Remittance of funds outside Indiaby Gulshan Aggarwal Digital Marketer
Remittance of funds:
A process of transferring the funds or money in the form of foreign exchange by an Indian Resident for any purpose to a beneficiary or dependent outside India or abroad is known as remittance of funds. The purpose for the payments must be as per the guidelines of the Reserve Bank of India (RBI) and must be approved by the Foreign Exchange Management Act (FEMA). RBI has laid down specific guidelines for remittance of funds outside India and these guidelines are different for resident and non-resident Indians. This is because taxability of Non-Resident Indians on income is different from that of residents.
Types of Remittance of funds outside India:
The remittance of fund made abroad can be for various purposes and reasons. This purpose is what determines its type. These payments are-
1. For education purpose abroad
2. For medical treatment outside India
3. Disbursing the wages of the crew on a ship
4. Payments made by travel agents in India to agents overseas
5. Remittance of funds transferred for private visits.
6. Fees paid for taking specialized training or for participating in global conferences
7. Fees paid for the examinations in India and abroad and the additional score exam sheets for IELTS, TOFL, GRE etc.
8. Amount made towards training, prize money and sponsorship for participating in competitions and international events
9. Payments made for consultancy fees and immigration
10. Remittances related to business travelling
11. Remittance of funds for tie up educational arrangements with the universities abroad
12. Funds provided for employment and overseas job application processing fees
Transactions prohibited as Remittance of funds outside India:
Certain types of payments are not calculated under the category of remittance of funds made or paid outside India. These transactions are-
1. Any payments as advised by the Reserve Bank of India, made to entities which are identified as significant risk of carrying on and committing terrorist activities.
2. Payments made for purchasing sweepstakes, lottery tickets or proscribed magazines or any other item that has been prohibited or restricted to buy under Schedule 2 of the Foreign Exchange Management Rule, 2000.
3. Remittances made for purchasing FCCB issued by an Indian Company in the secondary market overseas or for trade in foreign exchange.
4. Any kind of capital account remittances of fund to countries and territories that have been declared as non-cooperative by the Financial Action Task Force (FATF).
Guidelines for Remittance of funds:Under the Liberalized Remittance Scheme (LRS) a resident individual is allowed to transfer or remit an aggregate amount of 2,50,000 $ in a fiscal year for any capital or current account transaction. They are not bounded to prior approval from RBI. Every remittance of fund made abroad is required to be made of net applicable taxes. While remitting such funds the remitter has to submit Form 15CA and 15CB. Form 15CA is self-declaration form and Form 15CB is a certification from chartered accountant on such payments made outside India. These both have to furnished to the bank and institutions while remitting the amount in order to make assurance that the applicable taxes on such funds have been paid already
Created on Dec 3rd 2019 10:50. Viewed 33 times.