Everything You Need to Know About NRI Gift Tax in India (2024)

FAQs

Everything You Need to Know About NRI Gift Tax in India? ›

Taxation on Gifts to Resident Indians by NRI

Gifts received from NRI relatives by resident Indians are not subject to taxation in India, and this exemption applies to both the giver and the receiver. Gifts from NRIs (non-relatives) to resident Indians, up to ₹50,000/-, are also exempt from tax for both the giver and the receiver.

For gifts or bequests from a nonresident alien or foreign estate, you are required to report the receipt of such gifts or bequests only if the aggregate amount received from that nonresident alien or foreign estate exceeds $100,000 during the taxable year.

Under current tax laws, not all gifts received in India are subject to tax. However, the Income Tax Act 1962 includes key provisions which allow you to receive various tax-exempt gifts. Cash gifts: You do not have to pay gift tax on gifts or cash up to Rs. 50,000 in a financial year.

No gift tax is applicable where gifts are received from relative. There is no limit on this amount. Gifts received from non relatives for amount > Rs. 50000 in any financial year comes under levy of TAX.

The general rate of import duty is 30 percent but many articles are liable to a higher rate. 2. Import duty is chargeable even if the articles are received as free gifts. The fact that goods are old or second-hand or gifts or articles intended for personal use does not entitle them per se to exemption from import duty.

However, any gift to a person who is not a relative* will be taxable for the recipient if the aggregate amount is greater than ₹50,000 as per Section 56(2)(x) of the Income Tax Act, 1961.

Non-Resident Indians (NRIs) can repatriate a maximum of $1 million without paying any tax on money transfers from India to the USA. The reason is, as per Section 206C(1G) of the Income Tax Act, there is no applicable TCS when NRIs transfer money from their NRO to their NRE account.

Here's how a gift is treated for tax if a resident Indian receives it from an NRI: If the gift amount exceeds ₹50,000, the entire amount becomes taxable for the recipient under the income category Income from Other Sources.

Can NRI send money to parents in India? ›

Under the RBI's LRS, NRIs are allowed to remit up to USD 250,000 per financial year for various purposes, including maintenance of close relatives in India (which includes parents). Money sent to parents for their maintenance or support is generally not taxable in the hands of the recipient (parents).

Here, the total value of all gifts received is counted. In another instance, in case you receive Rs. 50,000 from one friend as a gift and Rs. 25,000 from another friend, the limit of Rs. 50,000 would be considered to be breached. The entire gift value (Rs. 75,000) would be taxable in your hands.

The IRS has no limit on how much money you can send to India. However, above $11.7 million USD, you'll be liable for taxes.

Points to remember for saving tax by gifting

If the gift giver and receiver are not relatives, the maximum tax-free amount of transfer is Rs. 50,000. If the gift amount exceeds that, then the whole amount, not just the excess, becomes taxable as per the tax slab of the receiver.

Cash or gifts received upto Rs. 50,000 during a financial year are exempt from tax; however, in case of gifts of a value higher than this threshold, the entire amount is taxable in the hands of the recipient.

So no gift tax in US as there is no tax liability for recipients. Also US gift tax applies if person making the gift is US taxpayer. Capital gains tax is levied at the time of sale of the property, if the gift is a capital asset subject to capital gain taxation. The cost basis is taken as “cost to the original owner”.

Tax Deduction at Source (TDS): While there's no tax on the amount received as remittance, any income generated from that amount (like interest from deposits) is taxable.

As a general rule, when a gift comes from a nonresident foreign national, the recipient is usually not taxed on the gift itself, and it does not count toward gross income. That's because the IRS does not have jurisdiction over gifts that come from overseas from nonresident, non-US citizens.

Ans. Yes, all kinds of gifts including cash, gold, real estate, paintings or any other valuable item are taxable. However, if the cash amount or value of the gift in kind is less than Rs. 50,000, the same would not be taxable.