When making international money transfers, both banks and online money transfer providers send money in a different currency to an overseas bank account. In the end, they provide the same service.
However, the two employ very different techniques to complete the task. Since cost, transparency, convenience, speed, and security are important considerations, you might want to know which is better for you. This article will help you in making an informed decision about sending money overseas.
For banks, international money transfers, also known as wire transfers are done via the SWIFT network by using a SWIFT code. SWIFT or Society for Worldwide Interbank Financial Telecommunication is an international network that links banks in 200 countries and territories to enable cross-border payments.
Although SWIFT is safe, the costs associated with sending money can soar because of the numerous processes and third parties involved. It might be necessary to use intermediaries to complete the transfer if your bank has no financial connection to overseas banks. The dreaded correspondent bank fee, which may be as high as USD 100 or more for each transfer, may therefore need to be included.
So, although international transactions can be made through the bank, the transfer fees might cost more.
On the other hand, online money transfer specialists avoid the SWIFT network and its high costs entirely by utilizing a clever network of accounts with local banks around the world and offering bank-beating exchange rates. For instance, when you use Wise to send money overseas, it appears as though the funds are being sent directly from your bank account to the recipient's bank account.
The way it operates is as follows: Wise has accounts all around the world. When sending money overseas, you deposit funds into Wise's local account using your currency. Local currency will then be sent to the recipient from the Wise account in the overseas country where you want to send money. Your payments never actually cross international borders.
Consider sending money to family members in the U.S. from the U.K. You would sign onto your Wise account, link it to your British bank account, and enter the bank information for your recipient in the U.S.
Wise will deposit the requested money in British pounds (GBP) into their own UK account as soon as it is ready. Wise would then inform its U.S. account, which would then send the agreed-upon sum of U.S. dollars to your recipient's bank account.
Because these highly competitive international money transfer specialists are solely focused on providing what foreign exchange departments at banks do, the money transfer service they offer is a lot quicker and cheaper!
Let's now compare the two services in more detail in terms of the fees, security, speed, and transparency that are crucial elements to take into account when transferring money abroad:
Typically, banks are far more expensive when sending money abroad than online money transfer companies.
This is because money transfer specialists can completely avoid the SWIFT network, resulting in lower fees for you as the sender. In addition, when you send money abroad through your bank, you will typically be charged the following two costs in addition to SWIFT fees:
Although money transfer services also make money by charging the above-mentioned fees, they generally charge one or the other but not both, whereas banks will charge both. Additionally, transfer fees and exchange rate margins set by third-party money transfer services are much lower than those imposed by banks.
Let’s imagine you want to send money from the US to India. To send the money, you had to choose Bank of America or Wise, one of the cheapest ways to exchange money.
You pay a 35 USD transfer fee to Bank of America in addition to correspondent bank fees that can range from USD 10 to USD 100 for each transfer, plus the exchange rate margin of 5% to 7%. This is in contrast to Wise, where you pay a minimum fixed cost of 4.25 USD + 0.69% of the converted amount. Additionally, the mid-market rate sourced from Reuters is used to exchange the currency.
Thus, online money transfer services are cheaper than banks when sending money abroad.
As we discussed above, banks utilize SWIFT to move money across different currencies and countries. As a result, there are typically several processes that add delay to the fund's transfer process. Due to this, SWIFT transactions rarely arrive in less than 24 hours, and unless specifically specified by your bank, you can typically anticipate a bank wire transfer to arrive in 3 to 5 days.
Meanwhile, with money transfer services, the time it takes for money to arrive can vary significantly based on the payment method, the sending and receiving currencies, and other factors. Money can transfer almost instantly, sometimes even in a matter of seconds or minutes. But for some transfers, it may take several days to reach the recipient. Despite the variations, online money transfer services send money more quickly than SWIFT payments and, consequently, more quickly than banks.
Ultimately, when it comes to transferring speed, online service providers are much faster.
Banks are seen as more reliable than money transfer companies in the area of security. Banks have, after all, been transferring money between different currencies in some capacity for many years. Only in the past two decades has there been a rise in popularity for more specialized money transfer services thanks to the internet.
But this does not necessarily imply that online money transfer services are any less secure than banks. The majority of specialized services are fully authorized financial services providers that are allowed and governed in the countries in which they operate. Moreover, ten of thousands and even millions of consumers transact each day, amounting to massive transaction volumes. For instance, in Q2 FY2022, approximately 4 million users transacted on Wise, and the number of active personal users increased by 22% YoY to 3.7 million.
