Foreign firms’ branches free to remit profits sans RBI okay

The central bank in a press release said: "For remmitances of profits without the Reserve Bank’s prior approval, the branches of foreign companies operating in the country can now approach an authorised dealer.

Before allowing remmitance of profits, authorised dealers will ensure that the income of the branch has accrued from sources in India and from activities specifically approved by the Reserve Bank, the branch has compiled with the requirements of the Companies Act and has either paid all the applicable taxes or has made adequate provision for paying them".

This latestmeasure is in line with Reserve Bank’s recent steps of further liberalising exchange control regulations.

The Reserve Bank had recently allowed foreign banks to repatriate profits without its prior approval. Domestic corporates had also been extended a like relaxation while remitting dividends to their non-resident shareholders.