Should I use an NRE or NRO account to transfer money from India to the US? Any reports needed?
Deposits into NRE account can only be done from funds outside India. So your brother cannot deposit into your NRE account.  He can deposit in NRO account or directly wire transfer the funds. Both these require some paper work depending on the amount. NRE is better. It's a tax free account, exempt from income tax. NRE account is freely repatriable (Principal and interest earned) while the NRO account has restricted repatriability
Is it liable for taxation in India? Taxation does not depend on whether to transfer money to India or keep it in GCC. It depends on your tax status. In a given Financial year; 1st April to 31st March, if you are outside of India for more than 182 days, your are Non-Resident Indian, NRI for tax purposes.  If you are NRI, income earned outside of India is not taxable in India [even if you transfer the funds to India]. If you are not an NRI, you income in GCC will be taxable in India [Even if you keep the money in GCC]. We both send our salary into a friends account in India and then transfer an amount to our own accounts This is an incorrect practise, If you are NRI, you should not be holding a Savings account, it should be converted into NRO and you can if you want open an NRE account. For your friend where you are transferring money, if there is an income tax audit, there would be quite a few questions asked and your friend has to establish and keep records that this is not GIFT, but more of a convenience agreement. "As Dheer has already told you in his answer, your plan is perfectly legal, and there are no US tax issues other than making sure that you report all the interest that you earn in all your NRE accounts (not just this one) as well as all your NRO accounts, stock and mutual fund dividends and capital gains, rental income, etc to the IRS and pay appropriate taxes. (You do get a credit from the IRS for taxes paid to India on NRO account income etc)  You also may also need to report the existence of accounts if the balance exceeds $10K at any time etc. But, in addition to the foreign exchange conversion risk that Dheer has pointed out to you, have you given any thought to what is going to happen with that credit card? That 0% interest balance of $5K does not mean an interest-free loan 0f $5K for a year (with $150 service charge on that transaction). Instead, consider the following. If you use the card for any purchases, then after the first month, your purchases will be charged interest from the day that you make them till the day they are paid off: there is no 25-day grace period. The only way to avoid this is to pay off the full balance ($5K 0% interest loan PLUS $150 service charge as well as any other service charges, annual fees etc PLUS all purchases PLUS any interest) shown on the first monthly statement that you receive after taking that loan. If you choose this option, then, in effect, have taken a $5K loan for only about 55 days and have paid 3%  interest (sorry, I meant to write) service fee for the privilege. If you don't use the card for any purchases at all, then the first monthly statement will show a statement balance of $5130 and (most likely) a minimum required payment of $200. By law, the minimum required payment is all interest charged for that month($0) PLUS all service fees charged during that month ($150) PLUS 1% of the rest ($50). Well, actually the law says something like ""a sufficient fraction of the balance to ensure that a person making the required minimum payment each month can pay off the debt in a reasonable time"" and most credit card companies choose 1% as the sufficient fraction and 108 months as a reasonable time.  OK, so you pay the $200 and feel that you have paid off the service fee and $50 of that 0% interest loan. Not so!  If you make the required minimum payment, the law allows that amount to be be applied to any part of the balance owing. It is only the excess over the minimum payment that the law says must be applied to the balance being charged the highest rate. So, you have paid off $200 of that $5K loan and still owe the service fee. The following month's statement will include interest on that unpaid $150. In short, to leave only the 0% balance owing, you have to pay $350 that first month so that next month's statement balance will be $4800 at 0%. The next month's required minimum payment will be $48, and so on. In short, you really need to keep on top of things and understand how credit-card payments really work in order to pull off your scheme successfully. Note also that the remaining part of that 0% interest balance must be paid off by the end of the period or else a humongous rate of interest will be applied retroactively from Day One, more than enough to blow away all that FD interest. So make sure that you have the cash handy to pay it off in timely fashion when it comes due." Assuming you are NRI, any income you earn is not taxable in India whether you transfer to India or not. Is this amount taxable in India? If yes then how much I have to pay as tax. No it is not taxable. How to fixed Deposit this money from Saudi Arabia or from India through my husband or parents? You can open Fixed Deposits in your name or your husband/parents name. It is your choice. Some Banks allow you to operate an NRE account via Internet If I put this money in 2-3 FD's (like 5 lakh one FD and 2 or 3 lakh other FD's) then the interest earned is taxable? Interest is taxable.  