5 mistakes to avoid when making an international money transfer

For many individuals, making a money transfer has become a necessity, if not a part of their daily habits. Such individuals send money from one location to another for various purposes such as sending money back home, making a purchase or a donation amongst many others. While there are several vehicles that facilitate this transfer, one of the most popular options is the telegraphic transfer. While this may be one of the most effective, quick and cheap ways to send funds, any mistake you make will cost your time and money.

Given below are a few mistakes to avoid when you want to make an international money transfer through this vehicle:

Getting the account details wrong: As a part of the telegraphic transfer process, you will need both the sender and the receiver’s bank account and routeing numbers. However, at times, these details aren’t always straightforward. These factors, which together identify the bank accounts on either end of the transfer, had different formats that vary by country. A simple transposition of the account or routeing number can lead to wrong account details being provided.

Not converting dollars to the local foreign currency: When making an international transfer, you normally will start with your local currency while expecting the right currency to arrive at the receiver’s bank account. However, you must take into consideration the current conditions when the currency conversion occurs. If you skip converting the currency at your end, the transfer can be rejected. Alternatively, the receiver’s bank may convert the funds at a higher exchange rate or for a higher fee. This can not only lead to a delivery delay but also a reduction in the amount that is being said.

Looking only at straight fees: There are only two costings when it comes to international money transfers. One of the main costings is the service fee providers that is charged for sending fund. The second costing is the amount you normally pay for conversion charges. These costing will depend on the lending institute you are sending the funds too, and the foreign exchange rate between the two currencies. If you can, do check the approximate transfer rates before you make the transfer.

Failure to compare different transfer providers: There are plenty of transfer provider services in the market that offer different yet competitive rates. In other words, you will have plenty of choices in terms of different exchange rates and fees. While it may seem like a waste of time to shop around, it will give you an idea of how much you are spending on your transfers and how much you can save if you switch to a cheaper service.

Failure to check the estimated time of delivery:Not all transfers possess the same speed overseas. NBFC’s often provide several choices of payment methods with different delivery options that can affect the speed of the transfer. For example, you can pay with a banking card to speed up the delivery, and yet face an expensive cost for that. Being aware of the available options in terms of providers, cost and delivery will help you send funds the best way that suits you.

What are the common costings you should be aware of when remitting to India?

Plenty of individuals uses money transfer services to send funds from one country or one location to another. While the reason for these transfers may vary, some of them include financing one’s education, facilitating the maintenance of retired family members amongst many others.

However, when it comes to choosing the option to remit to India, there are several factors you need to take into consideration. These factors will play an important decisive factor when it comes to selecting the vehicle to make your transfer. Amongst the factors that will influence your decision, is the costing.

Ask any individual who regularly sends funds, and they will tell how tricky it is to calculate funds. Depending on your option to send funds, the fees, charges, and margins are not completely obvious. This can leave you with an immense bill at the end of the transfer, or the excessive funding will be required to be taken on by the receiver.

In order to be aware of the amount of funds you will be spending on a money transfer, there are certain common charges you should be aware of. They include:

• Transfer fee: This is one of the most basic fees for all money transfer services. This is also known as the TT or telegraphic transfer, wire or remittance fee. Normally, this fee is fixed but differs based on the lending institute.

• Exchange rate margin: It is understandable that most money transfer services aim to make some profit in order to run their services. This is normally due when your local currency in converted into the intended foreign currency, with an added amount known as the margin rate. This is basically the difference between the wholesale exchange rate and the rate in the market.

• Corresponded bank fees:This is the fee that the sender’s bank will charge, for sending funds to the right bank or NBFC account. Normally, this is deducted from the amount that is deposited in the receiver’s account. While it may be impossible to estimate or reverse, you can always approach the sender’s institute to get more details about it.

• Receiving bank fees: If you are planning to deposit foreign currency into an account, then the receiving bank will charge you for it. For example, if you are sending INR to a Dubai bank, the Dubai bank will charge you a fee to convert it.

Using this information, you can now easily remit to India with ease.It is crucial that you are aware of the different costing factors that occurs when you want to remit to India. Not only does it allow you to calculate the funds you will need to transfer, but it will also help you reduce and avoid any unwanted expenditures.

Send money to India: What are the best options?

Whether you are a long-term NRI residing abroad, or even a professional person residing abroad for a short duration, at some point in your life, you will be required to send funds back home. You may be sending funds for various reasons, ranging from home expenditures, family maintenance or purchase of monthly items amongst many other reasons.

But while the reasons may vary from individual to individual, there also comes a choice when it comes to considering the best option to make a money transfer to India. Listed are the different options you can consider, as an NRI to send money to India:

Money transfer companies: There are plenty of money transfer companies that offer a variety of money transfer services, which is also inclusive of options to transfer money back home. Most of the services focus on a secure, fast and inexpensive mean to send money to India. It also comes with several other benefits, such as beneficial exchange rates, lower transfer fees and an excellent customer service.

