Finder is committed to editorial independence. While we receive compensation when you click links to partners, they do not influence our content.
Tax guidelines and regulations for large money transfers into India
Failing to file could land both you and your recipient in tax trouble.
India is the world’s leading remittance recipient, with more than $83.1 billion USD sent from around the world to India in 2019 alone. 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 Rs. 50,000 (about R10 000) to someone in India who isn’t a blood relative, they’ll need to report it on their taxes. Any amount of money you send abroad will be reported to the South African Reserve Band (SARB), regardless of how you know them. Also, be aware that individuals are only allowed to transfer up to R1 million per year out of South Africa under THE Single Discretionary Allowance (SDA), and up to R10 million for investment purposes without additional tax requirements.
That said, 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.
Compare providers for your next large transfer to India
Compare money transfer options to save money on your next transfer. Simply enter the amount you want to send and click Calculate.
What are the penalties in India if my recipient fails to file?
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 South Africa and India.
Do I have to report large transfers out of South Africa?
Yes — though most legitimate transfer services will automatically do this for you anyway. Gifts over R10,000, business transactions, and any foreign account or trust in your name that’s earned returns will need to be reported on your taxes.
By law, banks report all cash transactions — and any transaction of any amount that alerts their suspicions. Money transfer businesses, which often solely send money between countries, will report any transfers to the SARB as well.
How much money can I send to India?
The legal cap on the amount of money you can send as an individual is R1 million per year, but some transfer providers will set their own limits as well. If you’re planning on initiating a large transfer, consider using a provider with a large maximum limit such as Currencyfair.
How will my recipient in India get the money?
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.
Frequently asked questions
More guides on Finder
South Africa Reserve Bank repo rate forecast report July 2021
97% of Finder’s panel predict that the SARB will hold the repo rate at the July meeting, but 16% say that it should cut the rate.
Streaming Statistics South Africa 2021
South Africa ranks 10 out of 18 for the percentage of its population with at least one streaming service, with 56.16% paying for a subscription.
Gemini vs Coinbase
We compare these two large cryptocurrency exchanges to see how their fees, features and customer support stack up.
Finder’s Bitcoin Predictions Report: December 2020
We asked 47 experts for their cryptocurrency price predictions and took a deep dive into the Bitcoin price rally.
How to invest in the Didi Chuxing IPO from South Africa
Everything we know about the Didi Chuxing IPO, plus information on how to buy in.
How to buy Robinhood stock from South Africa
Robinhood is expected to go public, here’s what you need to know if you’re looking to buy in from South Africa.
How to buy Polkadot (DOT)
Learn more about the DOT cryptocurrency in this beginner’s and buyer’s guide.
How to buy Coinbase (COIN) shares from South Africa
Steps to owning and managing Coinbase shares.
What does the future hold for investments?
Finder speaks with 33 investment experts about what the future of investing might hold.
Christmas Spending Statistics 2020
Finder polled 1,510 South African adults to reveal a whopping 56% plan to spend less this Christmas. Just how much less? Read on to find out.
Ask an Expert