All About NRI Gift Tax In India

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Key Takeaways

Income received in India is usually taxable. NRIs can send gifts to Resident Indian relatives, friends, etc. Under the Liberalised Remittance Scheme, NRIs can receive up to USD 250,000 per financial year.

As humans, we love giving and receiving gifts. If you are a Non-Resident Indian (NRI), gifting or receiving gifts comes with specific tax laws. Per the Income Tax Department of India, most gifts from or to NRIs are taxable. Rules may differ for relatives, friends, acquaintances, etc. Keep reading to learn more about gift tax in India for NRIs.

Rules For Tax On Gift Money In India

Here are the rules for NRI gifting:

• Resident Indians (RI) can only send monetary gifts to NRIs in their NRO accounts.
• As an RI, you can gift immovable property to an NRI with the remittance of sales proceeds not exceeding USD 1 million a year.
• As an NRI, you can receive gifts in the form of shares and securities from your relatives. However, their value should not exceed 5% of the company's paid-up capital.
• You shall be liable to pay penalties for cash gifts exceeding INR 2 Lakh. Such monetary gifts should be received via bank transfers like remittances or cheques.
• Gift tax in India will not be applicable if the gift is a wedding gift or an inheritance, regardless of whether the receiver is a relative or not.
• Immovable properties outside India that RIs receive as a gift are tax-free in India, but subject to the tax laws of the foreign country.

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Gifts From An NRI to A Resident Indian

• Gifts offered by NRIs to RI relatives are exempt from taxes.
• Gifts offered by NRIs to RI friends or acquaintances are tax exempted if the value does not exceed INR 50,000.
• Income from gifts by NRIs to RI friends or acquaintances is taxable if the value exceeds INR 50,000. The amount is added to the receiver's total taxable income and taxed per their income tax bracket.

Gifts From A Resident Indian To An NRI

• Gifts offered by RIs to NRIs are tax-free in India.
• Gifts offered by RIs to NRI friends or acquaintances are exempt from tax if the value does not exceed INR 50,000.
• Gifts from RIs to NRI friends or acquaintances are taxable if the value exceeds INR 50,000. The amount is added to the receiver's total taxable income and taxed per their income tax bracket. Per the Liberalised Remittance Scheme, the limit for such gifts is USD 250,000 per financial year.

What Is An NRI Gift Deed?

Per Section 17 of the Registration Act, 1908, NRI gifting requires signing a gift deed. The NRI gift deed comprises two parties, the donor (the one who gifts) and the receiver of the gift. The deed must be typed on stamp paper, and both parties must sign all pages of the deed.

Final Note

Any income you receive in India is taxable, with a few exceptions. You may be liable to pay taxes if you receive money from an NRI, except for marriage or inheritance reasons. Ensure you check the tax laws before you send or receive NRI gifts. Also, check out the suite of deposit and investment products offered by DBS Treasures to manage your cash gifts.

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*Disclaimer: This article is published purely from an information perspective and it should not be deduced that the offering is available from DBS Bank India Limited or in partnership with any of its channel partners.

The purpose of this blog is not to provide advice but to provide information. Sound professional advice should be taken before making any investment decisions. The bank will not be responsible for any tax loss/other loss suffered by a person acting on the above.