# Schedule I — Transactions for Which Drawal of Foreign Exchange is PROHIBITED

Schedule I to the FEM (Current Account Transactions) Rules, 2000 lists transactions where drawal of foreign exchange is absolutely prohibited. No RBI or Government approval can cure it — these are simply not permitted.

## The Eight Prohibited Transactions

#	Prohibited Transaction
(i)	Remittance out of lottery winnings
(ii)	Remittance of income from racing/riding etc., or any other hobby
(iii)	Remittance for purchase of lottery tickets, banned/prescribed magazines, football pools, sweepstakes etc.
(iv)	Payment of commission on exports made towards equity investment in Joint Ventures / Wholly Owned Subsidiaries abroad of Indian companies
(v)	Remittance of dividend by any company to which the requirement of dividend balancing is applicable
(vi)	Payment of commission on exports under Rupee State Credit Route — except commission up to 10% of invoice value of exports of tea and tobacco
(vii)	Payments related to 'Call Back Services' of telephones
(viii)	Remittance of interest income on funds held in Non-Resident Special Rupee Scheme account

## Memory Hooks

Gambling/vice-flavour entries: lottery (i, iii), racing/hobby income (ii), football pools, sweepstakes (iii).
Cross-border tax/structuring abuse entries: commission on exports to JV/WOS (iv), commission on Rupee State Credit Route (vi).
Specific niche prohibitions: dividend balancing dividends (v), Call Back Services (vii), NRSR interest (viii).

## The Tea & Tobacco Carve-out

Under item (vi), commission on exports under the Rupee State Credit Route is prohibited except commission up to 10% of invoice value on tea and tobacco exports. This is the only quantitative exception inside Schedule I.

Worked example

### Example 1

Example: An Indian winner of a US lottery wishes to remit the prize money to a foreign account.

Per Schedule I item (i), remittance out of lottery winnings is prohibited.
The remittance cannot be made — no RBI approval can permit it.

### Example 2

Example: An Indian tea exporter pays a commission of 8% of invoice value to a foreign agent under the Rupee State Credit Route.

Item (vi) prohibits commissions under this route, but carves out tea and tobacco up to 10% of invoice value.
8% is within the carve-out — permitted.

⚠️ Common exam mistakes

Confusing Schedule I (absolute prohibition) with Schedule II (prior Government approval) or Schedule III (limits/RBI approval). Schedule I has no approval route — these transactions simply cannot be done.
Forgetting the tea-and-tobacco carve-out under item (vi) and treating all Rupee State Credit Route commissions as prohibited.
Treating remittance of lottery tickets and remittance of lottery winnings as the same item — they are listed separately (iii and i) but both prohibited.
Missing item (viii) — NRSR interest income — which is easy to overlook in revision.

Reference: Schedule I — Foreign Exchange Management (Current Account Transactions) Rules, 2000

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FEM (Current Account Transactions) Rules, 2000 — Schedule I (Prohibited Drawal)

Worked example

⚠️ Common exam mistakes