What are tax implications on money transfer from USA to India?

Short Answer

To understand the tax implications for sending money, it is important to know where the individual is sending the money and for what purpose. As these implications depends on these factors and plays a huge role.

Detailed Answer

India is the top remittance receiving country in the world with 62.7 billion U.S. dollar in 2016, 65.3 billion U.S. dollars in 2017 and a whopping 78.6 billion U.S. dollars in the year 2018. India has also signed a Double Taxation Avoidance Agreement with 85 various nations including the United States of America (USA).

By knowing this, now we know the extent of the transfer made from other countries to India, so it is essential for the people to understand what are the tax implications which are laid for transferring the money so that they are stress free regarding the same and also so not hesitate while transferring the money to their family, friends, and others.

TAX IMPLICATIONS:

These implications vary on the need, amount and also on relation you share so here is the explanation on how it is done:

While receiving money from United States to India from a blood or a close relative, then the money sent will be entirely tax free because it is considered as a gift from them. The people who are enlisted in this list are:

  1. Spouse of the individual
  1. Brother or sister of the individual
  1. Brother or sister of the spouse of the individual
  1. Brother or sister of either of the parents of the individual
  1. Any lineal ascendant or descendant of the individuals
  1. Any lineal ascendant or descendant of spouse of the individuals.

In cases where you receive money from people you are not related with or are close to, will be taxable if the amount exceeds ₹50000 in a year as it will be considered as your income.

Also, there is no limit of the amount of money (when you pay the taxes that are required) that can be transferred from USA to India. When it comes to taxes that an individual needs to pay are in terms of the money they are planning to send:

For tax free transactions per year and for 1 person the amount should be less than or equal to $14000 while keeping it in mind that amount of income tax will not be deducted irrespective of the amount you send.

If paying taxes, the amount of money should exceed $14000 per year sent per person, then they need to be responsible for paying them while keeping it in mind that amount of income tax will not be deducted irrespective of the amount you send.

In case of transfers made in big amounts, it is also important to report about them so that they are not suspicious about any of your activities. The amounts also vary in such cases when to report in terms of transfers made:

  1. In case you have sent gifts, which exceeds amount of $15000.
  1. Foreign account of yours hold more than $10000 per year.
  1. Business transactions are made over $10000.

To conclude, it is necessary to be aware about all the tax implications that are laid so that you are not considered suspicious and also do these things in a hassle-free manner without getting into any sort of fraud or illegal activity unknowingly.

Tagged With: tax implicationsmoneytransferindiaremittance
Categories: USA
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