In terms of Reserve Bank Notification No FERA.7/74-RB dated 1st January 1974, for purpose of transactions in Indian rupees, undernoted categories of persons, firms, companies (including banks), et. resident in Nepal and Bhutan are treated as resident in India--

(a)Indians, Nepalese or Bhutanese resident in Nepal or Bhutan.

b)Offices and branches situated in Nepal or Bhutan of any business carried on by a company or a corporation incorporated or established under any law in force in India. Nepal or Bhutan.

c)Offices and branches situated in Nepal or Bhutan of any business carried on as a partnership firm or otherwise by Indians, Nepalese or Bhutanese.

For purpose of transactions in foreign exchange, however, persons, firms, companies or other organisations resident in Nepal and Bhutan are treated like any other non-resident. No sales of foreign exchange can be made to them except as specifically provided in this Manual.

NOTE: The provisions in the paragraph relate only to payments between persons resident in Indian and persons resident in Nepal and Bhutan. For all other purposes, such as transactions in shares of Indian companies, carrying on any business activity in India, transactions in immovable property in India, etc., persons resident in Nepal and Bhutan are treated like any other non-residents.