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What is Inward Remittance?
Posted on Wednesday, April 12th, 2023 | By IndusInd Bank
In this global economy, it is common for people to cross populate and work in foreign lands. Many such NRIs who have settled abroad for work, often transfer money back home to support their family and loved ones.
One of the most convenient and popular ways of sending money to India from a foreign country is through Inward Remittance. If you are wondering what is inward remittance and how to remit money to India from your country of residence, read on.
What is Inward Remittance?
Inward remittance is a secure Bank to Bank process to receive money in a domestic account from an international account . In case of India, inward remittance would mean any funds that are transferred to an India account from a foreign bank.
In India, inward remittances are regulated by the RBI as per the Foreign Exchange Management Act (FEMA). This regulation provides guidance on how much can be transferred, and the tax implications on the amount transferred.
How can you Send Money to India?
As per RBI, there are a couple of routes through which inward remittances are processed, namely Transfers via SWIFT , Rupee Drawing Arrangement (RDA) and Money Transfer Service Scheme (MTSS).
Under the RDA route, you can simply transfer money from your foreign bank account to an Indian bank account through wire transfers. This is probably the most common way through which you can receive inward remittances in India. Through this arrangement you can send any amount without restriction. But for trade, inward remittances are capped at Rs. 15 lakhs.
If you are looking for a safe, secure, and quick way of sending money to your loved ones in India, check out IndusInd Bank’s Inward Remittance services right here.
Under the MTSS route, specialised money transfer agencies work with authorised agents in India to facilitate inward remittances only for personal needs . Thus there is a cap of $2,500 & equivalenmt in other currencies per transfer under this route. Also, a maximum of 30 transfers can be made per year through the MTSS arrangement.
Tax implications you should know about
There are no additional tax implications for the sender apart from paying income tax that the sender is required to pay in his/her country of residence.
The receiver also will not be subject to any tax implications provided he/she is a close relative. The term close relative implies, spouse, brother/Sister of the individual or their spouse, any lineal ascendant or descendant of the individual or their spouse, or brother or sister of the sender’s parents as defined the companies act 2013.
However, if the receiver is not a close relative (for example, a friend), any amount beyond Rs. 50,000 will become taxable in the hands of the receiver.
Bottom Line
If you are looking for a safe and secure way to make an inward remittance to India, check out IndusInd Bank’s inward remittance services right here and send money in just 1-2 working daysThrough their vast correspondent bank network you can receive money in any currencies at competitive exchange rates.
Disclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information.
