the Toys and Games. A list of goods and with respective duty if some body imports for commercial purpose.

Description of imported goods Rate of Duty

Tricycles ,scooters,Dolls` carriages,dolls 14.712%

Video games,Playing cards 34.130%

Snow-skis,water-skis and other water sport 14.712%
equipment.

Golf clubs,balls and other golf equipment 14.712%

Lawn Tennis rackets 14.712%

Squash or racket ball badminton rackets 14.712%

Lawn-tennis balls 14.712%

football 14.712%

Volley ball 14.712%

Basket ball 14.712%

Hockey ball 14.712%

cricket ball 14.712%

Golf ball 14.712%

Rugby ball 14.712%

Ice skates and roller skates 14.712%

Boxing equipment 14.7 2%

Hockey sticks 14.712%


The above sports goods if imported for personal use than the total duty is 17.34%. A doubt is raised that when the some sports goods imported for commercial purpose are attracting lesser duty than the duty meant for goods for personal purpose.Then ,what should be duty to be paid for such personal imported sports goods?.Further these goods are for re-sale purpose than the effective duty after clearance will reduce by 4%.The goods imported for personal use are attracting more duty then the goods meant for personal purpose.This is discriminatory.

How to receive corporate gifts-through courier or Post

If you are to receive consumer electronics goods valuing more than Rs 2000/ as gifts-.Then it is advisable that you import through Courier,without any duty,upto Rs 10,000/-.

There is no duty on the Mobile /cellular phone and its components of any value. For example,You can import even mobile phone of Rs 40,000/- or more without any duty. Actually,
what you pay at the time of clearance ,4% duty,the same can be refunded after clearance.You have to produce sales invoice and file refund claim.Then, at the end of the day you donot pay duty.Personal import not being subject to sales,no refund of 4% possible on the mobile.

But corporate gifts of money clips,silk scarves,wallets ,ties and cuff links,computer bags,Candle holder and crystal miniatures upto Rs 10,000/- is without any duty,whether it is through postal or courier.However,If these imported goods worth more than rs 10,000/- then duty will differ on the same goods,depending upon whether you have imported through post or courier.For example,if the silk scarves are imported through post then total duty is @17.34% but if imported through courier then duty will be @24.421%. Therefore,The deciding factor is expected delivery period and transportation cost of the gifts.

Now you can use Post-Office to tranfer you money electronically

There is computerisation is goining on of Post-office all over India.Our Post-office will provide like other banks to transfer fund from one place to other through electronic medium.

In future The Post will become your payment channel as well as 3PL service provider for your supply chain needs of import and export. With linking of post-offices will make parcel visibility more and tracking easy.

It is time to Import and not export goods from India

There is high rupee and low dollar.This make Import cheaper and Export costlier.

This is the time when you can import goods which you wanted to purchase from abroad but being costly you are postponing.

You have to send less foreign currency and also pay less duty on such import, if at all. Your duty free gift limit also increased in Dollar terms.Happy shopping.

Customs Duty on kitchen ,office,toilet and decoration glassware

If you import Glassware articles for personal use and value is above Rs 10,000/- then you have to pay duty @ 17.34% for goods imported as post parcel .But for commercial purpose,the duty is almost double for the post parcel.Bonafide gifts of glassware up to Rs 10,000/-are free for both postal and courier parcels.

(Source of image:http://www.k-read.net)

The glassware articles imported through couriers are charged same rate of duty,34.130%,whether you import for own consumption or for selling purpose.

Now the 4% special additional duty(SAD )on import has been exempted.But to receive this duty benefit who have to produce sales invoice showing sales tax payment and file refund claim to the customs department.

you can plan import of your kitchen,office,interior decoration or drinking glass(including wine glass) from any where in the world.The import of glassware is absolutely free.However,ceramic-glassware are treated differently in the customs classification.

Now at least 4% reduction in duty for goods imported for business and trading purpose

There is reduction in duty at least 4% if goods are imported for selling purpose in India.First you have to pay 4 % special additional duty at the of import and then you have to file refund claim to the customs department. The refund is eligible only when you have claim filed within time limit, Sale invoice proof of payment of sale tax on the imported goods and other conditions of section 27 of the Customs Act 1962( Ref-Notification No. 102/2007-Customs ).
This reduction is on goods imported for trading purpose.The goods for personal use are not exempted from such special duty.
Any claim of refund of excess duty paid for post parcels are to be filed at Foreign Post office only. The reund claim of excess duty for courier goods at Air Cargo Complex.

Explore the Cost effective supply chain of the Indian Post to export goods

The postal channel not only costing less duty and transportation cost but also provide value added service for your export need.Specifically,Logistic post and Speed post account are worth exploring. A comparison of cost associated with exporting parcel may be made among commercial parcel companies like FedEx,UPS,DHL and others viz Indian Post.

Indian Post website may be visited for more information. A relevant portion related to speed post is copied here for ready reference.

``For corporate customers and regular users, Speed Post provides many value added services including pick-up from the premises, convenient monthly billings, account management facilities, assistance in import / export procedures of shipments, corporate tracking facilities, volume discounts etc. When you open a Speed Post account, you open the door to convenience and customized solutions, as per your requirements. As an account holder of Speed Post, you will have the assistance of a Marketing Executive in managing your accounts in all respects.
For having the Speed Post account, just fill this form on-line and submit it. We shall get in touch with you soon.``

The entrepreneur may see this link http://www.indiapost.gov.in/LogisticsPost.html to explore possibility of using Postal service.It will be useful information if any body share his experience of using Logistics Post.

first time export valuation rules introduced in India and will be operative from 10th Oct 2007

Now we have export valuation rules under Customs Act 1962.You have to be careful now to declare your export price of the goods.If you over-invoiced the export cargo then also your violating law and you do the same if you declare low price .

Earlier there was rule that the domestic market value of the goods can be much lower than the selling price to the international market.But now there is sequence to follow for determining export value of the goods.Further, you have should have all documents to justify your price.

