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

Emigrating, funding a business or helping family in India? Sending large sums to India from the Philippines can be tricky.

India is the world’s leading remittance recipient, with more than USD$42 million sent from the Philippines to India in 2017 alone, according to the World Bank. Knowing the tax implications and how the process works can help give you peace of mind when transferring money there.

Is there tax on money being transferred from abroad to India?

There is no 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 — 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 you’re sending more than 50,000 rupees (about ₱32,000, depending on the exchange rate) to someone in India who isn’t a blood relative, they’ll need to report it on their taxes — regardless of how you know them. 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.

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What are the penalties in India if my recipient fails to file?

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 Philippines and India.

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.

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

You personally won’t have to report any amount of money you transfer out of the Philippines. The bank or money transfer company you use will do this for you. They are required to report any suspicious transfers or transfers over ₱500,000 to the Anti Money Laundering Council.

MUST READ: How much money can I send to India?

There’s no legal cap on the amount of money you can send, but some transfer providers will set their own limits. If you’re planning on initiating a large transfer, consider using a limit-free provider.

How will my recipient receive my remittance in 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.

How to send money to India

Bottom line

If you’re sending money to a blood relative in India, they won’t have to worry about taxes — but if you’re sending money to a friend, they’ll need to report anything over INR50,000 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.

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