Foreign Remittances Income Tax Notice: A Detailed Guide
- Asharam Swain
- Dec 3, 2025
- 6 min read
Introduction
The Income Tax Department has intensified its examination of individuals who transfer large sums of money overseas. The department is thoroughly reviewing Form 15CC, a quarterly disclosure statement submitted by Authorised Dealer (AD) Banks for foreign remittances, due to inconsistencies between reported income and foreign payments, raising concerns about possible tax evasion. Problems with tax deducted at source (TDS) on outbound remittances have been recognised. Anyone who sends money abroad should be aware of these issues to avoid a notice in the first place and how to handle a notice if they receive one.
Table of Contents
What is Foreign Remittance?
The term foreign remittance describes the process of moving money from an individual or organisation in one country to another individual or organisation in a different country. Sending money for education, medical care, business reasons, or family assistance qualifies as a foreign remittance under Indian foreign exchange laws. Although resident Indians can remit a cumulative amount of USD 250,000 per financial year for various reasons, Non-Resident Indians (NRIs) are permitted to remit up to USD 1 million per financial year, subject to specific regulations.
Common types of foreign remittance include:
Family upkeep and assistance
Medical care abroad
Educational costs for studying overseas
Travel costs
Gift payments to relatives overseas
Business and investment reasons
Purchases of real estate in specific nations
Is Foreign Remittance Taxable in India?
The taxation of foreign remittances in India is regulated by the Income Tax Act of 1961 and the Liberalised Remittance Scheme (LRS) as overseen by the Reserve Bank of India (RBI). The regulations vary depending on whether the remittance is inward (funds received from overseas) or outward (funds sent overseas).
Outward Remittance (Sending Money Abroad)
When a resident individual transfers funds to a Non-Resident Indian's (NRI) bank account, whether located abroad or in India (NRE/NRO), a designated percentage is collected as TCS by the authorised dealer, which is usually a bank.
Inward Remittance (Receiving Money from Abroad)
Typically, it is not taxable. Money received in India as a gift or personal transfer from abroad is exempt from taxation, unless it constitutes income (such as salary or consultancy fees), in which case it is taxed based on the recipient's income tax slab.
Foreign Remittances Reporting and Compliance
Here are the things to keep in mind to ensure proper reporting and compliance for foreign remittance transactions:
Form 15CA/CB: In the case of outward remittances, the remitter must provide Form 15CA (and Form 15CB, which should be certified by a Chartered Accountant) to the Income Tax Department, specifying the nature and amount of the remittance.
Documentation: It is essential to maintain proper documentation and adhere to RBI and Income Tax regulations to prevent penalties.
When Can You Receive a Foreign Remittances Income Tax Notice
Individuals who have sent over Rs 6 lakh abroad could be subject to increased examination by the Income Tax department. If the department detects discrepancies between the information submitted in Form 15CC, the income reported in the ITR, and the amount sent abroad, they may issue notices requiring explanations or additional paperwork. Such discrepancies may result from exaggerated or understated remittance amounts, incorrect remittance details, failure to submit or late submission of Form 15CC, inconsistencies between declared income and foreign bank account balances, or dubious transactions. For example, if you failed to declare foreign income in your ITR or made numerous small remittances without a clear justification, you might receive a notice.
Maintaining exact records of all outgoing remittances is essential, and tax returns must duly reflect this information. It is necessary to act quickly and offer accurate details to prevent additional issues. The income tax department usually has the power to assess and reassess income related to foreign remittances for a maximum period of 6 years, even though the specific section of the notice issuing might differ. The particular section under which a notice gets issued is unclear. The income tax department can initiate by asking you to furnish information pursuant to section 133. In light of the lack of evidence or confirmation regarding reported or declared earnings, the department may issue a notice under section 143 for scrutiny assessment (provided it falls within the timeframe allowed by that section) or under section 148 for reassessment.