The sequences to follow to determine export value .First it is transactional value(rule 3),second by comparing price(rule4),third computed method(rule5) fourth Residual method by adopting principal of reasonableness.If the customs officer has doubt about export value,then he may reject the export price it self.[source:NOTIFICATION No. 95/2007-Customs (N.T.) ].
There is fine,penalty and adjudication process for export violation.At time department may launch prosecution against exporter as the case may be.

Export price in foreign currency is to be converted with RBI notified exchange rate

Every month The RBI issue exchange rate for export and import for a month. We have different rate for Export and import.Even though both are part of international business.But in day to day business we have fluctuating exchange rate.It changes almost every day.Therefore, it may be poosible that price paid to your buyer or importer may be different in rupee terms .In dollar or other foreign currency,it may be same.The invoice price and remittance paid to foreign person is same.The loss or gain may be in rupees terms to you.
Most of company hedge the foreign currency payment but they have to pay hedging charge to the bank.The recent rise in rupee became loss of profit margin in rupee payment for export cargo.However,the import into India is becoming cheaper on account of rupee rising.
Other option is receive price in more stable currency with respect to Rupees.

What are goods which can be imported through Postal but cannot be imported through Courier

It is interesting that you cannot import Perishable ,precious and semi precious stones,gold and silver in any form through Courier services BUT you can import through Postal Channel.

The gold,jewellary,silver are subjected to price verification from Expert jewellary assessing officer. The preshible also subjected to test for fitness for human use from various testing and inspecting agency.

Also gold is considered as foreign exchange,therefore, it has to satisfy all regulationS issued by the RBI.

whether MRP price delared on the export goods to be taken as Export value

Normally goods we purchase in domestic market are sold on MRP basis.A doubt may arise whether we have to delare export price same as MRP price.It is not so.The Export price is the price at which your foreign buyer has agreed to buy from you. Where as MRP is for buying goods in Indian market.Both are different.

As per recent ruling of Honourable Supreme Court if there is difference between Export price and domestic price of goods,then, it does not mean that the value of exported goods is mis-declared.[CC v Vishal Exports Overseas Ltd,2007(209)E.L.T.331 (SC)]

Explore possibility of using Post and Courier for the same shipment to reduce delivery time

The import and export through Post provides cost saving on transportation.Less transportation cost results in less C.I.F value to calculate duty.The end result is less duty on goods.It takes longer time to import or export through Postal channel.Therefore, if some body wants to save duty on goods but not bothered about time then he may use Post as mode of importation.

But if any body is intrested in faster delivery or receiving of goods then he may use Courier as a mode.Of course you have to pay more duty as you have paid more transportation cost on goods. Therefore there is trade off between Cost and service before choosing mode of importation.
It is possible that we can try both Postal and Courier for sending same goods.Like you can import or export through Post upto Indian ports,then some body handle your clearance at the Customs, and , forward through local courier.You can reduce time taken in the Customs clearance and travelling time taken by the parcel in India.
Some courier comany can import on your behalf,handle customs clearance and send parcel to your address. We can think many combination of doing such things.I feel happy some body share his views on this subject.

Now LCD monitor , Digital still image camera,Camcorder will attract less duty

The Goverment has reclassified LCD Monitor and camcorder in Customs heading which attract zero Customs duty presently .But excise duty is still 16%.The reduction in customs duty will also result in lesser excise duty.As the excise duty is collected on value which is equal to Assessable value and Customs duty of the goods.Earlier there was dispute whether LCD monitor and LCD TV are same or different.Similarly,camcorder and digital still image camera are same or not.

Rapid convergence of technology cause such disputes.The world Customs Organisation revise every four year the Customs tariff classification.The Customs classification code is same through out world same.

Before i conclude my writing on foreign remittance some more things to be remember

First you have to produce evidence of import to your bank that particular transaction is related to import purchase,second, you need not to use any form before your bank for amount not exceeding USD500 is used towards import payment. I think most of transaction through post are covered in the above range.
Evidence of import is must in case foreign remittance is more than USD 100,000 or its equivalent.
In case of EXPORT, no GR or PP declaration is required for amount not exceeding USD 25,000 or its equivalent. Export of goods not involving any involving any foreign remittance directly or indirectly, requires waiver of GR/PP procedure from Reserve Bank of India.The Export of goods by way of Gift is permissible up to five lakhs per year.
Hence you should be in touch with your bank and visit RBI websites and if you feel you can contact me for discussion.
Happy buying and selling on Internet

Payment through your International card for purchasing goods from foreign seller is better option

As Per RBI , there is no documents insisted by the Banks if the foreign remittance is less than US $250 or equivalent for bonafide case.Most of online purchase falls under this range only.
Further, there is no monetary limit for using International credit card(ICC).


Regarding payment in Indian rupees for import made by a person is accepted through ICC by any authorised bank. There is restriction to use ICC for prohibited transactions. A ready reference list for additinal use is produced below(source is RBI WEBSITE):


(a) Import of software through Internet.
(b) Fees for training or education of scientific/technical nature through Internet.
(c) Registration of Internet domain name, hosting charges for websites/home pages overseas and access fees for Internet related services through website .
(d) Advance payment not exceeding U.S.$ 15,000 for import of software/database through internet may also be allowed .The cardholder should furnish the details of software/database obtained through the Internet, charges to be paid to the overseas organisation for downloading the software/data and a declaration having received the software/data for which the payment was made through ICC .

There are many digital goods like Music,which can be bought through internet, but,no specific guidelines by the RBI.It seems that general rules related to foreign remittance will apply.

Sending payment to your Foreign Seller through PayPal may be legally valid

Yesterday i went to Bank and ask them,how the remittance happened through PayPal.The Manager was not aware except the fact that the cheque related to PayPal bear Citibank name.Promised to find more detail about how the payment are received in India.

If you see RBI website, The Citibank N.A is authorised dealer in India for foreign remittance.If this is the case,then the PayPal must be having account with the Citibank for settling cheques issued in Indian rupees. The banking operation related for payment made through PayPal should be carried out by the Citibank . Further you are paying through Cheque and Cards issued by your Bank,which means you are using clean money for buying and selling goods over internet.More over we are heading towards full convertability of rupees for all accounts.In such situation ,it appears that paying for your purchase through PayPal should not be illegal. We need some more inputs from valuable readers before making any judgement.

