Tax Implications- When Making an International Money Transfer

Tax Implications, nrihelpinfo

What are the Tax Implications of sending money from the USA?

The yearly federal gift Tax Implications exclusion permits you to give away up to $14,000 in 2015 to as several people as you want without those gifts counting against your lifetime privilege (Later 2015, the $14,000 exclusion may be increased for inflation).

If you are married, you and your spouse can choose to split the gift. Thus, you can potentially send $28,000, per person, in a year.

Hence, under the law, if you sent $40,000 to 4 different persons, that is, if you gave $10,000 each, the cost of gift would be below the yearly exclusion threshold, and you also will not owe any gift tax on this.

Obtaining Money in India

Gifts you receive from persons rather than your blood relatives more than Rupees 50,000, in a year, is viewed as your income and it is taxable as ordinary income. Thus, the tax implications on taxable gifts are to be paid by the recipient of the gift.

A close or blood relative would be:

1.    Spouse of the individual

2.    Brother or sister of the individual

3.    Sister or brother of the spouse of the individual

4.    Brother or sister of either of the parents of the individual

5.    Any lineal descendant or ascendant of the individuals

6.    Any lineal ascendant or descendant of spouse of the individuals

What are the various tax implications of money transfer from India to the USA?

Under FEM (CAT) Amendment Rules, 2015, Individuals can avail of foreign exchange facility for the following objectives within the limit of USD 250,000 only on financial year (April – March) basis.

1.    Private visits to any nation (except Bhutan and Nepal)

2.    Gift or donation.

3.    Going abroad for employment

4.    Emigration

5.    Maintenance of close relatives abroad

6.    Travel for business, or specific training or attending a conference or check-up abroad, or for meeting medical expenses, or for accompanying as attendant to a patient travelling abroad for medical treatment/ check-up.

7.    Expenses in connection with medical treatment abroad

8.    Studies abroad

9.    Any other current account transaction

Expenses exceeding this limit require prior permission from RBI. No separate taxes need to be paid by you for this as these funds are after payment of applicable taxes.

How Much Money can One Send from the USA to India?

There is no limit on sending money from the USA to India, provided you pay the required taxes. However, there is a limit of US $14,000 per person per year for tax-free gift transactions. Any amount sent above the US $14,000 per person per year, the sender is responsible for funding the gift taxes. Remark that there is no income tax deduction for the expense you send.

How to repatriate cash from Sale of Property in India?

  • To be able to transfer funds received in India from the sale of your property, it is essential that the payment for the property is accepted through legal banking channels. Documentary proof showing the source of funds will be required when transferring money overseas.
  • To transfer the cash, it must first be deposited to an NRO bank account. Remember, your CA has to verify that taxes have been paid on ‘Form 15CB.’
  • NRIs are permitted to repatriate an expense up to USD 1 million, per financial year, from their NRO account. Such money transfers are granted, subject to tax compliance. The limit of USD 1 million covers sale proceeds of immovable properties held by NRIs and PIOs.
  • In the United States, you are asked to report this capital gains transaction on your Federal Income Tax Return and pay the appropriate capital gains tax.

How Much Money can One Send from India to the USA?

Under the LPS (Liberalized Remittance Scheme), all resident individuals, including minors, are permitted to freely release up to USD 250,000 through the accounting year (April – March) for any permitted current or capital account transaction or a mixture of both. In a matter of remitter being a minor, the LRS declaration form must be countersigned by the minor’s native guardian.

Are there any Limitations on the Regularity of the Remittance from India?

There are no limitations on the frequency of remittances under LRS. But, the total amount of foreign exchange obtained from or remitted through, all roots in India throughout a financial year should be within the aggregate limit of USD 250,000.

Who is Responsible for Paying Taxes While Money transfer to India?

Under the federal tax laws, the US person is responsible for paying taxes while money transfer.

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Tax Implications- When Making an International Money Transfer

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