You know how they say travel makes you wiser? I say it first robs you, then teaches you. Before my first international trip, I felt pretty sorted. Tickets? Booked. Itinerary? Color-coded. Forex? Exchanged at my local bank. Months later, while randomly scrolling online, I saw an ad from a forex platform offering far better rates and lower fees, and that’s when it hit me.
Currency exchange charges in India include 2-15% rate markups, ₹500-2000 service fees, and GST. Banks and airports often charge the highest. The cheapest way out? Use trusted online forex platforms like BookMyForex that offer zero markup rates, zero commission, and free same-day currency delivery.
When you exchange Indian Rupees (INR) for any foreign currency, the rate you see on Google (the interbank rate) isn’t usually the rate you get. Several charges are layered on top, making the final cost much higher. Let’s decode where these extra charges come from!
What You Pay for Currency Exchange in India
1. Exchange Rate Markups
The exchange rate you see on Google (the interbank or mid-market rate) is essentially what banks use among themselves. But when you exchange your Indian Rupees for a foreign currency, you rarely get this “best” rate.
A rate markup or a margin is added by banks, money changers, and currency exchange platforms on the interbank exchange rate.
For example, if the interbank rate for USD to INR is Rs. 85, a provider might offer Rs. 87. That Rs. 2 difference is the hidden markup fees.
Banks and offline money changers typically keep a markup of 2% to 5% over interbank rates. They often use fixed rates for the day to protect against market volatility, which can mean a higher margin for them.
Airport currency exchange centers are known for the highest markups, often reaching 5% to 15%. A higher markup means you get less foreign currency for your Indian Rupees.
Over a large transaction, this can add up to a significant amount. For instance, a 5% markup on a Rs. 1,00,000 exchange means you pay an extra Rs. 5000 as fees.
Even a small difference in the exchange rate can make a big impact on how much foreign currency you actually get, so always keep an eye on that rate before you exchange currency!
2. Commission or Service Fees
Another small yet significant chunk of your cost often comes from commission or service fees charged by banks, money changers, and forex providers.
These fees may sometimes be upfront and visible, and other times they can be hidden or buried in fine print, making it easy to overlook how much you are actually paying.
As an example, banks charge a service fee for issuing foreign currency. The fee is generally a fixed fee, say Rs. 150 or Rs. 300 or Rs. 500, regardless of the amount being exchanged.
Others may charge a commission, which can be a percentage of the total amount you’re exchanging. For instance, a 0.5% to 2% commission means that if you exchange Rs. 1,00,000, you might end up paying an extra Rs. 500 to Rs. 2000 simply as a fee.
You might be asking yourself, Why these fees? Currency exchange isn’t a simple cash swap; it involves real operational costs.
These fees are meant to cover the operational costs associated with currency exchange service, which are: staffing, technologies, currency logistics, compliance with regulations, and, of course, creating a profit margin.
That said, not every provider takes a commission or service fee. Some modern tech-driven fintech platforms have completely eliminated them.
These platforms operate with lower overhead costs (no branches, fewer middlemen) and often do high-volume/low-margin business. So, choosing the right service provider can help you avoid or reduce these commissions and service fees.
3. Goods and Services Tax (GST)
No matter where you exchange currency in India – whether through a bank, an offline money changer, or an online currency exchange service – you will have to pay GST. This fee is levied by the Government of India.
The current GST rates are as follows:
a. On commission, fees, and charges: 18% GST will apply
b. On the amount of foreign currency exchanged: Please refer to the slab below
| Amount of Currency Exchanged (ACE) | GST rates | Minimum GST | Maximum GST |
|---|---|---|---|
| Up to Rs. 1 lakh | 0.18% of ACE | Rs. 45 | Rs. 180 |
| Between Rs. 1 lakh and up to Rs. 10 lakh | INR 180 + 0.09% of ACE | Rs. 180 | Rs. 990 |
| Above Rs. 10 lakh | INR 990 + 0.018% of ACE | Rs. 990 | Rs. 10,800 |
While it’s not something you can avoid, understanding the GST slabs helps you spot unfair charges in case someone’s overcharging under the GST label.
