What is held at the door

The money held at the door is collected at source before any rupee leaves the country. This page explains the shape of that collection: nothing is collected up to a yearly threshold, a fixed share of everything above it is, and the share of the whole year's remittance that is held back rises as the amount rises.

Nothing, and then a fifth of the rest

What is collected before the money leaves, and what arrives on the other side.

The rule in one sentence

Nothing is collected on the part of a year's remittances that falls under the threshold, and a fixed share is collected on everything above it. The threshold is set once a year and does not move, so the share of the whole year's remittance that is held back rises as the amount rises.

That share never reaches the headline rate, because the threshold always shelters the first part of the year's total. A reader who sends a large amount will see a larger share held back than a reader who sends a small amount, but neither will lose the full rate on the whole sum.

What leaves, and what is kept back

The table above shows the year's total remittance in rupees and dollars, the amount collected at source, and the amount that actually reaches the account abroad. One column is what is collected; another is what is left to invest.

The columns are recalculated at every reading from a live rate taken from two independent sources. The figures are not updated when the two sources disagree by more than a small margin, so a reader can see when the rate is uncertain.

Why the share held back rises

The threshold is a fixed amount, so a small remittance may fall under it entirely and nothing is collected. A larger remittance crosses the threshold, and the fixed share applies to the part above it. The part above the threshold grows faster than the whole, so the share held back rises.

A reader who sends twice the threshold does not pay the fixed share on the whole sum; the first part is still sheltered. But the amount held back is larger, and the share of the whole year's remittance that is frozen is larger too.

What the collection is not

The collection is not a fee for the transfer, and it is not a charge by the bank. It is collected by the bank on behalf of the government, and it is credited against income tax when the return is filed. A reader who files a return can claim it back.

But the credit is not immediate, and the money is not available for investment in the meantime. A reader who plans a purchase should treat the collected amount as unavailable until the return is filed and the refund is processed.

Who the collection falls on

The collection falls on the person who sends the money, not on the recipient abroad. A reader who sends money from a joint account should know that the threshold is per individual, not per account, and the bank will ask whose remittance it is.

The collection is the same whether the money buys a share, a fund, or a balance in a foreign account. The purpose of the remittance does not change the arithmetic, and the threshold does not reset for a different purpose.

What a reader should have in hand

Before sending money, a reader should know the year's total remittances so far, because the threshold is cumulative and the collection is calculated on the whole year. A reader who has sent nothing else can read the first row of the table as the cost of that one transfer.

A reader who has sent earlier money must add it, and the table's shape makes that addition impossible to forget. The bank will ask for the purpose of the remittance, and the answer does not change the collection.