Taxation-on-foreign-Inward-Remittances (1).pdf

The money one receives in an Indian bank account from abroad is called an inward remittance, and foreign inward remittances come under the governance of the FEMA or the Foreign Exchange Management Act.

Read more about Taxation on foreign transactions here- https://www.salt.pe/blog/how-are-foreign-inward-remittance-taxed-in-india

Watch this video to know more- https://www.youtube.com/watch?v=RveNhtBo7_8

Salt is a fintech startup based out of Bangalore, helping businesses thrive in the international market with effortless international payments and the compliances.

Read more about Salt here: https://www.salt.pe

1. https://salt.pe/
Taxation
On Foreign Inward Remittances:

2. https://salt.pe/
What is an 
Inward Remittance 
& how is it regulated?
The money one receives in an Indian bank account from abroad 
is called an inward remittance.
The inward remittances come under the governance of the FEMA 
or the Foreign Exchange Management Act.

3. https://salt.pe/
Money Transfer 
Service Schemes
Personal inward remittances to India are permitted under the MTSS.
These include remittances for family support and remittances to foreign 
tourists visiting India from their families & friends overseas. A family is 
only permitted to receive 30 remittances &  $2,500 in one calendar year.

4. https://salt.pe/
Rate of TCS 
on Foreign Remittance
The current Income Tax regulations have specified rates for TCS  
collection on international remittance under the LRS.
If a buyer presents a PAN card, TCS will be deducted 5% otherwise,
the tax would be applied at 10%.
Tax is deducted at source at a rate of 0.5% on any funds transferred 
to repay a loan obtained from a bank to pay for education. Again, 
the TCS is applied at 5% in absence of a PAN card.

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What factors might 
afect whether your 
money transfer is taxed?
The funds' source : Depending on whether the fund comes from a pension, 
sale of a residence, or an inheritance fund, the source significantly impacts 
whether your money transfer is subject to tax.
The two nations' tax regulations : Diferent nations have diferent tax laws. 
These include reporting to appropriate authorities to prove the legitimacy 
of the source.
Money transferred: Does the amount surpass the country's tax threshold?

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When is the money sent 
to someone in India from 
a foreign country taxable?
While there is no cap on the amount of money you can send to 
your family, the nation you’re sending to may have regulations and 
restrictions on the highest amount you can send to India 
without being subject to tax.

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How much money can be 
sent as inward remittance 
to India in a year?
The amount of money you can send to relatives listed in FEMA in 
India without taxation has no upper limit.
If money is transferred to someone not on the list, they are regarded 
as non-relatives, and if the amount received exceeds Rs 50,000
in a year, it will be taxed as income.

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What kind of tax 
maybe charged 
on Inward Remittances?
Individuals in India can receive an inward remittance in either a rupee
drawing arrangement (RDA) or a money transfer service scheme (MTSS).
Under the RDA , there is no limit on how much money can be sent overseas 
for personal purposes.
Under MTSS, each inward remittance is restricted to $2500.

9. https://salt.pe/
Tax for sending money from 
diferent countries to India
In the case of the USA, according to the IRS, money sent as gifts to 
family members in India upto $15,000 every year would be tax-free. 
However, most gifts over USD 15,000 will result in a tax event.
While in the UK, under the yearly exemption, you can send gifts worth
up to £3,000 from the country during the fiscal year. Additionally,the 
montary value of gifts presented in civil ceremonies are also defined.

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Conclusion
In conclusion, the taxation depends on various factors like
   The amount you receive(large sums are more likely to be classified as 
   income or gifts that may be taxable)
   The reason you're receiving the money (is it a foreign inheritance, 
   a remittance payment from a family member abroad?)
   Specific tax laws in your own country