Knowing how to send money from India to the UAE is essential if you want to carry out financial transactions across borders. Whether it’s for supporting family members, managing property, or conducting business, the process is governed by regulations and influenced by factors such as exchange rates, service fees, and transaction speeds.
With a mix of traditional banking and modern digital platforms, the remittance landscape offers multiple funds transfer options. We explore the legal framework, reasons for remittance, and the step-by-step procedures involved, ensuring that your money reaches its destination in the United Arab Emirates efficiently and securely.
Money Transfer from India to UAE
Legal Framework and Regulations
When transferring money from India to the UAE you must adhere to a set of regulations to ensure the process is legal and secure. The Foreign Exchange Management Act (FEMA) of 1999, and specifically the Foreign Exchange Management (Remittance of Assets) Regulations of 2016, set the legal framework for these transactions. Under these regulations, you can remit up to USD 1 million per financial year from your Non-Resident Ordinary (NRO) account.
To transfer funds, you’ll need to provide the necessary documentation, which includes Form 15 CA, an undertaking by the individual, and Form 15CB, a certification by a chartered accountant. These forms can be submitted online, streamlining the process.
The regulations also allow for the remittance of up to USD 1 million from the sale of properties inherited through succession. The amount repatriated can’t exceed the original purchase price paid in foreign exchange. It must be transferred through normal banking channels or from a Non-Resident External (NRE) account.
The repatriation of sale proceeds for residential properties is limited to two properties. Remittance is permitted for specific individuals who aren’t of Indian origin, including retired personnel from employment in India, inheritors of property in India, or non-resident widows or widowers who have inherited assets from their deceased spouse who was an Indian citizen.
Common Reasons for Sending Money to the UAE
Individuals might need to transfer money from India to the UAE for various reasons. Common purposes include paying educational fees and covering a family member’s medical expenses. Some may need to support a family member’s maintenance expenditures, book tours through a travel agent, or invest in business ventures.
Others want to send money to friends living in the UAE.
Tax Implications When Determining the Amount to Send
When deciding on the amount to send, you must consider the legal limits and tax implications. The Liberalised Remittance Scheme (LRS) allows Indian residents to remit up to USD 250,000 or equivalent per financial year for permissible current or capital account transactions. It’s important to remember that from October 2020, forex transactions are subject to a Tax Collected at Source (TCS).
A service tax of 5% applies if the remittance exceeds USD 250,000 per annum. However, a reduced rate of 0.5% applies if the funds are being transferred from an educational loan for educational purposes.
Frequency of Transactions
The frequency of transactions may vary based on your needs. You should make regular payments, such as for tuition fees or maintenance. Others may only need to send money occasionally.
It’s important to remember that the total amount remitted during the financial year should not exceed the prescribed limits under the LRS. All transactions must comply with the regulations set by FEMA and the Reserve Bank of India (RBI). RBI guidelines prohibit outward remittances to high-risk countries, as the Financial Action Task Force (FATF) indicates.
When planning frequent transactions, you should consider the costs involved, including any transfer fees and Goods and Services Tax (GST). For instance, BookMyForex, a platform that facilitates money transfers, charges a transfer fee of Rs225 plus GST. They ensure that all remittances are processed through authorised banks, providing a secure and compliant way to transfer funds.
Choosing the Right Money Transfer Service
Selecting an appropriate channel for transferring funds to the UAE ensures a cost-effective and efficient process. The choice between established financial institutions and specialised MTOs can significantly impact the overall cost, speed, and ease of your transaction.
Evaluating Banks vs. Money Transfer Operators
While traditional banks provide a sense of security, they may not always be the most economical or swift option for international transfers. They typically impose higher service charges and less favourable currency conversion rates compared to MTOs.
Conversely, MTOs focus exclusively on remittances, often resulting in more competitive rates and reduced fees. Their specialisation in this area can also lead to quicker processing times.
It is essential to verify the credibility and reliability of the MTO before proceeding with a transaction.
Comparison of Fees and Exchange Rates
Fees and currency conversion rates greatly influence the total cost of an international transfer. Financial institutions may apply a significant markup to the exchange rate, reducing the final amount received. They may also charge a service fee or a percentage of the transfer sum.
