Profits obtained by a foreign firm's branch in India will be recorded on which side and in which account of balance of payment.

Debit side of current account

The correct answer is option (2) : Debit side of current account

Current Account: This part of the balance of payments records transactions involving the export and import of goods and services, as well as income receipts and payments, including profits, dividends, and interest.

Debit Side: When profits are sent out of the country (from India to the foreign firm's home country), it represents an outflow of funds, which is recorded as a debit in the current account.

Thus, the transaction is recorded on the debit side of the current account because it involves an outflow of income from India.

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Answer is as per NTA.