Every year, millions of Non-Resident Indians (NRI), send money home. The most common reasons are to support parents, fund a sibling’s education, invest in property, or simply maintain ties to India. The question that follows almost every large transfer is the same: is this taxed?
Most personal remittances from NRIs to family in India are not taxed in India because the funds have already been taxed in the country where the NRI earned them. However, NRIs must declare large transfers and may face Tax Collected at Source (TCS) of 20% on remittances above 7 lakh rupees per financial year under the Liberalised Remittance Scheme.
The full picture is nuanced. NRI remittance tax rules in India distinguish between types of money, recipients, and accounts. Getting the details wrong can mean unexpected tax bills, compliance issues, or missed opportunities to structure transfers more efficiently.
This article covers what is and isn’t taxed, the TCS rules that apply above certain thresholds, how Double Taxation Avoidance Agreements protect NRIs in key markets, and how to send money to India at a cost-effective rate.
This article provides general guidance only, not professional tax advice. India’s tax regulations are subject to change, and individual circumstances vary. Please consult a qualified chartered accountant or tax advisor familiar with NRI taxation for advice specific to your situation.
What is NRI remittance tax?
A Non-Resident Indian is an Indian citizen or person of Indian origin who resides outside India for more than 182 days in a financial year, or who has lived outside India for more than 365 days across four consecutive years and more than 60 days in the current financial year. The specific definition is set out under the Foreign Exchange Management Act (FEMA) and the Income Tax Act, 1961, and the two definitions differ in certain respects.
The Reserve Bank of India regulates all foreign exchange transactions involving India, including inbound remittances. Under current RBI rules, there is no limit on the amount an NRI can remit to India for legitimate personal purposes.
India does not levy a specific “remittance tax” on money sent into the country. Inbound remittances are not treated as taxable income in the hands of the recipient simply because the money arrived from abroad. What matters for tax purposes in India is the nature of the funds: what they represent, who receives them, and in which type of account they are held.
The tax complexity for NRIs operates primarily on the outbound side, specifically under the Liberalised Remittance Scheme for Indian residents remitting money out of India, and on the income side, where income earned in India by an NRI is taxable in India regardless of where the NRI lives.
Tax on NRI remittance to India
For the vast majority of NRIs sending money home to family, the funds are not taxable in India on receipt.
When an NRI earns income abroad, that income is taxed in the country where it is earned. The NRI pays income tax in the UK, the US, the UAE, Canada, or wherever they are resident. The after-tax income is then remitted to India. India does not tax this again simply because it crosses the border.
Gifts to close relatives
Under Section 56(2) of the Income Tax Act, 1961, gifts received from specified relatives are exempt from tax in the hands of the recipient, regardless of the amount. The definition of “relative” for this purpose includes spouse, siblings, siblings of the spouse, siblings of either parent, any lineal ascendant or descendant, and their spouses.
In practical terms, an NRI in London sending ₹15 lakh to their parents or siblings in India does not create a tax liability for the recipient. The gift is exempt because it comes from a close relative as defined under the Act.
Gifts to non-relatives
Gifts received from non-relatives above ₹50,000 in a financial year are taxable as income in the hands of the recipient under Section 56(2)(x). If an NRI sends a large amount to a friend or distant relative not covered by the specified relative definition, the recipient may have a tax liability on the amount received above ₹50,000.
Income remitted versus personal funds remitted
The distinction that matters most is whether the funds represent income earned in India or personal savings remitted from abroad. Income earned in India by an NRI, from rental property, business activities, capital gains on Indian assets, or interest on certain accounts, is taxable in India when it arises, not when it is remitted. The act of transferring those funds does not create a second tax event, but the income itself is taxable at the point of earning.
India remittance tax rules for NRIs
The most significant tax rule NRIs need to understand is Tax Collected at Source (TCS) under Section 206C(1G) of the Income Tax Act, 1961. This applies specifically to outbound remittances under the Liberalised Remittance Scheme (LRS), which governs money sent out of India by Indian residents.
TCS under LRS: what it is and who it affects
TCS of 20% applies on remittances above ₹7 lakh per financial year under LRS. This rule applies to Indian residents remitting money abroad, not to NRIs remitting money into India. However, NRIs need to understand it for two reasons.
