Economics · Economy
An Indian resident consultant returned from abroad holding a Resident Foreign Currency (RFC) account. He later established a domestic consultancy firm exporting services, holding an EEFC account and an RFC(D) account. He wishes to pay USD 60,000 to a German software vendor using funds from EEFC and RFC accounts. Under FEMA guidelines, which statement correctly evaluates the legality of this transaction?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Funds held in an RFC(D) account must be converted into INR prior to issuing foreign remittances.
- 2Gift remittances to non-resident relatives from RFC accounts are completely exempt from LRS ceiling reporting.
- 3The payment to the foreign vendor is a permitted current account transaction and can be legally funded from both EEFC and RFC accounts.✓
- 4Funds from an RFC account cannot be used for Indian consultancy firm operational business expenses.
Correct answer
The payment to the foreign vendor is a permitted current account transaction and can be legally funded from both EEFC and RFC accounts.
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