Foreign exchange inflow/outflow in director's report

An Indian private company receives payment for online services from foreign customers by paypal / swift transfer. The swift transfer in USD is handled by Indian bank that is authorized by RBI. Similarly paypal handles USD and converts back to INR. Finally, all USD amounts are deposited to company bank account as INR .

1) Will it be considered as foreign exchange inflow for the company?
2) What should be mentioned under foreign exchange inflow/outflow in director's report for above case?

Looking forward your reply. Thank you.
Asked 1 year ago in Income Tax from Kolkata, West Bengal
1 yes

2 Give details of earnings and expenses in foreign exchange 
Vijay N. Kale
CA, Hyderabad
248 Answers
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In this transaction, it is the inflow of the foreign exchange in India . please obtain the FIRC  ( Foreign Inward remittance certificate ) from the Indian Bank , and it will be treated as the inflow of the foreign exchange .  The BRC issued by the bank will be very useful The director report should contain the detail of the invoice done ( FOB value of the exports of services ) , payment received and payment outstanding if any . If the payment is outstanding for more than six months , it has to separately reported .
  
Prakash Sinha
CA, Delhi
112 Answers
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You dont need RBIn approval for such purposes .

yes it will be earnings in foreign exchange and it is good to report such.

If you are claiming relief based on export earnings , you need firc from bank .

It will give a good profile to company it it is earning in foreign currency.

you check Foreign Trade policy for documentation in this regard. 
Vijay N. Kale
CA, Hyderabad
248 Answers
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already the same is being answered by my professional colleagues.
Shyam Sunder Modani
CA, Hyderabad
953 Answers
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1. Required
2. FIRC not required for service tax, Roc filling and IT filling, its the details like total income or total service provides is used in aforesaid returns
3.No issue but please note that your service must be fall under Export of service definition as per service tax Act 
4. You need to report the same in Report
Deepak Rathore
CA, New Delhi
23 Answers
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1.No the amount which you recd from them is to be shown as foreign inflow
2. Yes for the sake maintaining true and fair view of the report , material things need to report
3. Yes, If it is likely to have adverse affect on the interest of stakeholder.
4.Yes , the same will b disclosed as foreign outgo
5. Yes , you need to take 15CA/15CB at the time of Payment from Chartered Accountant 
Deepak Rathore
CA, New Delhi
23 Answers
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I think I am late in joining this interesting issue. Normally I would have passed it over, as the queries were addressed to other professional colleagues. However, I thought I could add few points here. 

If the company's bank account is credited with the foreign currency converted into INR, then the company can say that it has received foreign currency directly through its bank. Instead of a bank, an agency like paypal receives the foreign currency in your account, which is normally maintained in foreign currency and you decide it to convert into INR at any point of time, then you are taking the benefit / risk of foreign exchange fluctuation. Nevertheless, the amount received by you in this way is also your foreign exchange earnings.

These are inward foreign exchanges remittances to your account. The actual foreign exchange earned by you should be disclosed in the Directors' report. 

As regards the foreign exchange outflow, the actual remittance by way of foreign exchange will have to be disclosed by you in the Directors' report.  Foreign exchange remittances upto certain limits are allowed without any prior approval for different purposes. 

If you are making any payment to a Non Resident, you must be careful about TDS u/s 195. You will not be able to remit, unless you get a CA certificate about the remittance of tax deducted at source, if applicable.  

As regards the payments through the accounts of the directors, you need to check with the compliance with the provisions of Companies Act 2013 regarding borrowings from directors and related parties. 
B Vijaya Kumar
CA, Hyderabad
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1. Schedule III requires following information:

 I export of goods calculated on F.O.B. basis
 II Royalty, knowhow, professional and consultation fees.
III Interest and divident
VI other income indicating the nature thereof.

2 If you are claiming any relief based on exports then you should have firc.

Vijay N. Kale
CA, Hyderabad
248 Answers
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