Schedule III explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Paragraph 2 of Schedule III lists four kinds of remittance by persons other than individuals that need the prior approval of the Reserve Bank once a stated threshold is crossed: donations, commission to agents abroad on sale of property in India, consultancy services, and reimbursement of pre-incorporation expenses. Rules 6 and 7 add the EEFC account and credit card exceptions. A new company planning its first foreign payments can discuss the set-up with our Indian subsidiary team.
Under paragraph 2 of Schedule III to the Foreign Exchange Management (Current Account Transactions) Rules, 2000, a company, firm or other person who is not an individual needs the prior approval of the Reserve Bank for donations above one per cent of foreign exchange earnings of the previous three financial years or USD 5,000,000, whichever is less, agent commission above USD 25,000 or five percent of the inward remittance, whichever is more, consultancy above stated per-project amounts, and pre-incorporation expense reimbursement above five per cent of investment brought in or USD 100,000, whichever is higher.
The text and its source
The Rules are made by the Central Government under section 5 and sub-section (1) and clause (a) of sub-section (2) of section 46 of the Foreign Exchange Management Act, 1999; see section 5 and section 46.
The text used is the one reproduced by the Reserve Bank in Annex 1 of its Master Direction - Other Remittance Facilities, updated as on May 06, 2026, with Schedule III printed as "Notified by GOI Notification No. G.S.R 426(E) dated May 26, 2015". Paragraph 4 of the Master Direction (same date) restates the four heads as directions to authorised dealers and is read beside the Rules below. Later amendments and circulars should be checked on the Reserve Bank and Gazette sites.
Paragraph 2 of Schedule III: four remittances
Paragraph 2 is headed "Facilities for persons other than individual" and says that the listed remittances "shall require prior approval of the Reserve Bank of India". The thresholds are:
| Head | What is remitted | Threshold above which approval is required (as printed) |
|---|---|---|
| (i) Donations | For creation of Chairs in reputed educational institutes; contribution to funds (not being an investment fund) promoted by educational institutes; contribution to a technical institution or body or association in the field of activity of the donor Company | Exceeding one per cent of foreign exchange earnings during the previous three financial years or USD 5,000,000, whichever is less |
| (ii) Commission | Commission, per transaction, to agents abroad for sale of residential flats or commercial plots in India | Exceeding USD 25,000 or five percent of the inward remittance, whichever is more |
| (iii) Consultancy | Consultancy services procured from outside India | Exceeding USD 10,000,000 per project for infrastructure projects, and USD 1,000,000 per project for other consultancy services |
| (iv) Pre-incorporation expenses | Reimbursement of pre-incorporation expenses by an entity in India | Exceeding five per cent of investment brought into India or USD 100,000, whichever is higher |
For head (iii), the Explanation says "infrastructure" means as defined in the explanation to paragraph 1(iv)(A)(a) of Schedule I of "FEMA Notification 3/2000-RB, dated the May 3, 2000". The Annex does not set that definition out. The Master Direction adds "as amended from time to time" after it, so the definition may have changed since; the text before us is silent on what it now says.
What the Master Direction adds
Paragraph 4 of the Master Direction - Other Remittance Facilities, updated as on May 06, 2026, covers the same four heads as directions to authorised dealers. It says in paragraph 4.1 that "general permission is available" to persons other than individuals to remit donations up to the one per cent or USD 5,000,000 figure for the three listed purposes, and that any remittance in excess needs the prior approval of the Reserve Bank. For purposes other than the three, applications may be forwarded to the Chief General Manager, Reserve Bank of India, Central Office, Foreign Exchange Department, Foreign Investments Division (EPD), Mumbai, with the details of foreign exchange earnings during the last three years, a brief background of the company's activities, the purpose of the donation and the likely benefits to the corporate.
Paragraphs 4.2, 4.3 and 4.4 repeat the commission, consultancy and pre-incorporation thresholds in the same figures as the Rules. So for these four heads the Rules and the Master Direction print the same numbers; the Master Direction is the one that tells the bank what to do with an application.
