10 Common Mistakes NRIs Make When Sending Money Home (And How to Avoid Them)

Last month, Rajesh, an NRI working in Dubai, sent AED 20,000 to his family in Mumbai. He used his regular salary account, picked the first service he found, and clicked "send."

Three days later, his mother received ₹4,32,000 instead of the ₹4,47,000 he expected.

Where did ₹15,000 disappear? Poor exchange rate, hidden fees, and using the wrong account.

If you're an NRI sending money home regularly, you've probably lost thousands without realizing it. After helping hundreds of NRIs optimize their remittances over the past decade, we've seen the same mistakes repeat. The good news? All of them are easy to fix once you know what to watch for.

This guide covers the 10 most common mistakes NRIs make when sending money to India - and shows you exactly how to avoid each one. Whether you're supporting family, investing in property, or planning to return, these insights can save you significant money.

(Join Belong's WhatsApp community to get real-time exchange rate alerts and expert remittance advice from fellow NRIs.)

Mistake #1: Not Timing Your Transfer with Exchange Rates

Most NRIs send money whenever they remember or when family asks. They never check if the exchange rate is favorable.

Here's what happens: The AED-INR rate fluctuates daily. A difference of even 0.50 paise can mean thousands of rupees on a ₹5 lakh transfer.

Let's say you're sending AED 15,000 to India:

• At 22.50 INR/AED = ₹3,37,500
• At 23.00 INR/AED = ₹3,45,000
• Difference = ₹7,500

That's a family dinner wasted just because you didn't wait a few days.

How to avoid this:

• Use Belong's Rupee vs Dollar tracker to monitor currency trends
• Set rate alerts on your remittance app
• Plan bulk transfers during favorable periods (usually at month-end or quarter-end)
• Avoid emergency transfers when rates are poor

👉 Tip: If you're sending money regularly, use a currency forward contract to lock in rates for future transfers.

Mistake #2: Using the Wrong Bank Account for Transfers

This is huge. Many NRIs use their regular salary account to send money home. Big mistake.

The bank sees this as an international wire transfer and charges premium rates plus multiple fees. You're also missing out on better exchange rates available through NRE or NRO accounts.

Here's what you should use instead:

NRE Account (Non-Resident External):

• For foreign earnings sent to India
• Fully repatriable with no limits
• Interest is tax-free in India
• Best for: Regular salary transfers, building an FD corpus

NRO Account (Non-Resident Ordinary):

• For Indian income (rent, dividends, pension)
• Repatriable up to USD 1 million per year
• Interest is taxable
• Best for: Managing Indian income

Regular Savings Account:

• Expensive wire transfer fees
• Poor exchange rates
• Not compliant for long-term NRI use
• Best for: Nothing, if you're an NRI

According to RBI regulations, once you become an NRI, you must convert your regular account to NRE/NRO within a reasonable time.

Mistake #3: Ignoring Hidden Fees and Charges

"Zero fees!" the banner says. You transfer AED 10,000, but your family receives ₹15,000 less than expected.

Welcome to hidden charges.

Common fees that eat into your transfer:

• Service fee (₹100-500 per transaction)
• Currency conversion markup (0.5%-3%)
• Correspondent bank charges (₹500-1,000)
• Receiving bank charges (₹150-300)
• GST on service charges

That "free" transfer just cost you ₹2,000+.

Banks and remittance services make money on exchange rate markups. They offer you a rate that's 1-3% worse than the interbank rate. On a ₹5 lakh transfer, that's ₹5,000-15,000 gone.

How to avoid this:

• Ask for the "all-in" rate (total cost including markup)
• Compare at least 3 services before sending
• Check NRI account charges across different banks
• Use fintech services that offer transparent pricing (like Vance, Wise, or bank-owned platforms)

Check the exchange rate on Google or Belong's tracker. If the rate offered is more than 0.5% different, you're paying too much.

What Happens if You Enter Wrong Recipient Details?

Imagine this: You've sent ₹2 lakh to your mother's account. But you typed one wrong digit in the account number.

The money lands in someone else's account. Getting it back? That's a 3-month nightmare involving your bank, the receiving bank, and the RBI.

Wrong details are the #1 reason for failed or delayed transfers.

Most common mistakes:

• Incorrect bank account number
• Wrong IFSC code
• Name mismatch with bank records (even spelling variations matter)
• Old account details (account was closed or changed)

How to avoid this:

• Double-check EVERY digit before confirming
• Ask the recipient to send a screenshot of their bank details
• Send a small test amount (₹100) first if it's a new recipient
• Save verified recipient details in your app
• Confirm with the recipient once the money arrives

According to the Foreign Exchange Management Act guidelines, reversing an incorrect remittance requires documentation from both banks and can take 60-90 days.