This means that when using online service providers such as XE money transfer, Remitly, Instarem, Wise, Skrill, and many more, you can send money with confidence.
That being said, banks continue to have a distinct advantage over specialized services in terms of perceived comfort, security, and familiarity. Though online service providers are not inherently any less secure than banks, it is understandable why for some people, banks may seem a better choice. You may still use a bank to send money overseas if you are someone who doesn't mind paying extra fees for the peace of mind you get when using your bank.
Banks typically charge fees that are much less transparent than those charged by specialized services. While some banks are far better than others at being transparent about their fee structures, customers of major banks throughout the world are rarely made aware of the full extent of fees, with the final cost of the transfer only becoming clear after making the transfer.
This is especially what happens with exchange rate margins. The percentage difference between the mid-market rate and the exchange rate offered to consumers is known as the exchange rate margins. One of the ways banks and providers profit is through this rate difference. When sending large sums of money, even a small fluctuation in the exchange rate can have a significant impact.
Some banks conceal any mention of the fact that there is an additional cost for currency exchange. This hidden fee can cost you a lot of money unknowingly. Whereas money transfer specialists are typically more transparent about these fees. The majority of them include cost estimators on their website listing all the potential expenses, including exchange rate margins. Some even go rather far in explaining what each implies.
Do keep in mind that no two currency exchange services are exactly alike. All online money transfer services are entirely transparent about their exchange rate margin on their homepages.
When choosing between banks and online service providers, there are important things to consider. The first is cost. If you don't mind paying extra fees for the ease of transferring money overseas with your trusted bank, go for it because they'll probably provide you with all you need.
If you want the best deal on exchange rates, fees, and speed for your next transfer abroad and want your recipient to receive more money on the other end, we recommend you compare your options on CompareRemit. There are several online money transfer providers available in the market.
Here is a list of top online money transfer providers for you to compare.
XE money transfer offers international wire transfers to foreign bank accounts in more than 130 countries and more than 60 different currencies via the XE website or its mobile app. For large bank-to-bank transfers, XE is a fantastic choice. For transfers of $500 or more, there are no fees. Most transfers take a few minutes or up to four working days, depending on the currencies.
Wise provides online international money transfers with upfront charges and real exchange rates from 59 countries to over 80 destinations. Your recipient will receive extra money as a result. A multi-currency account offered by Wise allows you to hold 50 or more foreign currencies and convert them at a reasonable rate. Fees are computed as a percentage of the total amount of money sent. Depending on the currency combination and payment method, the transfer speed will vary.
With Skrill, you may send money online to a bank account, a mobile wallet, an email address, or a phone number in over 180 different countries and 40 different currencies (all options may not be available in all countries). Skrill doesn't charge any transfer fees for international money transfers to foreign bank accounts. Skrill makes money by charging a markup on exchange rates of up to 4.99%of the entire value of your payment. Transferring money from Skrill to Skrill incurs a 2.99% fee.
Remitly provides international money transfers to more than 100 different countries from 21 sending nations. They provide several methods of payment, such as home delivery, mobile money, cash pick-ups, and bank deposits. First-time users can take advantage of fantastic promotional pricing from Remitly. The exchange rate margins can range from 0.5 to 1.5%. The amount of the transfer, the delivery speed, the method of funding the transfer, the destination country, and the manner of receiving the money all influence the overall transfer fees.
Through its global network of more than 8000 institutions, Instarem enables online money transfers to more than 55 countries. Real-time currency rates are also provided by Instarem. Instarem is particularly well-liked for tiny transfers because it is less expensive.
Fees will vary based on the sending country and the transfer corridor. For each transaction, it could range from 0.25% to 1%. The transfer fees are shown before sending money. The majority of the transfers are completed in a matter of seconds. It may take more than two business days to reach the recipient's bank account, depending on the destination countries, corridors, and payment type.
Panda Remit provides offers low-cost online international money transfers to more than 30 countries. Payment options include bank transfers, credit cards, or both. There are no fees for transfers funded by bank transfers. They also offer a money-back guarantee if you are not completely satisfied with the service.
The exchange rate margins range from 0.02% to 0.62%. There are no hidden fees. You can check the rates and fees by choosing the sending and receiving countries or the currency combination, then entering the transfer amount into their online calculator.
Pangea provides international money transfers between the U.S. and 40 other nations. Pangea is a great way to send money to Latin America and Asia. Pangea is not available in all US states. The majority of money transfers take less than 24 hours, but if you pay with a US debit card, it only takes 30 seconds.
