Shipping Firms, Airlines Allowed To Pay Charter Fee Through Ads

The Reserve Bank of India (RBI) has allowed airline and shipping companies to remit funds overseas to pay for charter fees through their authorised dealers (AD). The apex bank move will come in handy for the agencies concerned as it will cutting through a plethora of paperwork involved in remittances for charter fees which run into millions of rupees. The relaxation given off late on the forex front have been for remittances of small quantities.

The RBI has now delegated powers to authorised dealers to allow remittances for Indian companies or individuals intending to charger ships on a voyage basis and aircraft on an ad hoc basis. The apex bank has also issued a separate circular with regard to time charter. As per the circular, remittance may be allowed after obtaining approval of the Director General of Shipping (DGS) or the Director General of Civil Aviation (DGCA).

 

The RBI has specified that for chartering foreign ships, in addition to DGS approval, the individual/firm concerned should present all relevant details (specifically charter party agreement, freight invoice, non-negotiable copy of bill of landing, certified copy of custom attested form, and a tax clearance certificate from the income tax authorities) to the authorised dealers.

In case of chartering of foreign aircraft on ad hoc flight basis, application for remittance may be made along with the approval of DGCA, the clearance for the flights concerned and a tax clearance certificate.

It should be ensured that the remittance is made by the person who is chartering only to the owner. In case an application for remittance of freight for voyage charter is accompanied by a claim from the ship owner towards demurrage, the authorised dealer may allow it after the scrutiny of the relevant documents, the RBI circular said. However, applications from public sector undertakings (PSU) seeking to remit 90 per cent of freight on the basis of fixture note and the balance 10 per cent with demurrage may continue to be referred to the RBI. Besides, applications of vessels chartered on time charter basis may be referred to the RBI. In cases of import cargo on FOB/FAS terms, and remittance made to a country having double taxation avoidance agreement with the Indian government, the annual no objection certificate valid on the date of remittance may be accepted, it said.

Particulars of demurrage payment allowed must be reported by the authorised dealers to the customs with full particulars of the import-export code number of the applicant, number and date of relative bill of entry and amount of the demurrage allowed.

Applications for making advance remittances, before the vessel sails in case of exports or before the exports arrive in case of imports, should be referred to the RBI for prior permission.

A proper record of the remittances allowed and the documents verified should be kept by the authorised dealers for their own internal verification and also for RBI inspection. The authorised dealers should also forward monthly statements in respect of remittances allowed towards freight/charger hire in respect of voyage charters/ad hoc flights, including demurrage, if any to the RBI before the 10th of every month.