What is FIRC
FIRC (Foreign Inward Remittance Certificate) is a document that is issued by a bank to their customers against all the inward remittances entering India. It can be an advance payment against export proceeds, ocean or airfreight, or remuneration or wages under consultancy charges or for any other reasons.
What is e FIRC
e FIRC is used to denote an FIRC which is issued by a bank in EDPMS (Export Data Processing and Monitoring System), after the funds have been credited into a customer’s account.
What is the difference between BRC and FIRC?
Both BRC & FIRC are certificates issued by authorized dealer banks to customers for receiving amounts from foreign countries.
FIRC (Foreign Inward Remittance Certificate) is issued against any receipt of amount from foreign countries by a bank to their customers. It can be an advance payment against export proceeds, ocean or airfreight, or remuneration or wages under consultancy charges or for any other reasons.
BRC (Bank Realization Certificate) is issued by banks to its customers who run export businesses. BRC is issued on each shipment of export proceeds. Various export promotion agencies provide incentives, import duty exemptions and other financial assistance to the exporters. These agencies require export proof to be submitted by exporters to claim such benefits. One such proof of export is Bank Realization Certificate BRC issued by the respective bank who received foreign amount for exporters.
What are the uses of FIRC
FIRC is used by most statutory authorities as a document of proof that an individual has received a payment in foreign currency from outside the country. FIRC is considered a very important document as it serves a lot of purposes. If shares are issued in the name of a person or company which exists outside a country then FIRC acts as the proof of money received in lieu of share application.
In those cases where a resident Indian sells or transfers his shares to some non-resident Indian or foreign identity then FIRC testifies that the resident seller has got the share purchase consideration. FIRC is a very crucial document which is submitted to DGFC in case of EPCG and Advance License.
When payment is received for export of services then no GST is levied according to the rules of export of services. In such cases, FIRC acts as an important proof of export of services and remittances which are received in lieu of them.
How are payments routed to beneficiary’s account?
When an individual receives some amount of money from a foreign country then it is credited to his account through banks authorized to do so by the Reserve Bank of India. If the beneficiary does not have a bank account in an authorized bank then he cannot get his money transferred into his bank account.
Details contained in FIRC
A Foreign Inward Remittance Certificate – FIRC contains the following details-
- Beneficiary’s name
- Whether the money has been paid by cash or by crediting the account of the beneficiary
- Name and the address of the person being remitted
- Name and address of the authorized bank remitting the amount
- DD / TT No / Cheque No
- The foreign direct investment amount in the foreign currency
- The equivalent amount in rupee (should be in figures as well as words)
- The name of the person in who’s favor the amount has been remitted
- The prevalent exchange rate which has been applied
- What the purpose of the respective remittance is as stated by the beneficiary
The FIRC has to be signed by the authorized signatory of the authorized designated bank and is further countersigned by one more person. As per procedure, the Foreign Inward Remittance Certificate has to be issued to the address of the account holder, which normally has to be within a period of not more than fifteen days from the date on which the funds were credited to the beneficiary’s account in the authorized bank.
In cases where the inward remittance has been transferred into the beneficiary’s account through more than one bank account, the first bank that received the inward remittance in convertible foreign currency must issue the Foreign Inward Remittance Certificate first, as it would have the requisite details of the overseas bank which have remitted the foreign exchange. This clarification was made in RBI notifications and circulars as well as the provisions under FEMA.
Therefore, the Foreign Inward Remittance Certificate (FIRC) is of great importance when it comes to remittances received from banks, which are overseas, and not in India. Thus, it is necessary that the beneficiaries make it a point and priority to follow up with the banks and get their Foreign Inward Remittance Certificate issued as soon as possible after the inward remittance has been credited. Also, it is necessary to check the purpose of foreign direct investment, as any error in the mentioning of this has serious implications and consequences when it comes to remittance, its usage, and accounting of the same.