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Gift by NRI to Resident Indian or Vice-Versa – Tax & Other Issues

We love getting gifts. Gifts might involve a lot of emotion and tradition. But we have to consider practical and mundane things like rules and taxation when it comes to gifts in terms of cash or assets.

NRIs can give and receive gifts in cash or kind (jewelry, antiques, property) to and from relatives and non-relatives in India. Check NRI Gift rules & exemption limits…

You can also get NRI Gift Deed Format from the end of this post

nri gift tax india

NRI Gift Tax India

Let us look at the tax implications of gifting for NRIs but first check basic definitions which will help you in understanding the rules & other issues.

Definition

The Income Tax Act defines gift as any asset received without consideration like money or money’s worth. It can include cash, movable property, immovable property, jewelry etc.

Relatives and Non-relatives

The treatment of gift tax is different when given to relatives and when given to non-relatives. The following people are considered relatives –

FatherChild’s Spouse
MotherGrandchildren
StepmotherGrandchild’s spouse
SpouseSiblings
ChildrenStepsister and Stepbrother
StepchildrenSiblings’ spouse.
Grandparents

All other persons are considered non-relatives.

NRI Gift Rules 

  • Immovable property can be gifted to an NRI provided the remittance of sales proceeds does not exceed USD 1,000,000 per year.
  • NRIs can get gifts from relatives in the form of shares and securities provided the gift does not exceed 5% of paid up capital of the company; the sectoral cap is not breached and the NRI is eligible to hold the securities.
  • Gift received from a specified trust, specified fund or as a scholarship from educational institutions is not taxable.
  • If the gift is an immovable property outside of India, it is exempt from tax.
  • The value of the gift cannot be considered as deduction while calculating income tax.
  • Income received from a gift in India is taxable in India whether the receiver and giver are Resident Indians or NRIs.
  • When you receive a gift, make sure the necessary documentation is in place.
  • Cash gifts that exceed Rs. 2,00,000 can be subject to penalty. Ensure that you get the relevant gift through cheques or bank account transfers.

nri gift

Gift by NRI to Resident Indian

NRI gift to Resident Indian – Let us look at the different scenarios when an NRI gifts a Resident Indian –

  • Gift from NRI Relative are exempted from tax – When an NRI gives a gift in the form of cash, cheque, items or property to a Resident Indian who is a relative, both giver and receiver are exempt from tax in India.
  • When an NRI gives a gift in the form of cash, cheque, items or property that is within the value of Rs. 50,000 to a Resident Indian who is not a relative, both giver and receiver are exempt from tax in India.
  • When an NRI gives a gift in the form of cash, cheque, items or property that exceeds the value of Rs. 50,000 to a Resident Indian who is a non-relative, gift tax is payable by the receiver. The amount is added to the receiver’s income and taxed as per the income tax slab applicable to the receiver.
  • When an NRI gives a gift in the form of cash, cheque, items or property to a Resident Indian for marriage or through will, both giver and receiver are exempt from tax in India irrespective of the ‘relative’ status.

Gift to NRI by Resident Indian

Resident Indian gives a gift to an NRI – Let us look at the different scenarios when an NRI receives a gift from a Resident Indian –

  • Gift to NRI Relative are exempted from tax – When a resident Indian gives a gift in the form of cash, cheque, items or property to an NRI who is a relative, both giver and receiver are exempt from tax in India.
  • When a resident Indian gives a gift in the form of cash, cheque, items or property that is within the value of Rs. 50,000 to an NRI who is not a relative, both giver and receiver are exempt from tax in India.
  • When a resident Indian gives a gift in the form of cash, cheque, items or property that exceeds the value of Rs. 50,000 to an NRI, who is a non-relative, the gift tax is payable by the receiver. The amount is added to the receiver’s income and taxed as per the income tax slab applicable to the receiver. The maximum limit for such a gift is USD 250,000 in one financial year. [This limit is defined under LRS (Liberalised Remittance Scheme) – the total amount of foreign exchange purchased from or remitted through, all sources in India.]
  • When a resident Indian gives a gift in the form of cash, cheque, items or property to an NRI for marriage or through will, both giver and receiver are exempt from tax in India irrespective of the ‘relative’ status.
  • When a resident Indian gives a gift in the form of shares or securities of an Indian company, the total value cannot exceed USD 50,000 in one financial year. The gift should follow the regulations of RBI regarding NRIs holding stock in Indian companies.

When you give a gift or get a gift, make sure you understand the rules regarding gifts and the tax implications and act accordingly.

wiseNRI

The information that I shared in the above post is one part of the story – issues can be complex based on your resident status. If we talk about USA – you can gift up to $15,000 in a year. This is not that simple but just an example. So check rules in countries where you are staying.

