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Businesses typically use SWIFT bank transfers to send payments from India to the UK, but these come with slow processing times and high charges. Many companies unknowingly pay 2-4% extra due to bank imposed forex markups.
Thankfully modern forex solutions like Karbon Forex, multi-currency accounts and fintech platforms offer a faster, cheaper and more transparent way to send payments to the UK.
This guide will cover the best ways to send payments from India to UK, how to minimize fees, and compliance tips to avoid mistakes.
Before sending payments from India to the UK, businesses and freelancers must follow RBI’s foreign exchange regulations. Failure to follow these rules can lead to delays or penalties. Here’s what you need to know:
Liberalized Remittance Scheme (LRS)
The Liberalized Remittance Scheme (LRS) governs outward remittances for individuals and sole proprietors. Under LRS:
Purpose Codes (e.g., P0105, P0305)
Every international transaction requires a purpose code, which tells banks and regulators the reason for the transfer. Choosing the wrong code can lead to delays or rejections. For UK-bound payments, common purpose codes are:
P0105 – Business and professional services (consulting, software, legal fees, etc.).
P0305 – Import payments for goods.
S1101 – Payment for software services.
Tip: If unsure, confirm the correct code with your bank or forex provider before initiating a transfer.
Tax Deducted at Source (TDS) and GST
Depending on the nature of the payment, TDS and GST apply to outward remittances:
Tip: Always check double taxation treaties (DTAA) between India and the UK to avoid unnecessary tax deductions.
Form 15CA & 15CB: Documentation for Tax Compliance
For payments exceeding ₹5 lakh, RBI requires businesses to submit Form 15CA (online declaration) and Form 15CB (chartered accountant’s certificate) before processing international transfers. These forms act as proof of compliance with RBI and Income Tax regulations.💡
Tip: Karbon Forex provides Form 15CA/CB via its online dashboard to help with faster India to UK payment processing.
Below are the most efficient options, ranked by their benefits for Indian businesses and freelancers.
Karbon Forex offers low forex markups, faster processing, and fully online, no hassle—the best choice for Indian businesses making UK payments.
Lowest FX Markups: Banks and some fintechs add 2-4% markup on exchange rates, meaning you pay more. Karbon Forex gives you live market rates with 0% markup, save thousands on big transactions.
RBI Approved & Compliant: No hidden fees and simplified documentation for Indian businesses.
Best For: Companies paying UK suppliers, freelancers receiving GBP payments and businesses with multiple cross border transactions.
SWIFT transfers via ICICI, HDFC, SBI, and other banks is the traditional way, but come with high fees and slower processing.
Exchange Rate Markups: Banks charge 2-4% higher than the actual exchange rate, expensive.
Slow Processing: Payments take 1-3 business days due to intermediary banks.
Complex Documentation: Requires purpose codes, Form 15CA/CB and bank approvals.
Best For: Large corporate payments that require formal banking channels.
Wise or PayPal are popular choices for freelancers and small businesses looking for transparent, low cost international payments.
Fast & Easy: GBP transfers arrive in hours, depending on the recipient’s bank.
Best For: Freelancers and small businesses looking for fast transfers.
If your UK recipients have a digital wallet, consider Revolut, Payoneer or Skrill for faster payments.
Fast Transfers Within the UK: GBP payments arrive instantly when sent to a UK wallet.
Low FX Fees: Some platforms offer better rates than banks for INR to GBP conversion.
Recipient Requirements: The recipient has to have an account with the same platform.
Best For: Freelancers and businesses receiving GBP in the UK or making small frequent payments.
If you’re paying for UK-based services like software subscriptions, hosting, or vendor invoices, international bill payment services can make it easier. For example, a UK-based subscription (e.g. AWS, Google Cloud, Adobe) using Karbon Forex or Wise can save you a lot of fees.
Direct Vendor Payments: No need to transfer GBP to a recipient manually—payments go direct to the vendor.
Avoids Double Currency Conversion: Some services offer INR-to-GBP conversion at lower fees than banks.
Best For: Businesses paying for SaaS tools, cloud services and vendor invoices in the UK.
Reducing payment costs when sending money from India to the UK requires strategic planning. By leveraging financial tools and understanding market trends, businesses can minimize forex markups and transfer fees.
If you make regular payments to the UK, you can use forward contracts to lock in an exchange rate for future transactions. This eliminates the uncertainty of forex fluctuations and keeps costs stable. For businesses with fixed payment schedules, this means predictable expenses and easier budgeting. Karbon Forex and some banks offer forward contracts tailored to business needs.
Having a multi-currency account in GBP means you can convert INR when the rates are favourable and store the funds for future use. This avoids frequent conversions at higher rates. While some Indian banks offer this service, fintech platforms like Karbon Forex offer better rates and lower fees. This is especially useful for exporters or businesses with ongoing UK transactions.
Peer-to-peer (P2P) forex platforms connect buyers and sellers directly, cutting out traditional banking spreads. By matching businesses that need GBP with those that need INR, these platforms offer competitive exchange rates and lower conversion costs. Not as widely used as traditional transfer methods but can provide big savings for businesses comfortable with online forex trading.
