Foreign Inward Remittance Certificate which is also known as FIRC serves as proof of the origin of all outgoing international remittances to India. When an individual receives a payout in foreign currency from outside of the nation, the majority of statutory agencies will need them to provide this paperwork. After receiving money from another nation, an individual’s account is credited with that amount through an approved dealer, which is often banks that have been permitted to do this by the Reserve Bank of India. It will not be possible for the recipient to get his money if he does not have an account with an approved financial institution. In this article, we will learn what is FIRC and why they are important.
A number of vital functions are performed by the FIRC, which is widely regarded as a crucial document. The Financial Institutions Regulatory Commission (FIRC) serves as proof of cash collected instead of a share application in the case of shares issued within the name of a person or entity that does not exist in a nation. It is the responsibility of the Financial Inclusion and Regulatory Commission (FIRC) to determine if the resident seller has received the share purchase consideration from the non-resident Indian or foreign person. If you are applying for EPCG or an Advance License, the FIRC is a highly important document that must be provided to DGFC.
Why Foreign Inward Remittance Certificate so crucial?
A Foreign Inward Remittance Certificate is considered to be a highly essential form of evidence since it may be used for a variety of different purposes, all of which are listed on the certificate. For example, if a beneficiary receives a certain number of shares in the name of a firm that is located outside of the nation, the Foreign Inward Remittance Certificate serves as evidence of the money received as well as validation of the transaction. Additionally, the Foreign Inward Remittance Certificate serves as evidence in situations where such an Indian resident transfers or trades his or her shares to a person who is either a non-resident Indian or a foreign organization.
Here’s everything that you must know about FIRC
Therefore, in this scenario, the Foreign Inward Remittance Certificate (FIRC) can be used as evidence that the stock purchase consideration has already been received by both the resident seller and the foreign buyer. The document, which is highly important in situations of export promotion capital products and advanced licensing requirements, is presented to the Director-General of Foreign Trade.
FIRC serves as documentation of receipt of such share purchase consideration when the company or person to which the shares have been issued is located outside of the nation (whether it is an NRI or a foreign corporation).
When any of your payments are suspected of being questionable, it serves as evidence of your efforts to protect the fund movement from financial fraud and legal difficulties.
In order to be considered for various applications such as EPCG and Advance License, the FIRC must be submitted to the DGFC for approval.
The Financial Institutions Regulatory Commission (FIRC) serves as documentation of the export of services and the receipt of funds in exchange for those services. Due to the fact that the GST is not imposed on services exported, the FIRC serves as evidence in the case of GST exemption claims. As an example, it is necessary for the purpose of service tax refunds, exclusions from Customs Duty, and other similar transactions.
Issue of the-e-FIRC (Electronic Financial Institutions Review Commission)
When the export proceeds for a shipment of goods and services are received by a bank other than just the bank through which the papers were filed, the receiving bank issues an e-FIRC to establish a link between the two banks involved. Most of the time, when the home bank is happy with the documentation, the home bank will create an Inward remittance (IRM) on the government export portal (EDPMS), as well as the IRM number is referenced to as the e-FIRC number further down the line.
As previously stated, the Foreign Inward Remittance Certificate is extremely important to remittances received from banks that are located outside of India and are not affiliated with the Indian government. Consequently, it is imperative and important that perhaps the beneficiaries make a special effort and priority to follow this up with the banks and obtain their Foreign Inward Remittance Certificate as quickly as possible just after inward remittance has been deposited to their bank account. Furthermore, special attention and care must be paid to the goal of foreign direct investment, just like any inaccuracy in the mentioning of this has major implications and repercussions whenever it comes to remittance, its use, and the accounting of the same, among other things.