NRI Gift Deed Format

It’s important to sign gift deeds & keep them safe to avoid issues in the future. Many readers were asking for sample NRI gift deeds that they can copy. So I have added ready to use gift deed format for immovable property & even movable property.

Please share any additional information or experience that you have about a gift to NRI or gift from NRI – that will really help all readers. If you have any questions related to NRI gift tax – feel free to add in the comment section.

About the Author

Hemant Beniwal is a CERTIFIED FINANCIAL PLANNER and his Company Ark Primary Advisors Pvt Ltd is registered as an Investment Adviser with SEBI. Hemant is also a member of the Financial Planning Association, U.S.A and registered as a life planner with Kinder Institute of Life Planning, U.S.A. He started his Financial Planning Practice in 2009 & is among the first generation of financial planners in India. He also authored Bestseller book "Financial Life Planning".

  • Seetharama says:

    The limit to gift to US NRI is 15 K in 2018, every year it is revised.
    You need to define who are all relatives.
    Useful article, may add a para on bank/ IT formalities as well. SOme banks ask for specific forms from auditors to send gift money to NRIs.

  • Sanjay says:

    How are cash transfers by a resident or NRI father to resident son through net banking are treated for tax for giver as well as receiver?

    • Dear Sanjay,
      If I assume son is major – in that case, there are no tax issues in India. But to show that transferred amount was a gift – one can write a simple gift deed.
      In case of a minor son – any income from such transfer will be added to father’s income.

  • Vimal says:

    As resident indian, I want to gift my NRE daughter $ 10,000. What does it mean by ” it is tax exempted in India for giver and receiver. Can the giver reduce this gift amount from his taxable income. What is limit for giving US$ as gift to NRI relative.

  • MK says:

    Husband is NRI, and he is gifting money to his wife who is resident indian. This transfer is from husband’s NRE account to wife’s Resident saving account. If she does the FD and earns interest income. Taxation point of view, who will have to pay tax on this income husband or wife?

  • Nutan says:

    Thanks for a very informative post. I have a question: A NRI transfers rs. 10.000 every month from his nri account to his resident indian brothers savings account in order to assist him financially. Is this deal taxable? If yes, who has to pay and how much?

    • Anuj says:

      Hi nutan,

      If a NRI gives Gift to Resident Indian (Relative),it is exempt from tax in hands of both receiver and giver.You are sending money through bank transfers amounts to RS 120000 yearly. Your brother can claim this amount as gift and it is exempt from tax in his hand. Remember this Gift should be backed up by gift deed to claim exemption

  • Shrikant says:

    1. with reference to the point that NRI relative can receive gift in form of cash,cheque items or property from resident relative, is there a limit on the amount in cheque/cash that can be given to the NRI?
    2. are uncles, nephew, neices included in relatives definition for any such gift deeds?

    • Anuj says:

      Hi shrikant,

      1. Cash gift that exceeds Rs 200000 is subject to penalty and other than that is tax free

      2.You can check relative list above in this Article

  • Ajay Prakash Lohia says:

    Can I take gift from my nri son at my huf file

    • Anuj says:

      Hi Ajay,

      Yes, you can as your son is member of your HUF
      Gifts received by HUF from its members is exempt. But gift received by HUF from relatives of members shall be taxable.

  • Rohan says:

    I am a NRI. I want to send money from my US account to my brothers resident acccount a sum of Rs 10 lacs as a Loan or gift .Can I do that

    • Anuj says:

      Hi rohan,

      Yes you can do that as you are NRI and your Brother is relative.If you are giving that amount as a gift, your brother can claim gift exemption regarding this.

  • Tushar says:

    I am NRI and my wife stay in India. How much money I can give to my wife in a year through Cheque or bank transfer

    • Anuj says:

      Hi Tushar,

      There is no limit on Cheque or Bank transfer but there is a limit on cash gift which is Rs 200000. Above this amount, there is a penalty

  • Deepthi says:

    what all documents needed to gift a property to indian resident by NRI?

  • Ajay says:

    My son is working in Nigeria and he wants to send gift in dollar to my and my wife account and also he wants to send gift in dollar to my huf account, can it tax free income in India. please confirm

    • Anuj says:

      Hi Ajay,

      As your son is relative to you and your wife , there is no gift tax in your’s and your wife’s hand whether you receive gift in dollors or rupees.And Gifts received by HUF from members is exempt from tax. Remember that such gifts should be backed up by gift deed.

