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Laws and legal documents when transferring large sums of money into India

Emigrating, funding a business or helping family abroad? Sending large sums to India from Australia can be tricky.

Updated

There's a lot for you to consider when sending money to India. But you can’t avoid the laws and potential paperwork that go along with transferring large amounts of money.

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How India regulates large remittances

India is the world’s leading remittance recipient, with more than $1.9 billion sent from Australia to India in 2017 alone, according to the World Bank. Many providers in Australia offer transfer services to India, but your recipient could be on the hook for a gift tax as regulated by the Indian Income Tax Act.

In general, if your recipient is a "blood relative" — including spouses, children and grandchildren, siblings or in-laws — they do not pay tax on any amount that you send. Your recipient also won't pay tax on any money sent as part of an inheritance or a wedding gift.

However, if your recipient is not related to you, any amount over 50,000 rupees (about $980, depending on the exchange rate) that you send is taxable and must be declared as income.

As with all international money transfers, be wary of potential fraud and only send money to people you know. Using a reputable provider can safeguard you from potential scams.

What are the penalties for not reporting a large remittance?

With so much attention on money entering and leaving India, if you fail to report large sums, don’t know you have to report them or don’t report them correctly — it will likely be discovered. Make sure to declare any large remittance as income on your general tax return with the Indian Income Tax Department.

To avoid the severe penalties that could come with a failure to report large sums of money into the country, speak with a professional to guarantee that everything is above board and complies with the laws of both Australia and India.

Do I have to report large transfers out of Australia?

By law, banks and money transfer services report all cash transactions that exceed $10,000 — and any transaction of any amount that alerts their suspicions. Some money transfer businesses have reporting thresholds as low as $1,000. You generally won't need to do anything on top of this, but it's good to keep all records of the transfer just in case.

Learn about the legal requirements for transferring large amounts of money into Australia.

How will my recipient receive my remittance in India?

The process of receiving a money transfer in India will vary by provider and delivery method. In general, your recipient will provide ID or a confirmation number for the transaction to receive your funds.

If your recipient owns an account with an Indian bank or money transfer company, they may not need to provide this information each time you send money.


DISCLAIMER: This article is general advice. It does not consider your own personal circumstances and may not be applicable to you. You should obtain professional advice and consider your own situation before acting on anything contained in our article.


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