Foreign remittances exceeding ₹7 lakh in a financial year (under LRS) are subject to Tax Collected at Source (TCS). As of October 1, 2023, a 20% TCS is generally applied to the amount exceeding ₹7 lakh. Exceptions exist: 0.5% for education loans, 5% for education (self-funded), and 5% for medical, if they exceed specific thresholds.
Individuals can avail of foreign exchange facility for the following purposes within the LRS limit of USD 2,50,000 on financial year basis: Private visits to any country (except Nepal and Bhutan) Gift or donation.
Disclosure Requirements under Indian Law
Income-tax Act, 1961 require residents to report their foreign assets and income in their Income Tax Returns (ITR).
10 lakhs is exceeded. Banks and authorised dealers collect TCS at the time of transfer. Yes, but lower rates (5% above ₹10 lakh) apply if self-funded. Loans under 80E are exempt.
Best ways to send money from Canada to India
Wire transfers are a common choice. You can send secure, large wire transfers, typically within 2 to 5 business days, but you may need to visit your local branch to initiate the payment. Many banks also charge transfer fees for sending and receiving wires.
Maximum marginal rate is the highest rate of tax at any income level. This means for those with incomes between Rs 2 crore and Rs 5 crore, 39% will be the highest applicable tax rate, and for those with incomes above Rs 5 crore, it will be 42.74% — the highest tax rate since 1992.
Key takeaways: You're not taxed just because money comes from abroad: Tax liability depends on the purpose of the funds, not the bank transfer itself.
“Gifts” can be made in cash or other assets – securities, closely held business interests, real estate, artworks, collectibles or any other type of property. So long as the total market value of your gifts does not exceed $19,000 per recipient in 2026, the transfers are entirely gift tax-free.
5 Legal & Smart Ways to Avoid Paying 20% TCS on Foreign Remittances in 2025
Specified foreign financial assets
If the IRS mails you a notice about failing to file a Form 8938 and you don't file the form within 90 days, an additional continuation penalty of $10,000 for each 30-day period after the 90-day period has expired may apply.
The requirement to pay taxes on overseas money transfers often depends on the nature and amount of the transfer. Large gifts, significant investments, and business-related transactions are frequently taxable. Conversely, smaller personal transfers and remittances for family support might be exempt.
Remittance tax is a new US law that adds a 1% tax on certain money transfers. If you send money abroad from the US using cash, checks or money orders, an extra 1% will be taken. That means less money landing in your family's hands and more in the taxman's pocket.
NEFT (National Electronic Funds Transfer) is a popular method for transferring funds between bank accounts, and one of its key advantages is that there is no set limit on the amount that can be transferred. The Reserve Bank of India (RBI) does not impose any minimum or maximum amount for NEFT transactions.
There are a few common scenarios where you're likely to need to pay tax on money received from overseas. This generally applies when the payment is considered to be taxable income, such as when you receive a regular salary from an employer, payment from a freelance client, rental income, pension, interest or dividends.
If you receive a large gift or inheritance from someone abroad, you might wonder if you owe tax. In most cases, you don't – but you may need to report it to the IRS using Form 3520.
You can transfer large amounts of money, but transactions over $10,000, especially in cash or structured deposits, trigger mandatory reporting (like IRS Form 8300 or Bank Secrecy Act (BSA) reports), not necessarily taxes, to fight money laundering. Banks file reports for cash over $10k (CTR) or suspicious activity (SAR) if they see patterns to avoid reporting (structuring), which can flag accounts even for smaller amounts like $200 if part of a pattern.
Foreign Earned Income Exclusion (FEIE)
The FEIE allows you to exclude a significant portion of your foreign earned income from U.S. taxation. For tax year 2025 (filed in 2026), you can exclude up to $130,000. If you're married and both spouses qualify, you can each claim the exclusion for a combined total of $260,000.
Surcharge and Cess:
Surcharge under the New Regime (for individuals below 60 years): Income over ₹50 lakh but under ₹1 crore: 10% of income tax payable. Income over ₹1 crore but under ₹2 crore: 15% of income tax payable. Income over ₹2 crore but under ₹5 crore: 25% of income tax payable.
In her 2025 Budget speech, Finance Minister Nirmala Sitharaman shared big news. Under the new regime, if you earn up to Rs 12 lakh, you will not have to pay any income tax. Salaried taxpayers get an extra benefit too. The standard deduction, which was Rs 50,000 before, has now gone up to Rs 75,000 for the new regime.
1. Who is the highest taxpayer in India in FY 2023–24? Reliance Industries is the highest tax-paying company, and Akshay Kumar tops among individual celebrities.
An Indian individual beneficiary can receive 30 remittances under MTSS per calendar year (January-December) with a maximum of USD 2,500 per transfer. MTSS is mainly offered by fintechs. No outward remittance from India is permissible under MTSS.
Prefer digital channels: For amounts running into lakhs, electronic transfers through NEFT, RTGS, IMPS, or UPI are faster, safer, and beyond the scope of cash-related restrictions.
Yes, you can use Google Pay from the USA to send money to India by integrating with services like Wise or Western Union within the US Google Pay app, but you need an Indian recipient with a UPI ID or bank account and an Indian phone number to receive it. The US Google Pay app was discontinued in June 2024, so you'll use the Google Wallet app (which is the new name for GPay in the US) to initiate international transfers powered by partners like Wise to send money to India.