Sending or receiving money from India to a foreign country can often be a daunting procedure for both foreign businesses and the people living here in the country. There are various schemes and regulations that state and limit how much money can be remitted or sent and for what purpose. Outward remittance has to be approved under the Foreign Exchange Management Act (FEMA), 1999. This act regulates all transactions involving foreign exchange. This article explains the basic procedure for inward and outward foreign remittance.
Inward Remittance is used for remittance from an Overseas Bank to a Domestic Bank. Inward Remittance can be made against Export of Goods/ Services, for Investment purposes, Donations, Gifts, etc.
There are two things which have to be specially kept in mind and that are as follows:
At the start, the Sender of money which is the Remitter goes to his bank account and submits the request for payment into the receiver’s (Remittee) account.
For remittance the basic and mandatory information required by the Remitter bank of Remittee are:
After completing the transaction the Remitter Bank also provides an acknowledgment of transfer which the Remitter has to submit to the Remittee.
After finalization of the transfer, the Remittee bank holds the amount for Procedural completion and the compliance check. The Remittee then has to contact his or her bank and should have to submit all the required documents asked by the Bank.
The documents that are required by the Bank are as follows:
Bank Generally takes 1-2 working days to complete this whole transaction. If working for the first time, inward remittance to the Bank usually takes 3-4 working days.
The Bank charges are generally nil on inward remittances. However, the Bank charges GST on their fees. So, the GST should have to be paid to the Bank.
Another thing that is observed is that there is a difference in the Exchange rate and the rate at which the bank clears your funds. This is most of the case fall from 50 paise-70 paise per dollar.
So, overall your deduction in inward remittance falls to around Rs 1 per dollar.
An Outward Remittance is a process of transferring money in the form of foreign exchange, by a resident in a particular country, for instance, say India, to a beneficiary who is located outside the other country (except for Nepal and Bhutan) for any purpose and that is been approved under the Foreign Exchange Management Act (FEMA).
According to the Liberalized Remittance Scheme (LRS) made by the Reserve Bank of India (RBI), it is compulsory to quote PAN number for remittance transactions which take place from India to Abroad.
Banks are given a strict warning to report all LRS transactions to RBI, irrespective of Amount unlike earlier, and it is also expected that there would be regular checks to ensure that everyone is complying with the LRS rules every financial year.
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In how many days will an Indian Resident person eligible to receive Charity funds From US Dollar to Indian Rupees .
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