Want to send money abroad?- Here are the charges and taxes for outward remittances!

Outward remittance charges and taxes!

Outward remittance charges and taxes

When it comes to sending money abroad, people generally tend to have a lot of doubts and queries. These doubts may be about the charges, taxes, or any restrictions imposed. Keep reading to clear these doubts about outward remittance, as we have cleared them all in this article. 

Related: All you need to know about TCS on foreign remittance

Charges and taxes for outward remittances

  1. There are no such restrictions on the amount of money one is sending abroad. Thus, you do not need to worry about being unable to send the required amount due to the restrictions imposed by the government. You can remit up to USD 2.5 lakhs in a year. This is for a financial year and can be done through multiple transactions for any current or capital account transaction that is allowed. A combination of the two is also permissible. However, NRIs who hold NRO accounts can remit up to USD 10 lakhs per year. These limitations are not imposed upon people having NRE or FCNR accounts.
     
  2. There could be several reasons for sending the amount. It could be for private visits abroad, but Nepal and Bhutan are excluded from the list. One can also state the reason being a gift, donation, maintenance, business travel, attending a conference, special training, or simply for educational or medical expenses. 
     
  3. TCS or Tax Cleared at Source has been applicable since October 1, 2020. It is imposed for outward remittance to foreign lands when you send more than a certain amount. A 5% TCS is imposed on sending more than INR 7 lakhs as outward remittance. However, if the transaction for outward remittance is for repayment of an educational loan, then the TCS imposed would be reduced to 0.5%. However, in case of failure to provide PAN details, a TCS of 10% and 5% would be deducted in the aforementioned cases, respectively. An additional charge besides this is also applicable in the case of an NRI. 
     
  4. You might also be wondering about the cost. Well, the cost depends upon the mode of transaction. Thus, costs for offline and online transactions will vary. These charges typically consist of transfer fees, exchange rate and courier charges, bank fees, and also GST. Banks, as well as transfer agents, charge a combination of a flat fee or a certain percentage of the amount sent, including taxes, in case of an online transaction.
     
  5. The time taken to remit the amount can range from 24 hours or a day to 30 days depending upon the mode of transfer chosen by the individual. 
     
  6. Now there are several documents that you need to submit before you can send money abroad. These include your PAN details, proof of identity and address, and LRS and A2 declaration form. You could also be required to provide other documents like a passport, visa, ticket, or so on based upon the reason behind the remittance. Form 15CA and, in some cases, Form15CB are also required to be paid if the money is for an NRI.
     
  7. Online money transfer through wire transfer or exchange companies is faster and cheaper than offline remits through demand drafts. However, banks, as well as private money transfer companies, provide other online as well as offline remittance facilities that you may avail yourself of if required. You can conveniently use the sites or apps of these companies to complete the transaction digitally. 

Offline money transfer through demand draft or DD, however, is the least preferred option as it is the least convenient and takes a lot of time. Also Beware of these high value cash transactions that can attract an income tax notice

How to send Money to Foreign Countries

When it comes to sending money abroad, people generally tend to have a lot of doubts and queries. These doubts may be about the charges, taxes, or any restrictions imposed. Keep reading to clear these doubts about outward remittance, as we have cleared them all in this article. 

Related: All you need to know about TCS on foreign remittance

Charges and taxes for outward remittances

  1. There are no such restrictions on the amount of money one is sending abroad. Thus, you do not need to worry about being unable to send the required amount due to the restrictions imposed by the government. You can remit up to USD 2.5 lakhs in a year. This is for a financial year and can be done through multiple transactions for any current or capital account transaction that is allowed. A combination of the two is also permissible. However, NRIs who hold NRO accounts can remit up to USD 10 lakhs per year. These limitations are not imposed upon people having NRE or FCNR accounts.
     
  2. There could be several reasons for sending the amount. It could be for private visits abroad, but Nepal and Bhutan are excluded from the list. One can also state the reason being a gift, donation, maintenance, business travel, attending a conference, special training, or simply for educational or medical expenses. 
     
  3. TCS or Tax Cleared at Source has been applicable since October 1, 2020. It is imposed for outward remittance to foreign lands when you send more than a certain amount. A 5% TCS is imposed on sending more than INR 7 lakhs as outward remittance. However, if the transaction for outward remittance is for repayment of an educational loan, then the TCS imposed would be reduced to 0.5%. However, in case of failure to provide PAN details, a TCS of 10% and 5% would be deducted in the aforementioned cases, respectively. An additional charge besides this is also applicable in the case of an NRI. 
     
  4. You might also be wondering about the cost. Well, the cost depends upon the mode of transaction. Thus, costs for offline and online transactions will vary. These charges typically consist of transfer fees, exchange rate and courier charges, bank fees, and also GST. Banks, as well as transfer agents, charge a combination of a flat fee or a certain percentage of the amount sent, including taxes, in case of an online transaction.
     
  5. The time taken to remit the amount can range from 24 hours or a day to 30 days depending upon the mode of transfer chosen by the individual. 
     
  6. Now there are several documents that you need to submit before you can send money abroad. These include your PAN details, proof of identity and address, and LRS and A2 declaration form. You could also be required to provide other documents like a passport, visa, ticket, or so on based upon the reason behind the remittance. Form 15CA and, in some cases, Form15CB are also required to be paid if the money is for an NRI.
     
  7. Online money transfer through wire transfer or exchange companies is faster and cheaper than offline remits through demand drafts. However, banks, as well as private money transfer companies, provide other online as well as offline remittance facilities that you may avail yourself of if required. You can conveniently use the sites or apps of these companies to complete the transaction digitally. 

Offline money transfer through demand draft or DD, however, is the least preferred option as it is the least convenient and takes a lot of time. Also Beware of these high value cash transactions that can attract an income tax notice

How to send Money to Foreign Countries

Expert Article block example

NEWSLETTER

Related Article

Premium Articles