International Money Transfer Tips Every NRI Should Know

It is not uncommon for non-resident Indians (NRIs) to steer their hard-earned money to their roots in India. Many want to support their families back home, invest in financial assets or properties, or create a cushion for their post-retirement years.

Unfortunately, navigating the intricacies of cross-border money transfers can sometimes get tricky.  From exchange rate fluctuations and high transaction costs to regulatory compliances and security concerns, remitting money to India can involve many a complicated matter. Read on to discover 4 helpful tips to send money to India every NRI should be familiar with.

1.  Stay Updated on RBI Guidelines

The RBI (Reserve Bank of India) issues comprehensive rules and regulations related to transfering money from abroad to India. Make sure to stay abreast of changes or new policies to ensure compliance and avoid any violations that may result in financial penalties or legal complications. For example, key guidelines include:

• There is no limit on sending money to India for personal transactions.
• NRIs can only transfer a maximum of INR 15 lakh under the rupee drawing arrangement (RDA).
• With the Money Transfer Service Scheme (MTSS), the maximum limit is $2500 per transaction.
• Cross-border money transfers are restricted to 30 transactions per recipient per year.

2.  Choose the Right Transfer Method

When sending money to India, NRIs have an assortment of options to choose from. These include bank wire transfers, SWIFT transfers, international money orders, and money transfer agencies, among others. Evaluate different methods thoroughly and compare their exchange rates and transfer fees to select the best method that aligns with your remittance needs.

For a quick and hassle-free experience, select a financial institution that has partnered with your preferred foreign bank.

3.  Consider Transfer Speed and Time

The time taken to remit money to India varies depending on the selected method. You should also factor in any potential delays that might occur during the transfer process. Depending on your urgency, you could select a transfer method that is in sync with your timeline requirements.

For example, online methods are best for urgent transfers. Wire transfers typically take 24-96 hours. If you are not in a hurry, you could opt for offline methods such as cheque or money order. The recipient can encash cheques issued in foreign currency in 7-15 working days. On the other hand, money orders can take anywhere between 3 to 30 days. It is also important to consider public holidays and plan accordingly, as most banks do not facilitate money transfers on these days.

4.  Understand Tax Implications

NRIs sending money to family members are not liable to pay taxes. Family members may include parents, siblings, grandparents, spouse, children, and in-laws. When sending money to someone not related by blood, the receiver will have to pay taxes on amounts exceeding INR 50,000 in a year.

Tax implications also depend on the country you are residing in. For example, if you send money to India from the US, you’ll have to pay a gift tax for transfers over $17,000, regardless of your relationship with the recipient. For the United Kingdom, the limit is 3,000 GBP for tax-free transfers.

Ensure Secure and Efficient Money Transfers

If you are an NRI who must remit money to India, it is important to understand the twists and turns of cross-border money transfers. These include RBI guidelines, exchange rates, transaction costs, regulatory compliances, and tax implications. It is important to evaluate these factors with care to optimize your overseas financial management strategy and enjoy a hassle-free transfer experience.