Economic Impact of Inward and Outward Remittances and their Tax Implications

India being the largest recipient of international remittances in the world greatly enhances its household income, savings and investments in addition to favourably influencing GDP growth and tax receipts. Remittances maintain foreign reserves, raise living standards, and encourage local consumption. At the same time it also suffers from outward remittance on primarily its own aspiring middle class who send their children abroad for studies. Usually, inward remittances which are essential for family welfare and economic stability is left tax-free globally because of which India too has left it largely tax free. For NRIs, tax laws must be clear and uncomplicated to guarantee efficient and legal repatriation procedures too. The study examines how remittances influence the Indian economy and the impact of taxes on inward and outward remittances. The paper focuses on summarizing/analysing existing data/trends. Inward remittances enhance the welfare of recipient country families and contribute to economic growth. The flow of outward remittances are expected to be affected due to the changes in tax policy of India may impact the flow of outward remittances. The paper is based on review of existing research and policies. Future studies can include primary data with quantitative analysis. The paper shall contribute to the existing literature about remittances to/from India by summarizing statistics and identifying economic implications.