First, if an NRI has family members in India who remit money abroad (for example, to support the NRI or for investments), those family members are subject to the LRS TCS rules. Second, NRIs who return to India and become tax residents again will be subject to LRS rules if they subsequently remit money abroad.
TCS is not a final tax. It is a tax collected upfront by the authorised dealer (typically the bank processing the transfer). The person who pays TCS can claim it as a credit against their total tax liability when filing their Income Tax Return. If no tax is payable (because total income is below the taxable threshold), TCS can be claimed as a refund.
For a detailed breakdown of how LRS works, see our guide on the Liberalised Remittance Scheme explained.
PAN requirements
Any remittance transaction in India above ₹50,000 requires the remitter to provide their PAN (Permanent Account Number). For NRIs receiving funds into Indian bank accounts, a PAN is required for transactions of this size and is also necessary for filing income tax returns in India. NRIs without a PAN who need one for tax or banking purposes can apply through the Income Tax Department's portal at incometax.gov.in.
Reporting for large transfers
Banks in India are required to report high-value transactions to the Income Tax Department under the Statement of Financial Transactions (SFT) framework. Cash deposits of ₹10 lakh or more in a financial year, and certain other transactions, are automatically reported. NRIs receiving large remittances into Indian bank accounts should maintain clear documentation of the source of funds to respond to any queries from the tax authorities.
NRI sending money to India: what is taxed and what is not
| Type of remittance |
Taxable in India for recipient? |
Notes |
| Personal gift to spouse |
Not taxable |
Gifts between spouses are exempt regardless of amount |
| Personal gift to parents |
Not taxable |
Parents are specified relatives under Section 56(2) |
| Personal gift to siblings |
Not taxable |
Siblings are specified relatives under Section 56(2) |
| Personal gift to non-relative above ₹50,000 |
Taxable for recipient |
Excess above ₹50,000 is income for the recipient |
| Rental income from Indian property remitted abroad |
Taxable in India when earned |
Income arises in India; remittance does not create second event |
| Capital gains from sale of Indian property |
Taxable in India |
Tax applies at the point of sale; TDS deducted by buyer |
| Interest on NRE account |
Not taxable in India |
NRE account interest is explicitly exempt under Section 10(4) |
| Interest on NRO account |
Taxable in India |
Subject to TDS at 30% plus applicable surcharge and cess |
| Interest on FCNR(B) account |
Not taxable in India |
Exempt for NRIs under Section 10(4) |
Investment returns
(dividends, mutual fund gains) |
Taxable depending on type |
Subject to standard India tax rules for each investment type |
This table provides a general overview. Individual circumstances may vary. Consult a qualified tax advisor for advice specific to your situation.
NRE versus NRO accounts: the key distinction
An NRE (Non-Resident External) account holds foreign earnings remitted to India and is freely repatriable. Interest earned on NRE accounts is exempt from tax in India under Section 10(4) of the Income Tax Act. The principal and interest can be repatriated abroad without restriction.
An NRO (Non-Resident Ordinary) account holds income earned in India, such as rent, dividends, or pension. Interest on NRO accounts is taxable in India and subject to TDS at 30% (plus surcharge and cess). Repatriation from NRO accounts is permitted up to $1 million per financial year, subject to tax clearance.
The practical implication is that NRIs who want their India-held savings to be tax-free in India should hold them in NRE accounts rather than NRO accounts.
DTAA and double taxation: how it affects NRIs
A Double Taxation Avoidance Agreement (DTAA) is a treaty between India and another country that prevents the same income from being taxed twice, once in India and once in the country of residence. India has DTAAs with over 90 countries, including the US, UK, UAE, Canada, Australia, Germany, Singapore, and the Netherlands.
For NRIs, DTAAs are most relevant when income arises in India, and the NRI is also taxable in their country of residence on worldwide income. Without a DTAA, an NRI with rental income in India might pay Indian income tax on that rental income and then pay tax again in their country of residence. The DTAA allocates taxing rights between the two countries and allows the NRI to claim relief.
How to claim DTAA relief
To claim DTAA relief in India, the NRI must obtain a Tax Residency Certificate (TRC) from the tax authority in their country of residence. This certificate confirms the NRI’s residency status for the relevant financial year.
