Most of tech savvy freelancers who are earning money on various job sites provides services . In commercial language , what they do is exporting the services from India . Doing web development or programming codes or miscellaneous online jobs . All of them who gets payments in foreign exchange must take note of the fact that a new rules affecting the condition of compliance under FEMA has been notified by the Reserve Bank of India that regulates compliance under Foreign Exchange Management Act ( FEMA ) The new regulation called Foreign Exchange Management (Export of Goods & Services) Regulations, 2015 (FEM(Export of Goods & Services) 2015 )has been notified on 12/01/2016 in the Gazzette of India the new . While most of the rules may not be applicable to a freelance service provider , two rules must be taken care of :
No Declaration of Exports of Services
Regulation 3 of the FEM(Export of Goods & Services) 2015 ) is for Declaration of Exports . For all exporters of software and goods , it is mandatory to declare in prescribed form within time allotted under the Regulation about their exports . But , service providers have been exempted from such compliance . Sub-section 3 of Regulation 3 clearly exempts the exporters of services ( most freelancers will fall under this category ) from filing of any declaration about the export of their services. Read the provision under section 3(3)
(3) For the removal of doubt, it is clarified that, in respect of export of services to which none of the Forms specified in these Regulations apply, the exporter may export such services without furnishing any declaration, but shall be liable to realise the amount of foreign exchange which becomes due or accrues on account of such export, and to repatriate the same to India in accordance with the provisions of the Act, and these Regulations, as also other rules and regulations made under the Act.
Realization of Export Proceeds Must Within Time
While the exporters of services have been exempted from requirement of any kind of declaration , the FEM( Export of Goods & Service ) 2015 clearly not exempt from the regulation of bringing the export proceed within time . So what is the regulation about the realization of export proceeds .
Section 9 of teh FEM(Export of Goods & Services) Regulation 2015 provides the period within with the export proceed must be realized . As per this provision, the export proceed should usually be realized with a period of 9 months from the date of exports
- Period within which export value of goods/software/ services to be realised:-
(1) The amount representing the full export value of goods / software/ services exported shall be realised and repatriated to India within nine months from the date of export, provided
(a) that where the goods are exported to a warehouse established outside India with the permission of the Reserve Bank, the amount representing the full export value of goods exported shall be paid to the authorised dealer as soon as it is realised and in any case within fifteen months from the date of shipment of goods;
(b) further that the Reserve Bank, or subject to the directions issued by that Bank in this behalf, the authorised dealer may, for a sufficient and reasonable cause shown, extend the period of nine months or fifteen months, as the case may be.
Conclusion on Freelancers on Compliance under FEM( Export of Goods & Service ) 2015
- No declaration of export of services required.
- However, you must bring the export proceed within 9 months