Third Party Payment in Export Import Business

Can I make payment to a third party after imports?  What are the conditions for the same?

(Third party here means party other than who had exported from overseas).

 

Can I receive payment from third party after exports? What are the conditions for the same?

(Third party here means party other than whom I had exported)

 

Few of the circulars of RBI like circular no. 70 and 100 explains about it and makes it clear that you can do payment to a third party for import or export through banks subject to following conditions:

 

  1. Firm irrevocable purchase order / tripartite agreement should be in place. However this require­ment will not be insisted upon in case where documentary evi­dence for circumstances leading to third party payments / name of the third party being men­tioned in the irrevocable order / invoice has been produced.
  2. Bank should be satisfied with the bonafides of the transac­tions and should consider the Fi­nancial Action Task Force (FATF) statement before handling the transactions;
  3. The Invoice should contain a narration that the related pay ment has to be made to the (named) third party;
  4. Bill of Entry should mention the name of the shipper as also the narration that the related pay­ment has to be made to the (named) third party;
  5. Importer should comply with the related extant instructions relat­ing to imports including those on advance payment being made for import of goods.

 

Subject to the above conditions, third party payment either for exports or imports will be valid.

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