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What has changed with the RBIs circular Dated 22.06.2023?
As per the Circular dated 22.06.2023, the RBI has allowed the authorised persons to facilitate remittances by resident individuals for payment of fees to foreign universities or foreign institutions in IFSCs for pursuing specified courses. This remittance will be treated as remittance under the purpose studies abroad as mentioned in Schedule III of Foreign Exchange Management (Current Account Transactions) Rules, 2000.
In order to align the study abroad provisions as specified under LRS for IFSCs, the RBI has now issued a circular specifying that the Authorised Persons are now allowed to assist resident individuals in making remittances for the purpose of studies abroad as outlined in Schedule III of the Foreign Exchange Management (Current Account Transactions) Rules, 2000.
This enables the payment of fees to foreign universities or institutions located in International Financial Services Centres (IFSCs) for pursuing courses mentioned in the gazette notification.
An Example:
Mr. A, a resident Indian, wants to remit USD 1,50,000 to a Foreign University established in the Gift City (IFSC) for the purpose of Engineering Studies. Can he make a remittance under the LRS?
Liberalised Remittance Scheme (LRS) allows resident individuals to remit up to USD 2,50,000 per financial year (April to March) for any permitted capital account transaction, current account transaction, or a combination of both. In light of the provision of the Circular Dated 22.06.2023, Mr. A is permitted to make remittance to the foreign university established in the IFSC for the purpose of studying.
The recent circular issued by the Reserve Bank of India (RBI) has set the stage for a groundbreaking transformation in the field of education. By allowing authorized individuals to facilitate remittances for payment of fees to foreign universities and institutions in International Financial Services Centres (IFSCs), the RBI has unleashed a wave of opportunities for students aspiring to pursue specified courses.
By bridging the gap between financial services and educational aspirations, the RBI has demonstrated its commitment to fostering a global learning ecosystem. Students can now explore diverse fields such as Financial Management, FinTech, Science, Technology, Engineering, and Mathematics, provided by foreign institutions in IFSCs, and realize their academic dreams on an international stage.
(Author is CS, LL.B Taxmann Research & Advisory Corporate Laws)
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