MTOs tend to offer rates that are more aligned with the mid-market rate and typically have a more cost-effective fee structure, either as a nominal flat rate or a lower percentage, making them an attractive option for remittances to the UAE.
Speed of Transaction
Another important consideration is the urgency of the transfer. While financial institutions may require several days to complete an international transfer, MTOs leverage advanced technology and their focused services to expedite the process, often enabling funds to be transferred within a shorter timeframe.
Customer Service and Reliability
Accessible and efficient customer support is essential for financial transactions. Established banks have customer service systems in place. Still, they may not be as responsive or adept at addressing queries specific to international transfers.
MTOs, despite sometimes being smaller operations, often provide dedicated support tailored to remittance services, offering more direct assistance. Prior to selecting a service provider, it is advisable to research their customer service reputation.
Step-by-Step Process of Sending Money
Setting Up an Account
Initiating a money transfer begins with creating an account with a financial institution or a digital remittance service. Existing customers of certain banks can manage this through their online banking services. New clients need to download the bank’s mobile application, such as the Digibank app for DBS Bank, and register for a savings account to access remittance services.
Similarly, online transfer services necessitate account creation, typically requiring personal information and the establishment of login credentials.
Verification Process
After your account is active, you must complete the verification process, which is essential for transaction security and adherence to regulatory standards. For banks, this may involve logging into your online banking and completing steps to authenticate a new payee. This process often includes receiving a challenge code via SMS, using it to obtain an OTP, and then entering the OTP on the online banking portal.
Indian regulations mandate that fund transfers cannot be enabled on mobile applications, necessitating the use of a web browser for this step. The verification process is paperless, with all necessary details and declarations gathered electronically.
Entering Beneficiary Details
The next phase involves inputting the beneficiary’s information, such as their full name, contact information, bank and branch name, and the SWIFT/IBAN code of their bank in the UAE. The SWIFT code is essential for identifying the destination bank in international transactions. Additionally, the recipient’s account number and address are required.
Once the beneficiary account is set up, which can take around half an hour, you can proceed to initiate the transfer.
Executing the Transfer
To execute the transfer:
- Navigate to the ‘Pay and Transfer’ section after logging into your account.
- Select ‘Overseas Transfer’, input the transfer amount and currency, and verify all details before submission. If the transaction is initiated before the bank’s cut-off time, the funds are typically delivered within one to three business days.
- Be mindful of the annual outward remittance ceiling of $250,000 per individual as stipulated by the RBI.
The financial institution or service provider will inform you of the estimated arrival time for the funds. Transfer charges vary by provider but are generally competitive. Following the transfer processing, confirmation is usually sent via email and SMS. While some transfers may be cancelled through the banking app, most cannot be recalled once initiated.
When transferring money to the UAE, it’s crucial to select a trustworthy service provider. Monitoring the fees, exchange rates, and disbursement speed is also advisable. The transaction can be executed smoothly and efficiently with proper preparation and understanding of the process.
Digital Platforms and Mobile Apps
Popular Apps for Money Transfers
The digital finance landscape is constantly evolving, with several mobile applications at the forefront of international money transfers. If you’re looking to send money from India to the UAE, you’ll likely turn to apps like Wise and Western Union. These platforms are favoured for their competitive rates and user-friendliness. Wise is especially known for its favourable rates for transfers from major corridors such as India and the UK to the UAE.
Remitly has also become popular for its cost-effectiveness, particularly for transfers to the UAE. It’s often the most economical choice. Moreover, Remitly is the go-to app for remittances from the UAE to Pakistan, which usually offers the lowest fees. Skrill is a viable option if you’re transferring funds from the UAE to countries like Pakistan or the Philippines.
CurrencyFair has established itself as a reliable service for transactions from the UAE to countries like the UK or Canada. XE Money Transfer is another top pick, frequently providing the lowest costs for many searches when sending money to the UAE.
Benefits of Using Mobile Apps
There are plenty of advantages to using mobile apps for international money transfers. Digital wallets, which are integral to these platforms, incorporate robust security measures that often surpass those found in traditional banking. You’ll enjoy lower fees and more competitive exchange rates than those offered by conventional bank transfers, ensuring that both the sender and recipient get better value.
