Planning to move money abroad? Indian banks make outward remittance a hassle-free process, whether for your child’s tuition, a family gift, an invoice for a business transaction, or that dream holiday abroad, but the paperwork has to be in place. This guide touches upon everything you will require for HDFC, ICICI, Axis, SBI, Canara, Federal, Bank of Baroda (BoB), and Kotak Mahindra Bank, along with some business concerns, taxation issues, etc. Let’s ensure a pain-free, compliant international transfer for you!
In this blog, we’ll walk you through the key documents required for outward and inward remittance in a way that’s easy to understand.
The Outward Remittance Process
Here’s how outward remittances work for personal or business purposes:
- Identify the Purpose: This could be to send the funds for education in abroad or travel of individuals, while businesses will remit money for imports, overseas investments, or operations.
- Choose a Method: Options vary by speed, cost, and compliance—online banking for quick transfers or branch visits for complex transactions.
- Prepare Documentation: Submit forms and proofs tailored to your purpose (details below).
- Initiate the Transfer: Provide beneficiary details (account number, SWIFT code) and purpose to your bank.
- Track and Confirm: Monitor progress through online portals or by contacting bank support; get confirmation once the remittance is processed.
- Funds Received: The money receives by the beneficiary, often requiring their bank details for crediting.
Note: In countries where banking systems limited or underdeveloped (e.g., Afghanistan, Somalia), this process may face delays or require alternative channels due to regulatory or infrastructure challenges.
Documents Required For Outward Remittance
These specifications pertain to standard documentation for outward remittance for the eight banks for both corporate and individual customers:
- Form A2: Mandatory under FEMA, this application-cum-declaration captures your as well as the recipient’s details, including purpose of remittance. This is available digitally and at the branches, and some banks allow submission of scanned applications via email also.
- PAN Card: Required for trackability of the USD 250,000 Liberalised Remittance Scheme (LRS) limit for an individual and for tax compliance.
- Purpose-Specific Documents:
- Education: Admission letter from university, a proof of fee invoice, or enrollment.
- Family Maintenance: A self-declaration on relationship and intent.
- Medical Expenses: Note from the doctor, hospital estimate, or bill.
- Travel: Visa, flight tickets, or itinerary.
- Business Payments: Invoice, contract, or agreement.
- Investment/Gift: Agreement, invoice, or self-declaration.
- KYC Documents: Mandatory passport/visa/address proof, which now applies for non-customers/old KYC
- Beneficiary Details: Account number, SWIFT code, bank name, and address.
- Form 15CA/CB:
- 15CA: elf-declaration for tax compliance regarding all remittances (mostly online).
- 15CB: Chartered Accountant (CA) certificate, required for amount ‘above’ 5 lakh, or taxable remittance, certifying TDS rate and taxability under the Income Tax Act or DTAA. Exception applies for TDS-exempt or low-value transfer (consult a CA).
General Notes:
- LRS Limit: An individual can remit an amount of 250,000 US dollars in one financial year; businesses have separate maxima based on purpose and RBI approved limits.
- Tax Implications: Gifts or personal savings may not be taxable, but remittances from taxable income (e.g., business profits) or which generate overseas profits, may need to be taxed. Withholding tax may be reduced under DTAA.
- Online vs. Branch: Online requires digital uploads; branches take physical. Banks may require other documents for any other compliance scrutiny.
Additional Requirements of Specific Banks
- HDFC Bank: RemitNow for making online “RemitNow” allows digital submission of Form A2 via NetBanking, no signature needed.
- ICICI Bank: ompletely digital for existing customers via iMobile/Internet Banking, including Form 15CA. Unfortunately, non-USD require a purpose code.
- Axis Bank: Common-Standard requirements apply.
- SBI: Education remittances can now require a student ID and admission letter, along with physical A2 forms mostly needed at branches.
- Canara Bank: Common-Standard requirements apply.
- Federal Bank: Gifts/maintenance under ₹10 lakh or less require just self-declaration.
- Bank of Baroda (BoB): Common-Standard requirements apply.
- Kotak Mahindra Bank: KYC probably will not be required if people send funds to their accounts linked here to abroad Kotak accounts.
