Limits of International Money Transfer: You might want to transfer money abroad for your child’s education or a relative’s medical purposes. To allow Indian citizens to transfer money internationally the RBI introduced a Liberalised Remittance Scheme (LRS). Any transactions made to beneficiaries outside India have to be done considering the rules of this scheme which falls under the Foreign Exchange Management Act, of 1999. Let’s learn all about the limit of International Money Transfer in this blog.
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Also Read: Check out the FAQs on the Restructuring 2.0 Scheme of RBI that provides benefits to the borrowers affected by the COVID-19 pandemic.
What is the limit of International Money Transfer?
The limit of International Money Transfer as per LRS is USD 250,000 (INR 2.7 crores) in a financial year for purposes like education, travel, investments or medical treatment. Earlier this limit was set to USD 25,000 in a financial year but was upgraded in the year 2015-16. The limit of remittances for an NRI is set to USD 1,000,000.
However, if an individual needs to transfer more than the prescribed limit of international money transfer, then they must seek permission from the RBI.
Permissible Transactions Under LRS
| Transaction Type | Details |
|---|---|
| Trade in Goods and Services Payments | Payments for goods and services purchased abroad |
| Investments Outside India | Investments in permitted capital instruments |
| Sending Money Abroad | Maximum limit of USD 250,000 per fiscal year |
| Medical Treatment Expenses Abroad | Maximum limit of USD 250,000 per fiscal year |
- There are no restrictions on the frequency of remittances; however, once the limit is reached, no further remittances can be made under this scheme for that financial year.
- The scheme facilitates various transactions, including education expenses and medical treatment costs abroad.
- Individuals can also open and maintain foreign currency accounts with banks outside India to manage these transactions.
What is the Liberalised Remittance Scheme?
The Liberalised Remittance Scheme is a scheme introduced by the Reserve Bank of India to regulate the amount of funds that can be transferred across borders. It also regulates the limit of international money transfers and the process of how Indian residents can transfer money to other countries.
According to the Liberalised Remittance Scheme, minors are also allowed to make international money transfers once the natural guardians of the minors sign the A2 Form in the LRS declaration form.
Here’s the list of purposes permitted by the RBI under which Indians can transfer money internationally-
- Pay education fees in another country
- Help family members who live abroad
- Medical treatment
- Gifts and donations
- Cost of tourism and travel
- International business trip
- Emigration
If you are facing issues in understanding Terms related to International Money Transfers, check out our blog to get yourself acquainted with them.
What are the ways to make International Money Transfers?
Before, we know about the payment methods, it is also important to consider the tips for the cheapest international money transfers. You must also decide on which method an individual can choose to transfer money internationally like online wire transfers, bank drafts, cashier’s cheques, or UPI. Let’s have a look at these methods-
Online Wire Transfer
You can easily transfer money internationally through wire transfers and it is one of the safest ways to transfer money. The maximum limit for international wire transfers should not exceed USD 10,000. Transactions of more than USD 10,000 need to be reported to the IRS (Internal Revenue Service).
You would need to log in to internet banking and gather necessary information like –
- Your bank account number
- Recipient’s name
- Recipient’s bank name and address
- Recipient’s bank SWIFT Code
- Recipient’s bank account number
You need to fill out the wire transfer form (online or offline), select the currency and mention the recipient’s bank account number, and the amount to be transferred. International wire transfers can take up to five days, or sometimes more. Here’s how you can check the status and track your international wire transfer.
Also Read: Wire transfer is one of the fastest and most secure methods of transferring money. Check out the Benefits of Wire Transfer in our blog.
Bank Drafts or Cashier’s Check
Bank Drafts and Cashier’s Checks are cheap methods of transferring money internationally but the complete process takes a long duration. They are easily available at the bank’s branch. Visit there to purchase the drafts and cheques in the currency of the country you want to transfer money to.
UPI Transfers
Unified Payment Interface is a popular method of transferring money between beneficiaries. Users can now transfer money through UPI across borders. The first step is to activate UPI International and scan the international merchant’s QR code. Then, enter the amount in payable foreign currency and confirm your payment by entering the UPI PIN.
Some of the applications through which international UPI transfer can be made are as follows-
- Wise
- PayPal
- Western Union
- MoneyGram
- Remitly
Note: International transactions are similar to domestic transactions, with the only difference being that banks apply foreign exchange conversion rates and applicable fees to complete the transactions.
FAQs on the Limit of International Money Transfer
The LRS Scheme allows Indian residents to remit (transfer) money abroad for diverse reasons. The scheme permits resident individuals to transfer a specific amount of money in a financial year for certain purposes, such as travel, education, investments, etc., to beneficiaries outside India.
According to the Liberalised Remittance Scheme by the RBI, Indians can transfer USD 250,000 per financial year. For an NRI, the limit is set to USD 1,000,000.
The maximum limit for international wire transfers should not exceed USD 10,000. Transactions of more than USD 10,000 need to be reported to the IRS (Internal Revenue Service).
An individual can choose to transfer money internationally through online wire transfers, bank drafts, cashier’s cheques, or UPI.
International money transfers are subject to tax deductions. There will be a deduction of 20% on all international remittances except for education and medical treatment.
If you exceed the LRS limit of USD 250,000 in a financial year, you must obtain prior approval from the Reserve Bank of India for any additional remittance.
Yes, minors can use the LRS for remittances, but a guardian must sign Form A2 on their behalf to facilitate the transaction.
Yes, LRS prohibits remittances for certain purposes, such as margin trading, lottery purchases, and transactions with countries identified as non-cooperative by the Financial Action Task Force.
No, NRIs are not covered under the LRS; however, they can remit funds through NRO or NRE accounts as per different regulations.
Yes, international remittances above INR 7 lakh are subject to Tax Collection at Source (TCS), which varies depending on the purpose of the transfer.
This was all about the limits of international money transfers. An individual can transfer USD 250,000 (INR 2.7 crores) in a financial year as per the LRS. The limit of remittances for an NRI is set to USD 1,000,000. The maximum limit for international wire transfers should not exceed USD 10,000. Transactions of more than USD 10,000 need to be reported to the IRS (Internal Revenue Service). Transferring more than the limit of international money transfers as prescribed by the RBI needs to be taken permission from them.
To know more about the loan application process, the best international bank accounts for students, forex and banking experience for global students or international money transfers, reach out to our experts at 1800572126 to help ease your study abroad experience.
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