What is Foreign Remittance? and How to remit funds outside India?

What is Foreign Remittance? and How to Transfer (Remit) funds outside India by Residents of India and Non-Resident of India?

In simple terms, Foreign remittance means a transfer of funds outside India by the Indian Bank to the Foreign Bank.

There are two types of Foreign remittances:

1. Foreign Inward Remittance
2. Foreign Outward Remittance

Overview:

Outward Remittance by Resident of India:

• Under Liberalised Remittance Scheme (LRS) –> Up to $2.50 Lakhs (Quarter Million) –> During the Financial Year
• Filing of Form 15CA / 15CB –> Not Required
• The customer needs to pay Applicable Bank Charges on every remittance made.

Outward Remittance by Non- Resident of India from NRO Account:

• LRS Scheme is not available to Non Resident of India.
  
• Form 15CA / 15CB is Required as mentioned below:
  • When remittance is not chargeable to tax –> Form 15CA Part D
  • When remittance is chargeable to tax:
    • Remittance up to Rs. 5 Lakhs –> Form 15CA Part A
    • Remittance is more than Rs. 5 Lakhs during the year:
    • Form 15CA Part B along with an order / certificate u/s 195(2) / 195(3) / 197
    • Form 15CA Part C along with Form 15CB from the Chartered Accountant.
      
• The customer needs to pay Applicable Bank Charges on every remittance made.

Other Important Points:

1. LRS scheme is not applicable to Non-residents (Already Discussed)
2. You cannot transfer funds from your saving account to NRO Account.
3. Interest earned in the NRO account is Taxable in India.
4. The maximum Limit under LRS is $2.5 Lakhs (Quarter Million) during the Financial Year. (Already Discussed) Maximum Account which can be Remit from an NRO Account in a Financial Year is $1 Million.

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