What are the Tax implications of Sending Money to India from the USA?
There are many reasons why people need to transfer money to India from the USA. You can send money to your family living in India or gift some amount to an acquaintance living in India. Thanks to cutting edge services offered by banks like ICICI, the process becomes very convenient. You can even send money online without worrying about electronic security or payment delays.
Just like the multiple reasons for sending money, there are various tax implications that the sender needs to face. Interested to see what these implications are? Then read on!
Tax on sending money as a gift
When you send money to India with no expectation of getting anything in return, it comes under the gift tax regulations. For US citizens, any amount gifted below $14,000 in a year per recipient will not attract tax. If the money transfer exceeds this amount, then, you are need to pay gift tax on the transfer.
Tax on sending money as a loan
Sending money as a loan also comes with its associated tax implications. You are required to pay needed tax on the money you send as a loan to India. The income taxis applied even when you don’t collect any interest from the receiver. The authorities put this tax on the money to ensure that no money goes out without proper taxation.
The rules also say that you need to pay tax on the interest you obtain for the money sent as a loan. These interest rates are calculate according to the current market rates. So, you have to pay taxes on the loan even if you don’t get any interest from the receiver.
The best way to save yourself from this implication is to ask the receiver to pay you the standard interest rates. This way, you can pay taxes without going under loss. However, it is extremely important to make sure that your interest rates are charged according to the guidelines provided by the government bodies.
USA Tax according to the amount of money
The amount of money is another important factor here. The government tries its best to restrict the money laundering process. Hence, the tax implications are strict for a large sum of money. You need to be very careful while planning a large transfer. Otherwise, it can also come under a criminal investigation.
There are various tax liabilities associated with money transferring process to India from the USA. So, your goal should be to become aware of all of them. Plus, make sure you choose the right bank for the service. This way, you can make the process valid, secure and efficient too.
When selecting a bank for online money transfer, don’t forget to look at the exchange rate offered. Also, find the transaction fees asked by the service provider and the receiving fees, if applied by the bank in India.
Cover all the aspects and choose an online platform that is easy to use. This will make the whole process convenient for you.