Remitting money from India to the United States is a common financial activity for students, families, investors, and professionals. Whether you are sending money for education, medical treatment, family support, or investing in U.S. assets, understanding the correct procedure, regulations, and available options is essential. With the growing volume of international transactions, it’s now easier and faster to send money abroad, but it still involves adherence to rules set by the Reserve Bank of India (RBI). Knowing how to remit funds from India to the US safely and cost-effectively can help individuals manage their finances better and avoid unnecessary delays or fees.
Understanding Remittance from India to the US
Remitting money from India to the US falls under the category of outward remittance. The RBI regulates all foreign exchange transactions under the Foreign Exchange Management Act (FEMA). The most common route used for personal remittances is the Liberalised Remittance Scheme (LRS), which permits Indian residents to send money abroad for permitted current or capital account transactions within a specific annual limit.
Liberalised Remittance Scheme (LRS)
The LRS allows Indian residents to remit up to USD 250,000 per financial year for purposes such as:
- Education expenses
- Medical treatment
- Travel expenses
- Family maintenance
- Gifts or donations
- Investment in foreign stocks, bonds, or real estate
All remittances under LRS must be made through authorized dealers, typically banks and licensed financial institutions that are authorized to handle foreign exchange.
Steps to Send Money from India to the US
1. Choose a Remittance Provider
There are several ways to remit money from India to the US. The most commonly used methods include:
- Bank Transfers: Most major Indian banks like HDFC, ICICI, SBI, and Axis Bank offer outward remittance services directly to U.S. bank accounts.
- Online Forex Platforms: Platforms like BookMyForex, Wise (formerly TransferWise), and Instarem provide competitive exchange rates and faster processing.
- Money Transfer Operators: Services such as Western Union or MoneyGram also support international money transfers, although they are more popular for inward remittances.
2. Provide KYC and PAN Details
Before initiating a transfer, the remitter must complete the Know Your Customer (KYC) process. The following documents are usually required:
- PAN card (mandatory under LRS)
- Valid passport or Aadhaar card
- Bank account details
- Purpose of remittance declaration
Some banks may also require a Form A2 declaration for foreign exchange transactions, especially for higher amounts.
3. Enter Beneficiary Details
To transfer funds, you will need the following information about the beneficiary in the U.S.:
- Full name and address
- Bank name and branch
- SWIFT/BIC code of the U.S. bank
- Routing number and account number
Accuracy is crucial to avoid delays or failed transfers. Double-check all details before confirming the transaction.
4. Select the Currency and Amount
Typically, funds are sent in USD. The conversion from INR to USD is based on the forex rate applicable at the time of the transaction. Be sure to review the exchange rate and any applicable conversion fees before proceeding.
5. Pay Transfer Charges and Taxes
There are costs associated with outward remittance that you should consider:
- Transfer fees: Charged by banks or service providers
- Exchange rate margin: The difference between the market rate and the rate offered to you
- GST: Goods and Services Tax may apply to certain fees
- TCS: Tax Collected at Source is applicable if your outward remittance exceeds INR 7 lakh in a financial year. TCS is generally 5% for most remittances and 0.5% for education if funded through a loan.
Time Taken for Transfers
Most remittances from India to the US are processed within 1 to 3 working days, depending on the method chosen and the provider’s processing capabilities. Bank holidays, compliance checks, or discrepancies in documentation may cause delays.
Permitted and Non-Permitted Uses Under LRS
Permitted Uses
- Paying tuition or living expenses for students studying in the US
- Sending money to family members living abroad
- Travel-related expenses including booking hotels or flight tickets
- Medical expenses incurred overseas
- Buying property, shares, or making deposits abroad
Prohibited Uses
- Remittance for trading in foreign exchange or cryptocurrencies
- Lottery, betting, and gambling payments
- Remittance for margin or futures trading abroad
Violating these rules can attract penalties under FEMA. Always verify that your purpose of remittance is eligible under RBI guidelines.
Tips to Reduce Remittance Costs
When sending money internationally, minimizing costs is a smart financial move. Here’s how you can reduce expenses:
- Compare multiple remittance providers for the best exchange rates and fees
- Time your transfers when the INR is stronger against the USD
- Avoid frequent small transfers; consolidate into fewer larger transactions
- Use online platforms that offer mid-market rates and low fixed fees
- Understand tax implications and keep records of all transactions
Reporting and Tax Compliance
All remittances under LRS must be reported to the Income Tax Department. Banks and financial institutions submit reports of high-value transactions, and individuals may be required to declare international transfers in their income tax returns.
If your total foreign remittance exceeds INR 7 lakh in a financial year, TCS will be deducted and can be claimed as credit while filing your ITR. It’s important to keep documents like foreign exchange slips, payment receipts, and bank records for future reference.
Common Use Cases for Remitting Money to the US
1. Education Expenses
One of the most common reasons for remittance is to fund higher education in the U.S. Students often receive money for tuition, accommodation, books, and daily expenses.
2. Family Maintenance
Indian residents often send money to support family members, such as elderly parents or children living in the U.S. This is fully allowed under the LRS scheme.
3. Investment Abroad
Investors use the LRS route to diversify by buying U.S. stocks, ETFs, or real estate. However, all such investments should be declared as per Indian tax laws.
Remitting money from India to the U.S. is a straightforward process when done through authorized channels and in compliance with RBI guidelines. By understanding the rules under the Liberalised Remittance Scheme, selecting the right service provider, and staying informed about taxes and fees, individuals can make efficient and cost-effective international transfers. Whether for education, personal support, or investment purposes, being aware of the process helps avoid delays and ensures a smooth experience. With the growth of digital platforms and streamlined banking services, sending money abroad from India has become more accessible than ever before.