How to transfer funds from Dubai upon leaving for good
Q: I want to know what I should do with funds lying in my bank account in Dubai when I return to India after retirement later this year. I also have deposits in a foreign currency non-resident account. Do I need to convert everything to Indian rupees or can I retain the foreign currency balance in India to guard against depreciation of the rupee?
A: As you wish to retain the whole or part of your past savings in foreign currency, you should open and maintain a resident foreign currency account with a bank in India at the time you return for good. The funds lying in your bank account in Dubai may be transferred to the resident foreign currency account either in US dollars, British pounds, euros or any other currency of your choice. Such funds can be retained in this account free from all restrictions regarding utilization of the balance. You can also use these funds to make investments outside India. Any pension or insurance maturity proceeds received from outside India can also be deposited in this account.
The interest payable on these funds will be at the prevailing international rates applicable to foreign currency deposits. During the two-year period that you are resident but not ordinarily resident, the interest will be tax free in India under section 10(15)(iv)(fa) of the Income-tax Act. You can include the name of your resident relative as a joint holder. However, during your lifetime, your relative will not be eligible to operate this account.
Q: Share-price manipulation is still going on in case of some companies as price sensitive information is withheld from investors at large. What steps are being taken to ensure a level playing field for investors in general?
A: With effect from April this year, the Securities and Exchange Board of India has made it mandatory for all companies to set up internal controls for identifying unpublished price sensitive information. Companies will be required to maintain a record of personal information of directors, employees and their immediate relatives, including their mobile numbers. This will enable the Sebi to establish the connection between the company and the person who trades in the shares of such company. Furthermore, publicly-listed companies will have to periodically review the effectiveness of internal controls to prevent misuse of unpublished price-sensitive information.
Certain information is permitted to be withheld for legitimate purposes. Therefore, sharing of unpublished price-sensitive information in the ordinary course of business with collaborators, lenders, suppliers, merchant bankers, legal advisers, auditors, etc, will not be covered by the new guidelines. Companies are required to formulate whistle-blower norms for reporting any leaks of unpublished price-sensitive information. They will also have to institute measures which need to be taken to determine the source of these leaks.
Q: I want to set up a company in India. However, I am told that it will take several months for getting registrations under various laws. Is there any likelihood of the processes being expedited?
A: The government of India is initiating a new set of reforms which will involve state agencies for an integrated clearance platform for setting up businesses. The Department for Promotion of Industry and Internal Trade is putting into place a single clearance mechanism to incorporate a company, and obtain a permanent account number. Registration under the Goods & Services Tax law will also be done in a seamless manner. Applications can also be made online for registering with the Employees’ Provident Fund Office and the Employees’ State Insurance Corporation.
The DPIIT’s proposed plan will include changes to the insolvency framework to make it more effective and align it with international best practices. The legal framework will be modified to ensure speedy enforcement of contracts. Registration of properties and payment of taxes are sought to be expedited. The Government wants to reform processes pertaining to securing electricity connections, construction permits, and getting credit and refund for taxes.
The writer is a practicing lawyer specialising in tax and exchange management laws of India.