The Remittances of Foreign Exchange and Investment in Foreign Exchange Bonds (Immunities and Exemptions)  Act, 1991
# THE REMITTANCES OF FOREIGN EXCHANGE AND INVESTMENT IN FOREIGN
 EXCHANGE BONDS (IMMUNITIES AND EXEMPTIONS) ACT, 1991
 _________

 ARRANGEMENT OF SECTIONS
 ________

CHAPTER I

PRELIMINARY

SECTIONS

1. Short title and extent.

CHAPTER II

REMITTANCES OF FOREIGN EXCHANGE

2. Definitions.
3. Immunities.
4. Remittances not to be taken into account in certain cases.

CHAPTER III

INVESTMENT IN FOREIGN EXCHANGE BONDS

5. Definitions.
6. Immunities.
7. Foreign Exchange Bonds not to be taken into account in certain cases.

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# THE REMITTANCES OF FOREIGN EXCHANGE AND INVESTMENT IN FOREIGN
 EXCHANGE BONDS (IMMUNITIES AND EXEMPTIONS) ACT, 1991

 ACT NO. 41 OF 1991

[18th September, 1991.]

# An Act to provide for certain immunities to persons receiving remittances in foregin exchange
 and to persons owning the Foreign Exchange Bonds and for certain exemptions from direct taxes in relation to such remittances and bonds and for matters connected therewith or incidental thereto.

WHEREAS the position relating to balance of payments has become difficult and it is necessary to

attract large inflow of foreign exchange;

AND WHEREAS with a view to attracting such inflow of foreign exchange, it is expedient to provide for

certain immunities and exemptions to render it possible for certain persons to receive the said remittances
in foreign exchange and to own the said Bonds;

BE it enacted by Parliament in the Forty-second Year of the Republic of India as follows:—

CHAPTER I

PRELIMINARY

**1. Short title and extent.—(1) This Act may be called the Remittances of Foreign Exchange and**

Investment in Foreign Exchange Bonds (Immunities and Exemptions) Act, 1991.

(2) It extends to the whole of India.

CHAPTER II

REMITTANCES OF FOREIGN EXCHANGE

**2. Definitions.—In this Chapter, unless the context otherwise requires,—**

(a) “recipient” means a person as defined in clause (31) of section 2 of the Income-tax Act, 1961

(43 of 1961) who receives any remittance under this Chapter;

(b) “remittance” means remittance made in foreign exchange by any person resident outside India

to a person resident in India on or after the date of commencement of this Act but before the specified
date, in the form of draft, traveller’s cheques, cheques drawn on banks situated outside India
telegraphic transfers, mail transfers, money orders or by way of transfer from Non-resident (External)
Account, Foreign Currency Non-resident Account or Foreign Currency Non-resident Special Deposit
Account maintained in India under the rules made under the Foreign Exchange Regulation Act, 1973
(46 of 1973).

_Explanation.—For the purposes of this clause, “specified date” means the 1st day of December,_

1991 or such other later date as the Central Government may, by notification in the Official Gazette,
specify in this behalf;

(c) all other words and expressions used in this Chapter but not defined and defined in the

Foreign Exchange Regulation Act, 1973 (46 of 1973) shall have the meanings respectively assigned
to them in that Act.

**3. Immunities.—(1) Notwithstanding anything contained in any other law for the time being in**

force,—

(a) no recipient, who claims immunity under this Chapter in accordance with such scheme as the

Reserve Bank of India may, by notification in the Official Gazette, specify for the purposes of
receiving remittances under this Chapter, shall be required to disclose, for any purpose whatsoever,
the nature and source of the remittance made to him;

(b) no inquiry or investigation shall be commenced against the recipient under any such law on

the ground that he has received such remittance;

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(c) the fact that the recipient has received a remittance shall not be taken into account and shall be

inadmissible as evidence in any proceedings relating to any offence or the imposition of any penalty
under any such law.

(2) Nothing in sub-section (1) shall apply—

(a) to any foreign exchange which is required to be brought into India under any of the provisions

of—

(i) the Foreign Exchange Regulation Act, 1973 (46 of 1973); or

(ii) the Income-tax Act, 1961 (43 of 1961), read with the Foreign Exchange Regulation Act,

1973 (46 of 1973),

if the period within which such foreign exchange is to be brought into India has not expired or where such
period has been extended, in any manner, by the Central Government or the Reserve Bank of India or any
other authority, such extended period has not expired on the date of commencement of this Act;

(b) in relation to prosecution for any offence punishable under Chapter IX or Chapter XVII of the

Indian Penal Code (45 of 1860), the Narcotic Drugs and Psychotropic Substances Act, 1985
(61 of 1985), the Terrorist and Disruptive Activities (Prevention) Act, 1987 (28 of 1987), the
Prevention of Corruption Act, 1988 (49 of 1988)or for the purpose of enforcement of any civil
liability.

(3) The Central Government shall cause the scheme notified under clause (a) of sub-section (1) to be

laid, as soon as may be after it is notified, before each House of Parliament.

