Sending Money Home & NRI Banking

Which account does this money belong in

The two accounts are not interchangeable, and the source of the money decides for you.

The line most guides skip: NRE interest is only tax-free in India. Once you are a US tax resident, interest on NRE, NRO and FCNR accounts all lands in your US return. Plan your US taxes on that basis from year one.

The treaty rate is not automatic. The India–US treaty rate of 15% does not apply by default. Your bank needs a Tax Residency Certificate from the IRS — Form 6166 — plus an e-filed Form 10F, and it applies the lower rate prospectively. Set this up before the interest is credited, not at filing time.

The conversion, in order:

1. Your existing resident savings account can only convert to NRO. You cannot convert a resident account into NRE, whatever a relationship manager tells you.
2. Open a fresh NRE account separately, if you plan to remit US income into India and want it exempt there and freely repatriable.
3. ICICI, HDFC, SBI and Axis all accept the conversion request with a visa copy, passport and overseas address proof. Some offer it fully online.
4. Redirect standing instructions — rent collection, dividend payouts and any SIP — to the NRO account once it is active.

What the transfer actually costs

Compare rupees landed, never the stated fee. The figures below are a snapshot on $5,250 at a mid-market rate near ₹95; corridor pricing changes without an announcement.

On $5,250 the bank wire costs about ₹19,570 more than the best transfer app. The gap between Remitly and Wise is ₹2,743, which is why you check both rather than picking a favourite once.

The conventional wisdom says Remitly wins small transfers and Wise wins above $3,000. On this corridor in August 2026 that crossover did not show up, and Remitly landed more rupees at both $1,000 and $5,000. So the advice is the boring one: run both calculators for anything over $2,000 and take that day’s winner.

The 1% remittance tax only hits cash. Started January 2026, and it applies only to transfers funded with physical cash, money orders or cashier’s cheques. Anything funded from a bank account or a US-issued card — Wise, Remitly or a wire — is exempt. If you were going to walk cash into a transfer agent, don’t.

Going the other way

Two different routes, and which one you use depends on whose money it is. Once you are an NRI, your channel out of India is the NRO one, not LRS.

The forms are renamed from 1 April 2026. 15CA becomes Form 145 and 15CB becomes Form 146 under the Income-tax Act, 2025. Thresholds and the CA requirement carry over, and remittances completed before 31 March 2026 stay on the old names. Some purposes are exempt from the forms entirely, so a CA who does NRI work will steer you in a ten-minute call.

Which forms do you owe

None of these create tax. All of them carry penalties for silence, and your Indian bank is already reporting your accounts to the IRS under FATCA — so the filings match records the IRS holds either way. Three numbers decide your set:

• Peak combined balance in Indian accounts. Over $10,000 at any point and FBAR (FinCEN Form 114) is required. Filed online and separately from your tax return, due 15 April with an automatic extension to 15 October. NRE, NRO, FCNR, mutual funds and demat all count toward the total.
• Gifts received from parents or relatives abroad. The $100,000 Form 3520 threshold aggregates gifts from a nonresident alien and everyone related to them — two parents sending $60,000 each crosses it. The deadline matches your return, but it cannot be e-filed with it: it goes in its own envelope to Ogden, Utah.
• The most you gave one person. Married founders can jointly give $38,000 per recipient per year by electing to gift-split on Form 709, which is useful when supporting both parents.

Thresholds shown are the 2026 figures for someone living in the US; the year-end and any-time tests for Form 8938 differ, and a CPA who does corridor work will confirm your set in one call.

The loose ends

Four things sitting in India that change status the moment you do.

The FCNR window, while it is open. The RBI temporarily lifted the rate ceiling on 3 to 5 year deposits until 30 September 2026, and banks are advertising 6.25 to 6.75% on those tenures. That is well above US savings rates with no rupee risk, though the interest is still US taxable. Rates move, so compare two or three banks the week you invest.

Do this now

• ☐ Convert your resident savings account to NRO immediately. Holding one as an NRI is a FEMA violation
• ☐ Open an NRE account before your first US-income remittance to India
• ☐ Redirect every standing instruction — rent, SIPs and dividends — to the NRO account
• ☐ Line up a CA before you need Form 15CB, or Form 146 from April 2026
• ☐ Run both a Wise and a Remitly quote for anything over $2,000 and compare rupees landed
• ☐ Update KYC to NRI on your mutual fund and demat accounts
• ☐ Talk to a PFIC-aware CA before adding money to any Indian mutual fund
• ☐ Indian accounts over $10,000 combined? Put FBAR on your US filing calendar

Sources & further reading

• RBI — NRO repatriation FAQ — the $1M route and its conditions.
• RBI — LRS FAQ — the $250k resident allowance.
• IRS — gifts from foreign persons — the Form 3520 threshold.
• IRS — FBAR — who must file and when.
• IRS — FATCA / Form 8938 — the second reporting set.
• IRS — PFIC / Form 8621 — why Indian mutual funds hurt.
• Wise — send to India — the benchmark rate.

This is general information, not legal/tax advice — verify with a professional before acting.