In part 2 of this series, we will discuss, Foreign inward personal remittances towards family maintenance and remittances favouring foreign tourists visiting India which are permissible under the Money Transfer Service Scheme (MTSS) of RBI.
No person can handle the business of cross-border money transfer to India in any capacity unless specifically permitted to do so by the Reserve Bank.
India is the highest recipient of Foreign Remittances with its overseas diaspora remitting USD 69 Billion to India in 2017.
Salient Features of the MTSS.
1. Only inward personal remittances into India such as remittances towards family maintenance and remittances favouring foreign tourists visiting India are permissible.
1.1 Donations/ contributions to charitable institutions/trusts, trade related remittances, remittance towards purchase of property, investments or credit to NRE Accounts shall not be made through this arrangement.
2. No outward remittance from India is permissible under MTSS.
3. The system envisages a tie-up between reputed money transfer companies abroad known as Overseas Principals and agents in India known as Indian Agents who would disburse funds to beneficiaries in India at ongoing exchange rates. The Indian Agents can in turn also appoint sub-agents to expand their network. The Indian Agent is not allowed to remit any amount to the Overseas Principal.
4. Under MTSS the remitters and the beneficiaries are individuals only. HUFs, Partnership Firms and corporates, etc cannot be remitters or beneficiaries under the MTSS.
5. A cap of USD 2500 has been placed on individual remittance under the scheme. Amounts up to Rs.50,000/- may be paid in cash to a beneficiary in India. Any amount exceeding this limit shall be paid by means of account payee cheque/ demand draft/ payment order, etc., or credited directly to the beneficiary’s bank account only.
6. Only 30 remittances can be received by a single individual beneficiary under the scheme during a calendar year.
7. To facilitate receipt of foreign inward remittances directly into bank account of the beneficiary, the foreign inward remittances received under MTSS can be transferred to the KYC compliant beneficiary bank account through electronic mode, such as NEFT, IMPS etc.
Further reading, RBI Master Directions on MTSS.