You can send money to someone else's debit card, mobile wallet, bank account, or address for cash pickup. A recipient in Mexico is eligible to receive a bank-to-bank transfer.
Paysend enables online money transfers to more than 150 nations worldwide. There are no transfer fees when sending money directly to your recipient's bank account. 90% of transfers made with Paysend are completed in 15 seconds or less. However, some can take up to 3 days.
There are no transaction fees when transferring money to a bank account. Using a recipient's name and card number to transfer directly to their Mastercard will only cost you Euro 1.5, GBP 1, or $2, depending on where you are sending the money from.
The transfer fee is the same, no matter how much is sent. Because of this, the fees are low and transparent in contrast to other businesses that charge a percentage of the transfer amount.
Revolut is a super financial app that allows you to send money to more than 100 countries in more than 30 different currencies. To facilitate international payments, you can hold up to 30 different currencies on your account at no additional cost. Revolut uses real exchange rates for exchanging foreign currencies.
It's free to send money to other Revolut users across the world or non-Revolut accounts in Europe's SEPA (Single Euro Payments Area) zone.
For payments sent outside the SEPA region, there are fees for international transfers to non-Revolut recipients.
Depending on the recipient's country and the currency being sent, the transfer may take place immediately or up to 2 working days.
In conclusion, to get the best deal on your international money transfer, compare money transfer exchange rates from our top remittance service provider partners today!
Growth in digital remittances can be a game-changer in international remittances, mainly in terms of reducing the cost of global money transfer, increasing accessibility, and being more customer-centric. In the case of Nepal, which is one of the highest recipients of remittances in the world, youth are leading the mobile and digital revolution in the country. 50% of the users of eSewa, Nepal's most prominent digital wallet, are between the age of 18 to 30 years. With eSewa, users can make various payments such as pay utility bills, pay internal bills, recharge phones, book airline, and bus tickets, scan and pay to merchants, make a bank transfer (from eSewa to a bank account), and so on. There are also cashback and reward points upon registration. Established in the year 2019, eSewa Money Transfer is affiliated with F1Soft Group. With 15 million users (almost half of the country's population), F1Soft has been the leading fintech company in Nepal since 2004. eSewa is licensed by Nepal Rastra Bank under foreign exchange regulation, so it is a safe and highly regulated mode of money transfer. It offers traditional brick-and-mortar and agent-based remittance services along with the non-traditional digital modes of remittance.Money Transfer Services from the U.S. to Nepal with eSewa eSewa is partnered with various leading money transfer companies such as MoneyGram, WorldRemit, Remitly, Skrill Money Transfer, TerraPay, WireBarley, enabling customers from the U.S. to send money to friends and family in Nepal directly into the recipient's bank account or eSewa wallet.The account deposit service is available in more than 65 banks in Nepal. With more than 4.2 million registered eSewa wallet users, the addition of remittance service to eSewa wallet will provide a boost in remittance inflow to Nepal.Remittances to Nepal constitute a major portion of the country's foreign exchange reserve, surpassing both the official development assistance and the total foreign direct investment. In 2019, Nepali migrant workers sent home $8.64 billion which constituted 25.4% of the country's GDP. Sending Large Amount of Money from the U.S. to NepalThe U.S. to Nepal money transfer corridor is a thriving one, with many money transfer operators competing for business. Here are the top 5 money transfer service providers from the U.S. to Nepal.XoomPayPal-owned Xoom, a leading digital money transfer provider is one of the fastest, secure and convenient ways to send money from the U.S. to Nepal. The Xoom mobile app or website allows users in the U.S. to send money in an instant to friends and family in Nepal using their U.S. bank account, debit card, or credit card. Xoom has partnered with major banks in Nepal - Everest Bank Ltd., Nabil Bank, Himalayan Bank, Nepal SBI Bank, and others offering instant bank deposits. The money can be transferred to a bank account or picked up from an agent location (from over 4000 cash pickup locations) in Nepal. The maximum transfer amount is $9,000 per transfer when using Xoom transfer. The transfer fee varies depending on the method. Bank transfers are usually free of cost. Fees for payments by card are percentage-based.Do keep in mind that a margin is added to the exchange rate when converting U.S. dollars (USD) into Nepalese rupees (NPR).Wise (formerly known as TransferWise)Wise (Ex-TransferWise) is a London-based financial technology company regulated by (Financial Conduct Authority) FCA in the UK. For online money transfers from the U.S. to Nepal, Wise is a secure, fast, and low-cost option. There are no hidden charges, no marked-up exchange rate. Wise gives you the interbank exchange rate for your transfers. You can pay by direct debit, bank transfer, debit card, or credit