Everything You Need to Know About India's Foreign Remittance Tax| North Loop Official Blog
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05 Feb 2020

Everything You Need to Know About India's Foreign Remittance Tax

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India Budget 2020

Note - this post is no longer applicable. On February 1st, 2020, Nirmala Sitharaman, India’s Finance Minister presented the annual budget. The budget is the government’s plan for spending in the coming year. As part of this plan, the government changes tax rates, announces stimulus programs and more.

Foreign Remittance Tax

One interesting announcement was the introduction of a 5% tax on outward remittances from India over Rs. 7 lakhs. This new TCS (Tax Cut at Source) means whenever you send a transfer overseas above the threshold, the forex provider/bank will add 5% on top of that. With education in the US costing over US$50,000 a year, that means at least US$ 2,500 tax increase (or 1.75 lakhs).
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Enjoy unlimited no fee ATM withdrawals with a student account

So, what does the remittance tax mean for you?

Well, a new 5% tax on outward remittances will make sending money to your child, paying foreign university fees and more much more expensive. Although you can claim credits, you will still have to pay this 5% upfront at the time of the remittance.
However, there is one way you do not have to pay this - if you transfer to yourself. If you have a bank account in your name in the US (for example), this transfer is exempted. To avail such a deduction, you can sign up for the North Loop Bank Account online and save over 1.75 lakhs a year. With North Loop, you can pay your university fees for free from your account itself.

Use North Loop to Save Money

Sign up for a free North Loop account in 5 minutes. The North Loop Account has free money transfers, no account minimums and no ATM fees. With free local US transfers, you can pay fees from your account to any US university for free.
Sign up here.

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This publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended be advice. You must obtain professional advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax, investment or other professional advice from North Loop or its affiliates. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date. All opinions expressed do not reflect the views of North Loop nor are endorsed by North Loop.