Can I use EEFC Account as an independent contractor receiving Foreign Inward Remittances?

[haideralipunjabi]

Hi

I started working as an independent contractor (Software Developer) last year and I am paid in CAD and I receive Foreign Inward Remittance in my personal account. I recently got my GST Registration and I now need to create a new account in which I will receive all my income. EEFC Account from HDFC looks like a good option to me but I have a few questions.

In the RBI FAQ for EEFC Accounts page the following two things are mentioned:

Q 9. What are the permissible debits into this account?

Ans. i) Payment outside India towards a permissible current account transaction [in accordance with the provisions of the Foreign Exchange Management (Current Account Transactions) Rules, 2000] and permissible capital account transaction [in accordance with the Foreign Exchange Management (Permissible Capital Account Transactions) Regulations, 2000].

ii) Payment in foreign exchange towards cost of goods purchased from a 100 percent Export Oriented Unit or a Unit in (a) Export Processing Zone or (b) Software Technology Park or (c) Electronic Hardware Technology Park

iii) Payment of customs duty in accordance with the provisions of the Foreign Trade Policy of the Central Government for the time being in force.

iv) Trade related loans/advances, extended by an exporter holding such account to his importer customer outside India, subject to compliance with the Foreign Exchange Management (Borrowing and Lending in Foreign Exchange) Regulations, 2000.

v) Payment in foreign exchange to a person resident in India for supply of goods/services including payments for airfare and hotel expenditure.

Q 10. Is there any restriction on withdrawal in rupees of funds held in an EEFC account?

Ans. No, there is no restriction on withdrawal in Rupees of funds held in an EEFC account. However, the amount withdrawn in Rupees shall not be eligible for conversion into foreign currency and for re-credit to the account.

I am confused whether I can use EEFC account to receive my pay and then transfer that to my personal Savings account once it is converted to INR fo my personal use. Under Q10 I think I should be able to, but under Q9 I think I should not.

Also, I make some money from Google Play (people buy apps I make) and those are credited via NEFT to my Savings Account. Since I should be paying GST on these as well, I think I should get this money deposited into my EEFC account as well. Is it allowed to get INR credited into EEFC account?

If these are not possible / allowed, I think I should create a regular current account instead.

 

[imdjay]

Hi

I started working as an independent contractor (Software Developer) last year and I am paid in CAD and I receive Foreign Inward Remittance in my personal account. I recently got my GST Registration and I now need to create a new account in which I will receive all my income. EEFC Account from HDFC looks like a good option to me but I have a few questions.

In the RBI FAQ for EEFC Accounts page the following two things are mentioned:



I am confused whether I can use EEFC account to receive my pay and then transfer that to my personal Savings account once it is converted to INR fo my personal use. Under Q10 I think I should be able to, but under Q9 I think I should not.

Also, I make some money from Google Play (people buy apps I make) and those are credited via NEFT to my Savings Account. Since I should be paying GST on these as well, I think I should get this money deposited into my EEFC account as well. Is it allowed to get INR credited into EEFC account?

If these are not possible / allowed, I think I should create a regular current account instead.

Chatgpt:

Your understanding is mostly correct, but let me clarify:

1. Receiving Salary in EEFC Account:
   
   • Yes, you can receive your software development payments in CAD in an EEFC account.
   • As per Q10, you can freely withdraw the converted INR amount to your personal savings account for personal use.
   • Q9 specifies permissible debits in foreign currency, which doesn't restrict INR withdrawals.
2. Google Play Earnings (NEFT in INR) into EEFC Account:
   
   • No, INR credits are not allowed in an EEFC account. EEFC accounts are for holding foreign exchange only, and RBI does not permit INR deposits into them.
   • You should continue receiving Google Play NEFT payments in your savings account (or a new GST-registered current account).

What Should You Do?​

• EEFC Account: Use it to receive CAD payments and convert INR when needed.
• Regular Current Account (GST-Registered): Use it for domestic transactions, including Google Play earnings and GST payments.

If GST compliance is your priority, a regular current account might be better for easier tracking.

 

[hender]

Hi

I started working as an independent contractor (Software Developer) last year and I am paid in CAD and I receive Foreign Inward Remittance in my personal account. I recently got my GST Registration and I now need to create a new account in which I will receive all my income. EEFC Account from HDFC looks like a good option to me but I have a few questions.

In the RBI FAQ for EEFC Accounts page the following two things are mentioned:



I am confused whether I can use EEFC account to receive my pay and then transfer that to my personal Savings account once it is converted to INR fo my personal use. Under Q10 I think I should be able to, but under Q9 I think I should not.

Also, I make some money from Google Play (people buy apps I make) and those are credited via NEFT to my Savings Account. Since I should be paying GST on these as well, I think I should get this money deposited into my EEFC account as well. Is it allowed to get INR credited into EEFC account?

If these are not possible / allowed, I think I should create a regular current account instead.

Taxation and other points better discuss with a CA, having experience in such type of cases.
Than have a word with specialize people in bank who take care such things.
Taking some time initally is better than inconvenience later.

I would have helped you, but no longer working in the organisation where I used to get, SWIFT payment from overseas clients, and was in sync with Expert of International Payments and taxation. Now not.

 

[haideralipunjabi]

Chatgpt:

Your understanding is mostly correct, but let me clarify:

1. Receiving Salary in EEFC Account:
   • Yes, you can receive your software development payments in CAD in an EEFC account.
   • As per Q10, you can freely withdraw the converted INR amount to your personal savings account for personal use.
   • Q9 specifies permissible debits in foreign currency, which doesn't restrict INR withdrawals.
2. Google Play Earnings (NEFT in INR) into EEFC Account:
   • No, INR credits are not allowed in an EEFC account. EEFC accounts are for holding foreign exchange only, and RBI does not permit INR deposits into them.
   • You should continue receiving Google Play NEFT payments in your savings account (or a new GST-registered current account).

What Should You Do?​

• EEFC Account: Use it to receive CAD payments and convert INR when needed.
• Regular Current Account (GST-Registered): Use it for domestic transactions, including Google Play earnings and GST payments.

If GST compliance is your priority, a regular current account might be better for easier tracking.

Thank you. I think creating a regular current account is what I need. Even though my earnings in INR are minimum at the moment, I do plan to increase them as well.

 

[imdjay]

Thank you. I think creating a regular current account is what I need. Even though my earnings in INR are minimum at the moment, I do plan to increase them as well.

For Google Play store earnings, I use a personal savings account instead of a current one. I think Google levies a less service charge- 5% for personal accounts, also the policies are easier to follow.