MUMBAI : The Reserve Bank today allowed companies to remit overseas the salaries offoreigners working in the country.
"We have been receiving queries whether remittance of salary outside the country can be effected for employees on deputation to a group company in India and for employees of limited liability partnerships," the RBI said, on what caused the change.
WASHINGTON: If you are wondering why the Government of India expends so much time and resources to rescue its emigrants from crisis- and war situations abroad, the answer in part lies an annual World Bank study that weights annual worldwide remittances of migratory work force -- or simply, the money Indian workers and professionals send back to India.
India received $34.9 billion in remittances between April-September
NEW DELHI: India has received $34.9 billion in remittances in the first six months of 2014-15 and is likely to surpass the previous year's $69.6 billion by end of the current fiscal.
Replying to a question in Rajya Sabha, Minister of State for Overseas Indian Affairs V K Singh said $34.9 billion was remitted to country from April to September.
With the ongoing fall in the rupee, the remittances volume has seen a massive spike as high networth individuals have started sending more money back home to cash in on the pricing difference.
While some pegged the volume increase up to 75 percent, others have seen the business jumping up to 20 percent. The currency ended at 63.61 against the dollar today compared to 63.53 yesterday, which was 13-month low.
The government today said remittances from abroad will not attract service tax, putting to rest the concerns raised in view of new tax norms.
"The matter has been examined and it is clarified that there is no service tax per se on the amount of foreign currency remitted to India from overseas," the Central Board of Excise and Customs (CBEC) said.
The clarification follows concerns over reports that there was a move to levy 12% tax on money sent back home by Indians abroad under the changed service tax regime from July 1
The Reserve Bank of India (RBI) on Friday raised the limit on the number of foreign remittances an individual can receive from 12 to 30 per calendar year. However, the cap on the amount of each transaction has been kept unchanged at $2,500 per person.
Market participants said the need for foreign funds to support the rupee would have triggered the move. "More remittances will certainly help in the current conditions when we need to attract more foreign fund inflows," said a senior treasury official from a large public sector bank. The official added people would also wish to take advantage of the weak rupee levels.
In its midterm monetary policy review, the Reserve Bank of India (RBI) has brought in three measures that directly affect individual investors. Here's a synopsis of the same.
Liberalised remittance scheme of USD 25,00oo0 for resident individuals. Limit now raised to USD 50,000 per calendar year.
The RBI has announced that resident individuals would be allowed to remit up to USD 50,000 per financial year (increased from USD 25,000) for any current or capital account transactions or a combination of both. Which means resident individuals are free to buy property or shares or any other asset outside India without prior approval of the RBI. Individuals can also open, maintain and hold foreign currency accounts with a bank outside India without prior approval of the RBI.