Also, several non-resident Indians (NRIs) have received notices for their transactions during the last one year while having overstayed in India in 2020-21 due to Covid-19. The law enforcement agency, which issued the notices under the Foreign Exchange Management Act (FEMA), is also questioning inflow and outflow of money for crossborder trades in Bitcoin and other cryptocurrencies on overseas crypto exchanges.
According to two persons aware of the ED action, the number of notices may have touched 1,000 in the past two months. “Most of the individuals who have come under attention are from Mumbai, Delhi, Pune, and Bengaluru,” said an ED official.
“Many have used international cards to place football bets with sites, which though legitimate services in those countries, may be considered a violation under FEMA. The re-use of preloaded forex cards is mostly out of carelessness, and may not be a conscious violation,” said another person.
Technically, under the regulations, a preloaded card can be used only by a person to whom the card has been issued. Also, a traveller is expected to return the card to the issuing bank. Many, however, let friends, family members and colleagues travelling abroad use their cards if there is unspent money.
“The real money gaming transactions have attracted the agency’s attention with the receipt of funds in several savings bank accounts… banks these days are quick to flag these off in their suspicious transaction report,” said a FEMA consultant.
While use of foreign exchange for online betting and gambling is construed as violation of foreign currency rules, as far as cryptos go, there is some division of opinion in the legal fraternity, with some under the impression that funds can be remitted under the Reserve Bank of India’s liberalised remittance scheme for buying digital assets abroad.
“But it’s unfortunate if NRIs are pulled up for FEMA violation because they could not fly out of India within the required period. Since they were stuck, there have been a higher number of transactions in their accounts during their stay here. This may have drawn ED’s notice,” said one of the sources.
According to current rules, NRIs staying for 182 days or more have to pay tax on their global income, while NRIs spending 120 days or more (but less than 182 days) have to pay tax on the total income, other than the income from foreign sources, as long as such earnings exceed Rs 15 lakh.