Law relating to valuation of imported parcel goods and payment through PayPal as evidence

Normally value declared by the foreign sender on the parcel is taken value for assement of duty. If this declared value of goods appears to be low than the prevailing price in the International market, then the customs department may reject this value . Various rules are there to determine the value of the imported goods which are based on WTO guidelines. As you are aware that any transaction will have various factors such as brand,quantity,discount,related or unrealted party, free gift, country of origin,place of import,etc, which may affect the price of the imported goods.

The Parliamentry Act and Government rules and interepretation of law by Honourable Court ,Tribunal,Appellate authority and practice of the day become the basis of the valuation.

To be more simple, what is actual price you paid to your foreign supplier through legally recognised channel of foreign remittance. If you produce the evidence to the Customs department that you have paid this much only to your supplier then the customs department will accept the price of the imported goods.But if you produce evidence of payment sent through PayPal,where you have paid only in Indian rupees to the PayPal,then, the departmnet may not accept this has a valid remittance.Be Careful!!

As reday reference, you may glance through relevant portion of the Indian Customs of Law ,which is reproduced below,to get feeling of Valuation subject.

The imported value of parcel goods is determined as per Section 14 of the Customs Act 1962 and CUSTOMS VALUATION (DETERMINATION OF PRICE OF IMPORTED GOODS) RULES, 1988. Various rulesThe section 4 of this rule defines :Transaction value. —
``(1)The transaction value of imported goods shall be the price actually paid or payable for the goods when sold for export to India, adjusted in accordance with the provisions of Rule 9 of these rules``.

The rule 9 is produced
``9)Cost and services. —
(1)
In determining the transaction value, there shall be added to the price actually paid or payable for the imported goods, —
(a)
the following cost and services, to the extent they are incurred by the buyer but are not included in the price actually paid or payable for the imported goods, namely:-
(i)
commissions and brokerage, except buying commissions;
(ii)
the cost of containers which are treated as being one for customs purposes with the goods in question;
(iii)
the cost of packing whether for labour or materials;
(b)
the value, apportioned as appropriate, of the following goods and services where supplied directly or indirectly by the buyer free of charge or at reduced cost for use in connection with the production and sale for export of imported goods, to the extent that such value has not been included in the price actually paid or payable, namely:-
(i)
materials, components, parts and similar items incorporated in the imported goods;
(ii)
tools, dies, moulds and similar items used in the production of the imported goods;
(iii)
materials consumed in the production of the imported goods;
(iv)
engineering, development, art work, design work, and plans and sketches undertaken elsewhere than in India and necessary for the production of the imported goods;
(c)
royalties and licence fees related to the imported goods that the buyer is required to pay, directly or indirectly, as a condition of the sale of the goods being valued, to the extent that such royalties and fees are not included in the price actually paid or payable;
(d)
the value of any part of the proceeds of any subsequent resale, disposal or use of the imported goods that accrues, directly or indirectly, to the seller;
(e)
all other payments actually made or to be made as a condition of sale of the imported goods, by the buyer to the seller, or by the buyer to a third party to satisfy an obligation of the seller to the extent that such payments are not included in the price actually paid or payable.
(2)
For the purposes of sub-section (1) and sub-section (1A) of Section 14 of the Customs Act, 1962 (52 of 1962) and these rules, the value of the imported goods shall be the value of such goods, for delivery at the time and place of importation and shall include -
(a)
the cost of transport of the imported goods to the place of importation;
(b)
loading, unloading and handling charges associated with the delivery of the imported goods at the place of importation; and
(c)
the cost of insurance :
Provided that —
(i)
where the cost of transport referred to in clause (a) is not ascertainable, such cost shall be twenty per cent of the free on board value of the goods;
(ii)
the charges referred to in clause (b) shall be one per cent of the free on board value of the goods plus the cost of transport referred to in clause (a) plus the cost of insurance referred to in clause (c);
(iii)
where the cost referred to in clause (c) is not ascertainable, such cost shall be 1.125% of free on board value of the goods;
Provided further that in the case of goods imported by air, where the cost referred to in clause (a) is ascertainable, such cost shall not exceed twenty per cent of free on board value of the goods :
Provided also that where the free on board value of the goods is not ascertainable, the costs referred to in clause (a) shall be twenty per cent of the free on board value of the goods plus cost of insurance for clause (i) above and the cost referred to in clause (c) shall be 1.125% of the free on board value of the goods plus cost of transport for clause (iii) above.
(3)
Additions to the price actually paid or payable shall be made under this rule on the basis of objective and quantifiable data.
(4)
No addition shall be made to the price actually paid or payable in determining the value of the imported goods except as provided for in this rule`.`

It will be useful for every body if we start making our data base of value declared to the Customs and accepted for valuation of the parcel goods.This will act as a refernce for future import by other person too.

How to value your export goods for Customs clearance

EXPORT VALUATION:

