Should Vietnam and India be granted E-2 Visa Status?

D&A Global Chairman Mark Davies argues the time is ripe to grant E2 and E1 Visa status for Vietnam and Indian citizens.

Before coming to Vietnam I did not realize that the US is Vietnam’s largest export market. Having spent years in India I did know of the massive potential to grow cross-border business between the US and India.

We are seeing a lot of interest in the L1 Visa and E2 Visa from companies in our offices in Ho Chi Minh City, Hanoi, Delhi, Bangalore and Mumbai much of it being Vietnamese and Indian businesses looking to access the US market. Many Vietnamese and Indian firms are looking to increase their trade with the US through E2 and L1.

Vietnam and India both represent a huge opportunity for US businesses to expand and invest. Vietnam is Asia’s fastest growing market and companies want to grow by investing through a business there.

At the moment, obtaining an E2 Visa means a Vietnamese or Indian national has to obtain a second nationality, popularly Grenada and Turkey.

It’s time to put an end to the need for Citizenship by Investment in Vietnam and India and for the US to enter into a treaty with both Vietnam and India allowing for both the E2 and E1 Visa. Such a treaty would allow Vietnamese businesses access to the US and streamline the process by which US businesses can access the lucrative Vietnamese market.


India Tax Changes on Remittances Delayed to October

Sukanya Raman, Associate in our Mumbai office, analyses changes to India’s taxation of remittances.

In February, 2020 the Union Budget had proposed the levy of Tax Collected at Source (TCS) on remittances made under the Liberalised Remittance Scheme (LRS) of the Reserve Bank of India. Although, the Scheme was introduced in the year 2004 with a limit of USD 25,000. This is the first time TCS shall be levied at 5% on remittances over and above certain limit.

TCS was to be applicable for remittances on or after April 1, 2020, as per the budget 2020. However, the provision shall now be effective from October 1, 2020.

In a Financial Year (FY) April- March under the Liberalised Remittance Scheme a resident individual can remit USD 250,000, equivalent to INR 1,90,00,000 with an exchange rate of INR 76.00.

LRS is applicable to resident individuals which also allows minors to remit money to any permissible current or capital account transaction or a combination of both. If remitter is a minor, then their natural guardian must undertake a declaration form. The LRS cannot be availed by corporates, partnership firms, HUF, Trusts etc.

TCS shall be collected at the rate of 5% on remittances aggregating to INR 7,00,000 or more in a financial year. 

Per the RBI guidelines, LRS is permitted for private visits to any country (except Nepal and Bhutan), gift or donation, traveling abroad for employment, emigration, investment abroad, maintenance of close relative abroad, medical treatment abroad, overseas education and Any other current account transaction which is not covered under the definition of the current account in FEMA 1999.

Under the LRS, remittances can be consolidated in respect of close family members. However, it shall be subject to the individual family members complying with the terms and conditions of the LRS.

The remitter is eligible to claim credit for the tax collected (TCS) by the bank while filing their Income Tax returns, if it is remitted to the sender’s own account abroad.  

Based on the data released by RBI, remittance rose by 36% in  FY20 to USD 18.75 billion over the previous high of USD 13.78 billion in FY19.

This blog is for informational purposes only and is not meant as legal advice. For advice on this matter, please contact our team.


India’s Bankruptcy Code: FAQs

Amid a global economic crisis, Neha Mehta answers some frequently asked questions about filing bankruptcy in India.

Q1. When is a Corporate Debtor in default?

A. “Default” is the non-payment of a whole, or a part, of a Corporate Debt when due and payable. Erosion of net worth is not a default under the Code.

Q2. Can a financial institution proceed against a Corporate Debtor under the Code although it may have already taken action under the Securitization and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (SARFAESI)?

A. Section 238 of the Code provides that its provisions shall have effect notwithstanding anything inconsistent in any other law or an instrument under any other law. Further the NCLT, Ahmedabad Bench, in Sarthak Creations Pvt. Ltd. vs Bank of Baroda & Others, held that pendency of proceedings before a Debt Recovery Tribunal (DRT) or invocation of SARFAESI Act, will not bar the commencement of CIRP, in view of the non-obstante provisions of section 238 of the Code.

