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Overview of RBI Guidelines for Outward Remittance

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FEMA and RBI oversee India’s FOREX Exchange Rules. RBI and FEMA give the rules for outward remittance depending upon the reason and nature of remittance. Under the FEMA Act’s different schemes and guidelines, the remittance limits for various entities/organizations are indicated.

This article will outline the RBI guidelines for remittance, including their purpose, limitations, approved institutions, mandatory requirements and prohibited transactions.

 Understanding Outward Remittance

Sending money abroad, known as remittance, refers to the transfer of currency from an Indian resident (whether an individual or a company) to someone located outside India except for Nepal and Bhutan. These funds can be used for purposes. It is fundamental to rigorously observe the guidelines specified in the Foreign Exchange Management Act (FEMA).

Purposes Requiring Outward Remittance

Several situations warrant outward remittance:

  1. Employment Abroad: If an individual needs to initiate a money transfer to join an office abroad.
  2. Family Support Abroad: Additional funds may be required when family members plan to join someone working abroad.
  3. Medical Treatment: If an individual or their family member needs medical treatment in a foreign country.
  4. Personal Travel: When a person travels to another country for personal reasons, they must follow specific rules. This is not applicable if they are travelling to Nepal or Bhutan.
  5. Relocation: When an individual migrates to another country for work or personal reasons.
  6. Education: Assets for abroad instruction, including educational expenses and everyday costs.
  7. Investments: For purchasing investment products from international markets.
  8. Business Transactions: Paying for products and services from foreign companies (excluding prohibited items mentioned in Schedule I of FEMA).

RBI Guidelines On Outward Remittance

The RBI guidelines on outward remittance are as follows:

  1. Maximum Transfer Limit: A resident can send money overseas Under the Liberalized Remittance Scheme (LRS) up to a maximum of USD 2,50,000 per fiscal year. This limit can be utilized for one massive exchange or multiple smaller ones.
  2. PAN Card Requirement: Since April 2018, providing the Permanent Account Number (PAN) card for all outward remittances has become mandatory, regardless of the transfer amount. This rule ensures compliance with the LRS limit.
  3. Restrictions on Entities: The Liberalized Remittance Scheme isn’t open to enterprises, association firms, trusts, etc, and it is just for resident people.

Mandatory RBI Requirements For Outward Remittance

To perform outward remittance from India, individuals must fulfil the following mandatory requirements:

  1. Purpose Declaration: People should declare the reason for the remittance and provide Know Your Customer (KYC) records to the picked bank or cash transformer working with the exchange.
  2. KYC Documents: The required KYC documents may vary based on the purpose of remittance but often include:
  • Indian Passport Copy of the sender
  • Sender’s PAN Card Copy
  • Another Government-issued Photo ID (e.g., Voter ID, Aadhar Card)
  • Purpose proof (e.g., University Letter for education, medical documents for treatment)
  • Bank account statements (if necessary)

Documents Required To Send Money Abroad

Sending cash abroad through Tarff has been simplified through our web-based booking platform. Over the years, the regulators have made a few documents mandatory for remittances under LRS. A sheet detailing purpose-wise documentation has been listed out here for the benefit of our customers.

POPULAR PURPOSES OF REMITTANCE AND CORRESPONDING RBI GUIDELINES

S.No. Purpose of Remittance KYC Documents
1 Remittance by Individual under Private Visits – S0306 Ø  Valid Passport, Ticket, Visa.

Ø  Application cum Declaration under LRS Scheme & A2 Form & FEMA Declaration

Ø  Application cum Declaration under LRS Scheme & A2 Form & FEMA Declaration

Ø  Invoice from overseas hotel/ travel agent confirming the
amount of remittance

Ø  Pan Card Mandatory.

 

2 Remittance by tour operators/travel agents to overseas agents/principals/ hotels (For code creation of the travel agent, the KYC of the Travel Agent like Registration with authorities- copy, PAN card copy, telephone bill copies to be furnished to HOT & IT) – S0306 Ø  KYC documents are mandatory as per RBI Guidelines.

