India sends billions of dollars abroad every year. Whether you’re an NRI sending rent for a home, a startup paying a foreign vendor, or a student covering tuition, understanding outward remittance helps you avoid surprises and save money.
In 2025 the Reserve Bank of India (RBI) reports a record $90 billion in outward flows, up 12% from last year. The surge comes from higher education fees, overseas investments, and family support. But with higher volumes come tighter rules, new fees, and faster digital options.
First, you pick a payment channel. Banks, licensed money‑transfer operators (MTOs), and fintech apps all have RBI approval. Each channel charges a fee, usually a flat rate plus a small percentage of the amount.
Next, you provide the beneficiary’s details – name, bank account, SWIFT code or IFSC if they’re in India. The sender’s bank converts the rupee amount to the foreign currency at the prevailing exchange rate. RBI’s Liberalised Remittance Scheme (LRS) caps individual annual outward remittance at USD 250 000, covering travel, education, medical, and investment purposes.
After conversion, the money moves through the correspondent banking network and lands in the recipient’s account, often within a day for popular corridors like US‑India or UAE‑India. Some fintech platforms claim same‑day delivery for small amounts, but watch out for hidden exchange mark‑ups.
1. Compare rates, not just fees. A low fee can be offset by a poor exchange rate. Use a quick calculator to see the total cost.
2. Use RBI‑approved fintechs. Apps like Paytm Payments Bank and RazorpayX have lower mark‑ups and quicker settlements than traditional banks.
3. Keep documents handy. For amounts over USD 10 000 you’ll need a PAN card, Aadhar, and a purpose‑specific declaration. Missing paperwork can delay the transfer.
4. Watch the LRS limit. If you need to send more than USD 250 000 in a year, you’ll have to set up a foreign‑exchange authorized dealer (FADA) account or use a corporate route.
5. Plan for taxes. Outward remittance itself isn’t taxed, but the income you’re sending may be. For example, sending dividends to an NRI will attract tax deduction at source (TDS) in India.
Startups often overlook remittance costs when budgeting for overseas vendors. A quick check shows that a USD 10 000 payment via a bank can cost USD 150 in fees and a 2‑3 % exchange spread, turning a USD 10 000 expense into roughly USD 10 300. That margin matters when you’re operating on thin profit lines.
For families, the biggest surprise is the “purpose code” requirement. RBI asks you to select a code (education, medical, travel, etc.) and the purpose must match the supporting documents. A mismatch can trigger a compliance query, delaying future transfers.
Lastly, stay updated on policy changes. The RBI reviews LRS limits every few years, and the government occasionally announces temporary relaxations for specific sectors like renewable energy or tech exports. Subscribing to a reliable finance newsletter or checking the RBI website once a quarter keeps you in the loop.
Understanding the basics, comparing options, and keeping paperwork ready makes outward remittance smooth and cost‑effective. Whether you’re sending a tuition fee or paying a foreign supplier, a little preparation can save you time and money.
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