Foreign Exchange Facilities for Importation of Service in Nepal from Foreign Jurisdiction

This article covers detail about the approval requirement that need to be taken by Nepalese entity or individuals to import the services from the service provider located at foreign jurisdiction. 

 

Nepal Rastra Bank (NRB) has issued Circular (Circular Number 10/2080 under Unified Circular Page Number: 145 to 146) specifying the condition of approval for importing services from (i) India and (ii) countries other than India. 

 

If a Nepalese entity wishes to import services in Nepal from service provider of foreign jurisdiction, they need to take certain approval from NRB or concerned government authorities or both, based on the amount of foreign currency to be paid to service provider. Nepalese entity and individual can only transfer the money to foreign service provider upon the fulfilment of certain conditions mentioned the Circular. 

 

The NRB Circular mandates following approval requirement for the service to be imported from India to Nepal.

S.N.	Amount (in INR)	Approval Required	Description
1	Foreign exchange facility up to INR 3,00,000	No approval required	Commercial Bank shall allow to transfer the payment. The following documents must be submitted to commercial banks in Nepal by either Nepalese citizens or firms, companies, or associations registered duly under the law of Nepal: - Bills/invoices or other documents proving the amount of foreign exchange. - A photocopy of citizenship for individuals, or a certificate of registration for firms, associations, etc. - Proof of tax clearance if required.
2	Payment up to INR 30,00,000	Must have approval or a recommendation from their governing or regulatory bodies	Companies, firms, or associations duly registered according to Nepalese law, whether foreign or Nepalese, can make payments up to INR 30,00,000 through commercial banks. These payments must be in accordance with the agreement between the service provider and the receiver and must have approval or a recommendation from their governing or regulatory bodies.
3	Payments exceeding INR 30,00,000	Approval from regulatory body and approval from NRB	For payments exceeding INR 30 lakhs, in addition to an agreement between the service provider and the receiver, approval from the regulatory body and additional approval from NRB is required.

 

Kindly Note: 

In case there is no regulatory authority or the agreement between service provider and receiver has not been approved or recommended by the regulatory authority, even transactions amounting to less than 30 Lakhs must be approved by NRB. 

 

 

The NRB Circular mandates following approval requirement for the service to be imported from countries other than India.

 

S.N.	Amount (IN USD)	Approval Required	Description
1	Up to USD 5,000 or equivalent convertible currency	No requirement for approval from NRB or concerned regulatory government authority	Following documents are needed to be submitted before Commercial Bank. Commercial Bank shall approve it: - Certificate of registration of firm, company, or association - Tax registration certificate - Tax clearance certificate - Latest audit report - Bill or invoice of service import - Agreement between the service provider and the importer, if applicable - Decision of the Board of Directors to request a foreign exchange facility - Recommendation of the regulatory body, if required - Certificate of advance tax deposited in accordance with applicable laws for the service provided - Documents confirming the request for exchange facility, if sought, after the completion of work - If payment has been received from the institution providing the work (employer), documents showing the amount and bank statement.
2	Amount between USD 5,000 to USD 12,000	Requirement of approval from regulatory governmental body	Firms, companies, or agencies wishing to transact between USD 5,000 to USD 12,000, or the equivalent in foreign currency, must obtain approval or a recommendation from their respective governing or regulatory bodies, in addition to submitting the necessary documents as mentioned above. These exchange facilities can be obtained directly from commercial banks. Approval from NRB is not needed.
3	Transactions exceeding USD 12,000	Additional approval from NRB is required, including the approval of the regulatory body	For transactions exceeding USD 12,000 or the equivalent in convertible currency, approval from both the relevant regulatory body and the NRB is required.
4	Transactions exceeding USD 50,000	Prior approval of NRB is required	Before receiving services equivalent to more than USD 50,000 from foreign firms, companies, or agencies, prior approval must be obtained from the NRB. As a matter of practice, the service agreement has to be approved and based on the approval parties can proceed with the service.

 

 

The Circular has incorporated separate provision for individual. Below are those provisions : 

 

• The beneficiary must be a foreign association, firm, or company; individuals cannot be beneficiaries.
• An invoice or documentary evidence of the required foreign currency must be available.
• A photocopy of citizenship or PAN card is required.
• An exchange facility of up to USD 1,500 or its equivalent in other convertible currencies may be provided. 
• For visa applications, if the embassy or authorized body requires fees in convertible currency (including electronically), the USD 1,500 limit will not apply to the visa fee.
• Evidence of tax payment must be provided if applicable.
• Funds cannot be used for capital market activities such as purchasing foreign shares or deposits.

 

Date of Publication: 2024/12/30

 

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