Q3. What is a COC?

A. The COC (Committee of Creditors) is constituted of a Corporate Debtor’s financial creditors. It is a decision maker in CIRP.

Q4. Can a claim, or proof of claim, be filed, or submitted after the elapse of 14 days from the date of a demand notice?

A. Regulation 12 (2) of the CIRP Regulations provides that a Creditor, who fails to submit a claim with proof within the time stipulated in a public announcement inviting claims, may submit by the 19th day of the Insolvency Commencement Date. This amendment to the CIRP Regulations was made effective from July 2018.

Q5. Are home buyers deemed to ‘Creditors’ under the Code?

A. Section 5(8)(f) of the Code was brought into effect from 6th June, 2018 to provide that an amount raised from a real estate allottee is deemed to be a ‘borrowing’. The logic behind such amendment is that home buyers/allottees advance monies to buyers/allottees advance monies to developers, thereby financing a real estate project, and thus they will fall within the definition of a ‘Financial Creditor’ under the Code.

Q6. Would a moratorium ordered against a Corporate Debtor under the Code affect pending proceedings under section 138 of the Negotiable Instrument Act 1881 (NI Act)?

A. Section 138 of the NI Act is a penal provision empowering the competent court to order imprisonment or a fine. A fine is not a money claim or recovery against a Corporate Debtor, and an order of imprisonment against Directors of a Corporate Debtor does not affect CIRP. Therefore, proceedings under 138 of NI Act therefore will not be affected by a moratorium. Further, no criminal proceeding lie under Section 14 of the Code.

Q7. Does the Code provide for punishment against a Corporate Debtor that commits fraud?

A. Under Section 68 of the Code, if any officer of a Corporate Debtor wilfully conceals its property, he or she would be punishable with imprisonment for 3 to 5 years and a fine extending from INR 100,000 upto 10,000,000.

Q8. Can a Creditor and Corporate Debtor arrive at an ‘out of Court’ settlement and withdraw CIRP?

A. Yes, but with a 90% of COC members voting in favour of the settlement.

Q9. Can an RP reduce a claim amount if a Financial Creditor has claimed usurious or extortionate interest?

A. An RP can revise a claim admitted under Regulation 14 of the CIRP Regulations, subject to the RP collating information warranting the revision. While empowered to do so, the RP should, ideally, intimate the NCLT of the revision.

Q10. Can interest, overdue charges and related charges in respect of a credit facility be treated a part of a claim?

A. Yes.

Q11. In a liquidation of a Corporate Debtor, how will proceeds from the sale of assets charged to a secured creditor be treated?

A. If a secured creditor has participated in the liquidation process, it would relinquish its security interest to the liquidation estate, and receive proceeds from the sale of assets per the waterfall mechanism in Section 53 of the Code.

Q12. Can aggrieved employees, operational creditors appeal against not settlement of any outstanding claims?

A. Any person who is a party to, and aggrieved by, a resolution plan may appeal to the National Company Law Appellate Tribunal (NCLAT) under Section 61(3)(iii) of the Code. The appeal be within the grounds permitted.

Q13. Within what period from the approval of a resolution plan will a resolution applicant have to pay the resolution amount?

A. A payment schedule has to form part of a resolution plan, and on its approval, it binds all stakeholders. Therefore, the resolution plan will stipulate the period within which payment is to be made, and it will bound by it, upon the plan being approved by the COC and the NCLT.

Q14. What is the status of personal guarantors in a CIRP?

A. Notwithstanding the pendency of CIRP, Financial Creditors may invoke personal guarantees for causing payment of the debts of the Corporate Debtor.

Q15. Where would the CIRP process be initiated, if a Corporate Debtor has, for example, a corporate office in Delhi and its registered office in Mumbai?

A. The CIRP will have to be initiated in the jurisdiction of the Corporate Debtor’s registered office.

Q16. What is the application fee payable for initiating CIRP under the Code?

A. It is INR 2000 if the applicant is an Operational Creditor, and INR 25,000 if it is a Financial Creditor.

Disclaimer: This article is provided for informational purposes only and is not legal advice. For more advice on the topic, please contact the author.