Sending money from India to the US is honestly a headache. If you’ve ever tried to move a significant chunk of change—maybe for your kid’s tuition at UCLA or to buy a property in Texas—you’ve likely hit a wall of paperwork that feels like it’s from the 1970s. Most people think it’s just about finding the best exchange rate. It’s not. It is actually about navigating the Liberalised Remittance Scheme (LRS) and keeping the Income Tax Department off your back.
The rules changed significantly in late 2023. If you aren't paying attention to the Tax Collected at Source (TCS) hikes, you might find 20% of your transfer "disappearing" into a tax credit you can't claim back until next year. That's a huge liquidity hit.
Why India to US money transfer is more than just an exchange rate
Look, banks love to talk about "zero commission." It is a marketing gimmick. They usually make their money on the spread—the difference between the interbank rate and the rate they give you. But for an India to US money transfer, the real "boss" is the Reserve Bank of India (RBI). Under the LRS, an individual can send up to $250,000 per financial year. That sounds like a lot, right? But that limit includes everything: your vacation spends on a Forex card, your Robinhood stock investments, and that wire transfer for your brother's wedding gift.
Once you cross the ₹7 lakh threshold (about $8,400 depending on the day), the government wants its cut upfront.
The TCS trap you didn't see coming
This is where it gets messy. Since October 1, 2023, the TCS on foreign remittances for most purposes—like investing in US stocks or just sending money to a relative—jumped from 5% to a staggering 20%.
Wait, don't panic. If you are sending money for education or medical treatment, the rates are different. For education funded by a loan, it’s a tiny 0.5%. If it’s your own savings for education, it’s 5%. But for everything else? 20%. You basically have to give the Indian government a free loan for several months until you file your tax returns.
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Choosing between a bank and a fintech
You have two main paths. You can walk into an HDFC or ICICI branch and fill out an A2 form. Or you can use a platform like Wise, Western Union, or BookMyForex.
Banks are safe. They are stable. But they are slow and expensive. They often charge a "cable fee" or a "handling charge" that they don't mention in the flashy brochures. Fintechs are usually cheaper because they have lower overheads. However, when you are doing an India to US money transfer for something like a home down payment, some people feel more comfortable with a bank-to-bank SWIFT transfer. It feels more "official" even if it costs an extra ₹2,000.
The reality of SWIFT codes and intermediary banks
Ever noticed that the amount you send from Mumbai isn't exactly what lands in New York? That is because of intermediary banks. When your money travels from an Indian bank to a US bank, it often stops at a third bank (usually a big player like JP Morgan or Citibank) that takes a "nibble" out of the transaction. This is the "Intermediary Bank Fee." It’s usually $15 to $30. If you are sending $500, that’s a huge percentage. If you’re sending $50,000, it’s a rounding error.
Documentation: The paperwork nightmare
Don't even try to start an India to US money transfer without your PAN card. It is the holy grail. The bank will check your PAN to see how much of your $250,000 limit you’ve already used this year.
If you are sending money to a student, you'll need the university's I-20 form or a fee brochure. Sending it as a gift? You might need a "Gift Letter" to satisfy the US bank on the receiving end. The IRS in the US is just as nosy as the IT Department in India. They want to make sure you aren't laundering money.
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Specifics matter. If you're paying for a property, the bank will ask for the Sale Agreement. They aren't being annoying; they are legally required to be.
Timing the market is a fool's errand
People wait for the Rupee to "strengthen" before sending money. Honestly? Unless you are moving millions, the difference between 83.1 and 83.5 isn't worth the stress of missing a tuition deadline. The Rupee has historically depreciated against the Dollar by about 3-5% annually over long periods.
If you need to send money, send it. Don't try to be a Forex trader. You will lose.
What happens on the US side?
Your job isn't done when the money leaves India. The US recipient might have to file Form 3520 if the gift exceeds $100,000 in a calendar year. While the recipient doesn't usually pay tax on a gift, the IRS needs to know where that money came from.
Banks in the US, like Chase or Bank of America, might also charge an "Incoming Wire Fee." It's usually around $15. It’s annoying. It’s also unavoidable unless you have a premium account.
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Common mistakes to avoid
- Forgetting the TCS: If you need $10,000 to land in the US, you need to have much more than that in your Indian account to cover the 20% TCS and the exchange rate.
- Wrong account types: You generally cannot send money from an NRO account under the same simple rules as a resident savings account. NRO transfers have a separate $1 million limit but require a CA certificate (Form 15CA/15CB).
- The "Friend" Route: Never ask a friend to "Zelle" you dollars in exchange for you giving them Rupees in India. This is a violation of the Foreign Exchange Management Act (FEMA). The RBI hates this. It’s called a Hawala-style transaction, even if it feels innocent. You can get fined heavily.
Actionable steps for your next transfer
First, compare the "Total Landing Cost." Don't look at the exchange rate. Look at exactly how many Rupees you spend to get exactly X dollars into the US bank account.
Second, check your TCS headroom. If you’ve already spent ₹6.5 lakh this year on foreign trips, your next transfer will trigger that 20% tax immediately.
Third, get your 15CA and 15CB forms ready if you are transferring from an NRO account. You'll need a Chartered Accountant for this. It usually costs between ₹2,000 and ₹5,000 for the certificate.
Fourth, use a platform that offers "Fixed Rates." Some services lock the rate for 24 hours. This protects you from a sudden Rupee crash while your paperwork is being processed.
Finally, keep a digital folder of every transfer receipt. You will need these when you file your Income Tax Returns (ITR) in India to claim back the TCS you paid. If you don't file properly, that 20% is gone forever.