How to Transfer Money From India to the USA

Transferring money from India to the United States is a common financial activity. Navigating the regulations and procedures involved is important for a smooth and compliant transfer. This guide explains the mechanisms and requirements for sending funds from India to the USA.

Indian Regulatory Framework for Overseas Transfers

The Reserve Bank of India (RBI) governs all outward remittances from India through the Foreign Exchange Management Act (FEMA), 1999. The Liberalised Remittance Scheme (LRS) permits resident individuals to send foreign exchange abroad. Under the LRS, an Indian resident can remit up to USD 250,000 per financial year, from April 1st to March 31st. This limit applies to all remittances made through various sources.

The LRS allows for a wide array of permissible transactions. These include current account transactions like private visits, gifts, donations, and maintenance of close relatives abroad. It also covers capital account transactions such as overseas education, medical treatment, employment, emigration, and investments in foreign shares or property.

Certain transactions are explicitly prohibited under the LRS. These include remittances for purchasing lottery tickets, engaging in margin trading, or trading in foreign exchange abroad. Remittances to countries identified as non-cooperative by the Financial Action Task Force (FATF) or for political contributions are also not permitted. The LRS is specifically for resident individuals and does not apply to corporate entities, partnership firms, or Hindu Undivided Families (HUFs).

Methods for Transferring Funds

Several channels exist for transferring money from India to the USA. Wire transfers, often through the SWIFT network, are a traditional bank method. These transfers involve direct bank-to-bank communication, taking one to five business days. Banks charge fees, which may include both sender and recipient bank charges.

Money Transfer Operators (MTOs) like Wise, Remitly, and Xoom provide alternative platforms. These services often offer competitive exchange rates and lower fees, particularly for smaller amounts. MTOs typically operate through online platforms or mobile applications. Many MTOs offer faster transfers compared to traditional wire methods.

Repatriation from Non-Resident External (NRE) and Non-Resident Ordinary (NRO) accounts is another method. Funds in an NRE account are fully and freely repatriable, with no upper limit. These accounts primarily hold foreign earnings brought into India.

NRO accounts hold income earned in India, such as rent, dividends, or pension. Repatriation from an NRO account is permitted up to USD 1 million per financial year, after applicable taxes. This limit applies cumulatively to all NRO accounts held by an individual.

Essential Documentation and Information

Before initiating any fund transfer from India, gather necessary documents. The sender must provide identification documents like a Permanent Account Number (PAN) card and an Aadhaar card, along with proof of address. The sender’s Indian bank account details are also required.

For the recipient in the USA, provide the following information:

• Recipient’s full name
• Physical address
• Bank name
• Account number
• Bank’s SWIFT/BIC (Bank Identifier Code) or routing number

Double-checking these details helps avoid delays or errors.

Indian regulations require the sender to declare the source of funds for the remittance. This might involve providing income proof, a sale deed if funds originate from property sales, or a gift deed. Stating the purpose of the remittance, such as family maintenance, educational fees, or medical treatment, is also mandatory.

For certain remittances to non-residents, Indian tax laws mandate the submission of Form 15CA and, in some cases, Form 15CB. Form 15CA is a declaration by the remitter, filed online, confirming taxes have been considered. Form 15CB is a certificate issued by a Chartered Accountant, confirming tax deduction compliance, and is generally required for taxable remittances exceeding INR 5 lakh (approximately USD 6,000).

US Reporting Obligations

Individuals in the United States receiving funds from abroad have reporting obligations. One requirement is the Report of Foreign Bank and Financial Accounts (FBAR), filed as FinCEN Form 114. This form must be filed by any U.S. person, including citizens and residents, who has a financial interest in or signature authority over at least one financial account located outside the United States.

The FBAR filing is triggered if the aggregate value of all foreign financial accounts exceeds $10,000 at any point during the calendar year. This is a reporting requirement, not a tax form. The FBAR is filed electronically with the Financial Crimes Enforcement Network (FinCEN), not the Internal Revenue Service (IRS).

Another IRS form is Form 3520, the Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts. This form is required when a U.S. person receives large gifts from foreign individuals or entities. For gifts from a foreign individual or estate, reporting is necessary if the aggregate amount received exceeds $100,000 in a taxable year.

For gifts received from foreign corporations or partnerships, a lower threshold applies, generally around $19,570 for 2024. Form 3520 is an informational return, meaning the gift itself is generally not taxable to the recipient in the U.S. However, failure to file this form when required can result in significant penalties. While a gift from abroad is not typically taxed, any income subsequently generated from the transferred funds, such as interest or dividends, becomes subject to U.S. income tax.

Executing the Fund Transfer

Initiating the fund transfer varies depending on the chosen method, whether through a traditional bank or a money transfer operator (MTO). For bank transfers, individuals can visit a branch or utilize their bank’s online banking portal.

When using an MTO, the transfer is initiated through their website or mobile application. The sender inputs key information, including the amount to be transferred and the recipient’s banking details. This includes the recipient’s bank account number, the bank’s name, and the appropriate SWIFT/BIC or routing code.

After initiating the transfer, the sender receives a confirmation. Most platforms and banks provide a tracking number or reference to monitor the status of the funds. Processing times range from a few minutes for some MTOs to several business days for traditional wire transfers.

Upon successful completion, keeping records of the transaction is important. This includes copies of submitted documents, transaction confirmations, and any communication related to the transfer. Maintaining these records assists with compliance for both Indian and U.S. regulatory requirements.