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Need to Transfer Money to Germany? Know About all the Charges Involved.

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Sending money abroad can be worrisome for people if not done in the right manner. I want to share my experience of doing international money transfer to Germany to give you a rough idea about all the charges that are involved in such transactions. So, my brother had enrolled for a master’s programme at a German university and we had to send his tuition fees. I made a transaction of 8,000 euros in the university’s bank account and I must tell you that it was the smoothest experience ever. 

It may seem daunting but sending money to Germany or any other country is fairly easy. I decided to use online services like online forex & remittance platform to transfer money to Germany and ultimately saved up on a lot of charges that I would usually incur if I would have done it directly via bank. 

My transaction amount was 8,000 euros which is roughly 6,88,680 Indian Rupee as of today’s conversion rate (1 Euro = INR 86.02). Here is the list of charges that were involved in my transaction:

  • Nostro charges

A Nostro account is a bank account formed in an overseas country for the purpose of conducting transactions there, typically in the currency of that nation. In order to facilitate the settlement of interbank and consumer transactions in US dollars, for instance, most commercial banks maintain US dollar accounts with their correspondent banks in the USA.

This is the case for all major currencies and in my case the country is Germany. So, the bank usually calls them as Nostro charges. Now the charges vary from bank to bank. If you go straight to banks, you would be charged an outrageous sum. But the plan here is to use online forex & remittance platform as such platforms have several tie-ups with a lot of banks and you can benefit by paying the least nostro charges possible on a transaction. 

My online provider had a tie-up with a major Indian bank which charged me a flat INR 590 for the transaction which was amazing. I had paid way more than that in my past overseas transactions, so I was surprised and extremely happy to be paying such small nostro charges. 

  • GST charges 

These are the GST rates that you would have to pay on your foreign transactions. Since my transaction fell into the 1 lac INR to 10 lac INR range, I paid GST charges accordingly.

If the gross amount of currency you are exchanging is up to INR 1 lac, then a 0.18% GST rate will be applied of the total gross value of currency with INR 45 as the minimum tax.

If the gross amount of currency you are exchanging is falling into INR 1 lac to INR 10 lac slab, then a 0.09% GST rate will be applied of the total gross value of currency with INR 180 as other separate charges. 

If the gross amount of currency you are exchanging is crossing INR 10 lac slab, then a 0.018% GST rate will be applied of the total gross value of currency with INR 990 as other separate charges. 

The customer care executive of the online platform will tell you briefly about the breakup of these charges and you can also check them on RBI’s official website. 

  • KYC charges 

There are two options to get the KYC (documentation) done for your transaction to go through successfully. You can either complete your KYC by visiting the bank branch and it will be done for free. But online platforms also provide a complete digital and paperless KYC that can be done from the comfort of your home. The charges again vary from bank to bank but some platforms charge 20 euro for online KYC feature. 

This is a great feature to have in the current COVID-19 situation as you would want to avoid going to banks where a lot of people come and you might be risking yourself. 

Please note: Now the Reserve Bank of India has also started to collect 5% TCS (tax collected at source) on foreign transactions over INR 7 lac. Since my transaction was less than INR 7 lac, there was no deductions. But let’s say your total amount is resulting to INR 7.8 lac, then 5% TCS would be deducted on INR 80,000 (Amount post INR 7 lac will be covered). Here, you would be paying INR 4,000 which can later be claimed when you file your normal income tax returns. 

I was also told that in some cases, the beneficiary account also gets a little deducted amount, so it’s always good to cross-check with the beneficiary about any such thing. In my case, my brother had confirmed it with the university accounts person and there was no such deduction done by the university’s end.

Conclusion

Speaking frankly, the best way to do international money transfers is by using an online forex & remittance platform. My experience was really wonderful as it gives you an easy way to do so by sitting just at home. The customer support staff is generally really nice to talk to and will help you with everything. You end up saving because of the special tie-ups these platforms have with the major banks.

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