Abhinav Aggarwal asked on 30/03/2020

Is there a tax implication for the money transferred from India to the US?

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SBNRI Team
answered on 30/03/2020

No. There are no taxes on money transferred from India to the US in India.

 

Avoid Double Taxes on money transferred from India to the US

However, In order to avoid tax implications in the USA, you need to declare the source of income in the US. NRIs in the USA must consult their CPA (Certified Public Accountant) to avoid any tax implications there.

 

Note: NRIs need not pay double taxes. There is a provision called DTAA (Double Taxation Avoidance Treaty). If the DTAA is signed between India and the country of residence of the NRI, the NRI will not be paying double taxes on the same source of income. NRIs will however need to pay differential taxes. (For example: If for a certain investment, taxes are 30% in India and 40% in the USA, NRIs from the USA need to pay the remaining 10% there.)

 

India has signed DTAA with more than 85+ countries all around the globe including USA, UK, Saudi Arabia and UAE. You can check the list of the countries and find additional information regarding DTAA here.

 

Taxes on sending money from India to USA based on the account chosen:

NRE: The NRE account can be opened for the purpose of maintaining the income earned outside India with tax free interest (upto 7.60%) on Fixed Deposits. Both the principal amount and interest earned are freely and completely repatriable from India.

 

NRO: Only the interest earned on NRO Deposits is taxable in India: 30% tax + surcharge + education cess* is deducted at the source of interest earned in India. The repatriation of the money in the account can be done up to a maximum of 1 million USD per financial year.

 

FCNR: FCNR deposits are tax-free in India. The principal amount as well as the interest are freely and completely repatriable.

 

Ask SBNRI Tax Expert Now

 

Receive money from abroad in India

There are multiple options to send money to India from abroad. Refer the table below to know the charges for sending money to India from abroad and choose the best suited medium for yourself.

 

*Money Transfer Operators: Money transfer operators (MTOs) are financial companies (but usually not banks) engaged in cross border transfer of funds using either their internal system or using their collaborations with other international banking networks. Eg: Transferwise, Western Union. 

 

*SWIFT: Society for Worldwide Inter-bank Financial Telecommunication (Offline money transfer facility that can be availed at bank branches overseas)

 

*Foreign Currency Demand Drafts: A form of demand draft made in foreign currency at various bank branches located overseas to remit money to India. The equivalent amount in INR will be debited for remittance. 

 

Place

Online 

Offline

Via Bank Branch

Internet/

Mobile Banking

(Card/ Bank Account Transfer)

Money Transfer Operators

(Card/ Bank Account Transfer)

Agents 

(Cash/ Cards/ Bank Account Transfer)

Call Centres

(Card/ Bank Account Transfer)

Foreign Currency Demand Draft SWIFT Transfers

Time and Charges

USA 1 hour to 2 working days

 Up to $9.38 per $200

1 hour to (3-5) working days

Up to $9.50 per $200

1 hour to 1 working day

Up to $11.88 per $200

1 working day

Up to $3.94 per $200

(2-3) weeks

Rs.500/- + taxes

(24-48) hours

service tax on currency conversion (up to Rs.300/- + taxes)

Dubai Same day to 2 working days

Up to 4.04 AED per 735 AED

Within an hour 

Up to 59.98 AED per 735 AED

1 hour to (3-5) working days

Up to 20.07 AED per 735 AED

1 hour to (3-5) working days

Up to 15.88 AED per 735 AED

(2-3) weeks

0.2% (making charges) + Rs.35/- (courier charges) or Rs.85/- (whichever is higher)

(24-48)

hours

service tax on currency conversion (up to Rs.300/- + taxes)

Saudi Arabia N.A. N.A. Within an hour

Up to 43.20 SAR per 735 SAR

2 working days

Up to 39.98 SAR per 735 SAR

(2-3) weeks

0.2% (making charges) + Rs.35/- (courier charges) or Rs.85/- (whichever is higher)

(24-48)

hours

Up to 39.98 SAR per 735 SAR

United Kingdom 1 hour to (3-5) working days

Up to 5.39 GBP per 120 GBP

1 hour to (3-5) working days

Up to 5.81 GBP per 120 GBP

1 hour to (3-5) working days

Up to 7.20 GBP per 120 GBP

1 hour to 1 working day

Up to 4.99 GBP per 120 GBP

(2-3) weeks

Rs.500/- + taxes

(24-48) hours

service tax on currency conversion (up to Rs.300/- + taxes)

 

Note: The receiver will receive the money either in their own/partner bank accounts or as cash from the agents of the respective firms/banks chosen for money transfer.

 

The summary of the table (based upon the time and the charges of sending money to India from abroad): 

 

USA: 

Less time, high cost: Agents

More time, low cost: Foreign Currency DD/ Swift Transfers

Moderate time and cost: Money Transfer Operators (Transferwise),Call Centres

 

Dubai:

Less time, high cost: Money Transfer Operators (Transferwise)

More time, low cost: Foreign Currency DD/ Swift Transfers

Moderate time and cost: Internet Banking

 

Saudi Arabia:

Less time, high cost: Agents

More time, low cost: Foreign Currency DD

Moderate time and cost: Call Centres

 

UK:

Less time, high cost: Agents

More time, low cost: Foreign Currency DD/ Swift Transfers

Moderate time and cost: Call Centres

 

Remit Money to India

 

More queries like “Taxes on money transferred from India to the US?” click here.

 

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