In addition, Form 10F must be submitted to the Indian payer (such as a tenant paying rent or a company paying dividends) to apply the DTAA benefit at source. Without Form 10F, the payer will deduct TDS at the higher non-DTAA rate.
Form 67 for foreign tax credit in India
If an NRI has paid tax abroad on income that is also taxable in India, they can claim a Foreign Tax Credit by filing Form 67 with their Indian ITR. The credit cannot exceed the Indian tax payable on the same income. Form 67 must be filed before the ITR due date for the relevant assessment year.
How to send money to India as an NRI
Most NRIs sending money to India use one of four methods: international wire transfer through a bank, online transfer through a dedicated remittance platform, NEFT or RTGS after the funds are already in an Indian account, or a combination of the above.
Wire transfer through a bank
The traditional route. Funds travel via SWIFT from the NRI’s overseas bank to their NRE or NRO account in India. Processing typically takes two to five business days. Bank wire fees run $25 to $50 for outbound international transfers, plus a 2 to 4% exchange rate margin at the receiving Indian bank. Correspondent bank fees may further reduce the amount received.
Online remittance platforms
Digital-first platforms that use local payment networks rather than SWIFT significantly reduce transfer fees and processing times.
Grey for NRI remittances
Grey provides multi-currency accounts for NRIs in the UK, Nigeria, Ghana, Kenya, and many other markets, with a growing India remittance capability. NRIs can open a multi-currency account with Grey to hold USD, GBP, EUR, and other currencies, and transfer funds to Indian accounts at competitive rates.
Frequently asked questions
Do NRIs pay tax on money sent to parents in India?
No. Gifts from NRIs to parents are exempt from tax in India under Section 56(2) of the Income Tax Act, 1961. Parents are considered specified relatives, and gifts from them are not taxable to the recipient, regardless of the amount. The parents do not need to declare this as income. However, if the gifted funds subsequently generate income (for example, if parents invest the money and earn interest), that income is taxable in the parents’ hands.
What is the gift tax limit for NRIs sending to India?
There is no upper limit on tax-free gifts to specified relatives in India. An NRI can send any amount to a spouse, parent, sibling, or other specified relative without creating a tax liability for the recipient. The exemption is unlimited for gifts between specified relatives. For gifts to non-relatives, any amount above ₹50,000 in a financial year is taxable as income in the hands of the recipient.
What is TCS on foreign remittance?
TCS (Tax Collected at Source) of 20% applies under Section 206C(1G) of the Income Tax Act on outbound remittances under the Liberalised Remittance Scheme above ₹7 lakh per financial year. This rule applies to Indian residents sending money abroad, not to NRIs sending money into India. TCS is not a final tax: it is collected upfront by the authorised bank and can be claimed as a credit against the remitter’s total tax liability or refunded if no tax is payable.
Is NRE account interest taxable?
No. Interest earned on NRE (Non-Resident External) accounts is explicitly exempt from income tax in India under Section 10(4) of the Income Tax Act, 1961. This exemption applies as long as the account holder maintains NRI status. NRE accounts are also freely repatriable: principal and interest can be transferred abroad without restriction. By contrast, interest on NRO (Non-Resident Ordinary) accounts is taxable in India and subject to TDS at 30% plus surcharge and cess.
Do I need to file an ITR in India as an NRI?
An NRI is required to file an Income Tax Return in India if their total income arising in India exceeds the basic exemption limit (currently ₹2.5 lakh for individuals below 60 years of age, for the assessment year 2025-26). Income arising in India includes rental income, capital gains on Indian assets, interest on NRO accounts, and any other India-sourced income. Income earned abroad is not included in the Indian ITR for NRIs. Remittances sent to family in India (personal gifts to relatives) do not constitute income for the NRI and are not included in the ITR.
Can I use Grey to send money to India from the UK or the US?
Grey provides multi-currency accounts for users in supported markets, including the UK and Nigeria, allowing them to hold and convert GBP, USD, EUR, and other currencies. Remittance capability to India and the specific currencies supported should be confirmed at grey.co before transacting, as Grey's remittance corridors are actively expanding. The deposit fee is 0.8% capped at $10/€10/£10 and conversion is 1% capped at $6, with no hidden deductions and the rate shown before confirmation.
Download the Grey to send money to India with Grey and verify the current availability for your specific corridor.
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