What Is Outward Remittance? Purpose Codes, Process & Charges Explained

Outward remittance is the process of transferring money from a bank account in India to an account abroad by a resident of India. Each transfer needs a specific RBI purpose code for outward remittance, such as S0305 for education or S1301 for family maintenance expenses. Resident individuals can send up to USD 250,000 per financial year under the Liberalised Remittance Scheme (LRS).

Sending money abroad from India takes more than an amount and an account number. Each transfer is reported to the RBI under a purpose code, and each of them counts against your annual LRS limit of USD 250,000. However, it carries some charges that differ by the provider. A wrong code can delay a tuition payment or raise the TCS on it from 2% to 20% above ₹10 lakh. This guide covers the transfer process, the purpose codes individuals use most, the charges, the documents you need, and the TCS rates from 1 April 2026, so you know the full cost before you pay.

What Is Outward Remittance?

Outward remittance means a resident of India sends money to a person or institution in another country. The money proceeds from an Indian bank account to a foreign one through an authorised dealer, which is either a bank or an RBI-authorised forex provider.

As you are learning what is outward remittance in banking, in simple words, it is a foreign exchange transaction that the bank reports to the RBI. That reporting is why each transfer carries a purpose code, and why an individual’s transfers count against the LRS limit.

People use it to pay university fees, cover a student’s living costs, settle hospital bills abroad, support relatives, send gifts or invest overseas. If you want to see how the service works end to end, the remittance from India page by Thomas Cook shows the steps and the price breakdown.

Note: As you have learned what is outward remittance, it’s time to know what is foreign outward remittance. It is the same thing under the name banks print on their forms. The term covers individuals sending money under the LRS and businesses paying for imports or services.

What Is the Process of Outward Remittance?

The outward remittance process is similar across banks and forex providers. Online providers usually finish them in one sitting, while a bank branch may ask you to submit paper forms.

1. Choose the currency and the amount. You will see the exchange rate and the rupee equivalent before you commit.
2. Decide who pays the overseas bank charges, you or the recipient.
3. Enter the purpose of the transfer along with the sender and beneficiary details, including the beneficiary’s bank account.
4. Upload your identity proof, PAN, and the Form A2 declaration, along with any supporting document for the purpose.
5. Pay from your own savings bank account. Thomas Cook does not accept cash for remittances.
6. Wait for the funds to reach the beneficiary. For major currencies and countries, Thomas Cook delivers in 24 to 48 hours, though payment mode and routine checks can add time.

Students paying tuition can also use Thomas Cook to send money internationally directly to a university.

What Is a Purpose Code for Outward Remittance?

A purpose code for outward remittance is an alphanumeric code set by the RBI that classifies the reason for a foreign payment. Outward codes start with S, and inward codes start with P. The code is different from a SWIFT code, which only identifies the receiving bank.

The purpose code for foreign outward remittance is asked for on every transfer, whether the sender is an individual or a company. The rule behind it comes from FEMA. Authorised dealers must report every remittance to the RBI with its code, and the RBI uses that data to track foreign exchange flows and compile India’s balance of payments. You declare the purpose on Form A2, and the bank or provider enters the matching code.

The code also decides how much tax is collected on your transfer. Education and medical codes get a lower TCS rate than most other purposes, so the code you declare has a direct effect on your cost.

What Is the RBI Purpose Code List for Outward Remittance?

The RBI purpose code list for outward remittance covers capital account, travel, trade, services, and income transfers. Individuals use only a small part of it. The table below lists the codes that come up most often for personal transfers and overseas investment.

List of Purpose Code for Outward Remittance Used by Individuals

Note: This table includes selected purpose codes commonly used by individuals for outward remittances and does not mention all. For the complete list of RBI purpose codes, refer to the   or consult your authorised dealer bank. The applicable code may vary depending on the nature of your transaction.

How Do You Choose the Right Purpose Code?

To choose the right purpose code, you need to pick the code that matches what the money will actually be used for. Also, you need to keep a document prepared that supports the transfer as proof. A tuition invoice supports S0305, while a hospital estimate supports S0304. On the other hand, a family maintenance declaration supports S1301.

Three pairs cause most of the mistakes:

1. S0305 and S1301: Money paid to a university for fees is S0305. Money sent to a parent or sibling for general support is S1301.
2. S1302 and S1301: A one-time gift is S1302, and regular support is S1301.
3. S0301 and S0306: S0301 is strictly for business travel, and holiday spending falls under S0306.

A wrong outward remittance purpose code can delay the transfer or lead to a query from the bank, and it can change the TCS you pay. If you are unsure, ask your forex provider before you pay, because TCS is collected at the time of the remittance.

What Are the Outward Remittance Charges?

Outward remittance charges are made up of several separate items. Bank charges for foreign outward remittance are only one of them.

1. Provider or bank fee: a fixed fee for processing the transfer.
2. GST: charged on that fee.
3. Overseas bank charges: levied by the receiving bank or an intermediary bank. You choose whether you or the recipient bears them.
4. Exchange rate margin: the gap between the market rate and the rate you are given. Compare the rate you are quoted, not only the fee.
5. TCS: a tax collected at source, not a fee. You can claim it as a credit when you file your income tax return.

The charges differ from one bank and provider to another. Thomas Cook’s forex services show the remittance amount, the platform charge, and the applicable taxes before you pay.

How Much TCS Applies to Outward Remittance in 2026-27?

Since 1 April 2026, TCS on LRS remittances depends on the purpose. The threshold is ₹10 lakh in a financial year, counted across all your LRS remittances.

Here is how it works in practice. If you send ₹15 lakh for self-funded tuition in a year, TCS applies to the ₹5 lakh above the threshold, which is ₹10,000 at 2%. If you send the same ₹15 lakh as gifts, TCS is ₹1,00,000 at 20%. Thomas Cook does not refund TCS if an order is cancelled, but the amount appears in your Form 26AS, so you can claim credit against your tax liability.

Which Documents Do You Need for Outward Remittance?

Documents often vary by bank, provider, and purpose. However, for an outward remittance through Thomas Cook, the sender provides:

1. Original passport or another officially valid ID
2. PAN card
3. Proof of the source of funds
4. Signed Form A2 declaration and the additional information form
5. Bank statements for the last six months
6. Proof of the relationship between sender and beneficiary, where the transfer is to a relative

The beneficiary’s bank details are also required. Depending on the purpose, you may need to add a fee invoice for education or a hospital estimate for medical treatment.

Frequently Asked Questions

What is the limit for outward remittance from India?

Resident individuals can remit up to USD 250,000 per financial year under the LRS. The limit even covers all your forex purchases and remittances for the year, regardless of which bank or provider you use.

How long does an outward remittance take?

For major currencies and countries, Thomas Cook sends the money within 24 to 48 hours. The exact time depends on the currency, the payment mode, and the time of the order.

Which purpose code should I use for a foreign holiday?

Use S0306, which covers other travel, including holiday trips. If you pay for an overseas tour package, TCS is 2% on each remittance with no threshold.

Can I send outward remittance in cash?

No, you can not send an outward remittance in cash. A provider such as Thomas Cook requires the payment to be debited from the remitter’s savings bank account.

Is TCS an extra cost?

TCS is an advance tax and not a fee. It is credited to your tax account, and you can adjust it against your income tax liability when you file your return for the financial year.