Forex Guidelines by RBI Explained

Forex Guidelines by RBI Explained – Know your Forex Exchange Limits

Whenever you travel abroad or transfer money overseas, you may need to exchange foreign currencies. The Reserve Bank of India (RBI) regulates foreign exchange (Forex) transactions in India via Foreign Exchange Management Act (FEMA). The FEMA Act defines outward remittance limits, TCS on foreign remittances, and guidelines for various entities and organizations. Here’s everything you need to know about RBI guidelines for foreign exchange transactions.

Guidelines for Outward Remittance by RBI

These are the FEMA guidelines under the Liberalized Remittance Scheme (LRS) that resident individuals must follow when sending money abroad from India: 

Maximum Limit

In accordance with the Liberalised Remittance Scheme, all Indian residents are allowed to remit up to USD 2,50,000 per financial year (April – March) for any permissible current or capital account transaction or a combination of both.

Authorized Institutions

To facilitate international money transfers, the Reserve Bank of India (RBI) has approved two types of institutions or authorized dealers:

• AD Banks (Authorised Dealer – I)
• Money changers having AD-II category license (Authorised Dealer – II).

Mandatory Requirements

• In order to carry out successful forex transactions, you must comply with the RBI guidelines for foreign exchange transactions. 
• It is important to send funds according to RBI-approved purposes and to submit “Know Your Customer (KYC)” documents.

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Guidelines for Currency Exchange by RBI

If you are buying or selling foreign currency, you are required to comply with the below RBI guidelines.

Buy Currency:

• In order to purchase foreign currency, you have to submit KYC documents.
• You can buy forex worth up to USD 2,50,000, or its equivalent in any other currency. 
• Up to USD 3000 may be purchased in cash and the remaining money may be carried via Forex cards or travelers’ cheques.
• The currency may only be purchased up to 60 days before the travel date, as indicated on your air ticket.
• Payments can be made in cash or online, but the total amount of the transaction must not exceed Rs 50,000.

Sell Currency:

• In order to sell foreign currency, you have to submit KYC documents.
• When returning to India, you must surrender unspent forex held in cash within 90 days, and those held in traveler’s checks and forex cards within 180 days.
• It is only permitted to keep foreign exchange in foreign currency notes or travelers’ cheques up to USD 2000 or equivalent in any other currency.
• You can bring back any amount of forex to India as long as you declare the same through a currency declaration form (CDF) if you have more than USD 5,000 in currency notes or USD 10,000 in traveler’s cheques.  

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