There is no law on export valuation in India and other foreign countries. In Global economy, the export is valuable source of foreign exchange earning source for all nations, Whether it is poor, developing and developed nation. [ 29th and 30th November 1996, Commissioners Conference at Mumbai].The Central Board of Excise and Customs viewed that while the declared value is being accepted by DGFT for issue of license under VABAL, providing for different standard of valuation for Customs purpose might not be in line with the steps taken to usher in the liberalization.The FOB price accepted by Ministry of Textile while endorsing quota and for collecting Cess and same was declared in Invoice& shipping Bills. This is in conformity to above view of Board.It would be illegal to accept higher FOB for Cess and re-determining FOB value of the same good for foreign exchange.The opinion of the Law Ministry “It may be stated that if the exporter is able to bring in foreign exchange equivalent to the value declared, it may be difficult for the concerned authorities to prove that it was a case of over-valuation. [Commissioner Conference decision]Therefore, presumption that the exporter would not bring foreign exchange equivalent to declared value export cargo, at the stage of examination / assessment at ICD, Udaipur will be contrary to the opinion of Ministry of Law.Ministry of Finance Instructed that the Custom Officers are authorized to verify the PMV of an export product but are not authorized to reduce FOB value.It is stated that the FOB value may be higher, as per the contract between the exporter and Foreign Buyer, ( depending on various factors) but the “Present Market Value” of the goods is an index of their local )wholesale/retail) price inclusive of excise duty, Sales Tax and other local taxes plus cost of transportation. [Ministry of Finance FM 605/51/97-DBK (Circular No:89/97 – Cus dated 08.12.1997]The PMV of the goods can be many multiple of the FOB (Annexure 68).The above Ministry’s Instruction is in line with Rules of valuation contemplated in World Trade Organization (WTO/World Customs Organization (WCO). There are two type of value, one is for foreign exchange or Government Statistics and other is for assessment of duty for Customs Purpose. The First value is corresponds to FOB and letter to the PMV.It is accepted practice in course of assessment of value for important goods to reject declared value in suspected under invoicing. The valuation is done as per WTO valuation Rules with Customs valuation Rules 1988. The goods are adjudicated on account of under invoicing of value and higher duty amount is realized on the increased value.But the Indian Importer only remit the foreign remittance as per the Invoice raised by the foreign supplier and Not the enhanced value determined by the customs.Normally in Import case, there is under invoicing and over invoicing in case of export case.As discussed for Import case, if there is higher PMV value declared by the exporter, then the customs department can re-asses the PMV. The goods can be adjudicated under section 113 and 114 of Custom Act 1962 for claiming higher drawback based on higher export price.But the exporter had to receive foreign exchange from the buyer, as declared in the G.R.Form as per Foreign Exchange Regulation Act 1974.The Foreign buyer would not remit Less foreign exchange corresponding to reduce FOB determined by the Customs authorities for the purpose of determining drawback eligibility.As stated earlier and above, the customs authorities only can determine PMV and not FOB.Definitions:FOB: The International Chambers of Commerce has defined FOB at relevant time of export as [ INCOTERMS 1990] “Free on Board means that the seller fulfils his obligation to deliver when the good have passed over the ship’s rail at the named post of shipment. This means that the buyer has to bear all costs and risks of loss of or damage to the goods from that point.The FOB term requires the seller to clear the goods for export.The buyer must pay the price as provided in Contract of Sale.The FOB is a International Terms of Sale Contract, under such term of sale, the sellers bears all the expenses prior to placing on Board. Thereafter the property usually vests in the buyer.Export Pricing:Price is an index of the value of a product. Rather, it represents besides value, its quality, durability and many other attributes like ego satisfaction or status consciousness.The price depends on cost, competition and demand.International markets are considered to be more competitive than domestic markets, because competition in export markets, originate from three quarters Viz.Competing domestic producers in the export markets;Producers in other competing supplying countries; andCompeting domestic producers in one’s own country.Similarly, demand in international markets is subject to a number of factors, which are different from those operating in domestic markets.A Product has to adapted to meet the special requirement of foreign buyers, which arises from different tastes, habits and customs.The produced may have to be tailored according to the requirements of the overseas consumers and their capacity to pay for it.The other factors, which affect pricing are:Lower price for short deliveries and higher price for long deliveries.Price on credits are higher than the cash.To capture market, offering goods at low price.Fluctuation in foreign currency on account of devaluation or appreciation.Interest rate ,Inflation ,Inventory cost ,allowance for wastage & shrinkage,Price of any product depends on cost of product, cost of distribution, cost of marketing support, supply and demand factors, price level and margins, competition etc.,Normally for FOB price structure includesFactory cost of goods,Export labeling, packing and marking,Loading for transport at factory,Transport to docks,Port handling charges and fees,Cost of documents,Consular Invoice (Certificate of origin)Export duty / cess,Demurrage charges,Godown charges ,Measurement / weighing charges,Re-strapping charges of opened cases,Octrio duty ,Sales Tax for merchant exporter.Charges if any, on account of:Overseas distributors / agents commissions,Cost of providing after sales service,Cost of spare parts ,Financing charge if exporting on credit terms,Direct administrative and selling expenses,Congestion surcharge,Bank Charges, etc ,Profit margin .The above price element in FOB are only illustrative and not are exhaustive. The price of goods varied from buyer to seller and form market to market.If the export price are under priced of a good then importing country may counter by Imposing anti-dumping duty ,Counter vailing or safeguard duty,High import duty ,License condition ,Cost of Product may be arrived on fixed cost, variable cost or Export specific / Indirect cost. Therefore price may vary depending on accounting principle adopted to arrive cost of product.Few examples below would make clear that price of product vary according to market:BPP’s ITC-HSC Classification on Import items with Indian Tariff (1999-2000), price in Rs.695/- (domestic price) and same book price for overseas as US$125 about Rs.6,500/- (Annexure 45). The International price is 10 times more than the domestic price of the same good.Forbes magazine price, India’s Rs.150/- United States US$4.95, Indonesia Rp.23,000/-Benefit Magazine Rs.10/US$4/UK£2.5 [International Market price is about Rs.200/- and domestic price is Rs.10/-] The International price is 20 times more thant he domestic price of the same good.Honourable court decision:At the relevant time of export, various Courts, including the Honorable Supreme Court took a view that over-invoicing is not offence.Such asDimple overseas [1995(76) E.L.T.48] 1996(86) E.L.TA67-(S.C).Shilpi Exports 1996(83) E.L.T.302Bird & Co 1988(37) E.L.T. 70 (Cal)Collectio of Custom V Lexus Exports Pvt. Ltd. 1994 (69) E.L.T 228 (Calcutta)Upheld decision in Shelpi Exports [A-219 of 2000 (115) E.L.T.Upheld Dimple Overseas Case Judgment, on 31.07.96.M.V.T. International Vs Commissioner of Customs, New Delhi 2000 (117) E.L.T. 258(7).Commissioner Vs. Akshay Exports 2004 (163) E.L.T. A67 (S.C.).It is difficult to prove that whether it is deliberate over-invoicing or ability of the exporters to realize higher price in the overseas market.