Why is the Foreign Remittances Income Tax Notice Issued?
The Income Tax Department aims to ensure that large sums of income are not escaping taxation, which is why the department focuses on these transactions to identify evaders. If you are an individual who has incurred minor expenses abroad, whether for a vacation or another reason, there is no need for concern.
A prevalent reason for the dispatch of these notices is the noticeable inconsistency between the various figures in the taxpayer's filed return. If a substantial sum gets transferred overseas, there should be corresponding income reflected in the individual's return to indicate the source of the funds.
One of the primary reasons the tax department issues a notice to taxpayers regarding substantial transfers abroad is the failure to submit their income tax return. There are two key reasons for this non-filing. One reason could be a delay past the due date, and the other may be the absence of any intention to file returns.
There are occasions when the tax department issues notifications to a significant number of individuals who have engaged in particular transactions. It may be one such instance, and the approach for the taxpayer to address this is straightforward. They should have included the relevant details in their return, along with clear evidence supporting the reason for transferring the funds overseas. They can respond to the notice or explain, including the various details that clarify this point, which would resolve the entire matter.
Steps to Deal with the Foreign Remittances Income Tax Notice
Your income tax return must include a declaration of any international transfers. Neglecting to do so could result in a notice from the Income Tax department. If you receive a tax notice concerning foreign remittances, there is no need to be alarmed. Usually, the first notice or intimation will ask you to confirm that you have remitted funds overseas, so you should acknowledge this accordingly.
Step 1: Comprehend the notice. Diligently read the notice to comprehend the rationale behind its issuance. The notice may address under-reporting or the absence of reporting foreign remittances, tax evasion issues, or documentation-related problems.
Step 2: Review the documentation. Validate the remittance specifics, including the amount, purpose, and any tax deducted at source (TDS). Confirm that the remittance was in line with the stipulated rules, and that you hold all necessary documentation such as Form 15CA/15CB, bank statements, and invoices, noted Bansal.
Step 3: Ensure timely response. Notices generally specify a deadline for replies. Submit your response through the Income Tax department's e-filing portal within the designated timeframe. Include all pertinent documents to substantiate your case.
Step 4: Seek expert guidance. Should you feel unsure about your response or if the notice relates to substantial amounts, it is advisable to consult tax professionals. They can assist you in formulating a suitable response and guarantee that all compliance matters get addressed.
Step 5: If necessary, submit supplementary information: If the Income Tax department requests more details or clarification, respond swiftly and accurately.
Conclusion
The guidelines for international money transfers were recently updated to align with tax and compliance requirements. These changes aim to enhance clarity and consistency; they also require that people stay more alert when organising international transfers. Ignoring a tax notice can lead to fines or additional repercussions, so prompt action is essential.
Frequently Asked Questions
Is there any tax on receiving foreign remittance in India?
Typically, no TCS is applicable when funds are received from overseas into your Indian bank account. Nonetheless, if the funds received constitute income generated overseas, they could be subject to taxation under Indian income tax regulations, depending on your residency status.
Do NRIs need to pay TCS when sending money to India?
No, NRIs are not subject to TCS when transferring funds to India from other countries. Nevertheless, they must be cognizant of the repatriation regulations and tax consequences in their country of residence.
Is TDS or TCS deducted from foreign remittances?
Both TDS and TCS apply to foreign remittances. TDS is primarily concerned with payments to non-residents for income taxable, while TCS is obligatory for remittances under the Liberalised Remittance Scheme (LRS).
What can you do to prevent such a Foreign Remittances Income Tax Notice?
Make sure that every source of income gets reported on your tax returns.
You are required to adhere to TCS guidelines and remit the appropriate TCS on any remittances surpassing Rs 7 lakh.
It is essential to uphold accurate documentation and maintain comprehensive records of all foreign remittances for future reference.
Should you encounter a complex financial situation or substantial remittances, it may be advisable to seek assistance from a professional tax consultant.
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