Why did my bank deduct tax when I sent money out of India?
Because India collects an amount at source on outward remittances under the Liberalised Remittance Scheme, and the rate applied follows the purpose you declared to the bank rather than the size of the transfer alone. The bank is the collecting agent, so it applies the collection before any question of your final liability is considered. The amount is creditable against your Indian tax for the year, which makes it a cash-flow cost rather than an additional tax cost. It is still real money out of the transfer, and it stays with the department until the year is filed and reconciled.
Can I get back the tax collected on my remittance to Canada?
It is recovered rather than refunded by the bank. The amount collected is credited against your Indian tax for the year in which it was collected, so where your Indian liability is lower than the total collected, the difference comes back as part of that year's reconciliation. That means the recovery depends on filing in India for the year, even where nothing was chargeable and you would otherwise not have filed at all. Keep the bank's collection record for each transfer alongside the purpose declared on it, because the credit has to be matched to them.
Does the purpose I declare on the remittance form matter?
It is the entry with the most consequences on the whole form. The declared purpose determines whether the transfer is permitted, the rate at which the amount is collected at source, and how the transfer is reported. Declaring a purpose that does not match what the money is actually used for creates a mismatch between the bank's record and your own, and the bank may come back for evidence long after the money has gone. Decide the purpose before the transfer rather than afterwards, and keep the documents showing the funds were applied to it.
Is the Indian remittance limit per person or per family?
The limit runs per person for a financial year, not per household. Each individual has an annual allowance of their own, and allowances cannot be pooled by treating one family member's as a shared pot. In practice that means a transfer made in one spouse's name out of the other's funds is the wrong structure, and it is usually corrected by having each person remit in their own name from their own account. The collection at source then follows each person's own transfers and each declared purpose.
I have no Indian income, so can I still claim the collected amount?
Yes, and filing is the only route to it. Where nothing chargeable arises in India, the amounts collected on your remittances are still your tax sitting with the department, and the return for the year is what turns them into a claim. People who have never filed in India often find several years of collections that were never brought into a claim at all. Each year stands on its own, so the collections have to be matched to the year in which the bank actually made them.
Does moving money to my own account abroad still count?
Yes. The scheme is concerned with funds leaving India, not with whether the receiving account belongs to somebody else, so a transfer into an account in your own name abroad sits inside the same annual allowance and attracts the same collection at source according to the purpose declared. Treating it as an internal movement of your own money is the common misreading, and the bank's form does not offer that as a purpose. The declared purpose still has to describe what the funds are for once they arrive.
How does an NRI prove residence to get the treaty rate?
With a tax residency certificate issued by the country you are resident in, plus Form 10F giving the details the certificate does not carry, plus a PAN in the payer's records. The certificate has to cover the period of the payment, and the payer needs it before paying, not afterwards. Missing any of the three and the deductor is obliged to withhold at the domestic rate, which turns a rate reduction into a refund claim. See TRC against Form 10F.
What is RNOR status and why does it matter to a returning NRI?
Resident but Not Ordinarily Resident is a transitional Indian status that can apply for a limited period after you return, based on how long you were non-resident before. While it lasts, certain foreign income stays outside the Indian net that would be taxed once you become an ordinary resident — which makes the timing of a return date, and of realising foreign gains, a genuine planning decision rather than an administrative one. See the RNOR window.
