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Remittance & Money Transfer

What Is Remittance: Meaning, Types and Currency Used

A remittance is money sent to someone, usually abroad, in any freely convertible currency; in India it is converted to or from rupees by the bank.

PN

Written by Priya Nair

Updated on 17 September 2026·5 min read

On this page9 sections
Credsir Remittance & Money Transfer guide cover with a globe icon

A remittance is money sent from one person to another, usually across a border, such as a worker abroad sending part of their pay home. Remittances can be sent in any freely convertible currency, like US dollars, UAE dirhams, pounds or euros. Money coming into India is converted to rupees before it reaches the recipient’s account, and money going out is converted from rupees to the currency the recipient needs.

Key facts

Item Details
Meaning A transfer of money to another person or organisation, usually in another country
Law in India Foreign Exchange Management Act, 1999 (FEMA), administered by RBI
Currency Any freely convertible foreign currency; converted to or from rupees by the bank
Outward limit for residents USD 2,50,000 per financial year under the Liberalised Remittance Scheme (LRS)
TCS on outward remittances Nil up to ₹10 lakh a year; then 2% (education, medical) or 20% (other); 2% on tour packages
Money Transfer Service Scheme (MTSS) Inward only; up to USD 2,500 per remittance and 30 remittances a year per person
India’s inflows, calendar 2025 USD 150.7 billion (World Bank)
India’s inflows, FY 2024-25 USD 135.46 billion (RBI data)

Types of remittance

Type What it is Example
Inward remittance Money sent into India from abroad A nurse in Dubai sends AED to her family’s account in Kerala, which receives rupees
Outward remittance Money sent from India to another country A parent in Pune pays a university in Canada in Canadian dollars
Personal or family remittance Support for relatives Monthly maintenance to parents
Business remittance Payments for trade or services An exporter receiving USD from a client
Informal remittance Transfers outside banks, such as hawala Not permitted under FEMA and unsafe

Which currency is used in a remittance

RBI’s LRS FAQ says outward remittances “can be made in any freely convertible foreign currency”, so you are not limited to US dollars. The sender picks the currency the recipient’s bank account holds. Your bank then sells you that currency at its telegraphic transfer (TT) selling rate.

For inward remittances, the sender abroad usually pays in their local currency. The transfer company or bank converts it, either before sending or when it reaches India. Money reaching an ordinary savings account in India is credited in rupees at the receiving bank’s buying rate. NRIs can hold some funds in foreign currency through FCNR(B) deposits, subject to RBI’s rules.

The rate you get matters more than the headline fee. Compare the rate you are offered with the day’s reference rate on the exchange rates today page, or work out the rupee value with the currency converter. The gap between the two is the provider’s margin.

How an outward remittance works

  1. Log in to your bank’s forex or outward remittance service, or visit the branch.
  2. Choose the purpose, the currency and the amount.
  3. Enter the recipient’s name, account number or IBAN, bank name and SWIFT code.
  4. Fill in Form A2 and the LRS declaration; PAN is mandatory.
  5. Upload any purpose documents, such as a fee invoice.
  6. Pay the rupee amount plus TCS (if due), bank charges and GST on the conversion service.
  7. Save the SWIFT reference to track the transfer.

Resident individuals can send up to USD 2,50,000 a year under LRS. Education and medical remittances can go above that against a university or hospital estimate. Full rules and TCS examples are in LRS limit and TCS rules.

How an inward remittance works

  1. The sender abroad chooses a bank wire, an online transfer service or an exchange house.
  2. They enter your name, account number, bank and IFSC in India.
  3. The provider converts the money and sends it, often through the SWIFT network or a partner bank in India.
  4. Your bank credits the rupee amount to your account.

Under the Money Transfer Service Scheme, an RBI-approved agent in India can pay you. According to RBI, each remittance is capped at USD 2,500, and one person can receive up to 30 remittances a year. Cash payouts are limited to ₹50,000; anything more is paid by cheque, demand draft or bank credit. MTSS is only for personal inward remittances, not trade payments. For more on receiving money, see sending money to India.

How much India receives

World Bank data show India received USD 150.7 billion in personal remittances in 2025. That compares with USD 137.7 billion in 2024 and USD 119.5 billion in 2023. On a financial-year basis, RBI data reported by All India Radio put private transfers at a record USD 135.46 billion in 2024-25. The RBI Bulletin of March 2025 noted that remittances more than doubled from USD 55.6 billion in 2010-11 to USD 118.7 billion in 2023-24. It said they finance about half of India’s merchandise trade deficit.

Charges and taxes to expect

ItemDetails
Transfer feea flat fee set by the bank or service.
Exchange marginthe difference between the rate you get and the market rate.
Correspondent bank chargesdeducted by intermediary banks on SWIFT transfers unless you choose to pay them upfront.
GSTcharged on the currency conversion and service fee, not on the amount sent.
TCScollected on outward LRS remittances above ₹10 lakh a year (2% on tour packages from the first rupee). You can claim it as credit in your income tax return.

If a remittance is delayed or wrongly debited, complain to your bank first. If it does not reply within 30 days, or you are not satisfied with its reply, file a complaint at cms.rbi.org.in within 90 days under the Integrated Ombudsman Scheme, 2026.

Frequently asked questions

What currency is used for remittance?

Any freely convertible currency can be used. The recipient’s bank usually decides it, and in India inward money is credited in rupees.

What is remittance in simple words?

Money you send to someone else, usually in another country, such as family support, fees or a gift.

What is the difference between inward and outward remittance?

Inward remittance is money coming into India from abroad. Outward remittance is money sent from India to another country, which for resident individuals falls under LRS.

Is TCS charged on money received from abroad?

No. TCS applies to outward remittances by residents under LRS, not to money you receive.

How much money can I receive through MTSS?

Up to USD 2,500 per remittance and 30 remittances a year, with cash payouts capped at ₹50,000.

Can I send money abroad in euros or pounds instead of dollars?

Yes. RBI allows LRS remittances in any freely convertible foreign currency.

Sources

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