  • Sw says:

    My daughter in US is a neighborhood. How much can she gift mother and sister in 2019 from her nro account.
    Mother and sister residents on India, staying in India. Will she have to show the gift given to her tax consultant in the US if it’s below the limit?

  • osma says:

    Does a British national with OCI Card have to pay gift tax when receiving cash from Indian relatives as gift

  • Avi says:

    Can my sister-i-law & her husband gift me money above Rs.20Lakhs from USA, & not attract tax?

    • Anuj says:

      Hi Avi,

      As you see above in the Article, Sister-in-law and her husband are not covered in Relative definition. From non relative you can receive gift tax free upto 50000rs and beyond that only on specific occassion like on marriage or through will.

  • ABHISHEK says:

    Does an NRI having stock market investments have to pay taxes on the capital gains before repatriating funds from India to his / her overseas bank account and at what rate?Can NRIs also file their returns online
    ?

  • Subhash says:

    Can nri gift to brother children wife? How much gift allowed to gift by us citizen (nri). To relative in 1 year

  • S says:

    My father has a property (vacant land) under his name & he purchased this property in 2005 for Rs.10Lakh and now it’s worth Rs.20 Cr. I am an NRI and I would like to understand what is the best option to minimise the tax / CGT.
    1) option#1: I receive the land as a gift from him, I sell the land and transfer the sale proceed to my overseas bank account via my Indian bank account
    2) option#2: He sells the land and transfers the money to my bank account as gift and I transfer the money from my Indian bank account to my overseas bank account

    I understand that there are other factors like FX and taxation laws of my residing country. I’d like to understand if there is any other (legally abiding) option that is better from a financial perspective.

    Thanks for your help & guidance.

    Regards.

  • Surendra says:

    Joint flat owners. Husband n wife. Husband NRI wife resident indian. They want to sell this flat. To avoid high TDS upto 23.92% can the NRI gift the flat to wife and then wife sells the flat immediately so that TDS is 1%

  • Krish says:

    My brother is a NRI and he is planning to send me Rs 2000000 as a gift. I am a resident Indian.

    • Anuj says:

      Hi Krish,
      Yes, you can receive it, as your NRI brother is relative. Both giver and receiver are exempt from tax in india. Ensure that this gift should be backed up by gift deed for reference.

  • Brij says:

    I have sold a property in India and paid the capital gains tax etc. The money is in my NRO account . I am a NRI based in UK. Can I remit the tax paid money as gift to my son and daughter in their UK bank account from my NRO account ?I have the CA certificate as well. Is there a limit how much can I remit outside India ?

    • Anuj says:

      Hi Brij,
      As your Son and Daughter are both relative, you can remit this amount as gift and no gift tax attracted to both receiver and giver.But remittances from NRO to NRE account are limited to USD 1000000 in a financial year.And further proper documentation is needed to send this money. You should hire a CA for this.

  • Naman says:

    What are the income tax implications of transferring funds from one NRE account to another NRE account. The NRE accounts are under different account holder names and different banks.

  • Mohan says:

    I am a NRI (now USA citizen) in old age. I want to gift my life’s savings which are in NRO account in India to my children in USA (who also are USA citizen). What is the limit of transferring money from Indian NRO account to their USA as a gift? What documentation do I need to submit to my bank in India?

  • Ani says:

    Hi,

    I’m a resident Indian. I would like to gift INR 7 lakhs to my paternal uncle (Tauji) who lives in the USA. I would like to transfer the money to his NRO account via NEFT transfer from my SB AC.

    What are the Tax implications and FEMA regulations compliance should I consider for the transaction?

    Thanks,

  • Kumar says:

    I want to send 400000 for my grandmother is taxable

  • Suja says:

    Bank says I cannot gift sharesTo my children who are non-resident but your article here says otherwise how do I resolve this

    • Anuj says:

      Hi Suja,

      You can gift shares to your children as they are relative to you provided RBI approval is required and regulations & compliances are required to be fulfilled like gift does not exceed 5% of the paid up capital of the company, sectoral cap is not breached, total value cannot exceed 50000USD in one financial year etc. Its better to consult a good CA for such matters

  • AG says:

    Gift Given to nri,it is taxable for payer and If income is chargeable to tax in India and any relief is claimed under DTAA-?or not

    • Anuj says:

      Hi AG,

      First we should check whether NRI is relative or not, If he/she is relative then both receiver and giver are exempt from tax in india.
      If NRI is non-relative then subject to certain exemption as mentioned above in article, gift tax is applicable and receiver have to pay tax in india. Regarding DTAA, its better to consult a good CA.

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