Why does my bank keep asking for more documents to remit money?
Because the bank is the checkpoint for the exchange-control regime, and it cannot release a transfer until the purpose is declared and evidenced. The scheme permits remittances by resident individuals within an annual limit and only for stated purposes, so the bank needs to see which purpose applies, that you are eligible to use it, and that the tax side has been dealt with. It is not the bank being difficult; it carries the obligation. The way to shorten the process is to decide the purpose before you start, gather the documents that go with that purpose, and keep the story consistent across every form.
Am I resident for the remittance rules if I am non-resident for tax?
The two regimes define residence differently and for different purposes, so the answer can be yes to one and no to the other at the same time. Tax residence decides what India can tax. Exchange-control residence decides which accounts you may hold, what you may remit, and by which route. People run into this after a move, when their status changes for one regime and not the other. Establish your position under each separately, and expect a bank to apply its own regime's test whatever your tax return says.
Does the annual limit apply per person or per family?
The limit under the scheme attaches to the individual, so each eligible person has their own. That is why families funding a common purpose, such as education or a property purchase, often remit from several accounts. Doing so has consequences well beyond the transfer: the person who remitted is generally the person treated as owning the funds abroad, and that matters when the asset is later reported, sold or passed on. Decide whose money it is before deciding whose account it leaves from, rather than the other way round.
Can I remit money out of India after moving abroad?
The scheme is for resident individuals, so once you are treated as non-resident under the exchange-control regime a different route generally applies to moving your funds, with its own documentation. What tends to happen instead is that people carry on using the account and the route they always used, because nothing prompts them to change. The account itself usually has to be re-designated on a change of status, and doing that late creates a tidying exercise. The sequence is to settle the status question, put the accounts on the right footing, and only then move the money.
What happens if I remit for one purpose and use it for another?
The declared purpose is what the permission rests on, so using the funds for something else undermines the basis on which they left. Some purposes are permitted and some are restricted, and the declaration is the record of which one you claimed. If the plan changes after the money has gone, the sensible response is to document when and why it changed and to establish whether the new use is itself permitted, rather than leaving a declaration on file that no longer describes what happened. That paperwork gets read when something else brings the account into view.
Do I have to report the money once it is abroad?
Sending funds under the scheme deals with permission to move them. It does not deal with what happens afterwards. The account or asset you fund abroad may be reportable in India while you remain resident there, and again in the country it sits in, and each regime has its own definitions and its own forms. Treat the remittance as the first step rather than the last, and set the reporting up at the same time. Most of the correspondence that follows these files comes from the reporting, not from the transfer.
Is moving money between my own accounts in two countries taxable?
Moving your own capital between your own accounts is not itself income, so the transfer is not what creates tax. What can create tax or reporting is the income the money earned before it moved, a foreign-exchange gain on certain holdings, and the reporting obligations the balances themselves trigger — foreign account and asset reports keyed to balances rather than income. Remittances out of some countries also need certification before the bank will send them. See foreign account reporting.
What counts as foreign income, and what is a foreign tax?
Foreign income is income sourced outside the country you are filing in — where the work was done, where the property sits, where the payer is resident, depending on the type. A foreign tax, for credit purposes, is a levy imposed by another country that functions as an income tax and that you were legally required to pay. Consumption taxes, property taxes and most social contributions are not, however real the cost. Sourcing is decided by rule, not by which bank received it. See the foreign tax credit.
