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Sending money to India from abroad: A guide for NRIs
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Ways to transfer money to India
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Key considerations and tax implications of sending money to India
The below content is purely for informational purposes and is not intended to constitute advisory of any kind. Please note, these are in-depth articles which are best viewed on large screen devices like laptops, desktops and tablets. The position reflected in this article has been updated as of February 15, 2024.
Foreign nationals, including Non-Resident Indians (NRIs)/Persons of Indian Origin (PIOs)/Overseas Citizens of India (OCIs), send money to India for various purposes, such as to their family or self-transfers to their own NRI bank accounts. The transfer of money from any foreign country to India is known as inward remittance. This article explores various options and key considerations for sending money to India.
Guidelines for inward remittances
In India, all inward remittances are regulated by the Reserve Bank of India (RBI) under the Foreign Exchange Management Act (FEMA). As per prevailing FEMA guidelines, you can send money to India for defined purposes only. Irrespective of the value of the transfer, each remittance should be accompanied by a purpose of remittance/transfer, such as:
- Financial support of family members;
- Medical care;
- Education;
- Travel expenses;
- Investments;
- Gifts, etc.
The RBI prohibits inward remittances for the following purposes:
- Online gaming;
- Other speculative or illegal activities.
Additionally, the beneficiary receiving inward remittance should seek a Foreign Inward Remittance Certificate/Statement (FIRC/FIRS) from beneficiary bank or converting/processing bank in India. It serves as proof of receipt and is helpful in establishing the purpose of inward remittance along with complete transaction details including remitter name & address, while filing your Income Tax Returns (ITR) in India. Banks will only issue FIRC/FIRS at the beneficiary's request and a No Objection Certificate (NOC) will be provided by the converting/processing bank.
Did you know?
FIRC is issued for inward remittances wherein the purpose is Foreign Direct Investment (FDI), returns on Overseas Direct Investments (ODI) and Foreign Institution Investment (FII), on the realisation of export of goods or services (advance for export and export proceeds). On the other hand, FIRS is issued for inward remittances meant for gifts, family expenses and other similar purposes.
Transferring funds to India from abroad
You can send money to India through various options as outlined below:
Online money transfer services: Various banks and fintech players provide digital platforms that allow you to transfer funds across geographies instantly. These funds can be transferred to any recipient bank providing such services. For instance, NRIs can use ICICI Bank’s Money2India to send money to India in an easy, secure and cost-effective manner. Account holders of all banks can use this digital platform.
Wire transfers
Wire transfers through branch: In addition to online transfers, you can explore sending money to India by visiting any overseas bank branch.
Wire transfers online: You can initiate the request online/net banking. You can submit relevant documentation, lock in exchange rates and track the transaction status online. For a convenient online solution, you can use ICICI Bank's Smart Wire transfer service. Smart Wire expedites remittance processing, enabling beneficiaries to access their funds with minimal waiting time. Please note there is no limit on the amount of money you can send via wire transfers.
Cross-border transaction under Unified Payments Interface (UPI): The international arm of the National Payments Corporation of India (NPCI), NPCI International Payments Limited (NIPL), has now developed the capability for international payments using cross-border UPI. NRIs can use this facility to send money to India. This service is currently available in the India-Singapore corridor and is expected to be extended to additional countries. You can send money to any bank account in India or UPI handle through a local remittance service provider or bank.
International Money Order (IMO): International money order is a reliable and accessible service offered by the Indian postal network for sending or receiving money across borders. The recipient can either deposit the money order into their bank account or redeem it at various check-cashing facilities. Funds may be available to the recipient on the same day, depending on the post office schedule.
Foreign Currency Cheque (FCC)/Foreign Currency Demand Draft (FCDD): You can send an FCC/FCDD from your overseas bank to the beneficiary in India. The beneficiary can then present the FCC/FCDD to their bank and receive the remittance or have it deposited into their account. When the recipient encashes an FCDD, they may incur charges that vary from bank to bank based on the amount of funds transferred.
Documents required
For an inward remittance, the remitter must provide the following details to their overseas bank or the authorised service provider:
- Remitter's name and address;
- Beneficiary’s name;
- Beneficiary’s bank account details, including the Society for Worldwide Interbank Financial Telecommunication (SWIFT) code;
- Purpose and amount of remittance
Upon receiving the funds in India, authorised dealers (bank) convert them to Indian rupees at the prevailing exchange rate and deposits or transfers the inward remittance amount into the beneficiary's bank account in India. Before you send money to India through any of the options outlined above, you should check the charges involved (exchange rate conversion and/or transaction fee), timelines for receipt of credit and transaction limits.
