Outward Remittance is a process of sending money to a Foreign Account while you are a Resident of India, in short transferring funds from your account to a account which is setup in another country. The Service is approved under the FEMA (Foreign Exchange Management Act), allowing you to transfer money to most countries all around the world except a few like Nepal, Mauritius, Pakistan & Bhutan etc as per their regulations. The Payments made through this service is generally performed for situations where in you need to pay for medical treatment, donations, sending gifts, payments for your family members education, foreign travel expenses etc. In case you have gone abroad for some work or a holiday and have fall short of money, the only option left with you is asking your family members in your country to send you a payment, which is classified a Outward Remittance. All these payments are documented under the Foreign Inward Remittance Certificates.
The Reserve Bank of India calls these kind of payments as ‘Liberalized Remittance Scheme’ under which any Resident of India who has a Individual status can remit upto 2,00,000 USD in a given financial year through their Capital or Current Accounts. You need to have a Account with a Nationalized Bank or a well known Private Bank like ICICI Bank, following which you can send a Outward Remittance, while Non-Account Holders can still apply for a Demand Draft and get a payment sent for any of the following reasons.
1. Employment Abroad
3. Maintenance of close relatives
4. Education abroad
5. Medical treatment abroad
The Money can be sent to abroad countries in the following modes only :
- Wire Transfer
- Foreign Currency Demand Draft
The remittance of funds can be done for the purpose of ‘maintenance of close relatives’ which covers the following persons :
(a) Members of your Hindu undivided family; or
(b) Your spouse
(c) You are related to the beneficiary in any of the manners indicated below:
Father, Mother (including step-mother), Son (including step-son), Son’s wife, Daughter (including step-daughter), Father’s father, Father’s mother, Mother’s mother, Mother’s father, Son’s son, Son’s son’s wife, Son’s daughter, Son’s daughter’s husband , Daughter’s husband, Daughter’s son, Daughter’s son’s wife, Daughter’s daughter, Daughter’s daughter’s husband & Brother (including step-brother), Brother’s wife, Sister (including step-sister) & Sister’s husband.
For Buying Shares : If you are planning to invest money in the foreign countries for buying shares then you can make a remittance under Liberalized Remittance Scheme with a maximum limit of 2,00,000 USD in a years period.
For Medical Treatment : In case you need to remit funds for the purpose of medical treatment expenses in the abroad countries then the transfer should not exceed more than 1,00,000 USD and this should be done in accordance with the estimate from Doctor from India or hospital abroad. If there is a higher requirement of funds then you need to seek approval from Reserve Bank of India for release of funds.
For Insurance Policy : If someone wants to buy a Life Insurance Policy from a foreign country then they are allowed to buy the same with no specific limits on the funds. While if you plan to buy a General Insurance Policy then you need to take permission from the Central Government for the same.
Small Value Remittances : When the remittances are in value of less than 5000 USD then they are listed under the Small Value Remittances. This is done through the outward remittance Request Letter and A2 Form. If the payment is made towards a purchase of good for personal use or if its for a subscription fees of some service or charges, then you need to provide the documentary proof of the transaction in the form of a invoice or debit note which is on the name of the Account Holder who is going to receive the funds.