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India is the world’s leading remittance recipient, with more than $11 billion sent from the US to India in 2017 alone. Knowing how much you’ll pay in tax on money received from abroad to India and how the process works can help give you peace of mind when transferring money there.
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 about $700 to someone in India who isn’t a blood relative, they’ll need to report it on their taxes — and you may need to report it to the IRS, regardless of blood relations. 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.
Exclusive: Minimum transfer of $1,000 for Finder readers (normally $5,000).
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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.
Generally, yes — though it depends on how much you’re sending and for what purpose. Gifts over $15,000, business transactions over $10,000 and any foreign account in your name that’s held more than $10,000 in the past year will need to be reported on your taxes.
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.
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 such as XE.
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
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 ₹50,000 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.
The US trades about $63.7 billion in goods and services with India. If you’re interested in getting in on that action, we’ve put together a guide to starting an import/export business with India that includes information on startup costs, registering your business and more.
If you follow the law and submit your legal documentation in a timely and accurate manner, you shouldn’t experience hassles with the IRS. If you choose not to follow the law, you may be on the hook for stiff penalties, including jail time.
Yes, you can avoid IRS penalties if you can show reasonable cause for your failure to file — such as a house fire, serious illness or natural disaster.
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I received 30000 cad as equalization amount on divorce..I want to send this amount to my father in india..do I have to pay taxes in canada
Hi Sneha,
Thanks for reaching out.
Transfers over CAD$10,000 will automatically be reported to FINTRAC by the bank or money transfer provider you’re using to send the money. In short, whether you’ll need to pay taxes on it or not is dependent on how the equalization was paid to you: consulting with your attorney would be best in this situation to make sure you won’t face a tax penalty later on.
Please refer to our Canadian guide for more information on money transfer taxes in Canada.
Hope this helps,
Zak
Hi! I sent Rs72,000.00 through wire transfer to non relative to India and they are telling me that the bank has deducted Rs.25,000.00 as TDS which looks very weird to me. It is Axis bank, is this true? Thanks
Hi Shammi,
Thank you for reaching out.
It shows that if your recipient in India is not related to you, any amount over 50,000 rupees that you send is taxable and must be declared as income.The amount of the tax will depend on your recipient’s income tax bracket.
Hope this helps! 😊
Kind Regards,
Mai
For sending remittance from UAE self bank account to India self bank account for investment purpose ( say FD or mutual funds etc.) is there any limit of amount per remittance or per year which can be sent . Remittances are sent through bank channels only.
Is it necessary to inform the India IT Dept on such remittances.
Hi Dipak,
Thank you for getting in touch with Finder.
I’m afraid that you need to confirm the limit of remittance and other requirements with the banks you’re having transactions with in the UAE and India.
I hope this helps.
Thank you and have a wonderful day!
Cheers,
Jeni
My sister is transferring some Euros to India via Transferwise, is that money taxable in India?
Hello Jane,
Thank you for your comment.
When you send money to India from an online remittance service, you will not be required to pay taxes on that amount if you are an NRI. However, if you are not an NRI then you will have to pay taxes on the global income.
An NRI can transfer funds from UK to India in his NRE account securely and conveniently. NRIs don’t have to pay taxes when they transfer money to India. Since they already pay tax on the amount earned in the country where they are working, they are not required to pay further tax on the same money. This is irrespective of whether they keep the money in Indian Rupees or Euros.
Regards,
Jhezelyn
If money transfer from Canada to India at around $355,000, does it transfer directly to the account of the Indian beneficiary?
Hi Victoria,
Thank you for getting in touch with finder.
Basically, international bank transfers automatically send funds to the receiver’s bank account. However, transfer fees and exchange rates apply to the transaction, so it’s worth comparing specialist online money transfer companies to see if you might be able to find a better deal.
I hope this helps.
Thank you and have a wonderful day!
Cheers,
Jeni