The GBP-INR exchange rate fluctuates based on global market trends, interest rates and economic news. Businesses that track forex trends can identify the best times to convert INR to GBP and get the most value. Some times of the month or year may be more favourable and strategic timing can reduce overall transfer costs. Using forex alerts or consulting financial experts can help you with this.
Sending money from India to the UK requires planning to ensure compliance and smooth processing. Here’s a step-by-step guide to make it seamless.
Step - 1: Choose the Right Payment Transfer Method
The best method depends on cost, speed, forex markup, and compliance. Karbon Forex is ideal for businesses that want competitive rates and a simple online process. Traditional SWIFT transfers are for bigger transactions but with higher fees and forex markups.
Step - 2: Get Documents Ready
Before you initiate a transfer, you must have all the necessary documents. This includes:
Having these documents in order prevents delays and compliance issues.
Step - 3: Compare Exchange Rates & Fees
Exchange rates fluctuate throughout the day and banks add a markup on top of the real exchange rate. Comparing rates across Karbon Forex, banks and fintech platforms helps you get the best deal. Also check for hidden fees like intermediary bank charges or receiving bank deductions to avoid unexpected costs.
Step - 4: Make the Transfer
Once you have chosen the right method and documents are ready, you can initiate the transfer. With Karbon Forex, you can transfer online with minimal processing time. If using SWIFT, you need to visit a bank or use net banking to initiate the transaction. For fintech solutions like Wise, you can transfer via their app or web portal but availability depends on the transaction type.
Step - 5: Track & Verify Payment
Once the payment is made, track the transaction. SWIFT transfers provide an MT103 tracking number which can be shared with the recipient for confirmation. Fintech platforms provide real-time tracking, making it easier to monitor. Once the recipient confirms receipt, document the transaction for tax and compliance records.
Follow this structured process for a smooth, cost-effective and compliant funds transfer from India to the UK.
When sending payments from India to the UK, businesses and freelancers face delays, extra fees and compliance challenges. Understand these issues and take preventive measures to make transactions smooth.
1. Payment Delays
Delays can happen due to bank processing time, incomplete documents or intermediary banks holding funds for verification. To avoid payment delays in India to UK payments:
2. High Forex Markups
Banks and many transfer providers add hidden margins to the exchange rate, increasing costs heavily. The real-time forex rate (mid-market rate) is hardly offered to businesses, resulting in 2-4% extra costs in conversion fees.
How to avoid it:
3. Compliance Rejections
The Reserve Bank of India (RBI) mandates documentation and purpose codes for every international transfer. Transfers under Liberalized Remittance Scheme (LRS) must comply with specific limits and reporting requirements.
How to avoid it:
4. Chargeback Risks
For freelancers and service providers, international clients sometimes dispute payments and initiate chargebacks or freeze funds. This is more common when payments are made via credit cards or PayPal. Here are some ways you can avoid chargebacks in India to UK payments:
Now you know the common mistakes in India to UK payments and how to avoid them!
This article should serve as a good starting point to understanding India to UK payments. We do suggest choosing a modern and tech-enabled online payment platform, as international payments can get quite complex.
Karbon Forex is a good alternative if you wish to avoid multiple trips to your bank and send payments from India to UK completely online. Our amazing makes it a breeze. Check it out now for free and see if it suits your needs.
Exceeding the LRS limit may lead to regulatory scrutiny and penalties from the RBI. If you need to send more than this amount, consult a forex advisor or Karbon about other business remittance frameworks that aren’t under LRS.
UK banks need a SWIFT/BIC code along with the IBAN or account number and sort code. Some UK banks may charge a receiving fee (typically £7-15) which will be deducted from the amount received. Confirm with your recipient if their bank charges such fees so the correct amount reaches.
When paying services to UK companies, you may need to consider the India-UK Double Taxation Avoidance Agreement (DTAA). With proper documentation (like a Tax Residency Certificate from the UK provider), you might be eligible for lower TDS rates. Speak to the experts at Karbon to see if you are eligible.
A Foreign Inward Remittance Certificate (FIRC) is an official document issued by banks in India to confirm receipt of foreign currency, while SWIFT confirmation is just a transaction receipt. UK recipients often need FIRC for their accounting and tax purposes. Not all transfer methods provide FIRCs so check if your recipient needs this document.
For recurring payments, consider setting up a standing instruction with your forex provider or use subscription payment services. Some platforms allow you to schedule payments at predetermined dates with locked in exchange rates, reducing administrative work and potential forex fluctuations.
Keep copies of invoices, payment confirmations, SWIFT/transaction references, Form 15CA/CB and bank statements showing debit. For GST purposes also keep record of input tax credit claimed on imported services. These records should be kept for at least 7 years as per Indian tax laws.
Small businesses and large corporations face different compliance requirements. Smaller businesses might qualify for simplified procedures under the MSME framework, while larger corporations may need additional documentation like authorized dealer approvals for certain transactions. The reporting requirements to RBI also differ based on company size and transaction volume.
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