Rules 6 and 7
Rule 6(1) says nothing in rule 4 or rule 5 applies to drawal out of funds held in the remitter's Exchange Earners' Foreign Currency (EEFC) account. Rule 6(2) continues the restrictions where the drawal from the EEFC account is for the purposes specified "in items 10 and 11 of Schedule II, or item 3, 4, 11, 16 & 17 of Schedule III, as the case may be".
A word of caution. These cross-references do not match the Schedules as printed in the Annex: item 10 of Schedule II is printed "Omitted", and Schedule III in the Annex has no items numbered 3, 4, 11, 16 or 17 (paragraph 1 purposes carry no numbers, and paragraph 2 is lettered in Roman numerals (i) to (iv)). We therefore state the rule as printed and do not guess which purposes it means. For the central government side see the article on Schedule II.
Rule 7 is headed "Use of International Credit Card while outside India" and says nothing in rule 5 applies to use of an International Credit Card for making payment by a person towards meeting expenses while on a visit outside India. Note that it speaks of rule 5 only: it does not lift rule 3 (prohibited transactions) or rule 4 (Government approval).
How the procedure runs
Paragraph 3 of Schedule III says the procedure for drawal or remittance under Schedule III is the same as that applicable for remitting any amount under the Liberalised Remittance Scheme. The Rules thus do not set out a separate form for companies. In the Master Direction, paragraph 6.4 says that for payments other than imports and remittances covering intermediary trade transactions the applicant fills Form A2, and paragraph 6.5 says authorised dealers obtain Form A2 in physical or digital form for all cross-border remittances. Read our article on travel cards and Form A2 for those paragraphs.
Example
Greenfield Machines Pvt Ltd is newly incorporated with an inward investment from its foreign parent. The founders had spent money abroad before incorporation on legal and market-study work, and now the company wants to reimburse the parent. Head (iv) says that reimbursement above five per cent of the investment brought into India, or USD 100,000, whichever is higher, needs the prior approval of the Reserve Bank. If the investment brought in is USD 4,000,000, five per cent is USD 200,000, which is higher than USD 100,000, so USD 200,000 is the line in this example. A reimbursement of USD 150,000 would be below the line that the text prints; one of USD 250,000 would be above it. A reimbursement above the line should be prepared as an application to the Reserve Bank with the supporting vouchers.
If the same company engaged a foreign consultant for a manufacturing project that is not infrastructure, head (iii) prints USD 1,000,000 per project as the level for approval.
Common mistakes
- Using the wrong comparison word: the donation test is "whichever is less", agent commission uses "whichever is more", and pre-incorporation expenses use "whichever is higher".
- Applying the one per cent figure to the wrong years: it is foreign exchange earnings during the previous three financial years.
- Treating the consultancy figures as annual. They are printed "per project".
- Assuming rule 7 lifts every restriction on credit card use. It lifts rule 5 only.
Need help with pre-incorporation expenses or a first remittance?
A new Indian subsidiary often meets this rule on its first remittance. Our Indian subsidiary team can work out which head applies, prepare the Reserve Bank application and sequence it with your incorporation steps.
Key takeaways
- Four remittances by persons other than individuals need Reserve Bank approval above the thresholds printed in paragraph 2 of Schedule III.
- The comparison word differs by head: less, more, per project, higher.
- The Master Direction repeats the commission, consultancy and pre-incorporation figures and gives an address for donation applications for other purposes.
- Rule 6(2) keeps restrictions for EEFC drawals but its item numbers do not match the Schedules printed.
- Rule 7 lifts rule 5 only for international credit card use while on a visit outside India.
Read next
- Remittance limit for individuals: rule 5 and Schedule III
- Travel cards and Form A2: Master Direction - Other Remittance Facilities
- Remittances needing Central Government approval: rule 4 and Schedule II
- Restricted transactions under FEMA
Disclaimer: Based on the rules, regulations and Reserve Bank Master Directions under the Foreign Exchange Management Act, 1999 that this article names, each in the version and up to the date stated in the article, as consulted on 2 October 2026. Some texts are third-party copies or older prints and are identified as such. Limits, forms and time limits change by amendment and circular; later changes should be checked on the Reserve Bank and Gazette sites. This article is general information, not legal advice; check the official text before acting.