Module: General Practice
Q70: Scenario: An AD Category-II entity's internal audit reveals that they sold USD 10,000 to a resident for a "Gift" remittance without obtaining the resident's PAN. What is the regulatory implication?
✅ Correct Answer: B
1. The Rule: The Liberalised Remittance Scheme (LRS) explicitly mandates that the Permanent Account Number (PAN) is mandatory for all transactions under the scheme, irrespective of the amount.
2. Section 10(5): This section of FEMA requires an Authorized Person to obtain a declaration from the customer to ensure the transaction complies with the Act.
3. Recent Tightening: The RBI and Tax authorities (specifically regarding Tax Collected at Source - TCS rules) have made PAN non-negotiable for LRS to track the USD 250,000 limit.
Form 60 is generally not accepted for forex remittances under LRS.
The AD-II has failed its due diligence.
2. Section 10(5): This section of FEMA requires an Authorized Person to obtain a declaration from the customer to ensure the transaction complies with the Act.
3. Recent Tightening: The RBI and Tax authorities (specifically regarding Tax Collected at Source - TCS rules) have made PAN non-negotiable for LRS to track the USD 250,000 limit.
Form 60 is generally not accepted for forex remittances under LRS.
The AD-II has failed its due diligence.