If you are a non-resident Indian (NRI) and want to send money to India on a regular basis, you must consider the taxation of transferred funds.
When non-resident indians transfer money to India, they are not allowed to pay taxes. They are not forced to pay extra tax on the same money because they already pay tax in the country where they operate. This is so if the money is kept in Indian rupees or GBP.
Things to remember when sending money to India
When sending money to India, there can be a few other considerations to remember. For eg, if you are sending money from uk to india for investing purposes, it is better to open an NRE savings Bank account for fund transfer. This is due to the fact that interest received on fixed deposits in NRE (Non-resident External) accounts is tax-free for banks in India. Let’s take a closer look at this.
If you do online money transfer to india in your mother’s resident saving account and open a 50,000 INR fixed deposit, the interest paid on this deposit will be taxable. If there is no PAN number available, the bank will subtract TDS at a rate of 20%.
However, once you open a fixed deposit using funds from your NRE savings account, you would not have to pay taxes on the interest received on this deposit.
Transferring funds to an NRO (Non-resident Ordinary)
Transferring funds to an NRO (Non-resident Ordinary) account is therefore not advised since the interest earned on an NRO account’s fixed deposit is also taxable. To keep your income in Indian currency, all you need is an NRO account. If you really need funds for a specific purpose, you can move the transferred sum of foreign currency (Dollars or Pounds) to your NRO account.
If you do not wish to move funds for investing purposes and merely want to give money to your parents for medical costs or as a gift to your children, it is best to send money to the recipient’s resident saving account. These online money transfers would be exempt from taxation.
If you are an NRI and want to send money to India through online payment services, you would not be allowed to pay taxes on that number. However, if you are not an NRI, you would pay taxes on your global wealth. In this scenario, you will still make a petition for the tax you pay while abroad.
So, if you’re curious how to do money transfer to india, it’s best to use an NRE account. NRE accounts are current or savings accounts owned in India by non-resident Indians. These accounts help the NRI to repatriate funds received abroad.
An NRI will use his or her NRE account to move funds from the United Kingdom or Australia to India in a safe and convenient manner. When you do international money transfers to your NRE bank account from your home country as an NRI, it is immediately translated into INR. Before you open an account, make sure you understand what there is to know about it.