Sending Money Across the Border

Neither country taxes you for moving your own money. What matters is which account the money goes to or leaves from, what paperwork the bank needs, what the conversion really costs, and a handful of reports that attach to gifts. This chapter takes the two directions in turn, separates three Indian rules that people mix up (the NRO limit, the Liberalised Remittance Scheme and tax collected at source), and says when a gift needs a form.

From the US to India

Money you send from abroad can go into several places, and the choice has consequences.

• Your NRE account or FCNR(B) deposit. Inward remittances are a permitted credit, the money stays repatriable, and the interest is not taxed in India (RBI, FAQs on accounts in India by non-residents, 16 January 2025). The interest is still taxable in the US.
• Your NRO account. Inward remittances from abroad are also a permitted credit, but balances in an NRO account can leave India later only as current income or within the yearly facility in the next section.
• A relative's resident account. This is a gift to the relative, discussed below.

Two US points come first. Sending your own principal to your own Indian account is not income and not a gift. And a transfer funded with cash, a money order or a similar physical instrument carries a federal excise tax of 1% that the provider collects; a transfer funded from an account at a regulated financial institution, or with a debit or credit card issued in the United States, does not (IRC section 4475(c) and (d), as added by Public Law 119-21; IRS Notice 2025-55). Fund it from a bank account.

What it costs

The price of a transfer has two parts, the fee you see and the exchange rate you are given, and the rate is usually the larger. A provider converts at a rate slightly worse than the market rate and keeps the difference. US rules require a remittance provider to show, before you pay, the fees, any taxes, the exchange rate it will use and the amount the recipient will receive. Compare providers on the last figure, for the same amount on the same day, and favour one that is licensed and shows its terms. Be wary of any service that holds your money while it waits for a better rate, because that is a risk you did not agree to take.

Small differences repeat when you send money every month:

A household whose monthly transfers lose $15 to fees and the rate gives up $180 a year and $1,800 over 10 years. To find your own figure, compare what arrives with what the same dollars would buy at the market rate on the same day.

Gifts to family in India

If you send money to parents or siblings, it is a gift (the plan for supporting parents in India goes further). In India, money received without anything in return is taxable as income in the recipient's hands once it passes a yearly amount, but money from a relative is left out, and a relative includes a spouse, siblings and any lineal ascendant or descendant (Income-tax Act, 2025, section 92(2)(m), (3)(a) and (5)(g), formerly section 56(2)(x) of the 1961 Act, as read on the Income Tax Department's page for the Act as amended in 2026). The exemption does not remove the need for a paper trail: keep the bank advice showing the amount and rate, a short signed gift letter, and the relationship.

In the US, if you are domiciled here, you can give each recipient up to $19,000 in 2026 without a gift tax return. Above it you file Form 709, though for most families that produces a form and not a tax bill. Domicile for gift tax is not the same as residence for income tax, so a visa holder who plans to leave should ask before a large gift. The visa-shelf chapter Sending and Receiving Money and Gifts Across Borders covers this side.

From India to the US

From NRE or FCNR(B). These balances are repatriable: you can send them abroad without a yearly cap, through the bank's normal process.

From NRO. Current income, such as this year's rent or interest, can be sent abroad. Beyond that, an NRI or Person of Indian Origin can remit up to $1,000,000 per financial year (April to March), counting NRO balances and other eligible assets together, under the Foreign Exchange Management (Remittance of Assets) Regulations, 2016 (RBI FAQ). Funds can also be moved from NRO to NRE within that same facility. Banks ask for proof of where the money came from, and the Indian tax forms. From 1 April 2026 the remitter's declaration is Form 145 and the Chartered Accountant's certificate is Form 146, which replaced Forms 15CA and 15CB; people still use the old numbers. The answer page How to bring money from India to the US gives the documents in order.

A large sale near the end of March can be split across two financial years, because the limit counts per year. Settle the Indian tax on a sale before you ask the bank, since the Chartered Accountant certifies that the tax has been paid or deducted.

Three rules that get mixed up

The RBI describes the LRS as a scheme for resident individuals, and the TCS entry is tied to remittances "under the Liberalised Remittance Scheme". They matter to an NRI in two ways. First, if your parents in India send you money from their resident accounts, that is an LRS remittance for them, and TCS can apply to them above the threshold. Second, if a branch applies TCS to your own NRO repatriation, ask which provision it relies on and ask for the Remittance of Assets rules, because the NRO facility is a different one. We have not found the Act or the RBI saying that TCS applies to an NRI's NRO repatriation, but check the position with your bank and a Chartered Accountant before acting on either view.

A rupee gift or loan from a resident to an NRI relative, within the LRS limits, may be credited to the relative's NRO account (RBI FAQ). For the US recipient, such a gift is generally not taxable income, but a US person must file Form 3520 if gifts and bequests from a nonresident alien individual or foreign estate total more than $100,000 in a year. Gifts from givers you know to be related to each other are added together, so two parents' gifts count as one total. The penalty for not reporting is 5% of the gift for each month, up to 25% (IRS, Instructions for Form 3520). The form is due on the same date as your income tax return, extensions included, and is filed separately from it.

When a gift needs a form