{"id":16480,"date":"2021-11-16T08:46:44","date_gmt":"2021-11-16T08:46:44","guid":{"rendered":"https:\/\/www.unimoni.in\/blog\/?p=16480"},"modified":"2025-07-31T06:15:06","modified_gmt":"2025-07-31T06:15:06","slug":"new-tax-rules-on-outward-remittance-april-2025","status":"publish","type":"post","link":"https:\/\/www.unimoni.in\/blog\/new-tax-rules-on-outward-remittance-april-2025\/","title":{"rendered":"Are Remittances Taxable?\u00a0"},"content":{"rendered":"<style><\/style><p><span data-preserver-spaces=\"true\">For every individual, an urgency may occur to transfer money abroad at some point in their life for some purpose. Through swift transfer, one can remit money to overseas countries quickly. These <a href=\"https:\/\/www.unimoni.in\/international-money-transfer\/\">outward remittances<\/a> should be done on a secure banking network, limiting the chances of fraud and financial loss to the sender and recipient.\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">The Indian government imposed a tax on remittance by resident individuals in India from 1st October 2020. Though this new rule directly does not affect NRIs, it will be significant if they remit money from India or send funds from other parties. And those who receive money for investment purposes will have to pay tax at 5% if the remittances are above INR 10,00,000. The tax is collected by the remitting bank and deposited with the government. Though the same was to take effect from April 2020, it was delayed because of the pandemic to October 2020.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Before going directly into the tax details for remittance, let\u2019s have a brief and detailed look at the RBIs law governing these rules:\u00a0<\/span><\/p>\n<h2><strong><span data-preserver-spaces=\"true\">What is LRS?<\/span><\/strong><\/h2>\n<p><span data-preserver-spaces=\"true\">The RBI has set specific guidelines and protocols to protect individuals who make an <a href=\"https:\/\/www.unimoni.in\/international-money-transfer\/\">outward foreign remittance<\/a>. These guidelines come under the Liberalized Remittance Scheme (LRS). Under the Liberalized Remittance (LRS) Scheme, all resident individuals, including students, and minors can freely remit up to $250000 per financial year (April \u2013 March). We can use up to the limit of $ 250000 in a single forex transaction or multiple forex transactions combined in a financial year.<\/span><\/p>\n<h2><strong><span data-preserver-spaces=\"true\">Why was LRS Introduced?\u00a0<\/span><\/strong><\/h2>\n<p><span data-preserver-spaces=\"true\">Before introducing LRS, it was difficult for Indians to send money abroad, especially to those parents whose children were studying abroad. RBI entrusted the responsibility to research and make recommendations to the Tarapore committee, and based on the committee recommendations, LRS came into being. The very purpose behind the introduction of LRS was to streamline\u00a0<\/span><a href=\"https:\/\/www.unimoni.in\/international-money-transfer\/\"><strong><span data-preserver-spaces=\"true\">Outward remittance<\/span><\/strong><\/a><span data-preserver-spaces=\"true\">.<\/span><\/p>\n<h3><strong><span data-preserver-spaces=\"true\">Significant Purposes of exchanges using LRS<\/span><\/strong><\/h3>\n<p><span data-preserver-spaces=\"true\">The primary purposes for <a href=\"https:\/\/www.unimoni.in\/family-maintenance\/\">sending money abroad<\/a> include <a href=\"https:\/\/www.unimoni.in\/travel-card\/\">travel<\/a>, <a href=\"https:\/\/www.unimoni.in\/gift-purpose\/\">gift<\/a>, repatriation, employment, <a href=\"https:\/\/www.unimoni.in\/emigration\/\">emigration<\/a>, maintenance of close relatives abroad, Medical treatment, and <a href=\"https:\/\/www.unimoni.in\/overseas-education\/\">study abroad<\/a>.\u00a0<\/span><strong><span data-preserver-spaces=\"true\">A Pan card\u00a0<\/span><\/strong><span data-preserver-spaces=\"true\">is mandatory for sending money abroad. If the remitter is a minor and does not have<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">pan card, the father\u2019s or mother\u2019s pan card will suffice the purpose.<\/span><\/p>\n<h3><strong><span data-preserver-spaces=\"true\">Key Points to Consider In International Money Transfer\u00a0<\/span><\/strong><\/h3>\n<p><span data-preserver-spaces=\"true\">\u25cf\u00a0 \u00a0\u00a0<\/span><strong><span data-preserver-spaces=\"true\">Exchange Rates:<\/span><\/strong><span data-preserver-spaces=\"true\">\u00a0Take a record of the exchange rates while opting for the services. Foreign exchange rates continually vary; hence it is often prudent to double-check the rates, especially in higher amounts.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">\u25cf Service Provider: Choose the safest, secured, and advanced assistance providers for International money transfers.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">\u25cf\u00a0 \u00a0\u00a0<\/span><strong><span data-preserver-spaces=\"true\">Transaction Charges:<\/span><\/strong><span data-preserver-spaces=\"true\">\u00a0Always try to rely on accredited service providers with standard transfer fees.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">\u25cf\u00a0 \u00a0\u00a0<\/span><strong><span data-preserver-spaces=\"true\">Time for Overseas Transfer:<\/span><\/strong><span data-preserver-spaces=\"true\">\u00a0SWIFT Transfer can take up to 48 working hours for the fund to be credited into the beneficiary account abroad.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Now let\u2019s hover more on tax applicability on Outward remittances.