card. Bank debit or ACH is the cheapest followed by bank transfer. While payment via credit cards has more fees. Depending on the transfers, the money can be reached in one day or even within seconds. There are limits to how much you can send to Nepal. For larger transfers, Wise might ask you to provide your ID card. To initiate the transfer process, sign up online or in Wise's app for free.WorldRemitWith WorldRemit, Nepalese immigrants in the U.S. can send money online to recipients in Nepal. The money can be received via cash pickup, bank deposits, mobile money, and even airtime top-up.The cask can be pick-up from thousands of Samsara, NIC Asia, and Citizen Bank locations within minutes. The bank transfer may take 1 business day.You can send up to $5,000 per transfer with bank transfer and up to NPR 300,000 with the cash pick-up option. A maximum amount of NPR 1,000,000 can be sent in a day. The transfer fee will depend on the transfer amount. WorldRemit adds a margin to the exchange rate.Muncha Money TransferMuncha money transfer lets you send money to Nepal from all the 50 states in the U.S. It is a preferred choice for many NRN (Non-resident Nepalese) as an online payment gateway. Muncha Money Money Transfer and ThamelRemit are popular ways of sending money.An individual with a U.S. bank account can transfer money to the recipient's bank account in Nepal. It takes about 48 hours to complete the transfer. It is licensed by Nepal Rastra Bank, so your money is safe and protected. It offers ACH transfer and can send up to $10,000 per transaction from the U.S. to Nepal. The first transaction is free for all customers.ThamelRemitThamelRemit is an online money transfer platform for sending money from the U.S. to Nepal. It is trusted by more than 50,000 Nepalese in the U.S.The platform is supported by Siddhartha Bank Ltd., one of the fast-emerging banks in Nepal, and is powered by MachNet.The transfer is carried out via ACH where money is directly debited in USD from your bank account in the U.S. and transferred to the recipient's bank account in Nepal in NPR. There is no charge or bank processing fee within Kathmandu Valley.Outside Kathmandu Valley, there may be a bank processing fee that is deducted from the recipient's bank account as per the particular bank's rules and regulations. The exchange rates offered are highly competitive and fees are affordable. You can send up to $10,000 per transaction and get the money deposited into the destination account in 48 hours.TakeawayThanks to the increasing number of users of digital payment platforms like eSewa and others, the cashless transaction is becoming a reality in Nepal.The above list is not an exhaustive list of all the services available to send money from the U.S. to Nepal. It can be difficult to choose one from a plethora of options. Before you make the transfer, compare the money transfer service providers to get the best value for your money while sending money from the U.S. to Nepal.Nepalese living abroad prefer to send remittances directly through mobile banking, internet banking, or digital wallet. It offers ease of use, convenience, lower cost, and a competitive marketplace of the money transfer industry that gives better service and better exchange rates.
How do you pay your employees? As an employer, paying your employees is an important part of your business. Direct deposit to your employee's bank account or issuing paper checks are two of the most common ways of compensating them. Gone are the days when employees used to get paid in cash.But what happens when some employees have no bank accounts? This is where paycards come in. Paycards for employees are an alternative option when the employees do not own a bank account, and the employers do not want to pay in hard cash.It is estimated that about 5.4% of U.S. households (approximately 7.1 million) were "unbanked" in 2019, according to the U.S. Federal Deposit Insurance Corporation (FDCI). An unbanked household means no one in the household had a checking or savings account at a bank or a credit union.For small businesses with employees with no bank accounts, paycards can be a convenient option as a payment option.Direct deposit and paycards both offer the benefit of a paperless payroll distribution process and allow the employer to electronically transfer funds conveniently. While direct deposit is the norm for many businesses, paycards are gaining popularity each year.There are pros and cons of using paycards, and in this blog, we will discuss if paycards are right for your business and employees.What is a Paycard?Paycard is a lot like a prepaid debit card as it is made of plastic and can be pre-loaded. In the case of a paycard, the money loaded comes from the employer in the form of an employee's pay. The card carries the issuer name such as MasterCard, Visa, or Discover.Are Paycards Good, and Who is it For?A pay card can be used to pay an employee who does not have a bank account. Paycard holders or employees can cash out from paycards at a bank, ATM, or other point-of-service locations.Employees can also pay bills over the phone using their paycard number or authorize electronic bill payments to specified companies.Employees can use paycards at any merchant, grocery store, retail shop, or gas station that accepts debit cards.Do Paycards Have Fees?By law, employees must be able to access their wages in full without any fees. They can obtain the cash at a bank teller, ATMs associated with