There is always a debate on how can we send money outside India i.e., how much funds can be transferred? , Are there any restrictions for remittance outside India?
We have received many queries on how we can transfer the funds, Is there any penalty in case of non- compliance? Being an expert team we decided to write a blog on this topic to guide them with easy methods of transferring money.
While transferring money outside India there are some basic rules and regulations to avoid any legal proceedings. When it comes to outward remittance, always make sure the purpose of transferring money outside India before transferring the money. Also it is necessary to see the list of countries where you cannot send money like Bhutan and Nepal. Always check current rules & regulations, government policies of the respective country in which funds are transferred.
Transferring money outside India has become easy from past few years. Earlier many hardships were faced while transferring money to stop black money. But now things have become favorable and government has also made clear rules so that people don’t get confused while remitting funds to other countries. Now a person can transfer money even without visiting bank or their respective branches where he/she is holding an account.
Before transferring money outside India person has to choose the purpose of transferring money for example-
These are some basic transactions in relation to which money can be transferred to abroad by knowing limits of transfer to their respective subject.
After getting through purpose, a person should be aware of the amount which can be sent. Earlier it was $ 2,00,000 per year and now it has been expanded up to $2,50,000 per year, for this transferor should be aware of all the rules and restrictions.
Process of transferring money abroad can be done with the help of banks and KYC rules set by RBI. Every person who has bank account can easily send money from his/her bank account Number. But if he/she transferring money from other banks than he/she has to provide KYC details as per regulations.
Money can be r\transfer in two ways wire transfer or by foreign currency demand draft. Among these options, wire transfer is faster and counted as secure method for transferring funds from India to other countries.
Funds can be transferred outside India in any freely convertible foreign currency. After this contact bank (note: account should be at least having one year with the same bank) else statements and IT return and all may be required.
Today rules and regulations have been eased from few years. Also exchanging currency is now frequently conducted through legal channels.
Above we have seen on which basis money can be transferred to other country now let us understand some of that points in brief for more knowledge.
A person can invest outside India for business and after a few years his/her earned money can be taken back and arguably it is not chargeable in India.
Money can be transferred for medical treatment by keeping in mind, limit which is up to $ 2,50,000 which doesn’t require documentation except receipts of hospital.
Money can be transferred for educational purpose, maximum amount which can be transferred is $2,50,000 for an academic year and have admission proof, self declaration, passport copy, and form A2 as documentary evidence. If the amount exceeds the specified limit it requires a different procedure.
Money can be transfer for donation purpose to NGOS of other countries for that self declaration and details of receipt and form A2 is required.
A person can remit some amount as a gift to friend, relatives and the maximum limit for the same is $2,50,000 per year not beyond that.
A person can transfer money for relatives as maintenance up to $ 2, 50,000 per year.
Money transfer to other country as miscellaneous expense up to $2,50,000 per year is permissible and also for that application form is required.
It is up to $2,50,000 for a financial year according to the provisions of the FEMA Act. In this Scheme a person can buy property abroad, invest in shares, bonds, mutual funds and other securities. For availing the benefit of this Scheme PAN number is Mandatory.
Selling Property in India and transferring money in their respective account abroad by adjusting capital gain tax which is applicable. Whether the property is owned or received in inheritance. Also some points are needed to be considered like tax in India and then it is transferable (we have written blog for our clients to understand this point better in our blog)
However, there is no particular limit for an individual transaction but it should not exceed $2,50,000 as a whole.
So these were some points which should be taken into consideration while transferring funds outside India so as to ensure proper compliance.