Sending $10,000+ to India? What you need to know about tax laws.
Laws legal documents sending money to India

Laws and legal documents when transferring large sums of money into India

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Emigrating, funding a business or helping family abroad? Sending large sums into India can be tricky.

There’s a lot for you to consider when sending money to India. But you can’t avoid the laws and potential paperwork that go along with transferring large amounts of money.

How India regulates large remittances

India is the world’s leading remittance recipient, with more than $10 billion sent from the US to India in 2015 alone. 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.

As with all international money transfers, be wary of potential fraud and only send money to people you know. Using a reputable provider can safeguard you from potential scams.

What are the penalties for not filing a large remittance?

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 is above board and complies with the laws of both the US and India.

Do I have to report large transfers out of the US?

To be safe, yes. By law, banks report all cash transactions that exceed $10,000 — and any transaction of any amount that alerts their suspicions. Money transfer businesses, which often solely send money between countries, sometimes have reporting thresholds as low as $1,000.
Sending a lot of money out of the country? Know what the IRS expects of you.

How will my recipient receive my remittance in India?

The process of receiving a money transfer in India will vary by provider and delivery method. In general, your recipient will provide ID or a confirmation number for the transaction to receive your funds.

If your recipient owns an account with an Indian bank or money transfer company, they may not need to provide this information each time you send money.
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6 Responses

  1. Default Gravatar
    ramanMay 22, 2018

    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.

    • finder Customer Care
      nikkiangcoMay 23, 2018Staff

      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

  2. Default Gravatar
    RamyaApril 30, 2018

    If we want to send 1 crore to my parents , do I need to pay tax in India for the transaction ?

    • finder Customer Care
      JhezelynMay 1, 2018Staff

      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

  3. Default Gravatar
    ArjunApril 28, 2018

    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?

    • finder Customer Care
      JeniApril 28, 2018Staff

      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

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