👉 Tip: Most banks now verify recipient names using NPCI's Penny Drop system. If the name doesn't match, the transfer fails immediately - which is actually a good thing.

Mistake #5: Not Understanding RBI Repatriation Limits

Here's where many NRIs get stuck.

You sell your Mumbai apartment for ₹1.5 crore. You want to send all of it to your US bank account. But you can't.

Why? RBI limits.

Here are the rules you MUST know:

From NRO Account:

• Maximum USD 1 million per financial year (April-March)
• Requires Form 15CA and 15CB (CA certificate)
• Property sale proceeds capped at 2 residential properties
• Source: RBI Master Circular on Remittance Facilities

From NRE Account:

• No repatriation limit
• Full amount can be transferred freely
• No tax on interest or principal

From FCNR Account:

• No repatriation limit
• Foreign currency deposits remain in original currency

Many NRIs park crores in NRO accounts thinking they can send it all abroad later. Then they discover the USD 1 million limit and panic.

Smart planning to avoid this:

• If you're earning abroad, use NRE accounts for maximum repatriation flexibility
• For property sales, consider reinvesting in GIFT City FDs (USD denominated, fully repatriable)
• Plan repatriation over multiple years if needed
• Don't miss Section 54 tax benefits when selling property

Read our detailed guide on how NRIs can repatriate money from India.

Using the Wrong Purpose Code

Every international transfer needs a purpose code. This isn't optional paperwork - it's a FEMA requirement.

Use the wrong code, and your transfer gets stuck in compliance checks. Use the right code, and money flows smoothly.

Common purpose codes for NRIs:

Using "S1101 - family maintenance" for everything might seem convenient, but banks report suspicious patterns to the RBI. If you're actually paying tuition fees, use S0005.

How to avoid this:

• Check the correct purpose code on the RBI website
• Keep supporting documents ready (the bank may ask)
• Don't use generic codes for specific purposes
• Ask your bank's forex desk if you're unsure

According to FEMA guidelines, misrepresentation of purpose codes can lead to penalties and account freezing.

Mistake #7: Not Keeping Proper Documentation

Your CA asks: "Show me proof of the ₹30 lakh you received from abroad last year."

You: "Um… I deleted those emails?"

Bad move. Very bad move.

When you send money to India, you need documentation for:

• Your home country taxes: Proof you didn't earn this money illegally
• Indian income tax: If the recipient is taxed
• Future repatriation: Proof of source when you want to send money back
• Property purchase: Banks want to see legitimate source of funds

Documents you MUST save:

FIRC (Foreign Inward Remittance Certificate):

• Issued by your Indian bank for money received
• Needed for property purchase, visa applications, and repatriation
• Keep digital and physical copies forever

Form A2:

• FEMA declaration form for outward remittances
• Shows purpose of transfer
• Required for amounts over USD 250,000 under LRS

Form 15CA and 15CB:

• Tax declaration forms for NRO repatriation
• CA certification of tax compliance
• Mandatory for transfers exceeding ₹5 lakh per year

Bank statements:

• Both sending and receiving ends
• Shows source of funds
• Keep for 7 years minimum

How to avoid this:

• Create a Google Drive folder: "NRI Remittances"
• Upload every FIRC, statement, and form immediately
• Request FIRC from your bank for every inward transfer
• Never rely on "the bank will have records" - they archive after 5 years

👉 Tip: If you're planning to sell property in India and repatriate funds, those old FIRCs are your golden ticket. Without them, proving the source becomes difficult.

Ignoring Tax Implications for Recipients

You send ₹5 lakh to your brother in India as a gift. Sweet gesture, right?

Surprise: He now owes ₹1.5 lakh in taxes (30% slab).

Most NRIs don't realize that the RECIPIENT may face tax implications, not just the sender.

Here's how gift tax works in India:

Tax-free gifts:

• To parents, spouse, children, siblings (blood relatives)
• On special occasions (weddings, inheritance)
• Up to ₹50,000 from non-relatives

Taxable gifts:

• Any amount over ₹50,000 from non-relatives (friends, cousins, distant family)
• Gets added to recipient's income and taxed at their slab rate
• Source: Section 56(2)(x) of Income Tax Act, 1961

For property and investments:

• Rental income: Taxable for recipient
• Property sale proceeds: Subject to capital gains tax
• Investment returns: TDS applies

How to avoid this:

• Send money to immediate family members (tax-free)
• Split larger gifts across multiple relatives
• Keep relationship proof (birth certificates, marriage certificates)
• Advise recipients to check with a CA before ITR filing
• Consider using DTAA benefits if both countries have a tax treaty

For NRIs in the UAE, understanding the India-UAE DTAA is crucial for managing rental income, dividends, and investment returns.

