When the remitter is a company, firm, LLP or other non-individual PRI, Schedule III prescribes specific ceilings for each head of remittance. Within the ceiling → no RBI approval; above the ceiling → RBI approval is required.
## 1. Consultancy charges from abroad
Sector of project
Limit (no approval up to)
Infrastructure projects
Up to US $1 Crore (US $10 million) per project
Other projects
Up to US $10 Lakh (US $1 million) per project
Above these limits → RBI approval.
## 2. Donations by a Corporate
Permitted donations cover:
A Chair in an educational institute
An educational institute
Activities related to the donor's business
NOT to investment funds
### Limit (no approval — LOWER of):
1% of foreign exchange earnings during preceding 3 FYs (average), OR
US $5,00,000 (US $5 lakh)
Exceeding → RBI approval.
## 3. Commission on Sale of Plots in India
When an Indian seller pays commission to a foreign agent for sale of plots in India:
### Limit (no approval — LOWER of):
5% of inward remittance, OR
US $25,000
Exceeding → RBI approval.
## 4. Pre-Incorporation Expenses
Reimbursement of pre-incorporation expenses incurred abroad by a foreign promoter:
### Limit (no approval — HIGHER of):
5% of inward remittance, OR
US $1,00,000 (US $100,000)
Above → RBI approval.
## Quick reference table
Remittance head
Ceiling (no approval)
Above ceiling
Consultancy — Infrastructure
US $1 crore
RBI approval
Consultancy — Others
US $10 lakh
RBI approval
Corporate donation
LOWER of 1% of avg 3-yr forex earnings or US $5 lakh
RBI approval
Commission on plot sale
LOWER of 5% of inward remittance or US $25,000
RBI approval
Pre-incorporation expense reimbursement
HIGHER of 5% of inward remittance or US $1 lakh
RBI approval
## Tip on "higher of" vs "lower of"
Asymmetry: corporate donation and plot-sale commission use the LOWER of two limits (restrictive); pre-incorporation expense uses the HIGHER of the two (liberal — to support new business). Memorise this difference.
Worked example
### Example 1
Example 1 — Consultancy for highway project
ABC Infra Ltd hires a German consultant for US $80 lakh for a national highway.
Answer: Highway = infrastructure → limit US $1 crore. US $80 lakh < US $1 crore → no RBI approval.
### Example 2
Example 2 — Donation by manufacturing company
XYZ Ltd's average 3-yr forex earnings = US $20 million. 1% = US $2 lakh. It wishes to donate US $4 lakh to a US university for a chair.
Answer: Limit = LOWER of US $2 lakh and US $5 lakh = US $2 lakh. Proposed US $4 lakh > limit → RBI approval required.
### Example 3
Example 3 — Commission on plot sale
A developer receives US $10 lakh inward remittance for a Mumbai plot and pays 4% commission (US $40,000) to a foreign agent.
Answer: Limit = LOWER of 5% (US $50,000) and US $25,000 = US $25,000. US $40,000 > US $25,000 → RBI approval required.
### Example 4
Example 4 — Pre-incorporation expense reimbursement
US promoter incurred US $1.5 lakh pre-incorporation expenses; Indian subsidiary received US $20 lakh inward capital.
Answer: Limit = HIGHER of 5% of US $20 lakh (= US $1 lakh) and US $1 lakh = US $1 lakh. US $1.5 lakh > US $1 lakh → RBI approval required.
⚠️ Common exam mistakes
Reversing 'lower of' and 'higher of' between donations, plot-sale commission, and pre-incorporation expenses.
Treating the consultancy infrastructure limit (US $1 crore) as applicable to all consultancies — non-infrastructure has only US $10 lakh.
Using current year forex earnings instead of average of preceding 3 years for the donation 1% computation.
Forgetting corporate donations cannot be to investment funds — only educational/business-related causes.
Bare-Act text Schedule III (Rule 5) · Foreign Exchange Management (Current Account Transactions) Rules, 2000 · click to expand
Drawal of foreign exchange by an entity in India for the following purposes is permitted up to specified limits, beyond which prior approval of the Reserve Bank is required: (i) Donations exceeding 1% of the foreign exchange earnings during the previous three financial years or US $5,000,000, whichever is less, by a corporate, for creation of Chairs in reputed educational institutes, to funds promoted by educational institutes, to a technical institution or body or association in the field of activity of the donor company; (ii) Commission to agents abroad for sale of residential flats or commercial plots in India exceeding US $25,000 or 5% of the inward remittance, whichever is less; (iii) Remittances exceeding US $10,000,000 per project for any consultancy services in respect of infrastructure projects and US $1,000,000 per project for other consultancy services procured from outside India; (iv) Remittances exceeding 5% of investment brought into India or US $100,000 whichever is higher, by an entity in India by way of reimbursement of pre-incorporation expenses.