I am a Permanent Resident of US. (My wife also has a GC).

We both are working (I am in IT and my wife works in a Store).

We both share the same Bank account in US. The question is how much money I can send to India in my NRE account per year?

  • What if I transfer 9999 dollars to my NRE account and have it withdrawn completely everytime after which I send another 9999$?. So technically I can send as much as I can to NRE account as long as money is withdrawn and never crosses 10000 dollars right?
    – user27472
    Apr 26 '15 at 22:56

I assume that you are a citizen of India, and are what Indian law calls a NRI (NonResident Indian) and thus entitled to operate an NRE (NonResident External) account in India. You can deposit US dollars into the NRE account, but the money is converted to Indian Rupees (INR) and held as INR. You can withdraw the money and bring it back to the US as US dollars, but the INR will be converted to US$ at the exchange rate applicable on the date of the transaction. With the recent decline of the Indian Rupee against the US dollar, many NRE accounts lost a lot of their value.

You can deposit any amount of money in your NRE account. Some banks may limit the amount you can send in one business day, but if 250 times that amount seriously limits the amount of money you want to send each year, you should not be asking here; there are enough expensive lawyers, bankers and tax advisors who will gladly guide you to a satisfactory solution. There is no limitation on the total amount that you can have in your NRE account.

The earnings (interest paid) on the sum in your NRE account is not taxable income to you in India but you may still need to file an income tax return in India to get a refund of the tax withheld by the bank (TDS) and sent to the tax authorities. The bank should not withhold tax on the earnings in an NRE account but it did happen to me (in the past). While the interest paid on your NRE account is not taxable in India, it is taxable income to you on your US tax returns (both Federal and State) and you must declare it on your tax return(s) even though the bank will not issue a 1099-INT form to you. Be aware also about the reporting requirements for foreign accounts (FBAR, TD F90-22.1 etc). Lots of people ignored this requirement in the past, but are more diligent these days after the IRS got a truckload of information about accounts in foreign banks and went after people charging them big penalties for not filing these forms for ever so many years. There was a huge ruckus in the Indian communities in the US about how the IRS was unfairly targeting simple folks instead of auditing the rich! But, if the total value of the accounts did not exceed $10K at any time of the year, these forms do not need to be filed. It seems, though, that you will not fall under this exemption since you are planning on having considerably larger sums in your NRE account. So be sure and follow the rules.

  • 1
    It might be that the Indian banks will soon start sending 1099-INT forms to NRI's, FATCA requires that. If I'm not mistaken, from 2014 every foreign bank will treat the US account holders with $50K or more the same the US banks treat them, including the tax reporting. Or refuse to open accounts for USans. Or not do any business in the US.
    – littleadv
    Oct 5 '13 at 7:44
  • Thanks for the additional information. In fact there is also a new Form 8938 that needs to be filed by US residents with more that $50K in off-shore assets in addition to the FBAR and TD 90-22.1 reporting. The statute of limitations has also been increased to 6 years etc. Oct 5 '13 at 11:55
  • So technically there is no limit if I send money to NRE account. There won't be any additional tax in USA. But if I send money directly to my parents account than there is a limit of around 14000 per person and over which there will be a gift tax. Right?
    – NinjaCoder
    Oct 12 '15 at 18:59

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