How do I send more than 250k USD a year from India abroad?

Hey! Great question — here’s a breakdown to help you out:

1. Sending more than USD 2,50,000 per financial year from India:

• The Liberalized Remittance Scheme (LRS) allows individuals to remit up to USD 2,50,000 per financial year for permitted current or capital account transactions.

• This limit is per individual. So if you have family members (like spouse, parents, siblings), each can remit up to USD 2,50,000 independently.

• For amounts beyond LRS, it’s generally not allowed for individuals without specific approvals from the RBI.

• However, companies and businesses can remit funds abroad beyond USD 2,50,000 under different regulations (like for trade, investment, or business purposes), but this requires proper documentation and compliance with FEMA rules and RBI approvals if needed.

2. Transferring 1 crore INR to your own firm abroad:

• If your Indian company transfers funds to its foreign branch or subsidiary abroad, this would be a remittance for business purposes, not under LRS.

• Such remittances are typically allowed but need to be reported properly and comply with FEMA and RBI guidelines.

• Tax implications depend on the nature of remittance — e.g., loans, capital contribution, or payment for services.

3. Is 5% tax applicable on such transfers?

• The 5% tax you are referring to might be TDS under Section 195 on remittances.

• If your company makes payments abroad (like interest, royalty, fees), TDS may apply.

• For transfer of funds to your own foreign company, tax implications depend on whether it’s a loan, capital contribution, or payment for services.

• Simply transferring money as capital or loan to your foreign entity does not attract TDS at 5%, but payments for services or royalties might.

• For trading business earning 1-1.5%, this income would be taxable as per Indian tax laws and depending on the structure of the entities.

What you should do:

• Consult a chartered accountant or tax expert who specializes in cross-border transactions and FEMA regulations.

• Maintain proper documentation for remittances (invoices, agreements).

• Ensure compliance with RBI/FEMA and Income Tax Act provisions.

• Your CA can help you plan tax-efficient remittances and avoid penalties.