How much money can parents send to their kids studying abroad?
More and more Indians are beginning to settle abroad as a result of globalization. Along with moving abroad, they have started international money transfer from India to the US and other countries.
Many students are in a dream of getting into foreign universities. For them, the parents want to send money for their tuition.
Then the option for you is outward remittance. It refers to the transfer of money from an Indian account holder to a recipient outside of India in the form of foreign currency. To send money abroad, currency conversion is necessary. Exchange rates, the amount of time required to finish the remittance, and other variables must be considered.
You can Send money overseas by adhering to the RBI's FEMA guidelines. The RBI launched the Liberalized Remittance Scheme in February 2004 as a step toward further streamlining and liberalizing the Foreign Exchange facilities accessible to resident Indians.
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To prevent any hiccups or misunderstandings, you must be aware of several rules associated with overseas remittance before you send your money.
An individual who resides in the country has the option to send money abroad up to USD 2, 50,000 per financial year under the LRS. A single transaction or a series of transactions may exhaust the entire limit.
For money transfer operations outside of India up to USD 25,000 or its equivalent, it was previously not necessary to provide a PAN card. But this regulation was altered in April 2018. Several how much money is being sent, the PAN card must now be shown for all international remittance operations. The purpose of this is to guarantee that a resident person complies with the LRS limit of USD 2, 50,000 in a year.
One must go to an organization that is approved by the RBI which are money changer with an AD-II Category License (Authorized Dealer – II) to Send money abroad, RBI demands that you inform the money changer, with whom you have decided to handle the money transfer, of the purpose of the remittance and provide the KYC documents. You won't be able to send money abroad from India if these two requirements are not satisfied.
Documents necessary for KYC:
- Indian passport, voter ID, Aadhar card, or other official identification documents of the sender Released Photo ID card
- PAN Card Copy of the Sender
- PAN Card Copy of the Sender
- Goal-oriented evidence (university letter/prospectus)
- Statement of a bank account (if required)
Only your personal savings account may be used for the online bank transfer payment to the bank or money exchange. Therefore, it is not possible to pay with a check, a card, or cash. Additionally, wire transfers or demand drafts are the only ways to send money abroad.
When it comes to delivering money to someone, demand drafts offer flexibility and simplicity. Advantageously, demand draft in foreign currencies can be used to move money from India to the abroad. To prepare a demand draft for these, you must contact your bank. The amount and details of the account holder will be requested.
A demand draft will then be created for you by the bank, which you can transfer to the recipient in the abroad. You'll see a debit to your account for the equivalent sum plus the associated fees. The processing time of this method, however straightforward, is a drawback. It will take some time to deliver the draft overseas.
Money can be sent electronically between two banks using wire transfers. The Society for Worldwide Interbank Financial Telecommunication (SWIFT) is used to send a standard money wire from one bank to another.
A wire transfer can be the best method for the task if you need to send or receive money rapidly. Wire transactions are frequently secure, dependable, and quick.
The following Beneficiary information is necessary for the money changer to process the international money transfer transaction:
- Name of the Bank
- Address of the Bank
- The account owner's name
- Account holder's home address
- Account No.
Students who are studying abroad can relax knowing that there won't be any consequences because the tax collect at source(TCS) on education-related foreign remittances funded by loans would only be 0.5% for amounts over Rs 7 Lakh.
This is because many Indian students take out loans to study abroad. The TCS rate will be 0.5% of the money transmitted under The Finance Act of 2020's Section 206C if the remittance is done out of a loan taken out for higher education.
Both international education and travel will become more expensive as a result of the TCS rule. Both purchases of overseas buying packages and any sending of money out of India conducted through an authorized dealer under the Reserve Bank of India's (RBI) Liberalized Remittance Scheme ('LRS') are considered foreign remittances on which such TCS would be imposed. For purchasers of international tour packages, no minimum threshold has been established, and a TCS of 5% is in force. TCS can be claimed as advance tax in the Income Tax Return.
Therefore, before choosing to transfer money, be sure to understand the transactional restrictions your agent may have on sending money abroad.
The simplest and most efficient way to send emergency funds abroad is by wire transfer, which can be used as an outbound remittance option.
Foreign students must understand the wire transfer procedure to continue receiving financial aid from friends and family while studying outside of their native country.
Due to their ability to move money quickly and securely, wire transfers are ideal for sending significant sums of money to cover costs like tuition and housing.
We at Orient Exchange provide easy and convenient wire transfer facility to transfer money internationally.