Import invoicing in Indian Rupees may help Online shopper

There is a discussion between RBI and Commerce Ministry to allowe export invoicing in Indian Rupees. This will help in hedging rupees, which is appreciating against major currencies and eroding margin of the exporter. Further government has lowered pre and post-shipment credit to 7.5-8% on the export goods.
Presently the bank charge very high premium for Hedging and covering risk for export and import of goods, which make individual importer and exporter to look for alternative option for international transaction.The PayPal and similar service offered by Yahoo and others offer easy payment method throgh electronic medium.
In India ,the retail banking and e-payment is still evolving. People will continue to use other than merchant account till legally permissible channel become more cost-effective and easy to use. We have to respond quickly to frame rules and regulation to changing technology in the e-Payment system.More important is education to citizen about pros and cons of a particular mode of payment.

Service tax liability- if you use PayPal and similar services

The Extract of PayPal legal relationship for India is reproduced below for reference only.you are advised to go their website http://www.paypal.com/. It is providing payment processing service and acting as agent on behalf of you. In my opinion you are liable to pay service tax on service amount charged to you. Such service may fall under Business Auxiliary Service or Credit Card, Debit Card, Charge Card or other payment card related services.

Further if service provider ,like PayPal ,is located outside India then it is receipent of service,person residing in India, is liable for service tax in India.
It is better if you consult your CA/TAX-CONSULTANT/LAWYER/OR ask Service TAX department.

The Legal Relationship between You and PayPal.(pl see PayPal website address)
2.1 Agency Relationship. PayPal acts as a facilitator to help you accept payments from and make payments to third parties. We act as your agent based upon your direction and your requests to use our Services that require us to perform tasks on your behalf. PayPal will at all times hold your funds separate from its corporate funds, will not use your funds for its operating expenses or any other corporate purposes, and will not voluntarily make funds available to its creditors in the event of bankruptcy or for any other purpose. You acknowledge that (i) PayPal is not a bank and the Service is a payment processing service rather than a banking service, and (ii) PayPal is not acting as a trustee, fiduciary or escrow with respect to your funds, but is acting only as an agent and custodian.


Discussion on this subject is required. We may seek a clarification from service tax department.
It is better to be safe and ensure better compliance with the rules.Ignorance is not any excuse.

It is advisable to go through terms of condition before using PayPal and similar type of service

One of my valued reader asked me whether PayPal is legal into India.My answer was that any foreign remittance is controlled by the RBI. It appears to me that the PayPal is non-banking activity in India. The RBI suspect such activity .
It is in your interest that any money to be transferred intenationally through authorised channel only.

There is one website whose link is http://www.paypalwarning.com/ ,discuss problem related with the PayPal. Any person is able to share his knowledge about using PayPal service to remove doubt will be welcome!

RBI `s FAQ on Foreign exchange related for individuals

It is very clear from RBI FAQ that you should inform all our export and import related transaction to your Bank.It is bring to your notice that in any international activity such as export and import , many Laws are attracted , for example Customs Act 1962, FEMA Act,Money Laundering Act 2002,COFEOPOSA 1974, Income Tax Act, and many more.

pl consult your CA or legal expert before involving in any international transaction. I am reproducing with RBI link for reference.

