Sending money between the US and India: what a US taxpayer needs to know

Most people who move money between the US and India worry about the wrong rule. This guide explains which Indian scheme does and does not apply to you as a US taxpayer, what the IRS cares about, and what paperwork is worth keeping. It is general information, not advice on your own transfers.

The first point: LRS is not your route

The Reserve Bank of India's Liberalised Remittance Scheme lets resident individuals send up to USD 250,000 per financial year (April to March) out of India for permitted purposes such as study, medical treatment, gifts and maintaining relatives abroad. The RBI's own FAQ says it is for resident individuals, including minors, and not for companies, firms, HUFs or trusts.

That is money leaving India, sent by someone who is resident there. If you are in the US on an H-1B, L-1 or green card, or are a US citizen, you are sending money the other way. The USD 250,000 limit is not a cap on what you can send into India. It does matter in one case: your parents in India sending you money for a house down payment would use LRS if they are Indian residents, and that is their side of the transfer.

Money going into India

There is no tax on the bank transfer itself, on either side. What matters is where the money lands and why.

• NRE account: for foreign earnings remitted from abroad. Principal and interest can be repatriated freely.
• NRO account: for Indian-source income and also for inward remittances. Interest is taxable in India, and repatriating the balance is capped at USD 1 million per financial year per PAN.
• Direct to a family member's resident account: treated as a gift or support from you to them. This is the usual route for supporting parents.

Which account suits you depends on your Indian residential status, which can differ from your US status. See the NRE and NRO guide.

Gifts and support for family

Under US law the giver reports. A US person who gives more than $19,000 to any one person in a calendar year (the 2025 figure; the IRS gift tax FAQ shows the same amount for 2026) generally files Form 709. For a spouse who is not a US citizen the annual exclusion for 2025 is $190,000 instead. Tuition or medical bills paid directly to the school or provider are excluded and need not be reported. Filing Form 709 usually means no tax is payable, as it uses up part of the lifetime exemption. The details are in the gifts guide.

Ongoing support to parents is a different question from claiming them as dependents. Sending money does not make them your dependents. See the dependents guide.

Buying property or investing in India

Sending money to buy a flat or invest does not create US tax. The tax comes later, on the income and the sale. Rent, interest, dividends and capital gains are all reportable on your US return (rental income, property sales). Indian mutual funds are a particular trap under the PFIC rules (PFIC guide).

Keep the exchange rate evidence for each transfer. Your cost basis in US dollars is what the US return will use when you sell.

The US reporting triggers

Form 8300 is not relevant. It is for businesses that receive more than $10,000 in cash, not for personal bank transfers. The FBAR and Form 8938 are separate filings and one does not replace the other. Details are in the FBAR and Form 8938 guide.

Note that an NRE or NRO account you open to hold the money is itself an FBAR account, even if you only use it for transfers.

What banks and transfer services ask

Expect to be asked for the purpose of the transfer (gift, family maintenance, investment, property purchase) and the source of funds (salary, savings, sale proceeds). Indian banks may also ask for your PAN, your passport and proof of residential status. Give the same purpose on every transfer. If you say "gift" to your parents and "loan" to a bank, you will have difficulty explaining it later.

Money coming back from India

Moving money out of India is controlled by FEMA and requires Indian tax paperwork. From 1 April 2026 the declaration and CA certificate forms formerly known as Form 15CA and 15CB are reported to have been replaced by Forms 145 and 146 under the Income-tax Act, 2025. The old forms apply to payments made before that date. Ask your bank which form it requires. For US purposes, sale proceeds are taxable gain, not a gift, and Indian tax paid may be credited (foreign tax credit).

Records to keep

1. Bank statements showing each transfer, with the date and the exchange rate.
2. A short note of the purpose and the relationship to the recipient.
3. Gift letters from the donor when you receive money.
4. Sale deeds, loan documents and any Indian tax certificates.
5. Highest balance of every Indian account for each year, for the FBAR.

Large or repeated transfers, a property purchase, a gift above $100,000 received, or repatriation of sale proceeds are the points at which a US CPA, working with your Indian adviser, should be involved before the money moves.