Treatment of Gifts by NRIs to Resident Relatives and non-relatives or vice-versa

32,768 views

Published on

The NRIs/PIOs often have queries, ranging from visit to
family and friends to attending marriages or to explore a
business opportunity or to gift or to adopt a child. Sometimes,
because of lack of awareness and information about the
procedural requirements relating to such laws in India, they
have a challenging time.
Now, the trend of transferring funds online has risen which
has in turn simplified the making of financial transactions
easy...

Published in: Business, Economy & Finance
0 Comments
3 Likes
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total views
32,768
On SlideShare
0
From Embeds
0
Number of Embeds
10
Actions
Shares
0
Downloads
157
Comments
0
Likes
3
Embeds 0
No embeds

No notes for slide

Treatment of Gifts by NRIs to Resident Relatives and non-relatives or vice-versa

  1. 1.   Treatment of Gifts by NRIs to Resident Relatives and non-relatives or vice-versa Facts & figures:The NRIs/PIOs often have queries, ranging from visit tofamily and friends to attending marriages or to explore abusiness opportunity or to gift or to adopt a child. Sometimes,because of lack of awareness and information about theprocedural requirements relating to such laws in India, theyhave a challenging time.Now, the trend of transferring funds online has risen whichhas in turn simplified the making of financial transactionseasy. It is observed that in May, 2012, NRIs deposited $2.76billion in Indian Banks, sharply higher than as compared tothat of April’s $1.99 billion. In just these two months, NRIshave parked close to $5billion in banks, higher than amounts Who is NRI?seen in long time.When it comes to transfer of funds, there are number of Non Resident Indiancircumstances when NRI/PIO remits funds to India. One of (NRI)them is in the form of gifts or sending funds for familymaintenance. An Indian citizen ordinarily A. Remittance in the form of Gifts residing outside India and holding Indian Passport Gifts can be divided into two parts; Who is PIO? 1 2 Gifts  by NRIs to  Gifts  by Indian  Person of Indian Origin Indian  Relatives/ Non  (PIO) Relatives/ Non  Relatives to  Relatives NRIs A person who or whose i. Treatment of gifts when NRI sends it to Indian any of ancestors was an relatives/Non relatives Indian national and who is presently holding another NRIs can send gifts (in the form of money/ cash country’s overseas transfers/goods) to their relatives/ Non relatives citizenship/ nationality irrespective of any amount as per FEMA Act and rules. However, there are some limits given under Income Tax Act, 1961 As per Income Tax Act, 1961 “Government may cut spend, Treatment of To Relatives To Non relatives raise NRI deposit rates to gifts In the form of Exempt from Exempt from tax boost economy ”- Cash/ Cheque tax upto Rs. or any irrespective 50,000/- in Economic Times, 24th articles/goods of Gift value aggregate in one June, 2012 Financial Year
  2. 2.   ii. Treatment of gifts when Resident Indians sends it to Meaning of Relatives NRIs under Income Tax Act; A resident Individual is permitted to make a rupee gift i. Spouse of to a NRI/PIO who is a close relative as defined under Individual Companies Act, 1956. ii. Brother or sister The gift amount should be within the overall limit of of the individual USD 200,000 per Financial Year as permitted under iii. Brother or sister Liberalised Remittance Scheme (LRS) for a resident of the spouse of individual. It would be the responsibility of the resident Individual donor to ensure that the gift amount is under the LRS iv. Brother or sister and remittances in the form of gifts during the of either of the Financial Year including the gift amount have not parents of the exceeded the limit prescribed under the LRS. It may individual be observed that only LRS limit of the remitter would v. Any lineal be utilized and gift amount would actually be credited ascendant or to NRO A/c of NRI/PIO close relative. descendant of the individual Meaning of Close Relatives under Companies Act, vi. Any lineal ascendant or 1956 descendant of Father Mother (including Step mother) the spouse of the Wife Husband individual, spouse of the person referred Son (including step Son’s daughter to in clause (ii) to son) (vi) Son’s wife Son’s daughter’s husband Daughter (including Daughters son step daughter) Father’s father Daughters sons wife Father’s mother Daughters daughter Meaning of Non Mother’s mother Daughters daughters husband Relatives Mother’s father Daughters husband Those individuals who are not Son’s son Son’s Son’s wife covered in the Sister (including step- Sisters husband definition of sister) Relatives are Non Relatives. Brother (including step- Brothers wife brother).
  3. 3.   B. Money Transfer Service Scheme Channels to repatriate money in India Money Transfer Service Scheme was launched by After knowing that it is RBI in 2003 which was later modified in June 2012. legally allowed under This scheme is a quick and easy way for NRIs for FEMA rules to transfer transferring personal remittances from abroad to funds in India subject to beneficiaries in India. Under this scheme, only certain limits, lets throw some light on the channels personal remittances such as remittances towards of transfer. The initial step family maintenance and remittances favouring foreign to transfer money in India tourists visiting India are permissible. by NRI would be through opening right Bank Conditions: Account.  NRE (Non Resident a. A cap of USD 2500 has been placed on individual External) account: Is transaction under this scheme. Amounts upto Rs. freely repatriable 50,000/- may be paid in cash. Any amount (principal and interest) exceeding this limit shall be paid by means of and does not require Cheque/D.D./P.O. etc. or credited directly to prior permission from beneficiary’s account only. RBI. b. Only 30 remittances can be received by a single  FCNR (Foreign individual during a calendar year. Currency Non Resident) account: FCNR Deposits are So, now, Non Resident Indians (NRIs) can easily fully repatriable (principal and interest). send as well as receive funds in the form of gifts to And the entire deposit India with great ease. is exempt from tax.  NRO (Non- Resident Ordinary) account : NRO deposits are not repatriable (principal) except on current NRI income like rent, dividend, pension, etc. and remittances indicated under “Repatriation of NRO Funds” only after payment of taxes due in India. Interest is freely repatriable. The NRI may remit up to USD one million per calendar year.

×