Please note, documents requirement and transaction charges may vary from bank to bank.
Channels of receiving inward remittances
Money Transfer Service Scheme (MTSS): Under this arrangement, only personal remittances are permitted, such as for family support or to cover expenses while visiting India. An Indian individual beneficiary can receive 30 remittances under MTSS per calendar year (January-December) with a maximum of USD 2,500 per transfer. MTSS is mainly offered by fintechs. No outward remittance from India is permissible under MTSS. Donations/contributions to charitable institutions/trusts, trade related remittances, remittance towards purchase of property, investments or credit to Non-Resident External (NRE) accounts shall not be made through this arrangement.
Rupee Drawing Arrangement (RDA): Several non-banking entities operate under RDA. Under this arrangement, there is no limit on the inward remittance amount for personal transfers. However, cash disbursements are not allowed and remittances have to be mandatorily credited to the beneficiary’s bank account only. Further, trade transactions (e.g., a company in the United States paying a company in India) are only permitted up to ₹15 lakh per transaction.
Correspondent bank: Traditionally, banks and other financial institutions rely heavily on SWIFT to send and receive payments internationally. In India, banks partner with foreign correspondent banks to handle transfer requests via the SWIFT messaging system. These transactions take anywhere from one to five days to be credited to the beneficiary’s bank account. The associated fees vary depending on the remittance amount and the originating country.
The choice between two frameworks for inward remittances in India depends on the authorised dealer (bank) and not the individual recipient. Please check with your remittance service provider before remitting the money.
Understanding tax implications on remittance to India
As an NRI, you are not subject to taxation on the money you send to India. However, sending money to India from overseas will have tax implications for the recipient who is a resident of India. This will depend on the purpose of the remittance.
- If money is received for family maintenance or supporting family members (for education, medical care, etc.), then it is not taxable.
- However, any gift to a person who is not a relative* will be taxable for the recipient if the aggregate amount is greater than ₹50,000 as per Section 56(2)(x) of the Income Tax Act, 1961.
*Section 2(77) of the Companies Act, 2013 defines relative as your parents (including stepfather and stepmother), your son and his wife, your daughter and her husband and your siblings (including stepbrother and stepsister).
To know more about gift and inheritance rules for an NRI, click here.
Please note, standard Goods and Services Tax (GST) may be applicable on the service charges payable on the remittance. You should consult a tax expert for more details.
Conclusion
NRIs/PIOs/OCIs including Foreign Nationals, can send money to India through multiple options such as online money transfer services, wire transfers, cross-border UPI, IMO, and FCC/FCDD. You should choose an option that best suits your needs based on speed, cost, and convenience. You must comply with FEMA guidelines and provide all the necessary details to your authorised dealer (bank). Sending money to India will have tax implications for the resident recipient. You should get in touch with your bank for more information.
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Frequently Asked Questions
What types of remittances cannot be received under MTSS?
Under MTSS, you are not allowed to send money to India for*:
- Donations/contributions to charitable institutions/trusts
- Trade-related remittances;
- Remittance towards purchase of property, investments, or credit to NRE accounts
*RBI FAQs
Is cash payment allowed for the beneficiary through MTSS?
Under MTSS, beneficiaries in India can receive up to ₹50,000 (per transaction) as cash payments. Pre-paid Instruments (PPIs) issued by banks (such as e-wallets and pre-paid cards) can also receive payments within this limit. Amounts beyond this limit must be paid through cheque, demand draft, or directly into the beneficiary's bank account.
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Disclaimer:
The contents of this article/infographic are meant solely for informational purposes. The contents are generic in nature and are not intended to serve as a substitute for specific advice on any matter whatsoever. The information is subject to updation, completion and verification and the applicable norms may keep changing materially from time to time. This information is also not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to applicable laws or would subject ICICI Bank Limited/its affiliates to any licensing or registration requirements. ICICI Bank Limited/its affiliates and their representatives shall not be liable for any direct or indirect losses or liability incurred arising in connection with any decision taken by any person on the basis of this content. Please conduct your own due diligence and consult your financial advisor before making any decision. Terms and conditions of ICICI Bank and third parties apply. ICICI Bank is not responsible for third party services. Nothing contained herein shall constitute or be deemed to constitute an advice, invitation or solicitation to avail any products/services of third parties.
