India is the world’s leading remittance recipient, with more than $12 billion sent from the US to India in 2019 alone. Knowing how much you’ll pay in tax and how the process works can give you peace of mind when sending money from the US to India.
There is no money transfer limit on how much you can transfer to India from the US, at least none imposed by the Indian or US governments. However, the specific money transfer or banking service that you are using might impose limits on how much they can accommodate in a single transfer. If you’re planning on initiating a large transfer, consider using a limit-free provider such as Xe.
When you send money to any person abroad in India, the first $15,000 USD will be exempt from taxes by the IRS under the Gift Tax policy. This limit is charged on a per-person basis — if you would like to send $15,000 USD each to multiple persons, you will still be off the hook for any gift taxes.
If you do send more than the allotted $15,000 USD, all you need to do is to file an IRS Form 709 to disclose the gift. On top of the $15,000 annual exclusion, you get an $11.7 million lifetime exclusion in 2021. Should you be fortunate enough to have remitted over $11.7 million, you may then be liable for gift taxes at a rate anywhere from 17% to 40%.
Sending a lot of money out of the country? Know what the IRS expects of you.
There is no recipient tax on money being transferred from abroad to India when it’s being sent to blood relatives. In general, “blood relatives” — including spouses, children and grandchildren, siblings or in-laws — don’t pay tax on any amount you send.
However, if you’re sending more than about $700 to someone in India who isn’t a blood relative, they’ll need to report it on their taxes. No matter how you send the money, your recipient could be on the hook for a gift tax if they aren’t a blood relative, as regulated by the Indian Income Tax Act.
In February 2020, the Indian government introduced a new law that would put in new limits for remittances out of India.
Because of this law, resident individuals in India can only remit a maximum of USD $250,000 overseas each year. Additionally, any amount remitted above ₹700,000, which translates to roughly 9,500 USD, will be taxed at 5%.
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If you don’t report a transfer on your taxes in India, you could be charged a 10%, 50% or 200% penalty on the taxes owed, depending on whether it was considered intentional or not.
With so much attention on money entering and leaving India, if you fail to report large sums, don’t know you have to report them or don’t report them correctly, it will likely be discovered. Make sure to declare any large remittance as income on your general tax return with the Indian Income Tax Department.
To avoid the severe penalties that could come with a failure to report large sums of money into the country, speak with a professional to guarantee that everything complies with the laws of both the US and India.
Your recipient can pick up the cash in person or have the money deposited directly into their bank account or mobile wallet. Not every provider will offer all three options, so check before initiating a transfer.
In general, your recipient will provide ID or a confirmation number for the transaction to pick up the money in cash.
Whether products shown are available to you is subject to individual provider sole approval and discretion in accordance with the eligibility criteria and T&Cs on the provider website.
Are you visiting from outside the US?
You’ll likely need to file with the IRS, and your recipient may have to pay a gift tax.
Your recipient may need to pay taxes on a large remittance, and you’ll likely need to report it.
Your recipient won’t be on the hook for any taxes, but there may be limits on how much you can send.
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Can I send huge amount lets say 40000 Canadian dollars from my Canadian account to my own Indian account? Will it cause Income Tax problem? I am paying taxes in Canada for the salary i get paid. please clarify.
Hi Raman,
Thanks for your message and for visiting finder – the leading comparison website & general information service built to give you advice in your buying decision needs. How are you doing today?
Can I send huge amount lets say 40,000 Canadian dollars from my Canadian account to my own Indian account?
– Yes, you can send 40,000 CAD to your Indian account. Just make sure to declare any large remittance as income on your general tax return with the Indian Income Tax Department.
Will it cause Income Tax problem?
– To avoid the severe penalties that could come with a failure to report large sums of money into the country, speak with a professional to guarantee that everything is above board and complies with the laws of both the US and India.
Hope this was helpful. Don’t hesitate to message us back if you have more questions.
Cheers,
Nikki
If we want to send 1 crore to my parents , do I need to pay tax in India for the transaction ?
Hello Ramya,
Thank you for your comment.
As per the Income tax Act, if the source of income was outside India, and also received outside India, then no tax will be levied on the income earned outside India in India. However, foreign country would have charged you tax on the income earned in their country.
Regards,
Jhezelyn
If a sender send an amount more than 1 crore rupees from USA to India, is there any rules that first the receiver to pay the international money transfer charges before the receiver receive the money?
Hi Arjun,
Thank you for getting in touch with finder.
As a friendly reminder, while we do not represent any company we feature on our pages, we can offer you general advice.
Many providers in the US offer transfer services to India, but your recipient could be on the hook for a gift tax as regulated by the Indian Income Tax Act.
In general, if your recipient is a “blood relative” — including spouses, children and grand-children, siblings or in-laws — they do not pay tax on any amount that you send. Your recipient also won’t pay tax on any money sent as part of an inheritance or a wedding gift.
However, if your recipient is not related to you, any amount over 50,000 rupees (about $750, depending on the exchange rate) that you send is taxable and must be declared as income.
You may want to check out this link for more info on paying taxes for large money transfers.
I hope this helps.
Have a great day!
Cheers,
Jeni