- Date : 04/06/2022
- Read: 3 mins
Avoid a penalty by RBI on your international debit or credit card transactions. FEMA 2000 rules cannot be ignored.
International credit or debit card users need to be aware of what not to pay for while vacationing or travelling abroad. FEMA – 2000 unequivocally states that certain notified transactions will result in a penalty of RBI, along with your card being blocked or revoked. Indian citizens, while using an authorised international credit or debit card, should read FEMA rules mentioned below and thereby avoid the punishment of financial or jail terms or both.
RBI Rules Under FEMA 2000 that Prohibit Credit or Debit Card Use:
1. All lottery-related transactions are banned.
2. Transactions for racing and riding, as well as other joys or hobbies, are likewise not permitted.
3. Transactions for the purchase of foreign lottery tickets, certain notified magazines, gambling on results of football matches or horse races, etc. are not allowed.
4. Payments made towards commissions on exports for equity investment to businesses or ventures are not permitted. This includes Indian corporates' partnerships or wholly-owned branches abroad.
5. Any transactions for dividends, where the requirement of dividend balancing is applicable for any company, are not permitted.
6. Transactions of commission on exports under Rupee State Credit Route (RSCR) are not permitted. For tea and tobacco exports, a commission of 10% is permissible on invoice value.
7. Any payments for telephone calls that come under "call back services" are not permitted.
8. Transactions arising from interest earned through the Non-Resident Special Rupee (Account) Scheme are not permitted.
9. Transactions for foreign exchange are prohibited for individuals who travel to Nepal and Bhutan. Likewise, any transactions for residents of Nepal and Bhutan by an Indian credit or debit cardholder are not permitted.
The Penalty for Violation of the FEMA Act is as follows:
1. Three times the value of transactions identified under FEMA will be enforced.
2. Penalty will be based on the value equivalent to Indian currency.
3. 5-year prison sentence + fine as applicable, or both.
It is also important to note that SBI has issued a notice via email to their international credit or debit card customers that betting, gambling, and foreign exchange trading are also prohibited, apart from those listed above in the FEMA restricted transactions list.
Most countries have no restrictions on racing, gambling, or purchases of unlawful or notified magazines. The advertisements used for these businesses abroad are so attractive that any Indian traveller could be easily lured by them. It is important that the individual doesn't get provoked into using his international credit or debit card for these restricted transactions.
International credit or debit card users need to be aware of what not to pay for while vacationing or travelling abroad. FEMA – 2000 unequivocally states that certain notified transactions will result in a penalty of RBI, along with your card being blocked or revoked. Indian citizens, while using an authorised international credit or debit card, should read FEMA rules mentioned below and thereby avoid the punishment of financial or jail terms or both.
RBI Rules Under FEMA 2000 that Prohibit Credit or Debit Card Use:
1. All lottery-related transactions are banned.
2. Transactions for racing and riding, as well as other joys or hobbies, are likewise not permitted.
3. Transactions for the purchase of foreign lottery tickets, certain notified magazines, gambling on results of football matches or horse races, etc. are not allowed.
4. Payments made towards commissions on exports for equity investment to businesses or ventures are not permitted. This includes Indian corporates' partnerships or wholly-owned branches abroad.
5. Any transactions for dividends, where the requirement of dividend balancing is applicable for any company, are not permitted.
6. Transactions of commission on exports under Rupee State Credit Route (RSCR) are not permitted. For tea and tobacco exports, a commission of 10% is permissible on invoice value.
7. Any payments for telephone calls that come under "call back services" are not permitted.
8. Transactions arising from interest earned through the Non-Resident Special Rupee (Account) Scheme are not permitted.
9. Transactions for foreign exchange are prohibited for individuals who travel to Nepal and Bhutan. Likewise, any transactions for residents of Nepal and Bhutan by an Indian credit or debit cardholder are not permitted.
The Penalty for Violation of the FEMA Act is as follows:
1. Three times the value of transactions identified under FEMA will be enforced.
2. Penalty will be based on the value equivalent to Indian currency.
3. 5-year prison sentence + fine as applicable, or both.
It is also important to note that SBI has issued a notice via email to their international credit or debit card customers that betting, gambling, and foreign exchange trading are also prohibited, apart from those listed above in the FEMA restricted transactions list.
Most countries have no restrictions on racing, gambling, or purchases of unlawful or notified magazines. The advertisements used for these businesses abroad are so attractive that any Indian traveller could be easily lured by them. It is important that the individual doesn't get provoked into using his international credit or debit card for these restricted transactions.
