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How much money can my father transfer from his India bank account to my U.S. bank account without both of us paying taxed on it ?

It will be used to buy a house in the U.S.I was thinking of getting myself added as a joint back account holder to his Indian account and then transfer the money to show that I transferred it from my own Indian account to U.S. account.

Will that help my father in avoiding taxation in India on the amount. Thanks!

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  • Re setting up a joint account with father, be aware that if you have become a US citizen, then you cannot hold an ordinary savings account jointly with your father, and if you previously (before you became a US citizen) were a joint account holder with your father, you cannot add your name back onto that account now that you are not an Indian citizen. Commented May 29 at 19:54

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From an India tax point of view your father can gift you unlimited amount of money and the transfer would be under Gift Tax act. As per the act there is NO tax on this transaction. I does not matter if you get yourself added into the joint account or not.

From a US tax point of view, this transfer would come under gift tax, however in US the gift tax is applicable on the Donor [i.e. your father]. As your father is not a US Citizen the provisions are not applicable to him.

Edit
Under the liberalized remittance scheme, an individual can transfer upto USD 1 million every year. A CA certificate is required certifying that the taxes on the funds have been paid. Your Bank would be able to guide you on the exact process.

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  • Thank you. How much money can I bring in from India ?
    – T C
    Commented Sep 22, 2015 at 22:24
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Let me give you a point by point reply:

  1. Your father can transfer up to USD 250,000 per FY without RBI approval.
  2. Also, since your father is a relative as per definition given by Income Tax Act, 1961, gift from him to you is exempt from Indian tax.
  3. From US pov, only if the gift you receive exceeds USD 100,000, then you need to report in Form 3520.
  4. The gift would also be exempt from US Tax. Both for you and your father
  5. The joint account approach would unnecessarily complicate the matter. Though as a consultant, I love complicated stuff haha

Here, I would like to bring out a judgment "United States v. Harris" which onfirmed that gifts from foreign sources must be reported but are not subject to U.S. income tax.

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