When you can’t think of anything to present, money is the safest choice. You can send money to your friends, kids, and relatives on their birthdays, special occasions, festivals, and in times of need. However, when you are sending money abroad, there are a couple of things you need to keep in mind.
Unlike transactions in the home country, a couple of regulations are associated when money has to cross borders. These rules ensure that people across borders are not using the money for illegal activities and the amount is received safely at the other end.
Rule 1 For Sending Money Abroad: Tax Regulations
Under the Liberalised Remittance Scheme (LRS), the Tax Collection at Source (TCS) has been increased from 5% to 20%. It means that initially, the sender had to pay 5% of the amount they were sending abroad as tax. Now, they will pay 20% of the amount.
Finance expert Bhanu Pathak said that this rule was applied from July 1, 2023. However, it is not applicable to the transactions made to support education and hospital bills. If you are sending money to your relatives or kids for education or medical needs, no one can ask you to pay tax on it.
You can also send them for travelling, for example, to book tickets, hotel bookings, etc. You can invest money in foreign start-ups, businesses, and joint ventures. Some people send money to charities working outside India.
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Rule 2 For Sending Money Abroad: How Much Money You Can Send
According to the LRS, there is a cap on the amount you can send abroad without paying any tax. The upper cap is ₹7,00,000 on which you won’t have to pay TCS.
However, if you have opted for an education loan or sending more than ₹7,00,000 abroad, you will have to pay 0.5% TCS on the amount.
Rule 3 For Sending Money Abroad: Documents Needed To Send Money
You cannot send money abroad without checking a few boxes and producing valid documents. The list includes:
- Copy of visa
- Copy of passport
- Aadhar card or identity proof
- PAN card copy
- The invoice received from travel agency
You will also need to fill out a form in which you will have to fill in all the information regarding sending money abroad.
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Tips For Sending Money Abroad
- Under the LRS, one can send money up to $250,000 in a financial year. You can send the amount via different banks or from the same.
- You can also send the entire money in one transaction.
- An Indian resident can send the money online or offline without hassle.
