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With Canada being a big market for Indian exporters, IT service providers, and freelancers, receiving payments in CAD has become a norm.
However, receiving CAD payments in India comes with its own set of challenges. High bank charges, bad exchange rates, and long processing times can eat into the final amount that businesses receive. Many Indian companies also face compliance issues and payment delays due to complex banking regulations.
This article will look at the best ways to receive CAD payments, costs and processing times, and the most suitable options for Indian businesses.
When getting CAD payments from Canada, cost, speed, and compliance are key. Here are the ways to get paid in CAD:
Karbon Forex is one of the best ways for Indian businesses to receive CAD payments at competitive exchange rates. With a simpler process, lower fees than banks and faster settlement times, Karbon is perfect for businesses looking for a cross-border payment solution.
Pros:
Low FX markup and transparent pricing
Faster settlement than banks
No hidden charges or intermediary bank fees
Cons:
Business verification and documentation required
SWIFT transfers are the common way to receive CAD payments directly into an Indian business bank account. While widely accepted, they come with high transaction fees, intermediary charges, and bad exchange rates.
Pros:
Secure and widely accepted by banks
Suitable for large payments
Cons:
High fees (includes intermediary and incoming bank charges)
Slower processing times (3-5 business days)
Freelancers and service-based businesses use payment gateways like PayPal, Stripe, and Payoneer. These platforms make it easy to receive CAD payments but come with high conversion fees and markup on exchange rates.
Pros:
Easy setup and user-friendly
Suitable for small businesses and freelancers
Cons:
High currency conversion fees (often 3-4% above market rate)
Payout delays and limited withdrawal options
Multi-currency accounts allow businesses to hold CAD and convert at better rates. Platforms like Wise and Interactive Brokers help avoid high FX markup by allowing transfers when rates are best.
Pros:
Lower forex conversion costs
Flexibility to hold CAD and convert at the best rate
Cons:
Not all platforms allow direct INR withdrawal
Business verification required
Canadian clients may issue CAD cheques that can be deposited into an Indian bank account. But processing time is extremely slow and bank fees are high.
Pros:
Traditional method, well known to businesses
Can work for clients who prefer cheques
Cons:
Processing time can take weeks
High clearance fees and exchange rate losses
For businesses that handle frequent CAD transactions, Karbon Business is a cost-effective and faster option than traditional banking channels. But if you need to hold foreign currency, a multi-currency account might be a better choice. SWIFT and payment gateways work but come with higher fees and crypto and cheque deposits are niche options with limitations.
Receiving CAD payments in India is regulated by the Reserve Bank of India (RBI) under the Foreign Exchange Management Act (FEMA). Businesses need to comply with certain rules to ensure compliant cross-border transactions.
Purpose Declaration: Every inward remittance should have a valid purpose code as per RBI’s guidelines (e.g., export of services, software, consultancy, etc.).
Authorized Dealer (AD) Banks: Only RBI-approved banks and financial institutions can process foreign currency transactions.
GST & Tax Compliance: Depending on the type of payment, Indian businesses may need to pay GST on foreign income and comply with TDS (Tax Deducted at Source) rules.
Foreign Currency Accounts: Businesses can open an Exchange Earners’ Foreign Currency (EEFC) account to hold CAD without converting to INR immediately. You can also use a Canada virtual bank account by Karbon.
Conversion Rules: If funds are not kept in an EEFC account, banks will convert CAD to INR at prevailing rates. You can bypass such restrictions by using a Canadian virtual bank account.
Payment Settlement: CAD payments are settled within 1-3 business days after compliance checks by the bank or service provider.
Regulatory Reporting: Large transactions (above USD 250,000 per financial year) may require additional reporting under FEMA and RBI’s monitoring system.
When you receive CAD payments in India, there are ways to reduced fees and more exchange rate. Here’s how:
Ask for Bank Transfers Over Payment Gateways: PayPal and Stripe charge high fees (3-5%). Instead, opt for direct bank transfers or cost-effective services like Karbon Business (up to 1%).
Batch Payments for Lower Fees: If you’re receiving multiple payments, ask clients to send one consolidated payment to reduce per-transfer charges.
Discuss FX Rate Responsibilities: Some clients may agree to pay conversion fees for large invoices.
Hold CAD in Foreign Currency Account: An EEFC (Exchange Earners’ Foreign Currency) account or an international virtual account allows you to hold CAD and convert at better rates instead of immediate conversion.
Use a Competitive FX Service: Platforms like Karbon give better exchange rates than banks.
Avoid Bank’s Auto-Conversion: Banks add 2-4% markup on exchange rates. With a multi-currency account, you can choose when to convert CAD to INR.
Karbon makes receiving CAD payments cheaper and faster for Indian businesses. Here’s how:
By choosing Karbon, Indian businesses can receive CAD payments faster, save costs, and improve cash flow.
Yes, but your bank will convert it to INR at their rate and may charge hidden markups. To avoid this, you can use a multi-currency account or Karbon.
No for businesses but large transactions (above USD 250,000 per year) may require additional compliance under RBI and FEMA regulations.
Your invoice should have the amount in CAD, payment method (bank transfer, PayPal, etc), and necessary banking details like SWIFT code and IBAN (if applicable), and correct GST and tax info.
Yes, businesses can hold CAD in an EEFC or Canadian virtual bank account and convert later when rates are favorable. Without an EEFC or virtual account, your bank will convert CAD to INR at the prevailing rates.
Delays can happen due to compliance checks, wrong beneficiary details or intermediary bank issues. If payment is rejected, the sender will get a refund but intermediary bank fees will be deducted.
For wire transfers, you can ask for a SWIFT MT103 receipt from the sender which has tracking details. Payment gateways and fintech platforms provide real-time tracking.
Yes, CAD payments are foreign income and may be subject to GST, income tax, or TDS depending on the transaction. Consult a tax professional to be sure.
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