Q614. How Indian resident can

send money to USA legally . . .

Question: Hi, Thank you for sharing the information about NRI's. It is very helpful and truly appreciate the sharing of information about lot's of knotty issues. I had a question on money repatriation from India. I am an NRI who has lived in US for the last 15 years. And over the course of 15 years I had sent money through banking channels (like money2india) to my parents account and chose the option of family maintenance/gifts as the reason for money transfer. All the transfers I made from US each time were less than $10k into his checking/savings account. There are bank statements that can validate this claim. Now my father wants to give me back some of the money I had sent. My father has all his income tax filed regularly and we wanted to be clear of any rules and regulations in place. I am planning on opening either a NRE/NRO account in India. Question is a) Can he deposit the money (to the tune of what I had given him without interest) into the NRE/NRO account ? b) Can I repatriate them over here to the US ? c) What are the tax implications or filing requirements for such a transaction ? Would appreciate if you could provide some guidance on my queries. Thanks in advance Praveen Answer: Regarding your questions: • While money from NRE account can be repatriated, Indian rupees cannot be deposited in NRE account. All NRE deposits must be made in foreign currency only • In case you get a joint NRO account with your father, then Rupee funds can be deposited in this type of account. However, generally NRO deposits are NOT repatriate-able

How Indian citizen can send money

abroad

• Your father, can send you money if he wishes through the Liberalised remittance scheme (LRS). Under this scheme all resident individuals are allowed to freely remit up to USD 75,000* per financial year (April – March) for any permissible current or capital account transaction or a combination of both. *Prior the August 14, 2013 up to US$ 200,000 could be sent under LRS. This was reduced to US$ 75,000 to help the Indian Rupee. There are indications that this amount may revert back to the original US$ 200,000 in the near future. • Liberalised remittance scheme (LRS) can also be used for gifts and donations sent abroad. Your bank in India should be able to help your father remit money via this scheme. • There should be no tax liability here. The US does not tax gifts a US resident receives from abroad, however there is a informational type of form that must be filled in and sent along with your income tax return to advise the IRS of the gifted money received. I believe Form 3520 is used for this purpose but you should confirm with IRS.

Taxes on gifted money sent by NRIs to

India

As per FEMA rules, There is no restriction on NRIs sending money to India. NRIs can send money to relatives or friends without any FEMA related restrictions. Assuming of course that the transfers are done in a legal manner of legally obtained money. Under the Income Tax Act, 1961. NRIs can gift money to their relatives and this money is exempt from tax regardless of the gift value. However, if money is gifted to a non-relative, then the tax exemption is only up to Rupees 50,000 per financial year. For more information on the Liberalised Remittance Scheme CLICK HERE