Forex Facilities for Residents (Individuals)
FREQUENTLY ASKED QUESTIONS ONFOREIGN EXCHANGE FACILITIES FOR RESIDENTS (AS ON FEBRUARY 1, 2007)
Introduction
The legal framework for administration of foreign exchange transactions in India is provided by the Foreign Exchange Management Act, 1999. Under the Act, freedom has been granted for buying and selling of foreign exchange for undertaking current account transactions. The Government has issued Foreign Exchange Management (Current Account Transactions) Rules, 2000 which have been notified vide Notifications GSR. 381(E) dated May 3, 2000, S.O. 301(E) dated March 30, 2001 and GSR.608(E) dated September 13, 2004 as amended from time to time. The last amendment to the G.S.R is vide Notification No., G.S.R. No.412 (E) dated July 10,2006 notifying certain relaxations on current account transactions in public interest.
Under the Foreign Exchange Management Act, 1999 (FEMA) [in lieu of FERA], which has come into force with effect from June 1, 2000, all transactions involving foreign exchange have been classified either as Capital or Current Account transactions. All transactions undertaken by a resident that do not alter his assets or liabilities outside India are current account transactions. In terms of Section 5 of the FEMA, persons are free to buy or sell foreign exchange for any current account transaction except for those transactions on which Central Government has imposed restrictions, vide its Notification referred to above A copy of the Notification is available in the Official Gazette as well as an annexure to our Master Circular on Miscellaneous Remittances available at our website http://www.rbi.org.in/scripts/BS_ViewMasterCirculars.aspx
These details are available on the Reserve Bank’s website as well as with the Authorised Dealers and Regional Offices of the Foreign Exchange Department of Reserve Bank. This FAQ attempts to answer all such questions in simple language.
I. Guidelines on Travel Related Matters
1. Who is a resident?
A 'person resident in India' is defined in Section 2(v) of FEMA, 1999 as:
A person residing in India for more than one hundred and eighty-two days during the course of the preceding financial year but does not include –
(A) a person who has gone out of India or who stays outside India, in either case -
for or on taking up employment outside India, or
for carrying on outside India a business or vocation outside India, or
for any other purpose, in such circumstances as would indicate his intention to stay outside India for an uncertain period;
(B) a person who has come to or stays in India, in either case, otherwise than – for or on taking up employment in India, or
for carrying on in India a business or vocation in India, or
for any other purpose, in such circumstances as would indicate his intention to stay in India for an uncertain period;
any person or body corporate registered or incorporated in India,
an office, branch or agency in India owned or controlled by a person resident outside India,
an office, branch or agency outside India owned or controlled by a person resident in India;
That is to qualify as a resident the person concerned will have to fulfill the criterion regarding (a) the duration of stay and (b) the purpose of stay.
The term Person Resident Outside India is defined in the Act as a person who is not a person resident in India.
2. From where one can buy foreign exchange?
Foreign exchange can be purchased from any authorised dealer. Besides authorised dealers, full-fledged money changers are also permitted to release exchange for business and private visits.
3. Who is an Authorised Dealer?
An Authorised Dealer is normally a bank specifically authorised by the Reserve Bank under Section 10(1) of FEMA,1999, to deal in foreign exchange or foreign securities (List available on http://www.fedai.org.in/ ).
4. How much exchange is available for a business trip?
Authorised Dealers can release foreign exchange up to USD 25,000 for a business trip to any country other than Nepal and Bhutan. Release of foreign exchange exceeding USD 25,000 for a travel abroad (other than Nepal and Bhutan) for business purposes, irrespective of period of stay, requires prior permission from Reserve Bank. Visits in connection with attending of an international conference, seminar, specialised training, study tour, apprentice training, etc., are treated as business visits. Maintenance expense of a patient going abroad for medical treatment and/or check up or for accompanying as assistant to the patient going abroad for medical treatment / check-up also falls within this category.
Incidentally, no release of foreign exchange is admissible for any kind of travel to Nepal and Bhutan or for any transaction with persons resident in Nepal and Bhutan.
5. Can one obtain foreign exchange for medical treatment outside India?
Authorised Dealers may release foreign exchange upto USD 100,000 or its equivalent to resident Indians for medical treatment abroad on self declaration basis of essential details, without insisting on any estimate from a hospital/doctor in India/abroad. A person visiting abroad for medical treatment can obtain foreign exchange exceeding the above limit, provided the request is supported by an estimate from a hospital/doctor in India/abroad. This exchange is to meet the expenses involved in treatment. In addition to the amount referred to in Answer to Question No.4 above may also be availed.
6. How much exchange is available for studies outside India?
ADs may release an amount of USD 100,000 per academic year or the estimate received from the institution abroad, whichever is higher.
Students going abroad for studies are treated as Non-Resident Indians (NRIs) and are eligible for all the facilities available to NRIs under FEMA. In addition, they can receive remittances up to USD 100,000 from close relatives (as defined in Section 6 of the Companies Act, 1956) from India on self-declaration, towards maintenance, which could include remittances towards their studies also. Educational and other loans availed of by students as resident in India can be allowed to continue. There is no dilution in the existing remittance facilities to students in regard to their academic pursuits.
7. How much foreign exchange can one buy when traveling abroad on private visits to a country outside India?
In connection with private visits abroad, viz., for tourism purposes, etc., foreign exchange up to USD10,000, in any financial year may be obtained from an authorised dealer on a self-declaration basis. The ceiling of USD10,000 is applicable in aggregate and foreign exchange may be obtained for one or more than one visit provided the aggregate foreign exchange availed of in one financial year does not exceed the prescribed ceiling of USD10,000 {The facility was earlier called B.T.Q or F.T.S.}. This limit of USD10,000 per financial year can be availed of by a person along with foreign exchange for travel abroad for any purpose, including for employment or immigration or studies. However, no foreign exchange is available for visit to Nepal and/or Bhutan for any purpose.
8. How much foreign exchange is available to a person going abroad on employment?Person going abroad for employment can draw foreign exchange up-to USD100,000 from any authorised dealer in India on the basis of self-declaration.
9. How much foreign exchange is available to a person going abroad on emigration?
Person going abroad on emigration can draw foreign exchange upto USD100,000 on self- declaration basis from an authorised dealer in India or the amount prescribed by the country of emigration. This amount is only to meet the incidental expenses in the country of emigration. No amount of foreign exchange can be remitted outside India to become eligible or for earning points or credits for immigration. All such remittances require prior permission of the Reserve Bank.
10. Is there any category of visit which requires prior approval from the Reserve Bank or Govt. of India?
Dance troupes, artistes, etc., who wish to undertake cultural tours abroad, are required to obtain prior approval from the Ministry of Human Resources Development, Government of India, New Delhi.
11. How much foreign exchange can be purchased in foreign currency notes while buying exchange for travel abroad?
Travellers are allowed to purchase foreign currency notes/coins only up to USD 2000. Balance amount can be taken in the form of travellers cheque or banker’s draft. Exceptions to this are (a) travellers proceeding to Iraq and Libya can draw foreign exchange in the form of foreign currency notes and coins not exceeding USD 5000 or its equivalent; (b) travellers proceeding to the Islamic Republic of Iran, Russian Federation and other Republics of Commonwealth of Independent States can draw entire foreign exchange released in the form of foreign currency notes or coins.
12. Do same Rules apply to persons going for studies abroad?