Wire Transfer: Wire transfers are very common, especially for international money transfers and US banks. With a wire transfer, you can directly transfer funds from any foreign bank account, which normally takes a take a few days. Wire transfer services can vary from bank to bank, so you will need to compare the different bank offers before selecting the one that suits your financial needs.

NRI accounts: Over the last few years, NRI accounts have slowly become one option to make a money transfer to India. But to make a money transfer, you will first need to open the NRE account. Through this account, you can deposit your foreign funds and transfer it back home through an authorised recipient back in India. This authorised individual can then withdraw funds in Indian rupees. Normally, this transaction will take around a few days to a week, and is normally non – taxable.

Personal checks: You can make a personal check to the recipient who can then deposit it in the bank account back home. However, you will need first to check if your bank accepts foreign checks. Additionally, you will need to check if there is a verification process to clear the deposit. The recipient may may also have to pay a few funds to cash the check.

Bank Draft in Indian Rupees: Selected Indian banks provide a facility where bank drafts can be made in Indian currency. This can be cashed instantly in India. Some of the bank drafts are also free if they surpass a certain amount, for example, Rs. 50,000, whereas any lower amount will attract a small charge.

Becoming an NRI: Converting your resident account into an NRO account

Plenty of Indian residents is now grabbing opportunities to travel, study or work abroad. Surely, this would be a big step to take, with several changes taking place during this transition. From the several changes that take place, one of the many changes you will need to undertake is your banking account. For one, you need to change your account from a resident account to a Non-Resident (Ordinary)account.

This account can be opened with funds that are remitted from abroad, or that is generated in India. Additionally, there are certain restrictions on the repatriation of the foreign proceeds. For example, only an amount of 1 million USD can be remitted in a single financial year. The income that is also earned in this account is taxable and is subjected to income, wealth and gift taxation. However, this account can be held jointly with another Indian resident or another NRI providing a more flexible usage of the account.

So far, the NRO account has been a popular choice for those who are looking to convert their resident account into NRI account. Here is how you can convert your existing account into this NRI account:

Form: Most of the major banks provide a specific form for the conversion of an existing savings account to the NRO account. This form can be easily obtained from the closest bank branch or even from the bank website. All the holders of the account will be required to sign the form. Most banks allow one filled form to be used to convert all the savings account held by the same customer.

Documents: Along with the conversion request form, a new account opening form will also need to be furnished. In this form, you will need to provide proof of your overseas address. You will also need to provide a copy of your passport, valid visa or work permit. If you have your PIO card, you may need to submit a copy of it.

Funding: All the NRI accounts must have a minimum amount of Rs. 75,000 on a monthly average. If the account in question possesses a zero balance before being converted, it will be needed to be funded until it meets the minimum balance.

Submission: The documents will be required to be submitted to the bank branch you would want to open the account in. In the event the customer is already outside the country, the form and the relevant documents needs to be attested by the Indian embassy and sent to the required bank branch.

Re-designation: Once the relevant form and documents have been received and verified by the bank, the account is then re – designated as an NRO account. While this may not change the bank account number, it will be flagged as NRO account in all banks records.

After the form and documents have been received and verified by the bank, the savings account is re-designated as an NRO account. Re-designation may not change the account number, but it may be flagged off as NRO account in bank records.

NRI accounts and taxations: Taxation rules that you should be aware of

As an NRI who is planning to invest in an NRI account, there are plenty of options available. However, at the same time, there are plenty of factors you need to keep in mind, one of which includes the taxation.
Here are a few rules you will need to keep in mind when it comes to the NRI accounts and taxations:

• If you have an NRI account that accrues income, you will need to pay an income tax on it. Therefore, if you have an NRO account that is used for income earned in India such as salary, rental income, interest income from FDs or capital gains on assets sold in India, it will be taxed. However, if the income of an NRI is more than the basic exemption limit for the year, then you can file your returns in India. You can also claim tax refunds or carry forward your losses by filing these returns.

• If you are an NRI who is returning to India permanently after spending considerable years abroad, the foreign income you earn will not come taxable in India immediately. In this case, if you have been a non – resident for a period of nine consecutive years, you will remain a resident but not an ordinarily resident (RNOR). This is a transitional status which not only defines your status to a fully fledged resident but also for tax purposes. Until you become a resident, which normally takes around two years, the foreign income that is earned will not be taxed, unless it is from a business or profession based in India.

• If you have fixed deposit NRI account, you are liable to pay TDS. However, TDF will not be deducted at a higher rate if you can provide alternative documents without your PAN 

• In you return to India and get the status of an Ordinary Resident Indian for a particular year, then you will be accountable to disclose all your foreign assets and foreign income in your tax returns. If you fail to do so, there are stringent penalties you will be liable to pay, as per the Undisclosed Foreign Income and Assets Bill of 2015, for not doing so. Therefore, such an income will not be taxed under the normal IT Act but rather under the provision of this new legislation on accounted funds.