The design and functionality of these apps are also key considerations. An app’s user-friendliness and the simplicity of its transaction process are crucial in enhancing the user experience. This makes sending money abroad more manageable and more efficient.
Security Measures in Digital Transfers
Security is paramount in digital transfers. Digital wallets use encryption to protect sensitive information such as card details, making the data inaccessible to unauthorised individuals. MFA is a commonly implemented security feature. It requires additional verification, like a PIN, fingerprint, or facial recognition, to access your account and confirm transactions.
Digital wallets often leverage smartphones’ security features, including fingerprint scanners and secure lock screens, to bolster their defences. Real-time transaction monitoring and alerts instantly notify you of any unusual activity on your account.
Biometric Authentication technologies, such as fingerprint and facial recognition, are increasingly used to secure logins and validate transactions, adding a unique layer of security for each user. Secure Communication Protocols, like HTTPS, ensure that all communication between your device and the wallet provider’s servers is encrypted. Providers also carry out regular security audits to identify and address any potential vulnerabilities, maintaining the integrity of the digital wallets against new threats.
Troubleshooting Common Issues With Money Transfers
Dealing with Delays in Transfer
Delays in transferring funds can occur due to a variety of factors. Global events, such as the COVID-19 pandemic, have impacted transfer times because of reduced staffing and changes in work arrangements. Additionally, natural disasters can disrupt the process.
Other factors that can slow down transfers include the complexities of currency exchange, differences in time zones, and the need for detailed documentation. Banking practices and public holidays, which differ between India and the UAE, may also affect the timing of your transfer.
The SWIFT network, which is often used for these transactions, processes payments within a range of 24 hours to five business days, depending on factors such as the destination country’s regulations and the completeness of the required documentation. To avoid delays, especially during the holiday season, it’s advisable to plan your transfers in advance and ensure all documentation is correct. Certain services can facilitate payments more rapidly, sometimes within a single business day for urgent transfers.
Resolving Disputes with Service Providers
It’s important to address the issue promptly in the event of a dispute with a service provider. Should you notice a discrepancy with your transfer, report it immediately. Service providers are responsible for resolving certain errors, such as incorrect amounts transferred or funds not delivered as scheduled.
You have 180 days from the expected date of fund availability to report an issue. The service provider must then investigate and resolve the error within 90 days of notification. If the error is a result of incorrect information you provided, the provider may not be responsible for refunding or resending the funds.
If you are unsatisfied with the outcome, you can seek assistance from the Consumer Financial Protection Bureau.
Handling Transaction Errors
Verifying all payment details thoroughly before confirming a transfer is crucial to prevent transaction errors. If an error does occur, inform your service provider immediately to address the issue. In India, providing accurate payment purpose codes is necessary for the correct processing of payments. Including comprehensive payment details, such as invoice numbers, can facilitate the process and minimise mistakes.
If the provider is at fault for the error, you may be eligible for a refund or to have the transfer completed correctly.
Updating Personal and Beneficiary Information
Maintaining current and accurate personal and beneficiary information is essential for efficient transactions. Incorrect details can cause delays or misdirected funds. It is recommended that you regularly revise your information with the service provider.
Understanding local banking practices, such as value dating, can be advantageous. Using centralised payment systems can improve efficiency and accuracy. Additionally, paying in the recipient’s local currency may offer benefits, including potential cost savings.
Final Thoughts on Transferring Funds
Navigating the intricacies of sending money from India to the UAE can initially seem daunting. However, with a clear understanding of the legal frameworks, choosing the right service provider and ensuring you’re up to date with the latest digital platforms, the process can be straightforward and secure. Whether you’re supporting your family, managing investments, or taking care of educational expenses, the key is to stay informed about the costs, limits, and regulations to ensure a smooth transaction.
Remember, by planning ahead, verifying all necessary details, and using a reputable transfer service, your money will reach its destination efficiently. As the digital finance landscape continues to evolve, keep an eye out for emerging tools and services that can further simplify and enhance your cross-border payment needs.
