Sending money abroad used to be a nightmare of paperwork and hidden fees. It's better now. But if you think you’re just paying a flat fee to transfer money from India to USA, you’re probably losing thousands of rupees without even realizing it.
Most people look at the Google exchange rate and think that’s what they’ll get. It isn't. Banks and many fintech apps take that "mid-market" rate and pad it. They call it a spread. It’s essentially a hidden tax on your hard-earned cash.
Whether you’re paying for a kid’s Master’s degree at Georgia Tech or just moving savings to a high-yield US account, the Liberalised Remittance Scheme (LRS) is your new best friend—and your biggest hurdle.
The LRS trap and the 20% TCS headache
Let's talk about the elephant in the room. The Indian government changed the rules on Tax Collected at Source (TCS) recently. It’s a mess. Honestly, it’s the first thing you need to grasp before you even look at exchange rates.
Under the LRS, an individual can send up to $250,000 per financial year out of India. That sounds like a lot. But the tax implications kick in way earlier. If you send more than ₹7 lakh in a financial year for general purposes, you’re looking at a 20% TCS.
Wait. Don’t panic.
It’s not a final tax. It’s more like a deposit. You can claim it back when you file your ITR. But if you’re trying to move ₹10 lakh to a US brokerage, having ₹2 lakh blocked by the government for a year feels like a punch in the gut.
There are exceptions. Education is the big one. If you’re funding a degree via an education loan, the TCS is a tiny 0.5% after the ₹7 lakh threshold. If it’s from your own savings for education, it’s 5%. Understanding these buckets is the difference between having liquidity and having your money stuck in a government ledger.
Why your bank is probably the worst option
Banks are comfortable. You already have the app. You trust the brand. But for a transfer money from India to USA transaction, they are often the most expensive route.
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Traditional banks usually charge a "cable charge" or a "handling fee" ranging from ₹500 to ₹2,500. That’s the visible cost. The invisible cost is the exchange rate markup. I’ve seen some major Indian private banks charge 2% to 3% above the mid-market rate. On a $10,000 transfer, that’s $300 vanished into thin air.
Digital-first platforms like Wise, BookMyForex, or Vested have flipped the script. They use the actual mid-market rate—or something very close to it—and charge a transparent fee.
Sometimes, the bank might give you a "preferential rate" if you’re a high-net-worth individual. If you have a Burgundy or Infinity account, call your relationship manager. Force them to compete with the online rates. They can often narrow the spread if they think you’re about to move your capital elsewhere.
The "hidden" paperwork you actually need
You can't just click a button and send millions. Well, you can, but the RBI will have questions.
The A2 Form is the backbone of Indian remittances. It’s basically a declaration of why the money is leaving the country. Most apps now digitize this, so you just click a dropdown menu. "Maintenance of close relatives" or "Education" are common ones.
You also need a PAN card. Obviously.
But here is where people get stuck: the source of funds. If you’re sending a large sum, the bank might ask for bank statements or an ITR copy to prove the money was earned legally and taxes were paid. They aren't being annoying; they're following Anti-Money Laundering (AML) laws.
Timing the market vs. the "now" necessity
Is the Rupee at 83? 84? 85?
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People obsess over the exchange rate. Look, if you need to pay tuition by Friday, the rate doesn't matter. Just send it. But if you’re investing, timing is everything.
The USD/INR pair is historically volatile but has a long-term trend of Rupee depreciation. If you see a sudden dip in the USD—maybe because of a Fed announcement or a shift in oil prices—that’s your window.
Don't try to catch the absolute bottom. It’s impossible. Use a "staggered" approach. If you need to send $50,000, send $10,000 every week for five weeks. This averages out your cost and protects you from a sudden spike in the exchange rate.
Fixed vs. Floating rates
This is a niche detail that saves a lot of stress.
Some platforms offer a "fixed rate" for a few hours. This means the rate you see is exactly what hits the US bank account. Others use a "floating rate," where the rate is determined when the funds are actually processed.
In a volatile market, floating rates are a gamble. I once saw someone lose ₹15,000 because the Rupee tanked in the six hours it took for the bank to verify their documents. If the platform offers a rate lock, take it.
The US side of the equation
We focus so much on getting the money out of India that we forget about the receiving end.
US banks often charge an "incoming wire fee." It’s usually between $15 and $30. It’s annoying, but standard. However, if you use a service like Wise that has local US bank details (ACH transfers), you can often bypass this wire fee entirely.
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Also, the IRS. If you’re a US tax resident (Green Card holder or on an H1B), you need to be aware of the FBAR and FATCA reporting. Sending money to yourself doesn't trigger a tax, but you must report the existence of foreign accounts if they exceed $10,000 at any point in the year.
Common myths about sending money to the States
- Myth: It takes a week. No. Most modern fintechs do it in 24 to 48 hours.
- Myth: Crypto is cheaper. Not really. By the time you pay the on-ramp fees in India (plus the 30% crypto tax) and off-ramp fees in the US, you’ve lost more than you would have with a bank.
- Myth: Only rich people do this. Thousands of parents send ₹50,000 a month for rent and groceries for their kids. The systems are built for all scales now.
A quick checklist for your next transfer
First, check the mid-market rate on Google. This is your benchmark.
Second, compare three sources. Look at your primary bank, a specialized forex platform like BookMyForex, and a global player like Wise.
Third, calculate the "All-in" cost. Don't look at the fee. Don't look at the rate. Look at how many Dollars actually land in the US account for every 1 Lakh Rupees you spend. That is the only number that matters.
Finally, keep your documents ready. Digital copies of your PAN and the recipient's bank details (Routing number and Account number) should be on hand to avoid session timeouts on the portal.
Actionable steps for your remittance
- Verify your TCS status: Check how much you’ve already sent this financial year. If you are near the ₹7 lakh mark, factor in that 20% "deposit" for your next transfer.
- Open a dedicated forex account: If you plan on doing this regularly, platforms like Vested or Winvesta allow you to hold a USD sub-account, which can make the process smoother.
- Choose the right purpose code: Ensure you select the correct RBI code (like S0003 for travel or S1107 for education). Wrong codes can lead to bank rejections and wasted fees.
- Confirm the intermediary fees: Ask your provider if they use "correspondent banks." These middle-man banks often take a $20 cut that neither the sender nor the receiver authorized. Use services that guarantee the full amount reaches the destination.
The process of how to transfer money from India to USA is no longer a mystery reserved for corporate treasurers. It’s a retail product. Treat it like one. Shop around, demand transparency, and never accept the first rate your bank offers you.
Your goal is simple: minimize the spread, dodge unnecessary fees, and keep your TCS records organized for tax season. With the right platform, you can save enough on a single large transfer to pay for a round-trip flight. It’s worth the twenty minutes of research.