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:
- 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.
- Bank should be satisfied with the bonafides of the transactions and should consider the Financial Action Task Force (FATF) statement before handling the transactions;
- The Invoice should contain a narration that the related pay ment has to be made to the (named) third party;
- 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;
- 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.