• As an NRI, you cannot open a public provident fund account. However, if you already have a PPF account before becoming an NRI, you can continue to use and operate the account, until it reaches the period of maturity. Once this period is met, you will have the option to remit the proceeds of the funds in the country of your residence, without extending the tenure of the account. In the event that you are unable to attend the account, it will be considered as "extended without contribution".

Quickremit: Making money transfers easier and faster

Money transfer is now become a necessity for the urban society. Plenty of individuals sends funds from one place or location to another for reasons such as payment of education, maintenance of retired parents or elderly folks amongst many others. And with several money transfer vehicles available in the market, one will be spoilt for choice.

But while the choices may be many, there remains the factor that you will spend a considerable amount of funds in your transfer. Can you risk that amount of funds, where you may end up paying double the amount just to get it transferred? Would you want to pay extra funds to transfer it fast in the occasion there is a financial emergency? What about convenience in the money transfer?

This is where quickremit service will prove to be beneficial. Here is how this service will give you the best value for your money:

• Good exchange rate: One of the main features that you must take into consideration when it comes to any money transfer is the exchange rate. While different companies may offer you different exchange rates, you must look out for that one that offers you the best deal, in correspondence to the amount you’re sending. Quickremit not only ensures that you get the best exchange rates but also ensures that you are aware of the current exchange rate values before you make the money transfer.

• Fees: While many money transfer services do claim a’ free charge’ service, they will charge you a small amount for your transfer. With these fees, you will be charged a service charge, transfer fee and exchange fee as the basic charges. Additional fees may be charged, depending on the discretion of the lending institute. However, you should be aware of these charges before you make the money transfer option, which is what quickremit does.

• Pick up methods: One of the main problems faced during a money transfer service is the drop and pick up method. This is often a cause for the problem, in remote places, where there is not bank or NBFC branch located. However, quickremit offers a doorstep delivery service which means, you can get the funds delivered directly to the recipient with ease. This works as an ideal alternative to being deposited directly into the account.

• Transfer times: Plenty of money transfer services offer different transfer times for a different price. Depending on how quickly you will need the funds delivered, you may have to choose between the services. However, with quickremit, you can get the funds delivered within 4 working days. You can even track the funds when it gets transferred.

• Customer service: No doubt, at some point in your transfer, you may need an update on your transfer or need someone to answer your queries. This is where the customer service will assist you. Quickremit’s reliable customer service department will ensure that all your doubts and queries are answered without causing you.

How to get the most of your investment in the NRE account

As an NRI, earning in foreign currencies offers plenty of financial benefits. However, these individuals also face a situation of maintaining a rupee account back home. This is normally the issue, when it comes to repatriating funds earned overseas or investing India based earnings in the country itself. In this case, there is an option of opening a NRI account, between the NRO and NRE account.

There are similarities between both accounts. For one, both accounts can be opened as savings as well as current account. Additionally, both can be held in Indian rupee accounts. At the same time, a minimum amount of Rs.. 75,000 must be maintained on a monthly average in both the accounts.

But while both accounts come under the same category, there are considerable differences between both accounts. For one, the NRE account tends to be more flexible as compared to the NRO account. Given below are the different features of the account of NRE and how you can make the most from investing in it:

Freely repatriable: As compared to the other NRI accounts, the NRE account is freely repatriable. This is applicable to both the principal amount as well as the interest that is earned in the account. Therefore, if you need to make any payments in your local country, you can always withdraw funds from the account for NRE.

Tax free treatment: One of the main drawbacks of investing in most investment options is the taxation. Depending on the investment vehicle and the amount that one would need to invest, the respective taxation amount will be calculated. In the long run, one would spend immense amount of funds just on taxation as opposed to saving. But one benefit offered by the NRE account is that it is taxation free. In other words, there is income tax, wealth tax or even gift tax applicable to the NRE account, which is applicable to the NRO account. Therefore, you can benefit from investing in this account, especially long term.

Deposit of rupee funds generated in India: The NRE account can only be used to invest funds that have been earned abroad. Therefore, any income, pension or even proceeds of any sale from abroad can be invested in this account. However, no income that is earned in India such as salary, dividends, or rent can be deposited in this account, but only in the NRO account. However, the funds from the NRO account can be transferred in the account for NRE.

Joint Holding: When it comes to joint holdings, the NRE account can be held jointly with another NRI. However, it cannot be held with another resident Indian.

From the above mentioned factors, you can see why the NRE account makes for the best investment option for any NRI.  This is especially beneficial for individuals who want to park their overseas earning remitted to India, especially if you want the funds to be converted into the Indian rupees. This is also beneficial for those who want to keep the funds liquid, especially if it wants to be freely repatriable.