**4. Remittances not to be taken into account in certain cases.—Without prejudice to the generality**

of the provisions of section 3,—

(a) any remittance received under this Chapter shall not be taken into account for the purpose of

any proceeding under the Income-tax Act, 1961 (43 of 1961) and, in particular, the recipient shall not
be entitled to claim any set-off or relief in any assessment, re-assessment, appeal, reference or other
proceeding under that Act or to re-open any assessment or re-assessment made under that Act on the
ground that he has received such remittance.

_Explanation.—For the avoidance of doubt, it is hereby declared that the provisions of the_

Income-tax Act, 1961 (43 of 1961) will apply to any income which accrues or arises or is deemed to
accrue or arise to the recipient from the amount of the remittance;

(b) any remittance received under this Chapter shall not form part of the assets of any assessee for

the purposes of computing his net wealth under the Wealth-tax Act, 1957 (27 of 1957) in relation to
any assessment year commencing before the 1st day of April, 1992.

CHAPTER III

INVESTMENT IN FOREIGN EXCHANGE BONDS

**5. Definitions.—(1) In this Chapter, unless the context otherwise requires,—**

(a) “Foreign Exchange Bonds” means the Bonds, issued by the State Bank of India constituted

under the State Bank of India Act, 1955 (28 of 1955) in accordance with such scheme as the Reserve
Bank of India may, by notification in the Official Gazette, specify in this behalf, the investment
wherein is made on or after the date of commencement of this Act but before the specified date.

_Explanation.—For the purposes of this clause, “specified date” means the 1st day of December,_

1991 or such other later date as the Central Government may, by notification in the Official Gazette,
specify in this behalf;

(b) “non-resident Indian” means an individual, being a citizen of India or a person of Indian

origin who is resident outside India.

_Explanation 1.—A person shall be deemed to be of Indian origin if—_

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(i) he, or either of his parents or any of his grand- parents, was a citizen of India by virtue of

the Constitution or the Citizenship Act, 1955 (57 of 1955); or

(ii) he at any time held an Indian passport:

Provided that the nationals of Pakistan or Bangladesh shall not be deemed to be of Indian origin.

_Explanation 2.—A spouse (not being a national of Pakistan or Bangladesh) of a person of Indian_

origin shall also be deemed to be of Indian origin;

(c) “overseas corporate body” means any institution, association or body, whether incorporated or

not, established under the laws of a country outside India wherein any non-resident Indian has any
interest;

(d) all other words and expressions used in this Chapter but not defined and defined in the

Foreign Exchange Regulation Act, 1973 (46 of 1973), shall have the meanings respectively assigned
to them in that Act.

(2) The Central Government shall cause the scheme notified under clause (a) of sub-section (1) to be

laid, as soon as may be after it is notified, before each House of Parliament.

**6. Immunities.—(1) Notwithstanding anything contained in the Wealth-tax Act, 1957 (27 of 1957),**

the Gift-tax Act, 1958 (18 of 1958), the Income-tax Act, 1961 (43 of 1961), the Foreign Exchange
Regulation Act, 1973 (46 of 1973) and the Foreign Contribution (Regulation) Act, 1976 (46 of 1976),—

(a) no non-resident Indian or overseas corporate body who or which owns the Foreign Exchange

Bonds or any person resident in India to whom a gift of such Bonds has been made by such nonresident Indian or overseas corporate body, shall be required to disclose, for any purpose whatsoever,
the nature and source of the investment in such Bonds;

(b) no inquiry or investigation shall be commenced against any of the persons referred to in

clause (a) under any of the said Acts on the ground that such person owns such Bonds;

(c) the fact that any of the persons referred to in clause (a) owns such Bonds shall not be taken

into account and shall be inadmissible as evidence in any proceedings relating to any offence or the
imposition of any penalty under any of the said Acts.

(2) Nothing in sub-section (1) shall apply to foreign exchange which is required to be brought into

India under any of the provisions of—

(i) the Foreign Exchange Regulation Act, 1973 (46 of 1973);or

(ii) the Income-tax Act, 1961 (43 of 1961), read with the Foreign Exchange Regulation Act,

1973 (46 of 1973),

if the period within which such foreign exchange is to be brought into India has not expired or where such
period has been extended, in any manner, by the Central Government or the Reserve Bank of India or any
other authority, such extended period has not expired on the date of commencement of this Act.

**7. Foreign Exchange Bonds not to be taken into account in certain cases.—Without prejudice to**

the generality of the provisions of section 6,—

(a) the provisions of the Income-tax Act, 1961 (43 of 1961) shall not apply to any interest

accruing in relation to the Foreign Exchange Bonds;

(b) the provisions of the Wealth-tax Act, 1957 (27 of 1957) shall not apply in relation to the

Foreign Exchange Bonds;

(c) the provisions of the Gift-tax Act, 1958 (18 of 1958) shall not apply where any non-resident

Indian becomes a resident in India and makes a gift of the Foreign Exchange Bonds.

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