What is Inward Remittance in India? All You Need to Know About Receiving Funds from Abroad

Inward remittance simply means receiving funds from abroad in your bank account in India. As per Global Migration Report, India stands as the largest recipient of inward remittance globally, thanks to globalization which has enabled Indians to travel outside for work as well as enabled Indian residents to work with global clients remotely.

Getting money from abroad—whether it’s payment from a client or a transfer from family—can feel a bit overwhelming. It’s not as straightforward as domestic transfers, thanks to forex rates, international systems, and RBI guidelines.

But don’t worry. In this blog, we’ll break down everything about inward remittance—what the rules are, how to keep your money safe, how long it takes, and the easiest ways to manage it. Plus, we’ll show you how Skydo can make receiving global payments faster, simpler, and more affordable. Let’s dive in!

What is Inward Remittance?

Inward remittance is simply money sent to your bank account in India from someone living abroad. It could be funds from an NRI family member helping with education or medical bills, or even a foreign employer or client paying your salary or invoices.

The money arrives in foreign currency and gets converted into Indian Rupees at the current exchange rate. Whether it’s personal support or business payments, understanding how inward remittance works makes it easier to manage and maximize what you receive.

What are the FEMA Guidelines for Inward Remittance in India?

In India, the RBI and FEMA (Foreign Exchange Management Act) have set out specific guidelines for receiving inward remittances in India: 

Authorised Dealer Category I Banks

 Only Authorised Dealer Category I (AD Cat I) banks are allowed to receive foreign inward remittances in India.  The AD Cat I banks are financial institutions that hold a license issued by the Reserve Bank of India (RBI) to buy and sell foreign currency for capital and current account transactions.

Purpose codes

Each foreign inward remittance must contain a purpose code. The code defines the purpose of inward remittances like education, investments, remuneration, travel, insurance and more. For example:

Foreign Inward Remittance Advice (FIRA)

If your inward remittance is payment for selling goods/services abroad then it must be accompanied by an FIRA. FIRA is proof that you have received a foreign payment in India and is issued by the AD Category I banks.

Prohibited transactions

Transfers related to lottery winnings, gambling, and other illegal activities are prohibited under FEMA guidelines.

Tax implications

For most foreign inward remittances, there’s no tax liability in India. However, if the remittance is income from sources like investments, salary, or business, it will be taxed according to your applicable income tax slab rate.

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What Documents Are Required for Receiving Inward Remittance in India? 

The list of necessary documents you will need to accept foreign inward remittances will depend on whether it’s a personal transfer or a business payment. We have shared the list for both the categories here:

For Accepting Personal Transfers

For Accepting Business Payments

You fall into this category if you’re an exporter, freelancer or someone who provides services to international clients. Here’s the document list:

You can find a detailed explanation of the documents required for inward remittance in India right here

How Do You Receive Inward Remittance in India?

There are three primary means to receive foreign inward remittances in India:

Let’s explore each medium and the steps in collecting inward remittances in India. 

 Banks

Banks are one of the most popular ways of transferring money from overseas to India. To receive inward remittance you must share your Indian bank account details like account number, bank and branch name, and SWIFT code with the sender. You can find the SWIFT code of your bank right here. 

PayPal

PayPal supports over 100 currencies and has gained popularity in India as a medium to receive inward remittances. You can use the PayPal website or download their app to receive foreign remittances. Link your bank account to PayPal, so that you can withdraw money when you like.

International Virtual Accounts

International virtual accounts are like digital gateways linked to your real bank account. They don’t store money themselves—when funds are credited, they’re transferred to your bank account. With platforms like Skydo, you can use virtual accounts to receive payments in different foreign currencies, making cross-border transactions simple and hassle-free.

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What Are The Bank Charges for Inward Remittances?

The cost of processing inward remittances varies across banks and can include charges like SWIFT fees, forex markups, and additional service fees. For business payments, it’s crucial to understand these charges, as they are often borne by the recipient.

Here’s a breakdown of inward remittance charges at popular Indian banks:

Important Notes:

Understanding these fees can help you plan your payments better and avoid unexpected deductions.

PayPal Charges for Receiving Inward Remittance

PayPal also comes with a hefty price tag for receiving foreign remittances in India especially when it comes to business payments. It charges a flat 4.4% transaction fee on every transaction. Additionally, you have to bear a fixed fee, which depends on the currency and a currency conversion fee of 4% on the current exchange rate. To get an in-depth explanation of each charge, check out our blog on PayPal India Charges.

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International virtual accounts Charges for Receiving Inward Remittance

Virtual accounts do not charge SWIFT fees because it’s treated as a local transfer making it a more affordable option. Here’s a quick breakdown of how much Skydo charges for receiving international payments via virtual accounts: 

With Skydo, for payments up to USD 2,000, you pay $19. For payments between 2,000 to 10,000, you pay $29. So for a USD 5000 inward remittance, you can expect to receive INR 5,424 more compared to banks and INR 32, 862 more compared to PayPal.

Is There Tax on Inward Remittance in India?

Are you supposed to pay taxes on inward remittances? According to the income tax rules for international remittances, it depends on the purpose of the remittance. We have covered three different scenarios to give you a snappy overview:

Find out how to receive foreign payments in India. 

How Much Inward Remittance is allowed in India?

According to the framework set by RBI for Online Payment Gateway Service Providers (OPGSP), there are no limitations on personal transfers.  However, as per RBI, there is a cap of INR 15.00 lakh for trade-related transactions.

Receive Business Inward Remittance Seamlessly with Skydo

For an exporter or a freelancer, paying hefty charges for inward remittances is a huge loss to their earnings. They deserve a platform that offers transparent pricing and advanced features for invoicing. Skydo fits the requirements perfectly and is a trusted partner for business owners looking to scale their revenue from international clients.