Is there a tax implication for the money transferred from India to the US?
SBNRI Team
answered on 30/01/2023
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.)
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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: View list
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.
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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
More queries like “Taxes on money transferred from India to the US?” click here.
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