For the purpose of studies abroad, exchange for maintenance expenses is released in the form of (i) currency notes up to USD 2,000, (ii) the balance foreign exchange may be taken in the form of travellers cheques or bank draft payable overseas.
13. How much in advance one can buy foreign exchange for travel abroad?
The foreign exchange acquired for any purpose has to be used within 60 days of purchase. In case it is not possible to use the foreign exchange within the period of 60 days, it should be surrendered to an authorised dealer.
14. Can one pay by cash full rupee equivalent of foreign exchange being purchased for travel abroad ?
Foreign exchange for travel abroad can be purchased from authorized banks against rupee payment in cash up to Rs.50,000/-. However, if the rupee equivalent exceeds Rs.50,000/-, the entire payment should be made by way of a crossed cheque/banker’s cheque/pay order/demand draft only.
15. Is there any time frame for a traveller for surrender of foreign exchange on his return to India?
On his return to India, the traveller is required to surrender the unspent foreign exchange, whether in the form of currency notes or travellers cheques, within 180 days from the date of return. However, a traveller can retain up to USD 2000 or its equivalent, either in the form of currency notes or travellers cheques, for future use. Further, the traveller also has the facility of retaining the entire unspent foreign exchange in his Resident Foreign Currency (Domestic) Account. In this regard please see Question 29 (c) below .
16. On return to India can one retain foreign exchange?
Yes. Resident travellers, on return to India, can retain unspent foreign exchange up to USD 2,000 or its equivalent, either in the form of currency notes or travellers cheques. The traveller can also credit the foreign currency amount to their RFC (Domestic) Account, without any limit, where the foreign exchange has been acquired by the traveller by any of the following modes : (Please see Question 29 (c) below)
a. while on a visit abroad as payment for services not arising from any business in or anything done in India; or b. as honorarium or gift or for services rendered or in settlement of any lawful obligation from any person who is not resident in India and who is on a visit to India; or c. as honorarium or gift while on a visit to any place outside India; or d. from an authorised person for travel abroad and represents the unspent amount thereof.
17. Is one required to surrender foreign coins also to an authorised dealer?There is no restriction on residents holding foreign coins.
18. How much foreign exchange can a resident individual send as gift / donation to a person resident outside India?
Limit of USD 50,000 per financial year under the Liberalised Remittance Scheme would also include remittances towards gift and donation by a resident individual. Accordingly, under the Scheme, any resident individual, if he so desires, may remit the entire limit of USD 50,000 in one financial year as gift to a person residing outside India or as donation to a charitable/educational/ religious/cultural organization outside India. Remittances exceeding the limit will require prior permission from the Reserve Bank.
19. How much foreign exchange can other residents send as gift / donation to a person resident outside India?
Other residents like corporates, partnership firms, trusts etc., are free to remit up to USD 5000 per annum per donor/remitter each as gift and donation. Remittances exceeding the limit will require prior permission from the Reserve Bank.
20. Is one permitted to use International Credit Card (ICC) for undertaking foreign exchange transactions?
Use of the International Credit Cards (ICCs) / ATMs/ Debit Cards can be made for making personal payments like subscription to foreign journals, internet subscription, etc., and for travel abroad in connection with various purposes. The entitlement of foreign exchange on International Credit Cards (ICCs) is limited by the credit limit fixed by the card issuing authority only. With ICCs one can (i) meet expenses/make purchases while abroad (ii) make payments in foreign exchange for purchase of books and other items through internet in India. If the person has a foreign currency account in India or with a bank overseas, he/she can even obtain ICCs of overseas banks and reputed agencies.
Use of these instruments for payment in foreign exchange in Nepal and Bhutan is not permitted.
21. While coming into India how much Indian currency can be brought in?
A person coming into India from abroad can bring in with him Indian currency notes within the limits given below:
a. up to Rs. 5,000 from any country other than Nepal or Bhutan, andb. any amount in denomination not exceeding Rs.100 from Nepal or Bhutan.
22. While going abroad how much foreign exchange, in cash, can a person carry?
Residents are free to carry the foreign exchange purchased from an authorised dealer or full fledged money changer in accordance with the Rules. They are, however, allowed to carry foreign exchange in the form of currency notes/coins up to USD 2,000 or its equivalent only. Balance amount can be carried in the form of travellers cheque or banker/s draft. (In this connection please see item No.11).
23. While going abroad how much Indian currency, in cash, can a person carry?
Residents are free to take outside India (other than to Nepal and Bhutan) currency notes of Government of India and Reserve Bank of India notes up to an amount not exceeding Rs. 5,000/ - per person. They may take or send outside India (other than to Nepal and Bhutan) commemorative coins not exceeding two coins each.
Explanation : 'Commemorative Coin' includes coin issued by Government of India Mint to commemorate any specific occasion or event and expressed in Indian currency.
A person can take or send out of India to Nepal or Bhutan, currency notes of Government of India and Reserve Bank of India notes (other than notes of denominations of above Rs. 100);
24. While coming into India how much foreign exchange can be brought in?
A person coming into India from abroad can bring with him foreign exchange without any limit. However, if the aggregate value of the foreign exchange in the form of currency notes, bank notes or travellers cheques brought in exceeds USD 10,000/- or its equivalent and/or the value of foreign currency exceeds USD 5,000/- or its equivalent, it should be declared to the Customs Authorities at the Airport in the Currency Declaration Form (CDF), on arrival in India.
25. Is one required to follow complete export procedure when a gift parcel is sent outside India?
A person resident in India is free to send (export) any gift article of value not exceeding Rs. 5,00,000 provided export of that item is not prohibited under the extant Foreign Trade Policy.
26. How much jewellery one can carry while going abroad?
Taking personal jewellery out of India is governed by Baggage Rules framed under Foreign Trade Policy by the Government of India. No approval of Reserve Bank is required in this case.
27. Can a resident extend local hospitality to a non-resident?
A person resident in India is free to make any payment in Indian Rupees towards meeting expenses on account of boarding, lodging and services related thereto or travel to and from and within India of a person resident outside India who is on a visit to India.
28. Can residents purchase air tickets in India for their travel not touching India?
Residents may book their tickets in India for their visit to any third country. That is, residents can book their tickets for travel, for instance from London to New York, through domestic/foreign airlines in India itself.
29. Can a resident open a foreign currency denominated account in India?
Persons resident in India are permitted to maintain foreign currency accounts in India under the following three Schemes:
a. Exchange Earners' Foreign Currency (EEFC) Accounts:-
All categories of resident foreign exchange earners can credit up to 100 per cent of their foreign exchange earnings, as specified in the paragraph 1 (A) of the Schedule to Notification No.FEMA.10/2000-RB dated 3rd May, 2000 and as amended from time to time, to their EEFC Account with an authorised dealer in India. Funds held in EEFC account can be utilised for all permissible current account transactions and also for approved capital account transactions as specified by the extant Rules/Regulations/ Notifications/ Directives issued by the Government/RBI from time to time.
b. Resident Foreign Currency (RFC) Accounts :-
