Module: | MODULE A: INTERNATIONAL BANKING
Q26: Consider the following statements regarding the aggregation of family limits and tax identification mandates under the Liberalised Remittance Scheme:
Statement 1: Remittances under the scheme can be consolidated by family members, provided each family member complies with the terms of the scheme and has their own Permanent Account Number.
Statement 2: Clubbing of limits by resident family members is permitted for capital account transactions, such as purchasing overseas real estate, even if the property is not jointly owned by the co-investors.
Statement 3: Furnishing a valid Permanent Account Number is mandatory for all transactions under this scheme, regardless of the amount being remitted, to facilitate accurate reporting to the central bank and tax authorities.
Which of the statements given above are incorrect?
Statement 2: Clubbing of limits by resident family members is permitted for capital account transactions, such as purchasing overseas real estate, even if the property is not jointly owned by the co-investors.
Statement 3: Furnishing a valid Permanent Account Number is mandatory for all transactions under this scheme, regardless of the amount being remitted, to facilitate accurate reporting to the central bank and tax authorities.
Which of the statements given above are incorrect?
✅ Correct Answer: B
The correct answer is B. Statement 2 is incorrect.
The scheme permits resident individuals to remit funds abroad for permitted transactions.
Structurally, family members can pool or aggregate their individual limits of 250,000 US Dollars to conduct a larger transaction.
However, the central bank enforces a strict structural constraint for capital account transactions.
If family members club their limits to purchase overseas assets like real estate or shares, the asset must be acquired and held in joint names of all the remitters.
Statement 2 incorrectly claims joint ownership is not required.
Historically, to prevent money laundering and ensure tax compliance, the central bank made the Permanent Account Number mandatory for all transactions irrespective of the value, validating Statement 3. Statement 1 is also correct as individual compliance and tax identification are prerequisites for aggregation.
The scheme permits resident individuals to remit funds abroad for permitted transactions.
Structurally, family members can pool or aggregate their individual limits of 250,000 US Dollars to conduct a larger transaction.
However, the central bank enforces a strict structural constraint for capital account transactions.
If family members club their limits to purchase overseas assets like real estate or shares, the asset must be acquired and held in joint names of all the remitters.
Statement 2 incorrectly claims joint ownership is not required.
Historically, to prevent money laundering and ensure tax compliance, the central bank made the Permanent Account Number mandatory for all transactions irrespective of the value, validating Statement 3. Statement 1 is also correct as individual compliance and tax identification are prerequisites for aggregation.