How To Send Money To Your Children Living Abroad, Check Details

As a parent, one of the challenges you may face is ensuring financial support for your children who are living abroad. Whether they are studying, working, or pursuing their dreams in a foreign country, sending money to them securely and efficiently is essential.

Thousands of people send money abroad every day for their children's education, medical expenditures, or recreation. Transferring money abroad is made easier in India thanks to the Liberalised Remittance Scheme (LRS). Sending money abroad was a time-consuming process prior to LRS, but it is now simpler than ever. You can send money to family members abroad in a variety of ways.

What is LRS?

The Reserve Bank of India (RBI) introduced the LRS in 2004 to simplify and streamline the process of moving money abroad. The scheme permits all residents to freely send money overseas up to USD 250,000 each year. Using your PAN Card, any authorised bank or dealer can facilitate the transfer. LRS allows parents to transfer money to their children studying overseas. The system also allows for money transfers abroad for medical, travel, and investment objectives. Aside from that, LRS allows for investment. You can buy stocks, mutual funds, and other securities, create a bank account in another nation, or buy real estate.
All Indian citizens are eligible to send money abroad using LRS. Corporates, partnership enterprises, and organisations, on the other hand, cannot use LRS.

Limit for the transfer-

Under the LRS (Liberalized Remittance Scheme) introduced in 2004, resident Indians have the provision to send up to $2,50,000 in a financial year to their adult children residing overseas.
The current RBI guidelines do not impose any restrictions on the frequency of remittances, as long as the total amount sent within one fiscal year does not exceed the limit prescribed by the RBI.
This means you can send money to your child on a monthly basis as long as the total amount does not exceed the annual limit and the purpose of the transfer is not forbidden by law.

How to transfer money to your children in abroad?

To begin, contact an authorised dealer bank, which will guide you through the appropriate compliance processes and documentation for international transfers. They will ensure that your remittance complies with the LRS standards, providing you with a secure and efficient method of transferring funds to your children living abroad.

It is vital to recall that the tax collection at source (TCS) rate on international remittances under LRS will increase from 5% to 20% commencing July 1. This means that when you transmit money, the authorised dealer bank will require you to follow specific rules, such as paying 20% TCS and completing Form A2, which details the nature of the transaction. TCS will not apply to remittances of up to Rs 7 lakh. Remittances for education and medical expenditures would not be eligible for the increased TCS.

When calculating the actual amount to be sent, TCS recommends factoring in the additional cash outflow for tax. This will allow you to make an informed decision and make the most use of your financial resources.