With international money transfer made easy, it is important to know about how secure and regulated transferring of your funds abroad is, whether sending money for family or paying college tuition. It is called outward remittance or international fund transfer.
In this blog you will learn more about the process, rules, and considerations when it comes to outward remittance.
International Fund Transfer And Its Importance
All laws governing outward and inward remittances in India fall under the Foreign Exchange Management Act (FEMA). This act ensures that money sent abroad is used for legal purposes and helps stabilise the local currency markets. Let’s delve deeper into the remittance process and the RBI guidelines governing it.
What Is Outward Remittance or International Fund Transfer?
This remittance involves transferring money from your home country to a foreign destination, which can be for reasons such as sending support to family members abroad, investing in foreign properties, funding education, etc., but with certain guidelines to ensure legal and secure transfers. RBI Guidelines For International Fund Transfer From India: According To RBI Guidelines Under FEMA, all Indian residents are free to remit money abroad without any specific permission, through the Liberalized Remittance Scheme (LRS). This is where international fund transfer from India comes into play. RBI has issued guidelines that allow all Indian residents to send money abroad freely without seeking special permissions. However, several key factors and considerations come into play when conducting an outward remittance.
Here is a beginner’s manual for you to gain knowledge about international currency transfer.
When To Choose International Fund Transfer
People transfer money out of India for different reasons. Here are several examples:
- To study abroad
- Travel or vacation
- Medical treatment abroad
- Overseas investments
- Buying property abroad
- Supporting a family member living abroad
- Paying overseas bills
- Employment abroad
Factors To Keep In Mind Before International Fund Transfer
Eligible Purposes
When sending money abroad, the RBI (Reserve Bank of India) asks you to explain why you’re doing it. You cannot transfer the money if your reason does not fit under one of the specified categories. The allowed reasons under the Liberalized Remittance Scheme (LRS) are:
- Education Expenses
- Employment-related payments
- Medical expenses
- Buying property in a foreign country
- Business travel
However, there are things you can’t use this scheme for. For example, you can’t use it to buy lottery tickets, banned magazines, or any items listed in Schedule 2 of the Foreign Exchange Management Rule.
Transaction Limit for International Fund Transfer
The RBI has set a transaction limit under the LRS. Currently, the limit stands at $250,000 per financial year per person. This means an individual can send up to $250,000 annually abroad for eligible purposes without seeking additional approvals.
Authorised Institutions
International fund transfer should be processed through authorised banks or financial institutions. Ensure that you choose a reputable institution to facilitate your transaction. With Unipay Forex, you can send funds abroad with zero transaction fees.
RBI Mandated Requirements For International Fund Transfer
RBI mandates that individuals making an outward remittance must declare the purpose of the transaction. It’s crucial to ensure that your purpose aligns with the approved categories under LRS to avoid any legal issues.
Money Transfer Methods
Depending on the institution and destination, numerous methods for outward remittances can be employed, such as wire transfers, online banking, or mobile apps. Choose the approach that best meets your requirements and preferences.
Intermediary Bank Charges
Be aware of any intermediary bank charges that may apply during the transfer. These charges can impact the total amount received by the beneficiary.
Beneficiary Account Details
Ensure you have accurate and complete beneficiary account details to avoid delays or complications in the transfer process. Double-check account numbers, names, and banking information.
Additional Considerations For Outward Remittance
Exchange Rates
Pay close attention to exchange rates when planning your outward remittance. Exchange rates can fluctuate, affecting the amount your beneficiary will receive in the foreign currency. Consider using Forex services offering competitive rates or consult a financial advisor for guidance.
Documentation and Compliance
Ensure that you have all the necessary documentation in place to support your outward remittance. This may include proof of the purpose of the transaction, such as admission letters for education-related remittances or property purchase agreements for real estate transactions. Compliance with these requirements is essential to avoid delays and legal issues.
Timely Planning
Plan your outward remittance well in advance, especially related to time-sensitive events like tuition fees or property purchases. This allows you to account for any processing times and potential delays in the transfer.
Tax Implications
Understand the tax implications of outward remittances. Depending on your country’s tax laws, you may need to report certain transactions or pay taxes on income used for remittances. Consult with Unipay Forex professionals for guidance.
Keeping Records
Maintain detailed records of your outward remittance transactions, including receipts, confirmation notices, and any communication with your bank or financial institution. These records can be invaluable in case of any disputes or inquiries.
In Conclusion
International fund transfer is a convenient and secure way to send money abroad for various purposes. However, it’s essential to be aware of the regulations, transaction limits, and eligible purposes set by the RBI under the Liberalized Remittance Scheme. By following these guidelines and choosing a reliable financial firm like Unipay Forex that provides Forex Services In India, you can ensure a smooth and compliant outward remittance experience, benefiting both you and your recipients.