Mistake #9: Not Comparing Transfer Services

"My bank has been sending money for me for 10 years. Why change?"

Because you've probably overpaid by lakhs.

Different services offer vastly different rates and fees. Let's compare a ₹5 lakh transfer:

That's a ₹11,300 difference on ONE transfer.

Factors to compare:

• Exchange rate markup (most important)
• Transfer fees
• Receiving bank charges
• Transfer speed (instant vs 1-3 days)
• Transfer limits per transaction
• Customer support quality

Best services for UAE to India:

• For speed: ICICI Money2India, HDFC Quick Remit
• For rates: Wise, Vance (now Aspora), RemitGuru
• For large amounts: Bank wire transfers (negotiate rates)
• For investments: Direct NRE account deposits

Check our guide on transferring money from Dubai to India for detailed service comparisons.

👉 Tip: Join Belong's WhatsApp community to get member-shared tips on the best rates and services each month.

Mistake #10: Not Tracking and Claiming TCS (Tax Collected at Source)

If you're sending money FROM India (as a resident or during home visits), the bank collects TCS under Section 206C of the Income Tax Act.

Most people pay this tax and forget about it. But TCS is not your final tax - you can claim it back if you have no tax liability.

When TCS applies (for outward remittances under LRS):

Source: ClearTax - Foreign Remittance Tax Guide

Example: You send ₹15 lakh from India to buy property abroad.

• TCS @ 20% on amount above ₹7 lakh = ₹1.6 lakh
• This TCS appears in your Form 26AS
• When you file ITR, you can claim it as tax credit or refund

How to avoid losing this money:

• Check Form 26AS every quarter on the income tax portal
• Note all TCS deductions
• File ITR even if you have no India income (to claim TCS refund)
• If you don't file, the government keeps your money
• Deadline: July 31 for ITR filing (or by due date for your category)

Many NRIs pay thousands in TCS and never claim it back because they think "I'm not a resident, why file ITR?" If you have Indian income, investments, or made LRS transfers, filing ITR is mandatory.

How Belong Helps You Avoid These Mistakes

At Belong, we've built a platform specifically to solve these remittance challenges for NRIs.

Here's how:

1. Real-time rate monitoring: Our Rupee vs Dollar tracker helps you time transfers perfectly. Get alerts when rates hit your target.

2. Smart account planning: We guide you on whether to use NRE, NRO, or FCNR accounts based on your repatriation needs. Use our NRI FD rates comparison tool to find the best returns.

3. GIFT City USD FDs: Bypass rupee risk entirely with USD fixed deposits in GIFT City. Tax-free returns, full repatriation, and no conversion hassles.

4. Tax and compliance support: Our team helps with Form 15CA/15CB documentation, NRI tax filing, and claiming TCS refunds.

5. Expert community: Join 100,000+ NRIs in our WhatsApp groups who share rate alerts, service reviews, and compliance tips daily.

Download the Belong App to access USD FDs starting at just $1,000 with returns up to 5.0% p.a., explore Alternative Investment Funds in GIFT City, and connect with our financial experts.

Conclusion: Send Smarter, Save More

Remittances are emotional. You're supporting family, building a future, staying connected to home.

But emotions shouldn't cost you lakhs.

Quick recap - avoid these 10 mistakes:

1. Time your transfers with favorable exchange rates
2. Use NRE/NRO accounts, not regular salary accounts
3. Check all fees and markups before confirming
4. Verify recipient details twice (or thrice)
5. Know RBI repatriation limits (USD 1M from NRO)
6. Use correct purpose codes for each transfer
7. Keep all documentation (FIRC, Forms 15CA/15CB)
8. Check tax implications for recipients
9. Compare services for each transfer
10. Track and claim TCS in your ITR

Every time you send money home, you're making dozens of small decisions. Each one affects how much your family actually receives.

The difference between doing it right and doing it carelessly? Thousands of rupees per transfer. Over a decade, that's millions saved.

Your next steps:

1. Check your last 3 remittances - calculate how much you lost to fees and poor rates
2. Open an NRE or NRO account if you haven't already (read our guide on best NRI accounts)
3. Join Belong's WhatsApp community to stay updated on rates and regulations
4. Download the Belong App to explore smarter ways to save and invest in India - starting with tax-free USD fixed deposits in GIFT City

Your hard-earned money deserves to reach home without leaking through the cracks.

Let's make sure it does.

Sources:

• Reserve Bank of India - Remittance Facilities for NRIs
• Income Tax Department - Gift Tax Rules
• RBI - Liberalised Remittance Scheme
• Foreign Exchange Management Act (FEMA) Guidelines
• ClearTax - Foreign Remittance Tax Guide