Can I withdraw any FD without maturity if needed in urgent? That depends on type of FD you have opened. Some allow withdrawal before maturity with a penalty other don't allow. If you are tax-resident in the US, then you must report income from sources within and without the United States.  Your foreign income generally must be reported to the IRS.  You will generally be eligible for a credit for foreign income taxes paid, via Form 1116. The question of the stock transfer is more complicated, but revolves around the beneficial owner.  If the stocks are yours but held by your brother, it is possible that you are the beneficial owner and you will have to report any income. There is no tax for bringing the money into the US.  As a US tax resident, you are already subject to income tax on the gain from the sale in India.  However, if the investment is held by a separate entity in India, which is not a US domestic entity or tax resident, then there is a separate analysis.  Paying a dividend to you of the sale proceeds (or part of the proceeds) would be taxable.  Your sale of the entity containing the investments would be taxable.  There are look-through provisions if the entity is insufficiently foreign (de facto US, such as a Subpart-F CFC).  There are ways to structure that transaction that are not taxable, such as making it a bona fide loan (which is enforceable and you must pay back on reasonable terms).  But if you are holding property directly, not through a foreign separate entity, then the sale triggers US tax; the transfer into the US is not meaningful for your taxes, except for reporting foreign accounts. Please review Publication 519 for general information on taxation of resident aliens. Will I able to put the Rs amount back in the NRE account the same amount which I have paid against that house? If you have purchased the property by debiting an NRE account [you should have the paper trail], the same amount of funds can be transferred back to NRE Account. For example the house was for 50 lacs, and you paid Rs 30 lacs from NRE account, when you sell the house, you can transfer back only 30 lacs into the NRE account. Will I need to pay TAX on NRE account money before transferring out of India? You need not pay tax on the funds in NRE account. However if you have made gains by buying and selling a house [irrespective of the source of funds], you have to pay capital gains tax. As the college education is very costly, I want to send USD 25,000 to him as a gift. What is the procedure and what Indian and American tax laws are involved ? This transaction will be treated as gift. As per Indian law you can transfer unlimited amount to your close relative [son-in-law/grandchildren/daughter/etc]. In US the gift tax is on donor, as you are no US citizen you are not bound by this. As your son-in-law/grandchildren are US citizens, there is no tax to them. Your son-in-law may still need to declare this in Form 3250 or such relevant returns. Under the Liberalized remittance scheme [Refer Q3], you can transfer upto USD 250,000 per year. There maybe some forms that you need to fill. Ask your Bank. If the amount is more than USD 25,000 a CA certificate along with 15CA, 15CB need to be filled. Essentially the CA certifies that taxes on the funds being transferred have already been paid to Govt of India. Can I send money to him directly or to his father who is submitting tax returns in USA? This does not make any difference in India. Someone else may answer this question if it makes a difference in US. Taxes Yes. You haven't indicated why the transfer is being made. If it is without any reason, it would attract a Gift Tax. legal liability It would definitely be investigated to see if Money Laundering or any other illegal activities is happening. If things are in order you have nothing to worry. charges  Normally none. Your Bank can confirm better. friend of mine Are you sure he is a friend and this is not some kind of scam ... it typically starts of with you will get huge money and then calls like its stuck with RBI you need to paysome one to fast track or any such stories to get money out of you. You have not mentioned the dates when you left India. Taxability is not depended on whether you transfer the funds to India or NOT. It is dependent on whether you are NRI for tax purposes for the given financial year. Refer to this question for more details Will it be taxable if I transfer money from UK account to India account? Edit: The lottery earnings are also treated in the same way. If you are NRI, you don't pay tax. Else you pay tax