the card issuer, pay bills by telephone, or use the card for point-of-sale purchases.However, there may be fees for electronic fund transfers or for cash withdrawals at ATMs that are not in the issuer's network. There may be fees for card replacements, balance inquiries, inactivity fees, or other reasons. The Consumer Financial Protection Bureau issued a rule in April 2019 that paycard issuers must disclose all the fees to cardholders.Employees must be informed of the potential fees. The paycard issuer is required to give you disclosures on such fees before you sign up for a paycard or a payroll card.Also, paycards are regulated by state laws, so you might have to check for additional details depending on your state. Some states are making efforts to reduce fees that affect employees.As you can see, paycards fees mostly affect employees. In the case of direct deposits, employers are the ones who have to pay fees for setting up the payroll distribution system and a transaction fee for each time they transfer wages into an employee's account. The payroll software may also charge a fee for their service.Can Employers Save Money When Using Paycards?Since paycards are reloadable cards, employers can have the banks reload the paycards with their employees' wages for the pay period, avoiding the costs and hassle of issuing paper checks, mailing them, or re-issuing lost checks. The savings may not be a substantial amount but they can add up gradually.Can Employers Choose between Direct Deposit and Paycards?While there is no mandate that employers can only offer either direct deposit or paycards to their employees for their wages, it is safe to check with your state's law on payroll distribution.One-third of states allow employers to require employees to have bank accounts for direct deposit. In such a case, paycards may not be needed. Also, there is no law preventing employees with bank accounts to opt for paycards as their payment option.Though generally, employees tend to prefer direct deposit because of its efficiency and the least costly method of payment, as a business owner or an employer, it is better to give options instead of imposing only one method.Ask your employees about their preferred method of payment and what benefits (convenience, low fees, etc.) serve them the best.In fact, Federal law requires employers to offer alternative payment methods like paper checks or direct deposits.Should Employer Provide Pay Stub?Pay stub provides details of the employees' pay for each pay period. Employers are not required by federal law to give employees their pay stubs. However, many states have laws that require some form of written pay statement.Even if your state doesn't need you to provide pay stubs, you are still required by the Fair Labour Standards Act to keep track of your employees' working hours.For employees, a pay stub gives a record of their wages, deductions, contributions, and other information. It is also proof of income or employment, which is often needed when applying for a loan, credit card, or housing.For employers, a pay stub is useful for tax purposes, and it can be used to resolve any discrepancies with employee pay.Is it Possible for Paycards to be Overdrafted?Usually, paycards works like debit card, allowing cardholders to withdraw up to the limit of the loaded amount. However, there are paycard that allows overdraft for employees. But it can come with hefty overdraft fees if employees use funds over the limit in their account. Usually, you should be able to prevent misuse by subscribing to an overdraft protection service.Will Paycard Affect Credit Score?Paycards, like all prepaid cards, do not affect an employee's credit score.What is a Paycard Gets Lost or Stolen?A replacement card can be issued in such cases. The employee needs to notify the employer, and then the employer should immediately notify the card issuer. The employee is not liable for the incident as long as the issue is timely reported. Paycards come with similar protection as that of a prepaid card.The reporting time is determined by the card issuer. If you wait longer to report after learning of the loss and theft, the fraudulent charges may increase. You may have to pay a fee for the replacement card.Pros and Cons of PaycardsProsA win-win situation for unbanked employees and their employers.Green alternative to paper checks.Immediate payment to employees.No hassle of cashing a paycheck.No monthly or maintenance fees.Added security when assessing their funds (paycards require a PIN).Employees can report to the issuer if funds are used unauthorized.Paycards can be reloaded during each payday, saving money on issuing paper checks.Added efficiency for the employer as the employer would not have to physically present or mail paychecks to unbanked employees.ConsEmployees may incur fees for several reasons. Be aware of such potential fees.Employers have certain responsibilities to educate employees about the usage of paycards.Limited range of services and flexibility in managing your funds compared to bank accounts and other prepaid cards.The best paycards programs are easy to set up, have lower fees, quick access to funds, and provide a range of benefits such as cashback and discounts. We have made a list of popular paycards providers for businesses:Wisely Paycard by ADPOnline portal and mobile appCompatible with Apple Pay, Samsung Pay, and Google PayZero cost sign upNo hidden feesNo credit checkNo overdraft feeZero cost