Sale to Foreigner deposited in FC or NonFC Bank?

Example

One of the NGOs is making handicraft items and exporting it out of India. Also, sometime foreigner visits their campus and buy such articles. Where should we deposit the sale proceeds of such transactions ? FC Bank or NonFC Bank?

Solution

So, when sales made to foreigners or exporting to foreign countries, such is purely a commercial transaction. Here there is no charitable transaction. As per the Explanation 3 of Section 2(1)(h) of FCRA, 2010 while defining “Foreign Contribution”, this type of commercial transactions are clearly excluded.

“Explanation 3 ‒ Any amount received, by an person from any foreign source in India, by way of fee (including fees charged by an educational institution in India from foreign student) or towards cost in lieu of goods or services rendered by such person in the ordinary course of his business, trade or commerce whether within India or outside India or any contribution received from an agent or a foreign source towards such fee or cost shall be excluded from the definition of foreign contribution within the meaning of this clause.”

Thus whatever received from sale of product to foreigner must be treated as revenue under the NonFC Books and deposited in NonFC Bank Account