Business-Specific Remittance Needs
In the case of remittances that are made solely for import, investment, or operational activities, a business usually would need to submit some very specific additional documentation, such as:
- Invoices/Contracts: The documents that will have to prove the transaction (for example, supplier invoice)
- Transfer Pricing Records: The document that will be used for related-party arrangements specifically made to meet tax law requirements and the double tax avoidance agreement (DTAA).
- Proof of Permanent Establishment (PE): Proof of PE status for the allocation of profit should be made available if the company operates overseas.
- Advance Pricing Agreements (APAs): Pricing plans pre-approved by tax authorities applicable to high-value or complicated transfers (e.g., over $1 million).
- Tax Certificates: Would be necessary claim DTAA benefits like reduced TDS (e.g., 10% vs. 30% under India-US DTAA).
Example: A Mumbai-based company would make a remittance of INR 10 lakh to a supplier in the UK; it would generate Form A2, an invoice, PAN, beneficiary details, Form 15CA, and a Form 15CB issued by CA (as it is greater than ₹5 lakh) to take advantage of India-UK DTAA for lower TDS.
Double Taxation Avoidance Agreement (DTAA) Benefits
DTAA with countries like the US, UK, or Singapore can ease compliance:
- Certificate of Tax Residency: Proves residency that there would be lower withholding tax or exemptions.
- Tax Declarations: Confirms eligibility for DTAA benefits (for example, no taxation on the remittance if made into Singapore under a certain condition).
- Lower Demands: DTAA may exempt small transactions or certain incomes (e.g., royalties) from extra documentation
Document Required For Inward Remittances
You are receiving money in India? you must have:
- Foreign Inward Remittance Certificate (FIRC): This is a proof of receipt from the bank for the inward remittance.
- KYC: PAN, Aadhaar, or address proof.
- Purpose Code: RBI code for the reason (for example, payment for freelance service).
- Bank Details: Your account details that are to be credited.
- Invoice/Agreement: Applicable in case of foreign business earnings or freelancing.
- Declaration Form: For remittances above a specified value, declaring the source for the inflow.
Example: For example, an NRI with Australian residence transfers 300,000 rupees to his account in India, receives the FIRC from the bank, and submits KYC and a gift declaration.
Special Cases: Extra Documentation
- Property Purchase Abroad: Sale agreement and/or registration papers.
- Inheritance: Will, death certificate, and evidence of legal heirship.
- Royalties/Patents: Licensing agreement and registration documents.
Documentation Do’s and Don’ts
- Do: Fill up all sections of the forms, match with ID, use up-to-date documents, attach proofs for an outward remittance, choose the right purpose code, check limits on remittances, and verify account numbers.
- Don’t: Skip any sections, use expired documents, mismatch any details, and exceed LRS without obtaining appropriate prior approval.
Why Documentation Matters
Proper documentation means that:
- Strict compliance with the regulation of RBI/FEMA
- Processed fast and without delays.
- No financial losses have happened due to mistakes.
- Build trust with global partners.
- Recordkeeping establishes taxation trails.
Example: Ravi, an NRI, was sending ₹200,000 for his sister’s wedding through HDFC RemitNow. The transfer went through successfully in 24 hours due to an impeccable upload of Form A2, these details, a Gift Declaration, and PAN of the main beneficiary.
Conclusion
Outward remittances-payments made to other countries, whether by NRIs, students, or businesses-require immaculate documentation in today’s globalized world. From Form A2 to DTAA certificates, the more correct are methods; the more relaxed the law; the more timely the transaction will be serviced. Check with your bank for modified requirements and enjoy a smooth remittance!
Disclaimer: The detail under this blog is for informational purposes only and should not be treated to be professional advice on tax, law or finance. While we make reasonable efforts to maintain the precision of the content, Fincirc Consulting India Private Limited makes no guarantees of any kind regarding its authenticity or relevance to particular individuals or business circumstances.
Users are urged to seek advice from an expert in tax or finance prior to acting upon the information presented. In no circumstances shall Fincirc Consulting India Private Limited be liable for any inaccuracies or omissions relating directly or indirectly to the information or for any consequences that arise from the use of the information.