Also, use reliable forex providers that display the GST amount transparently upfront, so you always know what you’re paying.
4. Tax Collected at Source (TCS)
Many travellers mistake TCS for a service fee, but it’s not a fee; it’s a tax.
While it’s not a fee you pay to the forex provider, TCS (Tax Collected at Source) can still affect your upfront cash outflow, especially if you’re exchanging large amounts of currency.
TCS is a tax that the seller (forex provider or bank) collects on behalf of the government when you purchase foreign currency under the Liberalised Remittance Scheme (LRS).
But here’s where it gets interesting. TCS (Tax Collected at Source) is deducted at the time of transaction only if your total foreign exchange purchase exceeds Rs 10 lakh in a financial year, and the TCS rate depends on the purpose of your currency purchase.
| Type of Transaction | TCS Rate |
|---|---|
| Purchase of Forex (Currency Notes & Forex Card) | 20% (only for spends over Rs. 10 lakhs in the financial year) |
| Purchase of Forex for Education and Medical Visits | 5% (only for spends over Rs. 10 lakhs in the financial year) |
So, if your total foreign exchange purchase exceeds Rs. 10 lakh in a financial year, your provider will collect TCS upfront at the applicable rate (e.g., 5% or 20%) during the transaction.
But if your total forex purchase is under Rs. 10 lakh (which is already a generous limit), you’re unlikely to see TCS deducted.
It’s important to remember that TCS is NOT an extra tax; it’s an advance tax that you can claim back as a credit against your total income tax liability or get a refund when filing your Income Tax Return (ITR).
The Cheapest Way to Exchange Currency in India
So, now that I’ve listed all the potential costs, let’s get into solutions. To put it simply, you won’t be paying excessive charges if you use the right currency exchange provider.
GST and TCS are essentially mandated by the government, however, for currency exchange, the real charges are always the rate markups and service fees. The right forex provider would eliminate both these charges, and that’s exactly where BookMyForex comes in.
Real-Time Exchange Rates: BookMyForex provides live and transparent exchange rates that change in real time based on actual market prices, unlike a fixed rate that is shown at banks and airport counters with huge markups.
Zero Commission & No Hidden Fees: Say goodbye to surprise charges. BookMyForex will not charge you any hidden commissions or high service fees; what you see is what you pay.
Free & Same-Day Delivery: Whether you are ordering currency or a prepaid forex card, you can enjoy free and same-day doorstep delivery.
Zero Charges on Card Issuance & Reloads: You can purchase BookMyForex’s multi-currency forex cards with zero issuance fee, can reload them anytime and for any of your future trips with zero reload fee.
Transparent TCS & GST Charges: All applicable TCS and GST charges are clearly displayed during order booking, so there are no unexpected costs or hidden surprises.
More Hacks to Save Big on Currency Exchange in India
1. Plan Ahead, Avoid Airport Rush!
Airport exchange counters are always the worst option because of their high mark-ups (5-15%) and service charges. Book your forex a few days or weeks in advance, and avoid the rush charges.
2. Compare, Compare, Compare!
Do not accept the first rate you see. Compare exchange rates across various banks and authorized money changers in your town as well as online. This way, you can easily find out who is offering you the best deal.
3. Forex Cards Are Often Your Best Bet
Forex Cards offer far better exchange rates than cash exchange, provide security, and allow you to lock in rates. Look for a forex card with zero issuance, reload, and ATM fees, and crucially, low or zero cross-currency markups.
4. Understand “Zero Markup” Claims
The word “zero markup” can be confusing. A few credit cards advertise “zero forex markup.” However, these could mean zero markup against the card network rate. These card network rates already have a markup of 1% or more above interbank rates.
5. Know the RBI Guidelines
You can take up to USD 3000 or its equivalent in cash out of the country. The rest of your travel funds can be loaded on a forex card, but the total must not exceed the RBI’s Liberalised Remittance Scheme limit of USD 2,50,000. Always check with the RBI regulations to avoid a penalty fee.
