Send Money from India to the USA: LRS, Gifts, Form 3520 and Tax Rules

Families who live between Aurora and Pune move money in both directions all the time: parents in Hyderabad helping with a down payment on a house in Naperville, or a son on an H-1B supporting a mother in Ahmedabad. If you want to send money from India to the USA, three sets of rules apply at once: Indian foreign-exchange law (the Liberalised Remittance Scheme, or LRS, for residents; NRO and NRE rules for non-residents), Indian income tax, and U.S. reporting on the receiving end. Most mistakes come from treating the transfer as a bank matter when it is also a tax filing.

How do you send money from India to the USA under the LRS?

Our LRS explainer covers the scheme in full. In short, the RBI describes the LRS as a facility for resident individuals, including minors, to remit up to USD 250,000 per financial year for permissible current or capital account transactions, or a combination. It is not available to companies, partnership firms, HUFs or trusts. There is no limit on how often you remit, but the cumulative total across all banks and all purposes in the year counts. Gifts to a person outside India fall within it, and the donor, not the bank, is responsible for staying inside the limit.

Prohibited uses include margin calls to overseas exchanges, forex trading abroad and certain remittances to listed non-cooperative jurisdictions. The remitter completes Form A2, the declaration of the purpose of the remittance, and a PAN is required for every LRS transaction. The RBI also notes that Form 15CA and 15CB requirements come from tax law rather than from RBI directions. Depending on purpose and amount, your bank may also collect tax at source (TCS) under Indian tax rules that have been revised in recent Finance Acts; ask the bank and your Chartered Accountant what applies on the day you remit.

An NRI cannot use the LRS, because it is for residents. An NRI sending money out of India relies on the NRE or NRO route below. (The RBI FAQ also describes a separate allowance for residents who are not permanently resident in India, tied to net salary after tax.)

Which route applies to you?

Our NRE, NRO and FCNR guide and Form 15CA and 15CB guide cover the Indian process in detail.

What does the U.S. recipient have to do?

A gift received from a person who is not a U.S. citizen or resident is not income to you. Reporting is the issue (see our Forms 3520 and 3520-A guide). IRS instructions for Form 3520 say a U.S. person must file if, in a tax year, they received more than $100,000 from a nonresident alien individual or foreign estate (including foreign persons related to that donor) that they treated as gifts or bequests. Related donors are aggregated: if your mother and father each send money, add them together. The threshold for gifts from foreign corporations and partnerships is separate and indexed for inflation each year, so check the IRS notice for the year.

Form 3520 is due on the 15th day of the fourth month after your tax year ends (April 15 for most calendar-year individuals), and the due date is October 15 if you have an extension for your return. It is a separate form mailed to the IRS center listed in the instructions. Late or incomplete reports can attract a penalty of 5% of the gift per month, up to 25%, unless reasonable cause is shown. The recipient does not pay U.S. tax because of a Form 3520 report, but missing one is costly. For how gifts and inheritances are treated in all three countries, see our gifts and estate comparison.

What about gifts the other way, from the U.S. to India?

A U.S. citizen or resident who gives money to a parent in India is the donor for U.S. gift tax purposes. The 2025 Form 709 instructions state an annual exclusion of $19,000 per recipient, and the IRS says the 2026 figure is also $19,000. Gifts above that are reported on Form 709 but typically use up part of the lifetime exemption (set at $15,000,000 for gifts made in 2026) instead of producing tax. The Indian parent receives the gift from a relative, which the Income Tax Department treats as exempt; a gift from a non-relative of more than Rs 50,000 in a year is taxable to the recipient in India. The department's definition of relative includes a lineal ascendant or descendant.

Step by step: a parent in India sends a gift to a child in the U.S.

1. The parent confirms residential status under FEMA and checks the LRS amount already used in the financial year.
2. The parent gives the bank a Form A2, PAN and the purpose (gift to a family member). The bank asks for the tax forms that apply.
3. The child provides U.S. bank details and keeps a short gift letter that states the donor, relationship, date, amount and that nothing has to be repaid.
4. The child records the wire in a running list of foreign gifts by calendar year.
5. If foreign gifts from nonresident alien individuals exceed $100,000 in the year, the child files Form 3520 with a copy of the supporting records.
6. If the money is a loan rather than a gift, a written loan agreement is essential, and the U.S. interest rules should be reviewed.

Worked example

Ramesh and Sunita, both Indian residents, each remit $110,000 in the same financial year to their son Anand, a green card holder in Aurora, for a house deposit. Each is inside their own USD 250,000 LRS limit. The IRS looks at Anand's total from related donors: $220,000 is above $100,000, so Anand must file Form 3520. If he fails to file, the penalty can reach 25% of the gifts, which is $55,000 in this hypothetical, even though no tax is due. The bank wires leave a clear paper trail that India and the U.S. can both see.

Mistakes to avoid

• Believing a gift under the Indian LRS limit has no U.S. consequence.
• Not aggregating gifts from both parents and related relatives.
• Sending the money as a "loan" without any loan documents.
• Using an NRI relative's NRO account for LRS purposes. The LRS belongs to residents.
• Forgetting FBAR: if the parent adds the child as a joint holder with signing authority on an Indian account, the child's FBAR duty may begin.

How we can help

We handle the U.S. side for families in Aurora and the Fox Valley: gift reporting on Form 3520, donor-side Form 709 reviews, FBAR and Form 8938 filings, and documentation that supports a down payment or a loan file. We coordinate with your Indian Chartered Accountant for LRS, Form 15CA and 15CB and Indian gift questions. See our relocation and immigration tax planning and cross-border tax services. We cannot guarantee any outcome.

Frequently asked questions

General information only. It is not tax, legal, accounting or immigration advice for your situation, and rules change; confirm the current rules with the official source or a licensed professional in the relevant country.