<\/span><\/p>\n<h2><strong><span data-preserver-spaces=\"true\">Tax applicability on Outward remittances\u00a0<\/span><\/strong><\/h2>\n<p><span data-preserver-spaces=\"true\">As mentioned earlier, from 1st October 2020 onwards, banks and authorized dealers must collect TCS @ 5% for outward remittances above seven lakhs in a financial year. Starting April 1, 2025, the annual TCS threshold for LRS remittances will be raised from \u20b97 lakh to \u20b910 lakh per financial year. It is necessary to see that this tax introduced is only applicable to amounts exceeding 10 lakhs. The government will reduce the tax to 0.5% if the source of remittance is an education loan. TCS can be claimed by filing an IT Return.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Let\u2019s look into some of the Outward remittances affected by this new tax applicability.<\/span><\/p>\n<h4><strong><span data-preserver-spaces=\"true\">1. FOREIGN TOUR PACKAGE\u00a0<\/span><\/strong><\/h4>\n<p><span data-preserver-spaces=\"true\">Payments for\u00a0<\/span><strong><span data-preserver-spaces=\"true\">foreign tour packages\u00a0<\/span><\/strong><span data-preserver-spaces=\"true\">are subject to a 5% tax, with no exemption threshold, applicable to all types of tours, including business, family, and religious tours, covering travel, lodging, and boarding expenses.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">For\u00a0<\/span><strong><span data-preserver-spaces=\"true\">education-related foreign remittances<\/span><\/strong><span data-preserver-spaces=\"true\"> supported by loans, the tax will be only 0.5% for any amount above INR 10,00,000, examining the significant number of Indian students who take loans to pursue education abroad.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">If a person remits funds abroad under LRS or buys a foreign tour package without a PAN\u00a0<\/span><strong><span data-preserver-spaces=\"true\">Card or Aadhar Card, the<\/span><\/strong><span data-preserver-spaces=\"true\">\u00a0tax rate will be\u00a0<\/span><strong><span data-preserver-spaces=\"true\">10%<\/span><\/strong><span data-preserver-spaces=\"true\">\u00a0instead of\u00a0<\/span><strong><span data-preserver-spaces=\"true\">5%.<\/span><\/strong><\/p>\n<p><span data-preserver-spaces=\"true\">PAN Card is mandatory for all taxpayers, and Aadhar is the unique national identity card linked to all bank transactions.<\/span><\/p>\n<h4><strong><span data-preserver-spaces=\"true\">2. Investors hit<\/span><\/strong><\/h4>\n<p><span data-preserver-spaces=\"true\">Though The new tax rules do not directly impact NRIs, Indian residents who invest in foreign stocks, bonds, or properties will find their upfront costs and expenses increased as the tax increases their prices.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">For example, anyone who transfers $9,500 or above for purchasing stocks or business will have to pay the tax the banks will collect.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Individuals can start, maintain and hold foreign currency accounts with banks outside India for proceeding out transactions allowed under the scheme. Still, they will have to meet 5% remittance tax if the investments are beyond the threshold limit.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Here also, the investors will have to carry the extra cost on account of the tax. Investors remitting less than INR 10,00,000 per year will see no impact of these rules.<\/span><\/p>\n<h4><strong><span data-preserver-spaces=\"true\">3. Netting Tax Evaders\u00a0<\/span><\/strong><\/h4>\n<p><span data-preserver-spaces=\"true\">The new law, to widen the tax net and to follow such remittances as the authorities found that individuals have frequently been using the LRS route to remit money abroad by overrunning the tax. While remitting money overseas, the lenders must collect 5% tax for depositing with the government.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">The\u00a0<\/span><strong><span data-preserver-spaces=\"true\">LRS<\/span><\/strong><span data-preserver-spaces=\"true\">\u00a0remittance scheme implements only for Indian residents.<\/span><\/p>\n<p><strong><span data-preserver-spaces=\"true\">NRI<\/span><\/strong><span data-preserver-spaces=\"true\">s can send up to $1m outside India per financial year from surpluses held in an\u00a0<\/span><strong><span data-preserver-spaces=\"true\">NRO<\/span><\/strong><span data-preserver-spaces=\"true\">\u00a0account.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Remittance exceeding that sum will require special permission from the\u00a0<\/span><strong><span data-preserver-spaces=\"true\">RBI<\/span><\/strong><span data-preserver-spaces=\"true\">.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">About any queries or doubts related to the tax laws under RBIs LRS Scheme, Contact us at\u00a0<\/span><strong><span data-preserver-spaces=\"true\">UNIMONI INDIA,\u00a0<\/span><\/strong><span data-preserver-spaces=\"true\">get into our website and arrange a free demo call with us. Our professional team will guide you through transferring your money for any need efficiently, abiding by all the tax rules and guidelines under the RBIs LRS Scheme.<\/span><\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>For every individual, an urgency may occur to transfer money abroad at some point in their life for some purpose. Through swift transfer, one can remit money to overseas countries quickly. These outward remittances should be done on a secure banking network, limiting the chances of fraud and financial loss to the sender and recipient.\u00a0&#8230;<\/p>\n","protected":false},"author":3,"featured_media":16485,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[41,55,1],"tags":[114,209,56,207,208],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v16.5 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>New Tax Rules on Outward Remittance Described | Apr 1, 2025-Unimoni.in<\/title>\n<meta name=\"description\" content=\"Get to know the new tax rules on outward remittance. 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