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Are there any downsides of using 3rd party remittance services to send money from US to India ?

  1. Like for example I use transferwise to send $x to my dad's account in India, would it show my name as the depositor ?

  2. Would it be considered as income for my dad ?

  3. Any special care/precaution to take before using such services ?

I am a bit skeptical because the IT department in India should know that I i.e. his son has deposited money, so that it can be considered as a gift and thus non-taxable. If I send it via my bank in the US, I am sure the banks in India would also recognize the validity of the depositor.

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Like for example I use transferwise to send $x to my dad's account in India, would it show my name as the depositor ?

That would depend from bank to bank, it may or may not show your name.

Would it be considered as income for my dad ?

Assuming your parents are Indian Residents for tax purposes. No. It would be considered as Gift. Gifts between father and son are tax free in India and there is no limit.

Any special care/precaution to take before using such services ?

Not really. Just to be safe, keep a copy of the transfer instruction / details of debit to you account etc, so that if there is enquiry you have all the data handy.

Edit:
Clarifying the comment, if you are Resident Alien in US for tax purposes, you would be liable to Gift Tax [Not your parents as they are Indian Residents and would follow Indian tax rules]. As per IRS the liability of Gift tax is on Donor subject to limit of $14000 per year per Donee. So you and your wife can gift your father and mother $14000 each. i.e. $56000 each year. Anything more will be taxable or can be reduced from the overall estate limit.

  • This link says that there is a $14000 limit on gifts. Can you clear that ? – Viraj Aug 27 '15 at 4:19
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Register an account with multiple transfer services and see who will actually give you the best rate, including any fees charged by the service itself, at the time you want to make the transfer.

Research the available methods to get the money into and out of the transfer service to five the lowest cost options, which would ideally be free on both ends.

Be patient. It can take a week for money to arrive in your recipients account depending on the methods of getting the money into and out of the transfer service. You might also be called to verify the transaction before it goes through.

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