Returning Indians, i.e., those Indians, who were non-residents earlier, and are returning now for permanent stay, are permitted to open, hold and maintain with an authorised dealer in India a Resident Foreign Currency (RFC) Account to keep their foreign currency assets. Assets held outside India at the time of return can be credited to such accounts. The foreign exchange (i) received or acquired as gift or inheritance from a person referred to sub-section (4) of section 6 of FEMA,1999 or (ii) referred to in clause (c) of section 9 of the Act or acquired as gift or inheritance therefrom may also be credited to this account or (iii) received as the proceeds of life insurance policy claims/maturity/ surrender values settled in foreign currency from an insurance company in India permitted to undertake life insurance business by the Insurance Regulatory and Development Authority.
The funds in RFC account are free from all restrictions regarding utilisation of foreign currency balances including any restriction on investment outside India.
c. RFC (Domestic) Account:-
A person resident in India can open, hold and maintain with an authorized dealer in India, a Resident Foreign Currency (Domestic) Account, out of foreign exchange acquired in the form of currency notes, Bank notes and travellers cheques from any of the sources like, payment for services rendered abroad, as honorarium, gift, services rendered or in settlement of any lawful obligation from any person not resident in India. The account may also be credited with/opened out of foreign exchange earned like proceeds of export of goods and/or services, royalty, honorarium, etc., and/or gifts received from close relatives (as defined in the Companies Act) and repatriated to India through normal banking channels by resident individuals. The account shall be maintained in the form of Current Account and shall not bear any interest. There is no ceiling on the balances in the account.
30. Can a person resident in India hold assets outside India?
In terms of sub-section 4, of Section (6) of the Foreign Exchange Management Act, 1999, a person resident in India is free to hold, own, transfer or invest in foreign currency, foreign security or any immovable property situated outside India if such currency, security or property was acquired, held or owned by such person when he was resident outside India or inherited from a person who was resident outside India. (Please also refer to the Liberalised Remittance Scheme of USD 50, 000 discussed below).
II. Liberalised Remittance Scheme of USD 50,000.
31. What is the Liberalised Remittance Scheme of USD 50,000?
This is a facility extended to all resident individuals under which, they may freely remit upto USD 50,000 per fianancial year for any permissible current or capital account transaction or a combination of both.
32. Who is eligible to avail of this Liberalised Remittance Facility?
The facility is available to resident individuals only.
33. Is there any frequency for the remittance?
There is no restriction on the frequency. However, the total amount of foreign exchange purchased from or remitted through, all sources in India during the current financial year should be within the limit of USD 50,000/-.
34. What are the purpose/s for which remittance can be made under the Scheme?
This facility is available for making remittance/s for any permissible current or capital account transaction or a combination of both. It is not available for purposes specifically prohibited (Schedule I) or regulated by the Government of India (Schedule II) of Foreign Exchange Management (Current Account Transactions) Rules, 2000.
35. Can residents avail of this facility for acquiring immovable property and other assets abroad?
Yes. Individuals are free to use this Scheme to acquire and hold immovable property, shares or any other asset outside India without prior approval of Reserve Bank.
36. Can individuals open foreign currency account abroad for making remittance under the Scheme?
Yes. Individuals are free to open, hold and maintain foreign currency accounts with a bank outside India for making remittances under the Scheme without the prior approval of Reserve Bank. The account can be used for putting through any transaction connected with or arising from remittances under the Scheme.
37. What is the impact of the Scheme on the existing facilities for private/business travel, studies, medical treatment etc./items covered in Schedule III of Foreign Exchange Management (Current Account Transactions) Rules, 2000?.
The facility under the Scheme is in addition to those already available under Foreign Exchange Management (Current Account Transactions) Rules, 2000.
38. Can an individual send remittance under the Scheme to any country?
Remittance cannot be made directly or indirectly to Bhutan, Nepal, Mauritius or Pakistan. The facility is also not available for making remittances directly or indirectly to countries identified by the Financial Action Task Force (FATF) as ‘non-co-operative Countries or Territories, from time to time.
For the current list of such countries/ territories please visit http://www.fedai.org.in/.
Further, remittance under the facility cannot be made to individuals and entities identified as posing significant risk or committing acts of terrorism as advised to banks by Reserve Bank from time to time.
39. What are the requirements to be complied with by the remitter?
The individual will have to designate a branch of an AD through which all the remittances under the Scheme will be made. The applicants should have maintained the bank account with the bank for a minimum period of one year prior to the remittance. He has to furnish an application-cum-declaration in the specified format regarding the purpose of the remittance and declare that the funds belong to him and will not be used for purposes prohibited or regulated under the Scheme.
40. If an investment of USD 50,000 rises in value within the year, can one book profits and invest abroad again?
The investor is free to book profit or loss abroad and to invest abroad again. He is under no obligation to repatriate the funds remitted abroad.
41. Can an individual, who has repatriated the amount remitted during the financial year, avail of the facility once again?
Once a remittance is made for an amount upto USD 50,000 during the financial year, he would not be eligible to make any further remittances under this route, even if the proceeds of the investments have been brought back into the country.
42. Can remittances be made only in US Dollars?
The remittances can be in any currency equivalent to USD 50,000 in a financial year.
43. Last year, resident individuals could invest in overseas companies listed on a recognised stock exchange abroad and which has the shareholding of at least 10 per cent in an Indian company listed on a recognised stock exchange in India. Does this condition still exist?
Investment by resident individual in overseas companies is subsumed under the Scheme of USD 50,000. The requirement of 10 per cent reciprocal shareholding in the listed Indian companies by such overseas companies has since been dispensed with.
III. Guidelines for Financial Intermediaries offering special schemes, protection under the Scheme.
44. Are intermediaries expected to seek specific approval for making overseas investments available to clients?
Banks including those not having operational presence in India are required to obtain prior approval from Reserve Bank for soliciting deposits for their foreign/overseas branches or for acting as agents for overseas mutual funds or any other foreign financial services company.
45. Are there any restrictions on the kind/quality of debt or equity instruments an individual can invest in?
No ratings or guidelines have been prescribed under the Liberalised Remittance Scheme of USD 50,000 on the quality of the investment an individual can make. However, the individual investor is expected to exercise due diligence while taking a decision regarding the investments which he or she proposes to make.
46. Whether minor resident individuals would be permitted to open, maintain and hold such foreign currency accounts, if the same is permissible as per local law in the country of the overseas branch?
Banks may take necessary steps in the matter based on the settled legal position regarding enforcement of the declaration in case the remittance is made on behalf of a minor.
47. Whether credit facilities in Indian Rupees or foreign currency would be permissible against security of such deposits?
No. The Scheme does not envisage extension of credit facility against the security of the deposits.
48. Can bankers open foreign currency accounts in India for residents under the Scheme?
No. Banks in India can not open foreign currency accounts in India for residents under the Scheme.
49. Can an Offshore Banking Unit (OBU) in India be treated on par with a branch of the bank outside India for the purpose of opening of foreign currency accounts by residents under the Scheme?
No. For the purpose of the Scheme, an OBU in India is not treated as an overseas branch of a bank in India.
General Information
For further details/guidance, please approach any bank authorised to deal in foreign exchange or contact Regional Offices of the Foreign Exchange Department of the Reserve Bank.