Ø  Form A2 and Application cum declaration/undertaking from Tour Operator and list of Passengers for whom the transaction is being undertaken and Certified copy of Invoice from the overseas beneficiary.

3 Business Travel – S0301 Ø  Form A2 and Application cum declaration and KYC documents to be obtained from Employees and features to be verified.

 

4  Fee for participation in global conferences & specialized training – S0301 Ø  Application cum Declaration under LRS Scheme & A2 Form & FEMA Declaration.

Ø  Conference Invite along with the participation fee details and Remittance details.

Ø  Photocopy of the Passport, Ticket, and Visa.

Ø  Pan Card Mandatory.

 

5 Remittance for participation in international events/competitions (towards training sponsorship & prize money) – S0301 Ø  Application cum Declaration under LRS Scheme & A2 Form & FEMA Declaration

Ø  KYC of the remitter, Copy of Passport.

Ø  Letter / Prospectus from the organizer of the event /competition stating the amount to be remitted.

Ø  Pan Card Mandatory.

 

6 Film Shooting – S0301 Ø  Application cum Declaration under LRS Scheme & A2 Form & FEMA Declaration.

Ø  The request letter should provide the purpose of travel, details of people travelling, and their designation and Passport numbers.

Ø  It should also include the date, travel venue and breakdown of the Amount / Cost involved.

Ø  Invoice from the overseas agent organizing or felicitating for shooting processes.

Ø  15 CA CB – in case the film shooting company does the remittance.

Ø  Undertaking from the company stating that no Foreign Exchange has been drawn from any other AD for the said trip.

Ø  Pan Card Mandatory.

 

7 Medical Treatment Abroad – S0304 For the Patient

Ø  Application cum Declaration under LRS Scheme & A2 Form & FEMA Declaration.

Ø  Passport, Ticket, Visa.

Ø  Prescription and recommendation from local Doctor/ Hospital, Estimate from the Overseas Hospital/ doctor.

Ø  Pan Card Mandatory.

For the accompanying person-

Ø  Application cum Declaration under LRS Scheme & A2 Form & FEMA Declaration.

Ø  Passport, Ticket, Visa. Retain copies

Ø  Pan Card Mandatory.

 

8 Disbursement of crew wages Ø  Application cum Declaration under LRS Scheme & FEMA Declaration.

Ø  Captain passport, Inward swift (Captain Name & Passport no / Ship Name & Port name for Forex delivery)

Ø  Instruction Mail from the Shipping Agent.

Ø  Crew List

 

9 Overseas Education – S0305 Ø  Application cum Declaration under LRS Scheme & A2 Form & FEMA Declaration.

Ø  Passport, Ticket, Visa. Retain copies.

Ø  Proof of Admission to the college/university aboard / I-20 (in case of 1st remittance of FEX)

Ø  Proof of continuing the course (in case of subsequent FEX remittance)

Ø  Pan Card Mandatory.

10 Remittance under Educational Tie-up (KYC of the Educational Institutes to be established and confirmed by remittance desk before execution of the first transaction) – S0301 Ø  Application cum Declaration under LRS Scheme & A2 Form & FEMA Declaration.

Ø  Copy of arrangement, Invoice.

Ø  Photocopy of the PAN card of the remitting institute
An authorisation letter to the Authorised signatory to sign the Form-A2 and the declaration

 

11 Remittance towards fees for examinations held in India & abroad & additional score sheet for GRE, TOEFL, etc. – S0305 Ø  Application cum Declaration under LRS Scheme & A2 Form & FEMA Declaration.

Ø  Examination Guidelines specifying the Fee.

Ø  Pan Card Mandatory.

12 Employment & processing, assessment fees for overseas job applications. – S0306 Ø  Application cum Declaration under LRS Scheme & A2 Form & FEMA Declaration.

