Inward and Outward Remittances

Inward and Outward Remittances

What is Inward Remittance?

Foreign inward remittance refers to the inflow of money into the home account from abroad. These transactions are done electronically on the EDPMS platform and an e-Foreign Inward Remittance Certificate (eFIRC) and are governed by the Foreign Exchange Management Act (FEMA).

What are the compliances for inward remittance?

The expansion of global trade and the Indian populace abroad has led to a massive inflow of foreign remittance. In India, these inflows should conform to the guidelines set by the RBI and FEMA.

What are the routes of inward remittance?

There are various routes of inward remittances available. Two such routes which are commonly allowed include the following:

• Bank transfer: This facility allows you to transfer money from one bank account to another. You can transfer money at reduced or no transaction charges and get the benefit of attractive interest rates. Bank transfers, however, might be available only for limited currencies.
• Online wire transfer or Click2Remit: This is the online mode of transferring money from a foreign bank account to an Indian one. The transfer is available in different currencies, and the limit of transfer is also higher.

What is an outward remittance?

As the nomenclature suggests, outward remittance is the transfer of money from India to a foreign country, except for countries like Nepal and Bhutan. These transactions are for specific purposes that must be on the list of proposed and approved objectives under FEMA.

What are some acceptable purposes for outward remittance?

FEMA regulates the outflow of money from India, which is done to ensure the usage for the correct purpose and not fund crime or illegal operations. Below is the list of some of the approved goals for outward remittance.

1. When you need to move some money before starting work/college in another country
2. To monetarily prepare for a family member to join you abroad
3. For medical treatment of self or a family member abroad
4. For usage during a personal trip. A caveat to that is outward remittance is not allowed when visiting Nepal or Bhutan
5. For foreign migration
6. As payment for products/services obtained from foreign sources. However, note that the product/service should fall under the purview of the acceptable products’ list as per Schedule I of FEMA
7. When one wants to buy investment products on the international market

What are the compliances for outward remittance?

The RBI has put an upper cap of $2,50,000 on outward remittances from India either in a one-time transaction or spread across multiple transfers. Moreover, from April 2018, the PAN card has become mandatory for every outward remittance.

Individuals and companies must be aware of all the guidelines and limitations when moving money to and from India. Therefore, be sure to read all documentation requirements and regulations before entering into contracts with parties abroad.

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