direct deposit of pay and other sources of income (including government benefits)Accepted wherever Visa is acceptedKeep track of spending and account balances 24/7 on the appGet cash back at major retailersSurcharge-free ATM withdrawalsFDIC insuredSecurity features include instant card lock, purchase protection, and travel alert notificationsRapid PaycardDirect Deposit onto rapid paycardLoad funds from approved checks with Ingo Money mobile appsNo fee for cashing paycheck24/7 account access with rapid! Access mobile appNo credit checkCan be used at ATMs, merchants worldwide, wherever Debit Mastercard or Visa debit cards are acceptedPay bills and make purchasesBook airline and hotel reservations onlineEarn interest on savings accountGet cash back rewardsFDIC insuredMoney protected with Zero Fraud LiabilityKittrell PaycardNo fees to use (there are fees for certain situations)Fee-free ATM network with MoneyPassWebsite and Kittreall AppGet real-time alerts and push notificationsCash back at point-of-sale terminals2-way texting to manage your card and accountCompatible with Apple Wallet, Google Pay, Samsung PayEasy portability (Get direct deposit of stimulus checks, tax refund, benefits)Freeze or unfreeze card on-demandSkylight PaycardZero sign up feeNo credit checkNo minimum balance Personalized your card with a family photo or unique imageManage money anywhere on Mobile AppDirect deposit your government benefits, tax refundsUse anywhere where Visa Debit & Debit Mastercard are acceptedFDIC insuredZero liability protectionPay bills onlineEarn interest on savings accountEarn cash back with Payback RewardsSend money to or receive money from friends and family with Netspend cardsSet text alerts about transactionsRefer a friend and boost your card balanceSkylight overdraft limit is $100 & 3 times/ monthConclusionOverall, paycards can be convenient and cost-effective for employees and employees when compared to paychecks or for those employees with no bank account. And the paycard fees are becoming more transparent and competitive.While paycards can be challenging at times, especially when you are employed in multiple jobs and have a separate paycard with each employer, your funds are scattered in multiple cards so it becomes difficult to manage your finances. Some may prefer to put all their money in one place, like a checking account.However, if you can't open a bank account, a paycard is a great option to get paid. Read the fine prints before signing up for a paycard and know the potential fees that come with it.
It is common for a Non-Resident to open an NRE Account or other similar accounts, with a bank in India and transfer their earnings from their foreign country into these accounts. NRI's are not required to pay taxes in India on earnings that they received outside of India however these guidelines are frequently abused. An influx of cases of money laundering and unexplained funds in NRE accounts has prompted the Enforcement Directorate of India (ED) to crack down on irregularities in NRE account activities.In one specific example, an individual transferred a large number of funds into a family members' NRE account. Upon investigation by the ED however, it was found that these funds were commission income which was generated abroad. He was then asked to furnish the overlaying contracts for these commission incomes and was penalized accordingly.As an NRI with an NRE account, it is very important that you are able to explain the source of your funds in your account should you be contacted by the ED. Failure to explain the source of your funds in your account is considered to be a violation and can result in tax penalties.In order to avoid being questioned by the ED in regards to NRE account activity, it is highly recommended that all NRI's protect themselves in the following ways:Distinguish between current account transactions from capital account transactions.Inform all applicable parties regarding any changes in residential status.Distinguish between Person Resident in India & Person Resident Outside India.Keep track of investments made in India from Rupee funds in India. For example, when their residential status is that of a Resident and the investments made from funds remitted from abroad and when their residential status is that of a non-resident.Understand the sale proceeds of movable and immovable assets in India.Comply with statutory guidelines for filing documents and reporting requirements for different transactions.Do not enter into capital account transactions that are prohibited or are not covered under general provisions of permission.Do not enter into current account transactions that are prohibited or restricted.Avoid participating in any " net - off " transaction with a resident individual.Never instruct or allow a resident to make an outward transaction on your behalf.The Foreign Exchange Management Act (FEMA) extends to all of India and makes offenses related to foreign exchange, civil offenses. Such offenses are not taken lightly by the Indian government, which is why it is imperative that these guidelines are abided by and taken seriously as any violations will likely result in penalties and legal action. Running into issues with your NRE account and have to deal with the ED can be extremely stressful and nerve-wracking, which is why it is important to follow the above guidelines in protecting yourself from such circumstances.
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