Ø  Passport, Ticket, Visa, Offer Letter. Retain copies.
Self-Declaration.

Ø  Pan Card Mandatory.

 

13 Immigration Emigration Consultancy Fees – S1109 Ø  Application cum Declaration under LRS Scheme & A2 Form & FEMA Declaration. Only once at the time of immigration.

Ø  Passport, Ticket, Visa. Retain Copies.

Ø  Self-Declaration

Ø  Pan Card Mandatory.

 

14 Skill / credential assessment fees for intending migrants Ø  Application cum Declaration under LRS Scheme & A2 Form & FEMA Declaration.

Ø  KYC of the remitter.

Ø  Letter / Prospectus from the Embassy authorizing the amount to be collected and the agency authorized to collect the fee.

Ø  Pan Card Mandatory.

 

15 Visa Fee – S1109 Ø  Application cum Declaration under LRS Scheme & A2 Form & FEMA Declaration.

Ø  Embassy guidelines.

Ø  Pan Card Mandatory.

 

16 Processing fees for registration of documents as required by the Portuguese / other governments Ø  Application cum Declaration under LRS Scheme & A2 Form & FEMA Declaration.

Ø  Letter issued by the consulate

Ø  Any ID proof & address proof

Ø  Pan Card Mandatory.

 

17 Registration/subscription/membership fees to international organizations Ø  Application cum Declaration under LRS Scheme & A2 Form & FEMA Declaration.

Ø  Invoice / Letter stating the amount to be remitted.

Ø  Pan Card Mandatory.

 

Prohibited Transactions Under LRS Scheme

Certain transactions are restricted or prohibited under the Liberalized Remittance Scheme (LRS) for outward remittance:

  1. Purchase of Prohibited Items: Remittances related to the purchase of lottery tickets, sweepstakes, banned magazines, or other items listed in Schedule 2 of the Foreign Exchange Management Rule 2000 are prohibited under LRS.
  1. Trading in Foreign Exchange: Remittance for trading in foreign exchange and purchasing Foreign Currency Convertible Bonds (FCCB) issued by an Indian Company in the overseas secondary market are not allowed under LRS.
  1. Capital Account Remittances: Capital account remittances to nations distinguished as “non-cooperative nations and regions” by the Financial Action Task Force (FATF) are either precluded or dependent upon limitations under LRS.
  1. Entities with Terrorism Risk: Remittances made to entities distinguished as a critical risk for committing acts of terrorism are restricted under the LRS Scheme by the Reserve Bank of India.

Account Details Required For Beneficiary

To handle outward remittance, the following bank subtleties of the beneficiary are required:

  • SWIFT Code: Mandatory for all countries.
  • Additional Country-specific Codes: Depending on the recipient’s country, additional codes like IBAN (for the Middle East & Europe), Sort Code (for the UK), BSB Code (for Australia), Routing Number (for the USA), and others may be needed.

Conclusion

It is essential for individuals and organizations engaged in international financial transactions to understand the RBI guidelines for outward remittance. These guidelines ensure compliance with Indian regulatory requirements and prevent illegal or prohibited activities. Although the regulations have become less strict, staying well informed and adhering to the guidelines remains crucial to avoid any complications or tax-related problems over time. The oversight and regulation of foreign exchange transactions by the Reserve Bank of India play a role in integrating India’s economy into the stage.

We hope that our article has been productive and helpful to you. If you need any further guidance, you can contact www.kanakkupillai.com 

G.Durghasree B.A.B.L (Hons)

G Durghasree B.A.B.L (Hons) is a registered trademark attorney with extensive experience as an Advocate for a period of 8 years. She possesses expertise in trademark law, including trademark filing and trademark hearings. Additionally, she is skilled in contract drafting and reviewing, providing legal advice and opinions, particularly in the areas of Company Law, Insolvency and Bankruptcy Code (IBC), and Goods and Service Tax Law (GST). Her experience encompasses both litigation and non-litigation aspects of these laws.